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You are here: Home > Economic Means to Freedom > Economic Means to Freedom - Part XI
Economic Means to Freedom - Part XI

by Frederick Mann
2/17/02
E-Gold and Alternative Currency FAQ

Introduction
The purpose of this article is to provide information on e-gold and other alternative currencies and to answer commonly asked questions.

"Thanks for the illuminating alternative currency FAQs. As usual, F. Mann talks and explains on the level that is expected of a sovereign individual. He also has equally high expectations of the decision making capacity of readers. Continue to wake us up." -- BH

See also:

Disclaimer
This article constitutes the dissemination of information in accordance with the right to free speech. Nothing in this article is to be interpreted as legal, accounting, tax, currency, banking, or investment advice. Anyone seeking such advice should consult a properly qualified and accredited professional. All readers of this article are emphatically advised to obey all laws on Earth and in the Universe to the letter.

Q. I'm interested in learning more about alternative currencies; where should I start?

A. I suggest you open a FREE e-gold account. For information on exactly how to do this, send a blank email to goldaccounts@InfoGeneratorPRO.com.

Q. What should I do next?

A. Have a look at the following FAQs:

Q. How do I get money into my e-gold account?

A. You utilize the services of a "market maker" -- see E-Gold Account Funding. To get an idea how market makers operate, see GoldChanger FAQ. For a list of market makers, see Gold Exchange Services.

Q. What is the least expensive way to fund my e-gold account?

A.

  1. If you don't already have one, open a FREE Evocash account.
  2. Access X-Changer$ and click on "Funding Options."
  3. Fund your Evocash account (no service fee).
  4. Use one of the following to convert your Evocash into e-gold for as little as 1% (unless rates change):

Q. What is the quickest way to fund my e-gold account?

A. With some market makers you can walk into a bank, make a cash deposit to the market maker's account, send them an email with the details, and within hours they credit your e-gold account. See Gold Exchange Services, where "Payment Methods" include "Direct Deposit(s)" or "Cash Deposit(s)."

Q. Can I use PayPal to fund my e-gold account?

A. Yes, you can check the websites of the market makers and the directories below. In particular, check the following:

Q. Can you provide me with a list of market makers?

A. See Gold Exchange Services. Also check out the directories listed below in the next answer.

Q. Can I use currencies such as e-gold to do my shopping?

A. Yes, to a limited extent. See:

Q. Can I purchase items on eBay and pay via e-gold?

A. Access the eBay home page.In the search box, enter e-gold and click "find it!". A page will appear with "Basic Search" on the left and "e-gold" in the search box. Check "in titles and descriptions" and click "Search." On 2/16/02 there were five pages of items you could purchase and pay for via e-gold. You can also offer items for sale on eBay to be paid for via e-gold.

Q. Which alternative currency is used most?

A. E-gold, probably followed by Evocash and OSGold. To get an idea of the extent of e-gold usage, check out the e-gold statistics. Usually the transaction volume in any 24-hour period is about $2 million equivalent. I've seen it as high as $3 million.

Q. Gold has been described by some economists as a "barbaric relic"; why use it as money?

A. As far as I know, John Maynard Keynes was the first economist to denounce gold as a "barbaric relic." Maybe it would be more appropriate to regard paper money as a "barbaric relic." Historically, gold has been the most enduring and form of money. See:

Q. Where can I find out more about gold in general?

A.

Q. Suppose I want to convert some of my e-gold into US$s, what do I do?

A. You get a market maker to send you a check. You can also get a debit card from Cash Cards. You can transfer e-gold to your debit card and then withdraw cash at an ATM. (Several of the alternative currency operators as well as some market makers provide similar services.) See also Alternative Currency Debit & Credit Cards.

Q. Can I use these alternative currency systems to provide me with services usually provided by regular banks?

A. Yes. You can use them as a store of value for liquid reserves. You can use them to deposit checks and to make payments, using market makers if necessary. You can check out the market makers to see what services they provide. You can also get a debit card from Cash Cards. You can transfer e-gold to your debit card and then withdraw cash at an ATM. (Several of the alternative currency operators as well as some market makers provide similar services.) See also Dark Castle's E-Gold FAQ. Regarding storage, see 1mdc.

