Part Three
Personal Economy in the Year 2000
"Man on the Planet" Series
In February of this year, a Malaysian visited Mr Douglas Jackson (43) in his office that overviews the Atlantic Ocean in Melbourne, Florida.
Interested in the "e-gold on-line financial settlement system," which is backed by gold, this man came expressly from Malaysia to pay a visit, explains Mr. Jackson, the inventor of the system.
"According to the Islamic religion?s sacred book, The Koran, true money does not bear interest. That`s why I would like to do transactions in gold." While eagerly listening to Mr Jackson`s explanation of the system, the Malaysian with strong religious convictions exclaimed with satisfaction, "This perfectly fits our needs!"
After the outbreak of the Asian financial crisis in 1998, foreign exchange controls were imposed in Malaysia, and the remittance of the funds abroad were restricted. But the controls don?t apply to transactions in gold. "Perhaps for that reason," explains Mr. Jackson, "many Malaysians have recently been depositing large amounts of gold"
E-gold is an on-line settlement system that uses four precious metals, including gold. When a user deposits gold in his account, he can effect transactions with any other user up to the amount of gold deposited. In other words, this is cyberspace gold, a settlement system backed by pure gold.
"What a good design. And the material is good too!" said Estonian Paul Buffle (sp. ?) (23) upon seeing a t-shirt he liked on an American shopping web page while sitting in his apartment in the capital Tallinn last November.
Having been remunerated for the work he had done for E-gold, he paid an American company from his account an amount of gold equivalent to approximately 1900Yen and was able to purchase the t-shirt without using dollars.
Since the autumn of 1996, when the system was launched, the number of E-gold account holders has grown to 27,000 and is increasing daily. 40 % of account holders are non-American, and, as well as developed countries like Canada, account holders come from Russia, Brazil, South Africa - 50 countries in all.
This system allows even those who don`t possess hard currency like dollars and those who live in financially highly restricted societies to participate equally in the rapidly expanding global on-line market. In other words, E-gold is a transactions system based on a surrogate currency that circulates in cyberspace.
Mr Jackson says, "We are a financial institution that has created an on-line currency as a means of settlement. Noticing that something new is happening in cyberspace, the FBI one day called us. After a thorough examination, they were satisfied and even opened the account," says Mr Jackson with great confidence.
Since its inception, the Internet Age has seen the development of a variety of new means for consumers to effect monetary settlement . On-line cash transactions are not reserved for big companies - they are also available to individuals.
"I repaid the money via e-mail!" Andrew Brenner (31) was told by his friend to whom he had lent $8.50 for a movie ticket. He used the electronic settlement service of the American company X.com. The user can send money on-line simply by typing the e-mail address and the amount. He only has to open an account and can make payments to another user who is notified by e-mail when the transaction is complete. This service, which started in November last year, already has 600,000 users.
"In US the number of users is increasing by 10,000 every day, says Chairman Eron Mask.(28). We are now planing to launch it in the EU and Japan.
Personal level on-line settlements are no longer an experiment. In Finland, the circulation of cash has significantly dropped in recent years due to the increase in on-line settlements between individuals in recent years. At the end of 1999, the total cash in circulation represented?s 24,3 % of Finland GDP, which is less than one fourth of the cash that circulates in Japanese market.
In its pursuit of convenience, the IT revolution and globalization have presented to individuals new means of effecting financial transactions that undermine borders and regulations. The "men of the planet" who are moving freely through cyberspace are probably striking an unexpected blow to complacent banking and financial institutions.