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When most Internet users think of digital currency they are picturing a Bank of America ‘online banking’ account or a PayPal account. Both of these prehistoric versions of electronic money helped to revolutionize the way our world handles e-commerce.
However, if you are ‘old school’ or just an ‘old fart’ like I am, digital currency memories bring up thoughts of that original Webmoney Keeper software from years ago still installed on my laptop or learning how to access my first Pecunix account. I was using e-gold digital gold currency almost a decade ago when the account numbers were still under 250,000 and of course they are now over 4 million. That won’t mean much to those of you who pay your electric bill via Bank of America online, but to those who remember placing that x.com referral link on your web way back when…..a low e-gold account number still holds a bit of nostalgia.
Unlike ‘Online Banking‘ or ‘Online Payment Systems’ digital currencies operate outside of conventional banking operations. Digital currency is not a part of the federally regulated banking alliance in the US or pretty much any other country. Instead, digital currency provides global commerce solutions to people who may not even have a bank account or live in a country yet conquered by PayPal. This new and innovative payment method provides a great addition to regular banking channels. This is especially true with Webmoney which has become very incorporated into daily life around Russia and other parts of the world. You don’t have to go online with the bank to pay your bills, Webmoney lets you do it without a bank.
Digital Currency is sometimes called ‘free market’ money. This ‘money’ is available if you want to use it, but its not government issued and you are not required do business using it.
The primary market of exchange and liquidity for the digital currency units is created and maintained by third party independent exchanges. These independent agents are a huge part of this private enterprise or a free market. Additionally, they are not a part of or regulated by any banking authority. Anyone can create some digital currency as long as they find someone else who will accept and use it in exchange for value.
Trying to use privately issued digital currency, is a bit like visiting America with a pocket full Pesos or Euros. Your local bank won’t accept them and only a few stores or restaurants in the US will either. If you want to spend them, you must privately find someone who will accept Pesos. If you want to exchange your Pesos or Euros into US Dollars you must find a third party independent exchange agent.
Many times I’m asked, “What is Digital Currency?”
I think, ‘digital currencies‘ and can be defined by their common traits such as the ability to be purchased from a third party agent outside of any conventional banking system and also be exchanged unit for unit with another digital currency. You can’t do that with BoA, PayPal or Moneybookers and any P2P transfer from that Bank of America account (wire) would run through the Fed Wire system. That bank wire transfer is a highly regulated government controlled system and not a private independent third party private agent. The other identifying feature that singles out all digital currency systems is their finality of payment. No chargebacks! Digital currency payments are 100% final and not reversible. Try that one on for size with a PayPal account.
Today I’d like to introduce a monster new entry into the digital currency arena. Its name is Loom Gold (www.loom.cc) This one is not quite an online payment system and I don’t even consider it to be a regular digital currency as I have described above….Loom is beyond all those ‘minor’ systems.
This system is pristine and uncharted territory for Internet users. Its so simple my 8 year old nephew with a crayon in his hand can understand and use it. (and he rides the short bus to school) You don’t need a bank account, credit card, ID, credit rating or even an email address to transfer value around the globe…….quite simply its awesome. More to come this week on Loom Gold including a brief interview with the developer, quick instructions, listings of third party agents who can help you get started, integration info and a short video tutorial. Stay tuned.
The Loom system is “invitation only.” If you don’t have usage tokens to get your first folder created, stay tuned this week and we’ll have plenty for players to test out the system. If you want some right away, you can email me anytime. mark.herpel@open2exchange.com or Panama@cryptoheaven.com
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Sounds interesting. From looking at the site I can’t say I’m too sure how it works, so it will be good to get some more info on it, and maybe some usage tokens at some point.
Thanks for sharing this interesting post Mark,
I read before that using e-currencies are only to send money to friends or relatives (for example) and not making business (I think that I read this sentence when I opened my webmoney account), and reading some parts of your post I think in one question about investment programs:
Is it legal accepting e-currencies (like e-gold, e-bullion…) in a HYIP or other investment program?, I don’t think so. And I think that it can be negative or dangerous to many reliable programs out there if USA or other governments could freeze these funds due to this reason.
Your answer will be so much appreciated Mark