Q. Are there any banks that accept alternative currencies as deposits.

A. Yes, Andros Bank.

Q. If I have money in e-gold and the gold price fluctuates, how does that affect my account balance?

A. Your e-gold account is denominated in grams of gold (or other precious metals). If US$ gold price in terms of US$s goes up, then your account balance in terms of grams of gold remains constant, however, its value in terms of US$s goes up.

Q. What is a good place to check the gold price?

A. Kitco.

Q. Which alternative currencies do you regard as the safest and why?

A. GoldMoney and e-gold. I've had considerable interaction with some of the principals and am satisfied with their integrity and reliability. By thoroughly studying their websites (including their site maps), you can form your own opinion about their safety. 1mdc may be safe, but I haven't checked this out myself. (You can inquire on the e-gold discussion list.)

Q. What is the risk of governments closing down these systems and seizing their assets.

A. They are generally domiciled in reasonably safe jurisdictions. The risk is probably no greater than that of a US government agency ordering a US bank to freeze or seize your US bank account. See also the references in #TL07B: The Nature of Government to "government as legal plunder."

Q. Can you insure your balances in alternative currency accounts?

A. Not as far as I know. They don't have the equivalent of the FDIC (Federal Deposit Insurance Corporation).

Q. What do you think of the Federal Reserve System?

A. See:

Q. Once I have e-gold in my account, are there ways to make it grow?

A. Yes, see http://www.bigbooster.com/business_opportunities/#PLC. Scroll down and register as BigBooster Associate. Or go direct to http://www.bigbooster.com/plc.

Q. Aren't all these and similar programs scams; I've heard that many scammers use e-gold?

A. First, it's necessary to make a distinction between "gold games" and "HYIPs" (High-Yield Income Programs). "Gold games" are Internet programs that promise outrageous returns such as "double your money in 7days!" Practically all (if not all without exception) of these "gold games" are scams. Second, HYIPs typically promise returns ranging from around 1-5% per month to 100% per month. The vast majority of such programs promoted on the Internet are scams, become scams, or fail for other reasons. But a few are legitimate. Some consistently pay 1-10% per month, year after year. A great deal of know-how has been developed on how to utilize them to make your alternative currencies grow. Even with programs that eventually fail, you may be able to earn a great deal. This is explained in detail on our Private Programs page and its links.

Q. Surely, any so-called "HYIP" (or whatever) that promises outrageous returns like 10% per month or more can only be a scam?

A. There are certain people who apply what I call "superior money formulas" in their areas of specialty. Three examples are Bill Gates, Warren Buffet, and George Soros. Over the years, these individuals have provided substantial to huge returns for their investors. Warren Buffet could be described as a "High-Yield Capital Gain Program" operator and George Soros as an HYIP operator. Fortunately, there are also other people who can and have provided substantial to huge returns for their investors. It certainly is true that the vast majority of "HYIPs" offered on the Internet are scams, become scams, or fail for other reasons. That does not make all of them scams. Similarly, the fact that 90% of new businesses fail in their first years or so, doesn't make all new businesses scams. Nevertheless, the scam/failure rate among "HYIPs" is considerably higher than for new businesses. Fortunately, there are a few honest, reliable, and trustworthy HYIP operators. For more on this, see Advanced Money Skills.

Q. Is it possible to earn your living speculating with the kinds of programs you feature?

A. Most definitely. There are probably several thousand people who do this successfully. However, you may have to learn the "tricks of the trade," which you can do from our Private Programs page and its links.

Q. I'm not interested in risking my hard-earned capital on questionable HYIPs. Are their ways to make my e-gold grow without taking big risks?

A. Yes. There is a way to spend $10 or $50 worth of e-gold, do some marketing, and develop a substantial weekly income. It's not MLM. In fact, it's vastly superior to MLM. See Assessment of MLM Madness! Your earnings will be in the form of US$ payments, which you can convert into e-gold using a market maker.

