Gold-Backed Cryptos Offer Alternative Method for Protecting Wealth
Gold-Backed Cryptos Offer Alternative Method for Protecting Wealth By Nick Giambruno for Casey Research
For thousands of years, gold has been the safe-haven asset. No government can easily confiscate, nationalize, freeze, or devalue it at the drop of a hat.
It’s simply the best way to preserve wealth over the long term.
Now, with the advent of cryptocurrencies and decentralized blockchain technology, people have a complementary tool for advancing their financial freedom.
Recently, dozens of gold-backed digital currencies have started to gain traction.
In a world dominated by constantly depreciating government fiat currencies, I think gold-backed digital currencies are a convenient way for ordinary people to protect their wealth.
Let’s take a step back and look at how it all started…
The World’s First Digital Currency
E-gold was the world’s first, temporarily successful, private digital currency.
Douglas Jackson established the currency in 1996, about 13 years before bitcoin came about. As the name implies, it was 100% backed by gold.
In other words, account holders could redeem their e-gold for actual, physical gold.
With e-gold, Jackson tried to tap into the 1990s internet revolution and bring sound money to ordinary people. He thought e-gold could liberate the world from the ills of central banks and fiat currencies. And, for a while, it looked like it might.
Within a few years, e-gold became the world’s second-most popular online payment system, just behind PayPal.
Anyone in the world could anonymously open an e-gold account. From there, users could instantly transfer grams of gold to other users and merchants.
At first, Jackson stored e-gold’s precious metals in safety deposit boxes in Florida. As the company grew, he moved the bullion into secured vaults in London and Dubai.
At its peak, e-gold had over 5 million customer accounts, spanning 165 countries. A thousand new accounts were opened daily.
Unfortunately, nothing escapes the eye of Sauron…
Eventually, e-gold’s soaring international popularity caught the attention of the U.S. government.
Jackson may have been a visionary and a firm believer in sound money. But he was also naïve.
The U.S. government imposes strict regulations and licensing requirements on financial companies. This includes an obligation to collect all sorts of customer information for so-called “Know Your Customer” and anti-money laundering laws.
Financial companies also have to file a report with the U.S. government for every transaction involving $10,000 or more. Plus, there’s another mandatory report for any sort of “suspicious” financial activity – a vague, broadly defined concept.
Jackson made many foolish mistakes here. E-gold didn’t comply with any of these laws. And because of that, it painted a big, red target on its back.
The U.S. government and its media allies have convinced the average person that “privacy” is a dirty word.
They’ve duped people into believing that only sneaks and criminals want privacy. “If you have nothing to hide, you have nothing to worry about,” as the popular – but wrongheaded – adage goes.
Unfortunately, the U.S. government has essentially forced the whole world to adopt privacy-killing regulations in the name of the War on Drugs, the War on Terror, anti-money laundering, etc.