Gold To Become E-Currency, Says E-Commerce Expert
By Steve Gold, Newsbytes
WASHINGTON., D.C., U.S.A.,
05 Dec 2000, 8:12 AM CST
A leading e-commerce expert has predicted that gold, the world's oldest method of monetary exchange after bartering, could soon appear online as digital gold.
In his study on the current state of play in the e-commerce marketplace, Richard W. Rahn, an expert on the development of digital money systems, said that digital gold could be cheap to implement as a means of online exchange.
"Digital gold-backed bonds or other digital gold instruments could have significant advantages over the use of established currencies," he said.
Rahn says that the e-gold group (http://www.e-gold.com ) is already preparing to offer a digital gold system on the Web. Known as GoldMoney, the system is due to start shortly," he said.
In his report, prepared for the World Gold Council, and entitled "Digital Money & Its Impact on Gold," Rahn acknowledges that digital- gold also faces obstacles.
Currently, he said, very few e-commerce or physical world businesses accept gold in exchange for goods and services, and there is a need to establish widespread confidence in the financial integrity of a gold currency system.
In some cases this will need a digital gold currency to be fully backed by physical gold, otherwise it is unlikely to attract and retain the confidence of users, unless it is underwritten by an established financial institution of unquestioned strength.
The advantage of digital gold, he went on to say, is that many people instinctively trust it.
"It is tangible, free of government control and the idea that gold is intrinsically valuable is ingrained in folk history. Thus, a digital currency perceived to be adequately backed by gold would have an automatic advantage in competing for people's trust over many other currencies," he said.
The second important advantage of gold as a digital currency, he went on to say, is the substantial demand that already exists for holding gold assets for purposes other than as a medium of exchange.
"This pre-existing demand for gold assets gives gold an important head start over all competitors, except major national currencies," he said, adding that, like the US dollar, gold is recognized worldwide as a store of value.
"This certainly makes digital gold a candidate as an international digital medium of exchange," he said.
In his report, Rahn argues that the real questions are not whether there will be digital money, but how long will it be before most paper currency and coin is eliminated, what portion of digital money will be issued by private institutions (as against governments and central banks today), and how much of that will be gold.
Digital money, he predicts, will eventually become the dominant form of money because it is less costly to handle than cash, checks, or credit cards, and it is more secure and efficient.
Institutions that currently own or produce gold, he said, are logical developers and marketers of digital gold products.
"There are no longer technological reasons why private companies cannot create international gold-backed monies to compete with government-issued monies," he said.
Reported by Newsbytes.com, newsbytes.com .
08:12 CST
Reposted 10:27 CST
(20001205/Press Contact: Robert Pringle, World Gold Council +44-20-7766-2723/WIRES ONLINE, BUSINESS/)
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