Q. Is there an email discussion list where I can discuss using alternative currencies to earn money?

A. There are at least three:

  1. Financial Independence List. You can also subscribe by sending a blank email to financial_independence-subscribe@topica.com.
  2. Gold Account Security discussion list. You can also subscribe by sending a blank email to gold_security-subscribe@topica.com.
  3. TransFinancial List. You can also subscribe by sending a blank email to: transfinancial-subscribe@yahoogroups.com.

Q. Are there other lists or forums where e-gold, etc. are discussed?

A. Yes:

Q. I'm interested in utilizing one or more of the alternative currency systems in my business; where can I find out more about this?

A. See:

Q. Can you provide an inclusive list of all the different alternative currencies?

A. All the ones I know of are listed in Is the Private Sector Really Part of the Public Sector?.

Q. Please tell me more about why should I use alternative currencies; what are their advantages?

A. The biggest advantage is probably that they are privately issued and less subject to "legal plunder" by government -- see #TL07B: The Nature of Government -- than government fiat currencies.

  1. Most transactions are private and confidential.
  2. Transactions tend to be convenient and instantaneous.
  3. Generally, transaction costs are very low.
  4. Generally, transactions are final and can't be repudiated.
  5. In some cases such as e-gold, high degrees of automation are possible.
  6. Because of the economic advantages, individuals and businesses (whether they're pro-freedom or not) are shifting some of their economic activities and assets into the alternative-currency economy.
  7. Some of the alternative currencies are less likely to lose their value through inflation, compared to government fiat currencies.
  8. With some of the currencies, micropayments (e.g., small fractions of a dollar or gram of gold) become possible.

Q. What disadvantages and risks are involved with using alternative currencies?

A. The biggest risk is probably that a cracker-thief will hack into your account and steal whatever money is in your account. (The issue of security is covered below in more detail.) Here are some other risks and disadvantages:

  1. You could accidentally pay to the wrong account (or pay too much), and the recipient refuses to return your money. Generally, transactions can't be repudiated.
  2. The operators of a currency may fail with their business or may "run with the money," leaving currency holders with small or large losses.
  3. If you're a business, using a particular currency, the currency owner may decide that he doesn't like your business and "cap your account" so your customers can't spend to it. This can be embarrassing, disruptive, and expensive in terms of lost business. (The e-gold management has been "trigger-happy" in this respect. As a result, some businesses have shifted to OSGold and Evocash.) If your business is receiving payments in these currencies, it may be prudent to use multiple currencies with multiple accounts for each, so your ability to receive payments is flexible.
  4. Some of the alternative currency operators sometimes don't provide good customer support services. Nevertheless, in my experience, most of the alternative currency operators provide adequate service.

Q. Can you provide an example of a merchant who is satisfied with e-gold as a payment system?

A. See:

  • K.I.A.C. Global
  • Dark Castle
  • Near the beginning of this FAQ, in answer to the question, "Can I use currencies such as e-gold to do my shopping?", a number of directories are listed. In the directories you can find merchants who use e-gold and other alternative currencies. You could contact them to find out how satisfied they are.

Q. How easy or difficult is it to convert from one alternative currency to another?

A. Numerous market makers provide this service. In particular, see:

Q. What about security?

A. There are several "professional thieves" in the business of raiding e-gold and other alternative currency accounts. Typically, they use the following methods:

