Tuesday, April 11, 2006

Exchanging Fiat Currency

e-gold does not sell its currency directly to clients. Instead numerous digital gold currency exchangers, such as OmniPay (a sister company of e-gold), act as market makers selling e-metal in exchange for fiat currency and a transaction fee. Conversely, these exchange providers will sell fiat currency in exchange for e-metal, and a transaction fee. In this manner e-metals can be converted back and forth to a variety of national currencies. The amount of a particular fiat currency or e-metal necessary to complete a transaction is determined by the spot price of the metal in relation to the value of the fiat currency. e-gold is known as private currency as it is not issued by governments.

Compared to other systems like PayPal, the process of buying e-gold can be confusing to a person unfamiliar with the e-gold system. e-gold, unlike e-Bullion for instance, does not sell digital currency directly to the user. According to their website the reason e-gold does not provide an in-house exchange service is so there can be no debt or contingent liabilities associated with the business, making e-gold Ltd. absolutely free of any financial risk. They claim e-gold Ltd. does not possess currency of any nation or even have a bank account.


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