Gold Redeemable Internet Currencies

Gold circulated over the Internet

Gold Redeemable Internet Currency, GRIC, (also called Digital Gold Currency, DGC) are electronic currencies which are backed and redeemable in gold or silver.

You can use them to transfer money, internationally, through the Internet, with very low fees and maximum privacy.

You can also use them to store and preserve your wealth.

Legend

Fiat money = Legal tender, especially paper currency, issued by a government, which is not backed on or redeemable into gold or silver. Examples are EUR, USD, CHF.

Backed = The currency in circulation amounts to the amount of gold owned by the company (in the name of its clients) and stored in vaults.

Redeemable = The currency in circulation can be exchanged, with its issuer, with gold or silver from the backing of the currency.

Chargeback = The process of taking back (= debiting) a merchant's account after the funds have been paid by a client to the merchant. This occurs when a customer disputes a credit / debit card transaction. This is not the same as a refund request.

Description

GRIC is a system where an issuer of GRIC has physical gold stored in a vault and creates an online user interface which allows people to circulate over the Internet the gold they purchase from the issuer.

Each user of GRIC has ownership over an allocated part of the gold stored in the issuer's vault, proportionally with what he has purchased previously either from the issuer or from an exchanger.

A GRIC account is similar with an online bank account, but your money is kept in gold instead of fiat money. You can see your balance, check your statement (/ history of spends), and make a payments to any other people who have a GRIC account with the same issuer. Using automated exchange services, you can even directly spend gold to a user who has a GRIC account with a different issuer.

The fee for payments with GRIC cost very little and are executed virtually instantly, even if you are paying (or are being paid by) someone on the other side of the world.

Although the balance of a GRIC account is kept in gold, it can also be displayed in any other currency, like USD or EUR. When you make a payment, you can also choose what currency to use.

However, the underlying payment is performed in gold, not in the currency you chose. When the payment is actually executed, the GRIC system makes a conversion from the currency you chose to gold. Basically, it's like you have USD in your bank account but make a payment to someone in EUR – the bank makes the exchange for you, transparently, at the current market exchange rate. But unlike in the case of a bank, you don't pay any fee for the conversion between currencies.

Advantages

No barriers

To open a GRIC account costs nothing. There is no credit check, no identification required, no minimum balance, no concept of a "merchant account".

In short, a GRIC account can be opened in just a few minutes by anyone.

Borderless

Anyone from anywhere can open an account and spend money to anyone else.

It's possible to do this even if the recipient of the money has no GRIC account (in the same system). If the recipient has an email address, the sender of the money can spend money to that email address.

The recipient of the money is then informed by the GRIC system that he has received a payment and is invited to open a GRIC account in order to have the money put in there. If the recipient doesn't create an account in a certain time frame (a few days), the money goes back to the spender's account.

Any currency

It's possible to spend:

One gram worth of GRIC.
One ounce worth of GRIC.

One EUR worth of GRIC.
One USD worth of GRIC.

This means that a Canadian can pay a German, and a Japanese can pay an Australian, the correct amount of money for goods or services as if the price had been quoted in the payers national currency, and there is no currency exchange fee (since everybody actually owns and spends gold).

Fast clearance

Payments clear virtually instantaneously, no matter how large the payment, no matter how far apart the spender and the recipient are.

No chargebacks

Unlike credit / debit cards, once a GRIC payment is made it cannot be reversed, so there are no chargebacks. This is very good for merchants, although other users could both like and dislike this feature. Merchants also don't need an expensive merchant account.

No merchant accounts

There is no need for merchants to open special merchant accounts. A simple GRIC account is all anyone needs to either buy or sell goods and services.

No identification required

Opening a GRIC account doesn't require users to identify themselves. However, some issuers require identification when the account balance exceeds a certain value.

No identity theft

Unlike in the case of credit / debit cards, it is not possible for someone to steal your identity.

Good privacy

Unlike in the case of credit / debit cards, when you make a purchase you don't have to give (to the seller or to the card processor) any personal information about yourself.

Since there can be no chargebacks, neither the GRIC issuer nor the the seller have any need for your personal information. Of course, sellers may still request (and even need in order to send you physical merchandise) such information from you, but they can't know whether the information you provide is accurate or not.

Preserve wealth

The most important advantage GRIC systems have over fiat money is that gold and silver are the only things which keep their value constant over long periods of time. See this for more information about preserving wealth.

Disadvantages

Complicated fiat money – GRIC exchange

In order to put money in a GRIC account, the owner can either:

Receive money from another GRIC account.
Purchase GRIC from an exchanger. The account owner sends money to the exchanger, using various methods: bank wire, credit / debit cards, checks, direct deposits, and even prepaid cards. The exchanger then spends the purchased GRIC to the clients GRIC account. This is called an in-exchange.

Purchasing GRIC from an exchanger takes a lot of time (even days until the exchanger receives the client's money) and a lot of money. For credit / debit cards, the in-exchange fee can exceed 10% from the amount of GRIC which is bought, but direct deposits are very cheap (but they are available only in a few countries, where exchangers have local bank accounts).

In order to get money out of a GRIC system, there are two methods:

Redeem GRIC into gold (or silver) and received gold bars or coins through mail.
Sell GRIC to an exchanger. The exchanger then sends money to the client using various methods, like those used for purchasing GRIC. This is called an out-exchange.

So, why is this complicated exchange necessary? Mainly because GRIC issuers have no liabilities, that is, no links to fiat money and no debt. GRIC issuers have no bank accounts and thus they have no way to receive (your) fiat money. By doing this, and by keeping the gold in vaults, they protect themselves and their customers from bankruptcy. Basically, their customers would always be able to get out of the system what they have put in the system (in gold's value).

Obviously, while the money circulates inside the GRIC systems, funding is not a problem because the money is already inside the system, and so only the transaction fee is applied and the transactions clear instantaneously. Also, the fee for exchanging one GRIC for another is small.

As GRIC systems will grow, it will become easier and easier to fund GRIC accounts, and this problem will fade away.

Exchange rate fluctuation

Because the balance of a GRIC account is kept in gold and most people are paid fiat money, the fluctuation of the exchange rate between gold and fiat money could cause some temporary worries.

However, you not should worry much because gold is the only thing which keeps its value constant over long periods of time. Read more about money and how to preserve wealth here.

Require computer security awareness

Since GRIC systems do not allow charge-backs, users who do not keep their computers secure could lose all the gold they have in all their GRIC accounts if a thief is able to install a spying program on the users' computers.

There are various ways to protect the money from GRIC accounts, but for the moment the most secure are not implemented.

Issuers

Here you can find a list of companies that are GRIC issuers, plus various other websites that accept GRIC for online purchases.