  1. Confidence trick: You receive an email that you've won $10,000 in e-gold, or that your e-gold account will be closed if you don't act, or some such. When you go to the URL (which could be something like WWW.E-QOLD.COM, looking just like www.e-gold.com), you are persuaded to enter your e-gold account number and password, which are captured and used to empty your account. Beware of fake emails that look like they were sent by the currency owner or operator.
  2. If you use a simple password, thieves may be able to "guess" it. Or they may use programs to systematically attempt to access all the accounts of a particular currency, using a range of simple passwords such as "CHRISTMAS," "ILOVEYOU," "MYMONEY," etc. (E-gold introduced their "Turing number" to guard against this kind of attack.)
  3. If you also use your e-gold password for other programs, crackers may be able to hack into those programs, get your password and use it to raid your e-gold account.
  4. You may provide your password to someone you trust -- or inadvertently to someone you don't think will be able to use it. Suppose you use someone else's computer to access your e-gold account. That computer is configured to "remember" account numbers and passwords. Later, the computer owner can access your e-gold account with the "remembered" account number and password. The same could happen if you use a "public" computer, e.g., in a library, Internet Café, or place of business. Another possibility is that you access your account and leave your computer for a few minutes. A sophisticated watcher transfers your balance to his account in a few seconds.
  5. You access a website where you do a purchase (spend or transfer) that ostensibly uses the e-gold, GoldMoney, or 1mdc automatic shopping cart interface
    (SCI). However, the website is programmed to capture your account number and password, which can then be used to raid your account.
  6. A cracker can plant a "Trojan Horse" in your system that sends information back to the cracker, such as your Internet connection "IP numbers," your keyboard strokes, your "password cache" information, etc. The cracker can then use this information to raid your accounts. There are basically three ways a trojan can be planted in your system:
    1. You receive an email with an attachment. When you click on the attachment, the trojan is installed.
    2. You access a website which has code to plant a trojan on every computer that accesses the site.
    3. A cracker logs into your system remotely, while you're logged onto the Internet, and installs a trojan.

Q. How can I protect my accounts?

A. The security of alternative currency accounts can be discussed on the Gold Account Security discussion list. You can also subscribe by sending a blank email to gold_security-subscribe@topica.com. See also Keeping GoldGrams Safe.

  1. Use long, complex, and unique passwords (or passphrases). Change them periodically. Never reveal your passwords to anyone else. Never use the same password for any other accounts.
  2. Be very suspicious when you receive an email that you've won money and need to do something to claim it, or an email purporting to be from the currency owner that you need to do something about your account.
  3. If you have significant balances, open multiple accounts and spread your money. Have one "public" account for "spends" and other private accounts for "storage." Never reveal the account numbers of your private accounts to anyone. Keep the balance of your "public" account low.
  4. When you make purchases, transfers, or "spends, using a currency SCI (shopping cart interface), check carefully that you're actually accessing the currency SCI. A website you access can be programmed so it looks like you're in the currency SCI, but you're really not. (A cracker could use "E-QOLD" instead of "E-GOLD" to deceive you. In lower case it's not easy to tell the difference.) As a further precaution, you could change your password every time after doing a "spend" on a website you're not sure is safe. As a further precaution, you may want to use only certain specific accounts for SCI spends. Before the spend, you transfer the amount you want to spend (plus transaction fee, if necessary) to the "SCI-spend" account. Then you do the spend, leaving only a small balance in the account. Never have any significant balances in these "SCI-spend" accounts.
  5. Never leave an e-gold session (or any other) unattended. If you use a computer other than your own to access your account, change the password immediately afterward.
  6. Never download files to your computer unless you are reasonably sure they don't contain viruses, worm, or trojans.
  7. Install anti-virus software on your computer, such as from McAfee. Update your "DAT" files regularly.
  8. Install anti-trojan software on your computer, such as from TDS.
  9. Install a firewall on your computer. This is software that can be set up to stop unauthorized access to and transmissions from your computer. A firewall can be used to stop a "keyboard sniffer" from sending out your password. See McAfee and ZoneAlarm.
  10. Copying & pasting your account number & password when accessing accounts also provides a degree of security.
  11. On the e-gold site, use your mouse instead of the keyboard to enter your passphrase. This can be done thanks to the SRK (blue circle) button on the right side of the passphrase field from the access account form. Click on it to see the virtual keyboard.
  12. Realize that Microsoft Windows is inherently insecure. It's important to realize that crackers can identify specific targets and attempt to get into their systems. If they expect that you have substantial account balances, they may regard you as a worthwhile target. Depending on the size of your accounts, it may be worth going to the extremes I have to protect your assets. Personally, I use a "supersafe three-computer" approach:
    1. I use a "gateway" or "bastion" computer (not Windows) with a firewall just to access the Internet. Two other computers are networked to the gateway computer.
    2. I use a second computer (Windows) to do most of my work -- e-mail, writing, accessing websites for research, etc. I don't use this computer to access any critical accounts.
    3. I use a third computer (not Windows) with a firewall just to access my critical accounts. This computer never receives nor sends email. [If you're interested in setting up such a "supersafe three-computer" system for yourself, I recommend the following books/websites:
    4. Operating systems like Linux, FreeBSD, OpenBSD, and NetBSD are great to use for firewall computers. If you choose to use one of these, be sure to search for information on how to "harden" the system so as to make it less vulnerable to attacks.

