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The first thing to realize is that E-Gold is not the only way pay in gold.

Gold payment seems to be a solution in search of a problem. I find it beguiling and has many theoretical advantages.

The main problem with payment in gold is that most of the problems that it solves are also theoretical rather than real.

I believe that we would not be talking about gold payment if it were not for the Libertarian Right in the USA. These people are suspicious of central bankers and all 'fiat' currency issued by them. They generally favor a return to the gold standard which they regard as the only real currency.

This is because they believe gold would eliminate inflation from the US economy.

There is no real debate about the wisdom of returning to the gold standard anywhere else but in the USA. It is one of those debates that rage on and on while the world scratches its head and wonders if it the USA or the rest of the world that has missed the point somewhere.

Nevertheless many Americans have decided to return to the gold standard without waiting for the Federal Government. To this end they bought gold coins and funded various Internet gold currencies. The only trouble being that nobody is really spending the gold.

This is the central difference between e-gold and money based systems such as Pay Pal. It is impossible to earn e-gold on sites such as these and there is also very little to spend your gold on once it has been earned.

Essentially e-gold is a savings currency while Libertarians wait for the economic collapse they believe is inevitable.

The ultimate irony is that they feel safe within e-gold because they believe it to be backed by real gold (the only money they believe in). Nevertheless there is no way of proving that the gold actually exists. The sector is quite unregulated because it is very new. It is possible that some of these schemes are no more backed by gold than the Dollar is.

One day e-gold will be a solution to a real, rather than an ideological problem. Unfortunately most people have not reached this point yet.

Learn more about this author, Richard Ford.
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