Actually, JP, I have to disagree with you on this one.
Here is the difference between Viamat or any other custodial storage vault,
and e-gold and other digital deposit currencies:
CUSTODIAL STORAGE
Viamat is a custodian. Each piece of gold in the Viamat vault has a serial
number, unique weight, and fineness, and owner's name recorded in their
books.
Each piece of gold has an identifiable owner, and each owner can identify
his bar(s) of gold.
This is like valet parking. If you deposit your car with them, you expect
them to give the same exact car back, not just one of the same make and
model.
DEPOSIT CURRENCY
A deposit system works differently, and is common for any mass storage of
commodities where each unit is essentially identical. With a deposit
currency, you deposit value into the system in the form of money, or wheat,
or gold bars, or whatever is being stored. The storage bank gives you a
receipt on an account, which is their liability to you.
This means that the storage bank now owes you something. It also means they
are the owner of the item you deposited. When you present your receipt for
redemption, it will be fulfilled but not with the same items you originally
deposited.
Example:
A wheat farmer deposits 1000 bushels of wheat with the local storage silo.
The silo operator gives him a receipt and an account indicating that he has
1000 bushels of wheat. This actually means the silo operator owns the
wheat, but he now owes the farmer 1000 bushels. A change of ownership has
taken place - the wheat was traded for a liability (receipt).
When the farmer comes back to take out his 1000 bushels, the silo will give
him a different 1000 bushels. If the silo catches on fire and the wheat is
destroyed, the silo operator STILL owes the farmer 1000 bushels.
I contend that all digital gold currencies in operation today are
essentially deposit currencies because none of them can tell which gram of
gold belongs to which account. Therefore the accounts, or in the case of
DigiGold, the digital certificates, are liabilities issued against the
company. The gold is actually owned by the trust or the agent on behalf of
the account holders.
Digital gold is not quite the same as gold. It is still paper and it is
therefore backed. This is easily illustrated by the fact that if one of the
companies has a computer glitch and issues more gold than is in the vault,
they will then have issued more paper than there is gold backing. They have
not created new gold, therefore the digital currency itself is not gold, but
a liability backed by gold. It is paper, just like a gold certificate.
Therefore "Gold Backed Currency" is just as valid as "Digital Gold
Currency".
(GoldMoney, Inc, denies this however. They claim that the Gold Gram Holder
is the ACTUAL owner of the gold in the vault, and they do the accounting for
ViaMat. However, I do not think that they have a system that allows them to
identify which particular piece of gold is owned by a particular Gold Gram
Holder. Therefore, I think they are a deposit currency, with better
governance perhaps, but still a deposit currency. They strongly disagree,
of course.)
Kind regards,
Ken Griffith
www.goldeconomy.com
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