1mdc
From Wikipedia, the free encyclopedia
1mdc is a digital gold currency (DGC) which was founded in 2001. Similar to other DGCs, 1mdc allows for the instant electronic transfer of gold between user accounts. Unlike most DGCs though, 1mdc is backed by e-gold instead of physical gold. It is fairly unique in that it is a digital currency backed by another digital currency.
Theoretically, it is fully backed by e-gold's real gold bullion. The web site seems to move between various offshore hosting locations, and is thought to use software designed by Interesting Software Ltd, an Anguilla company.
[edit] Features
As with any digital gold currency, one can use 1mdc to keep assets away from fiat currencies and avoid inflationary risks associated with them. To open an account, 1mdc only requires the user to have a functioning e-mail address, an e-gold account, a password, initials and a PIN. It is virtually anonymous.
For the time being, no fee is incurred when a user makes transactions in the 1mdc system. Also, no gold storage fees are incurred when a user stores their digital gold in 1mdc. This is in sharp contrast to e-gold, which charge a fee of 1% per annum. Coupled with the quick and easy transfer of funds between e-gold and 1mdc accounts, 1mdc is attractive to persons with large amounts of e-gold, whose balances gradually shrink due to e-gold's storage fees. 1mdc also offers virtually fee free exchange from Pecunix gold to 1mdc, and a 5% fee to exchange from 1mdc to Pecunix gold. It is often said that most or all heavy users of e-gold are 1mdc users, although of course there is no way of confirming this.
[edit] Criticisms
1mdc's e-gold is held in unallocated (pooled) storage (in several e-gold user accounts) which allows for extra privacy from e-gold's administrators. However this increases storage risk, as the client has no precedence on the e-gold they've entrusted 1mdc to hold, and there is virtually no way for a user to ensure that 1mdc is maintaining full reserves of their e-gold. The amount of gold held and in circulation in the 1mdc system is unknown (as of July 2006, one single e-gold account holds over 100kg of gold [1] which may belong to 1mdc, although this is unconfirmed).
Also, since 1mdc is backed by e-gold, many things that could affect e-gold could affect 1mdc. If e-gold Ltd. ever became insolvent or was shut down for any reason, 1mdc would be insolvent by default. If e-gold's servers go offline, a 1mdc user can not transfer their gold back to their e-gold account, but they could still transfer gold between 1mdc accounts.
