The Reserve Bank of Zimbabwe is also issuing the ZiG, a digital token backed by gold, which has also been granted legal tender status.
[1] [2] Proponents claim that DGC offers a truly global and borderless world currency system which is independent of exchange rate variations and political manipulation.
Unlike fractional-reserve banking, DGCs hold 100% of clients' funds in reserve as gold, silver, and/or platinum, which can be exchanged via digital certificates.
All of the other digital gold-backed currency systems[clarify] can be used to buy, hold, and sell precious metals, but do not promote themselves as an "investment", as this implies an anticipated return.
Some exchangers also sell and fund pre-paid debit cards to make it easier for their clientele to convert DGC into an easily spendable form of national currency.
Unlike the credit card industry, digital gold currency issuers generally do not have services to dispute or reverse charges.
The advantage of this agreement is that the operating costs of the digital currency system are significantly reduced because of the shortage of settlement of payment disputes.
On their website they claim their goal is to "further the interests of the industry as a whole and help with fighting fraud and other illegal activities, arbitrate disputes and act as escrow agent when and where required.
A legal case was brought against e-gold in April 2007 that included violations of 18 U.S. Code § 1960 (Prohibition of unlicensed money transmitting businesses).
In July 2008, following a ruling from the court that effectively enshrined in case law the Treasury Department's expansion of the definition of "money transmitter", e-gold entered into a plea agreement that detailed actions required to bring the companies into compliance with laws and regulations governing operation of a money transmitting business.
In August 2008, James Fayed, the owner and chief executive official of the E-Bullion Company, was taken into United States Federal custody to face felony charges of conducting unlicensed money transactions and the murder of his wife.
[citation needed] In a 2012 interview with DGC Magazine, Mr. Davis described the development of the Voucher-Safe software and peer-to-peer network for the exchange of digital currencies.
[citation needed] Digital gold systems are completely dependent on electronic storage and transmission of account ownership information.
E-gold basically places the entire responsibility on the user, and employs a user-name and password authentication system that is weak and highly vulnerable to interception by malware.
Pecunix devised a unique rotating key system that provides many of the benefits of a security token without requiring the user to buy one.
[20] Comparison of operating DGCs: DGC providers and exchangers have been accused of being a medium for fraudulent high-yield investment program (HYIP) schemes.
In January 2006, BusinessWeek reported that ShadowCrew, an online gang, used the e-gold system in a massive identity theft and fraud scheme.
Allegations that e-gold is a safe medium for crime and fraud are strongly denied by its chairman and founder, Dr. Douglas Jackson.