A New Twist on an Old Payment System

11 December 2000
What easily could be considered the oldest monetary unit known to mankind is also the newest payment option to hit the Internet. If history does indeed repeat itself, and a Canadian company has its way, soon Internet transactions of all kinds won't be paid with US dollars or British pounds; instead they'll be paid with gold.

A unique system has been set up to enable users to buy into customer accounts and use "e-gold" for Internet transactions.

With the system, buyers and sellers aren't actually having to buy the physical gold itself; instead they buy ownership in a specified amount of gold. The gold can then be spent anywhere online where e-gold is accepted.

The one drawback to the e-gold system: Not a lot of Web merchants are using it yet. The number of e-gold accounts, however, continues to rise over time, and the company recently secured its first online gaming account with gamebookers.com, an Antigua-based sportsbook.

gamebookers.com spokesperson Benjamin Terkov admits that, although his company is one of the first to buy into the e-gold system, he feels it is a safe agreement. "No one can tell if it will prove to be a true alternative," he said. "We think it's worth it to give e-gold a try."

And the advantages are clear for a company like gamebookers.com, which deals in e-commerce all over the world. Instead of hassling with currency rates and exchanges, customers have the option to buy the e-gold by weight in terms of eight different national currencies.

Terkov says a big appeal to e-gold is in the precious metal itself.

"As a private and largely unregulated initiative, it's actually hard to understand how this payment method could attract such a high number of enthusiastic fans," he said. "It might be the financial security people still seek in gold or just the fascination of gold itself."

Unlike other payment systems, e-gold Ltd. is finding a large portion of those using e-gold are from outside the U.S. While users get more security knowing they are buying into gold, Terkov said his company had two main reasons for getting affiliated with the program.

"It offers the user a high level of privacy and second, it has proven to be a true world currency," he said. "There is a clear international approach with e-gold. In contrast to many other online payment systems, nearly 40 percent of e-gold users are based outside the U.S."

And if the appeal to buying into a global commerce unit isn't enough, e-gold offers quicker turnarounds than more traditional forms of payment.

For gamebookers.com, it is that speed which has attracted many of its users.

"Winnings can be transferred to the customers account within a couple of hours," Terkov said. "Compare that to any other method of payment. Credit backs take a couple of days as do bank transfers. Checks take even longer than that."

e-gold has its advantages for operators as well. Transaction costs are than 1 percent depending on the amount of the transaction, and there is no worry of fraudulent credit cards or charge-backs.

Users can start an e-gold account with a credit card or through a Western Union or bank transfer. Not only can they get their winnings in e-gold, but they can also chose to "cash out" and get their winning through a transfer.

Another element to the e-gold concept that separates the system from other forms of payment is that e-gold can actually increase or decrease in value as the price of gold goes up or down.

Since the e-gold account represents gold in an electronic format the customer does risk losing money, but they also have the chance to make money just by letting their account sit. Terkov said it is this aspect that adds yet another appeal to e-gold.

"e-gold cannot be rendered worthless by a financial crisis," he said. "Paper money can."

Officials with e-gold didn't want to comment on how many sites currently have bought into the system. The company's website lists eight different "partners," not including gamebookers.com, that accept e-gold. These range from the popular eBay to sites where you can buy coffee and teddy bears.

What is known is e-gold is offering a new way to conduct business through the Internet. Only time will tell if the rest of the wired world jumps on the bandwagon that has brought a method of payment from Roman Times full-circle into the new millennium.

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at kevin@igamingnews.com.