Q. I just logged into my e-gold account and found it had been emptied. I mentioned this to a friend of mine on icq and this has happened to someone else he knows. He lost a whole lot more than me. It seems that e-gold is far from secure. It was e-gold that was hacked, not my PC, as I have a firewall that won't even let me do my own telebanking while it's on. How can my PC be more secure than that?

A. Depending on the quality of your firewall and how well it's configured, it may have holes crackers can drive big trucks through. I've seen several reports of PCs with firewalls that were hacked into -- resulting in emptied e-gold accounts. It's extremely unlikely that e-gold was hacked. How secure was your PC when you turned the firewall off to do telebanking? As for making your PC more secure, see previous answer.

Q. Are there any other kinds of scams I need to watch out for?

A. Yes. You need to know that it's relatively easy to send an email, making it look like it came from any specific email address. Some time ago, I received the email below, which has nothing to do with me. It was sent out by an impersonator. I most definitely have no involvement in this "Private Trade." One person who received the "offer," wrote to me: "I received this offer and wonder if it comes from you. I noticed that the SMTP server was l73-226.world-net.co.nz which could be a perfect scam. I receive almost daily offers from ".nz" SMTP server. These offers are always rip offs!"

>
>You are receiving this email because you requested
>information regarding the Private Trade.
>
>Just to re-capp, the investment yields 3-1 in 60 days.
>(triple your investment). As I mentioned in my email
>I am purchasing 15,000 of the units available, which
>leaves 35,000. The cost is per unit is US$100 each,
>minimum purchase is 1 unit. These will be sold on
>a "first in = first served" basis.
>
>For the purposes of this investment opportunity the
>trader has set up a special account for funds to be
>placed before they go to trade in a few days time.
>Bank Wire facility is not available because there is
>simply not enough time to use this facility, therefore
>the easiest way is to deposit funds by egold or
>evocash.  I presume you all have a free egold or
>evocash account by now!...
>
>If you want to include your family members or your
>closest friends then you must purchase units on
>their behalf (unless of course they are already a
>member of my group).
>
>Send your funds to either of the following accounts:
>
>Egold account # 503793
>Name on account =  Private Trade
>
>Evocash   account # 63531
>Name on account = Private Trade
>
>When you send in your funds, please put your
>email address in the "Memo Field"
>
>When the investment matures the funds will be sent
>back to the originating egold or evocash account.
>
>You will receive a confirmation when all the units
>are sold or the trade closes in a few days time
>(whichever comes sooner)
>
>"Success is ONLY a Commitment Away"
>
>Frederick Mann
>
> ---------------- UPGRADE YOUR LIFE! -----------------

I have nothing to do with the above "offer" and am not involved in it in any way.

Q. From all the references so far in this FAQ I get the impression that there could be a substantial economy associated with these alternative currencies? How fast is this economy growing?

A. It's probably growing by more than 10% per month. I've written four newsletter articles on what I call the "Golden Revolution" -- see:

See also Is the Private Sector Really Part of the Public Sector? and Massive Change Is Upon Us.

Q. For a businessman or entrepreneur there must be opportunities in this "new economy"; what do you suggest?

A. One major area of opportunity is the provision of "interface services" between the alternative currencies and national fiat currencies. The market makers (really a misnomer) operate in this area. There is most likely "room" for many more market makers. The question, "What products and services do people in this "new economy" need?", may suggest some opportunities. Businesses in the "old economy" could be provided with consulting and software services to implement alternative currencies as additional payment systems. There is most likely also "room" for more alternative currencies.

Q. What further information can you provide on alternative currencies?

A. You may want to check out the following articles and interviews:

[Please send suggestions for improving this FAQ to frederick@bigbooster.com.]

Feedback: What did you think of this article? We'd like to hear your thoughts. (Please mention the name of the article to which you are responding.)

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