Over the last six to seven years we have all seen numerous eCurrencies come and go. OsGold, Evocash, E-bullion, AlterGold, the list goes on and on. There were literally millions of dollars lost when these self proclaimed electronic currencies collapsed and scammed thousands of individuals and business’s. So how can we trust the numerous new eCurrencies that have been popping up seemingly every month? The answer is we really can’t.
For those of you who are unfamiliar with the term e-currency, let me just quickly explain it. An E-currency is an online fiat currency that people use to make transactions online. Most of these currencies are used in order to make their users, particularly sellers feel more secure. Companies like Paypal allow charge backs and other methods of payment reversals. While this is great to protect protect buyers from fraudulent charges and scam sellers, it doesn’t do anything to protect the sellers themselves. For instance if a merchant was to sell something that was not really tangible, like a service, a domain name, etc, the buyer could feasibly reverse the transaction and in turn get away with the service for free. What most eCurrencies do is eliminate the seller risk and place it solely on the buyer. This is why e-currencies are the preferred payment choice of online investment programs.
The problem with E-currencies is that they all operate outside the US Jurisdiction. This is because one needs to be licensed to run any type of currency online, meaning that they have to obide by strict United States regulation, which are in place to protect the public. When these currencies go offshore, it often means they are not regulated, and can pretty much do as they choose. This includes setting up their e-currencies with a ponzi scheme like backdrop. This is what companies like OsGold, Altergold, and Evocash were accused of doing. They stored money for people, and when they get millions of dollars in storage, simply run off. Luckily most of these crooks are caught eventually, but the clients of these eCurrencies are stuck holding a bag of worthless electronic money.
In conclusion it is very important to make sure you do not simply trust every company out there. Never leave extraordinary sums of money laying around in your eCurrency account, and always do proper due diligence on the company before you start accepting them as a form of payment for your business.