I keep seeing headlines such as this one: IMF Chief Warns Dollar May Suffer “Abrupt Fall” telling us all that, “The dollar may still have further to fall, and the effects would not be good for the global economy”.

Then there is the daily list of stories in my newsreader from precious metal gurus like James Turk of GoldMoney.com, forecasting that, “…we can expect US$800 gold by the end of the year, and a four-digit number next year.” What does it all mean?

The true meaning of this supersized USD/Gold combo is….Time to buy more gold.

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One of our readers, Jon Matonis, brought this to my attention and it is a truly advanced and fascinating piece of writing on digital cash.

Perhaps the most interesting twist to this work is the fact that he wrote it 12 years ago….Jon authored this piece way back in 1995. At the time he was working with VISA International and the plan was presented to them. Jon has given me permission to reprint some of the material which can from the Libertarian Alliance web site. His 12 year old ideas and concepts still rings true today.

DIGITAL CASH AND MONETARY FREEDOM
JON W. MATONIS

This paper describes the differences between mere encrypted credit card schemes and true digital cash, which presents a revolutionary opportunity to transform payments. The nine key elements of an electronic, digital cash are outlined and a tenth element is proposed which would embody digital cash with a non- political unit of value.

Key Elements of a Private Digital Cash System

As would-be currency providers should note, there are ten key elements to a successful, private digital cash system. This section compares and contrasts true digital cash to paper cash as we know it today. Each of the following key elements of a digital cash “token” will be defined and explored within the bounds of electronic commerce. I have yet to discover a working digital cash system which meets all ten criteria although several are reportedly close. In 1991, Tatsuaki Okamoto and Kazuo Ohta proposed six properties of an ideal digital cash,5 which are incorporated into elements one through six below:

1 Secure. The transaction protocol must ensure that a high level security is maintained through sophisticated encryption techniques. 6 For instance, Alice should be able to pass digital cash to Bob without either of them, or others, able to alter or reproduce the electronic token.

2 Anonymous. Anonymity assures the privacy of a transaction on multiple levels. Beyond encryption, this optional untraceability feature of digital cash promises to be one of the major points of competition as well as controversy between the various providers.7 Transactional privacy will also be at the heart of the government’s attack on digital cash because it is that feature which will most likely render current legal tender irrelevant.8 Both Alice and Bob should have the option to remain anonymous in relation to the payment. Furthermore, at the second level, they should have the option to remain completely invisible to the mere existence of a payment on their behalf.

8 Portable. The security and use of the digital cash is not dependent on any physical location. The cash can be transferred through computer networks and off the computer network into other storage devices, Alice and Bob should be able to walk away with their digital cash and transport it for use within alternative delivery systems, including non-computer-network delivery channels. Digital wealth should not be restricted to a unique, proprietary computer network.

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Another successful digital gold currency operation is now emerging with c-gold.com. It is always great to see healthy competition any industry or business, but with today’s regulatory environment it is especially exciting to watch c-gold showing early signs as a possible leader.

Headquartered in Malaysia, c-gold is opening new possibilities for all person’s interested in doing business with gold and digital gold.

When recently asked about the jurisdiction of the c-gold business, the operator had this to say:

WHY MALAYSIA?

Several reasons, firstly the government did in the past just about endorse e-dinar.com before it moved from Labuan to Dubai. In other words, the government did signal it’s interest in supporting the concept.

Secondly, rule of law. I can’t figure any way on God’s green Earth that any Malaysian court would hand down a forfeiture order against an operator when the value attached doesn’t belong to the operator. From following various kinds of AML legislation and enforcements, etc. over the years, I came to trust that in Malaysia law enforcement will first ask “how” and especially “why”, before deciding if further action is warranted.

Our local company has been doing arbitrage in the DGC business for years, and all the authorities want to know is that we know our customers, keep proper records and have strict AML procedures. Other that than, despite currency exchange controls, because of the nature of our business, there has been no problem or hindrance with literally receiving and sending millions of dollars from and to foreign banks every year. We file the reports, the central bank sees where the money is from and what it’s for, and that’s that. THIS is how things should be everywhere, and it is how they ARE in Malaysia.

Thirdly, we have the whole infrastructure already in place in Malaysia. While c-gold is in fact NOT owned by a Malaysian company, our local company DOES act as custodian of the gold and ensures smooth bailment’s and redemptions under an outsourcing agreement that is in line with what we have been doing all along and what the company here was incorporated for.

Fourthly, Malaysia is simply a great place to live and do business, Taxes are reasonably, cost of living is comparably low, and Malaysians never give you the feeling of being an outsider. I honestly admire the country and its people for what they have achieved.

Lastly, Malaysia is billing itself as a Muslim country, even though it practices a very liberal and tolerant interpretation of the religion and about 40% of the population follow other religions. A Muslim country can not possibly outlaw the possession of gold, nor can it forbid using gold as a tool for payments between private parties. **

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(Q) If you had 10 minutes of face to face discussion time with each of your customers, what is the one single idea you would try to teach each one of them about freedom?

(A) hmm, that is a really good question and one that is not easily answered. I don’t believe that ALL customers can be fit into a mold that would relate to something I could convey to them in some generic sense of things. I think freedom is something best left to each individual to determine for themselves. If I could present just one idea, then I guess it would be that.

(Q) Is there an advantage to shopping for one ounce silver bars from your web site, over visiting a local coins shop and buying from them?

(A) I think local dealers have a market that works well and is useful. Our aim is to supply silver bullion products to that market. If you have a local coin shop that also sells bullion then it would be useful to show them our products when you shop there. When a dealer places a large order they can convey the savings on shipping to their customers.

(Q) Are you operating as a Money Service Business? Do you hold any other Federal or State regulatory licenses which permit you to operate?

(A) We are not operating as a money services business as silver is not money according to the law today. Nevertheless, we do understand that the digital silver currency can be used by criminals to further criminal activity if left unchecked, so we have implemented a full anti money laundering program, a customer verification program, employee training and customer education program that serves to keep our system free from fraud. The results of this is thousands of clients and zero fraud. We also do possess a MSB license from the jurisdiction of the USA even though our company is based in Panama. We feel a good anti money laundering program and more importantly a strong anti fraud and anti crime policy is essential to our success and essential to the security of our client’s silver. Our terms of service policy explains all this in greater detail.

(Q) I know that I can buy digital Silver online from at least one other company, GoldMoney, what advantages does the Phoenix Dollar offer over James Turk’s digital product?

(A) James is a wise businessman. His product has its place in the market and is valuable even to our customers. That being said, it has absolutely no resemblance to our product offering. Our focus is on actually holding real silver in your hand where it belongs. We enable the average person, even if not rich, to hold silver in their hand even after someone sends it to you in digital form. This is something that is impossible in other systems.

(Q) Do you ship overseas?

(A) Yes, we ship all over the world to all but a few countries found on the sanctions lists.

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The Phoenix Dollar was created in late 2005. The company is a silver bullion retailer offering their own brand of pure silver bars, disks and even digital silver holdings which is 100% backed by bars in a secure vault.

These accounts are free to open and the Phoenix Dollar community offers some exciting advantages and tools to those who would use the digital silver for online commerce. The digital silver is transferable between anyone operating a Phoenix Dollar Holding and there are several popular independent exchange providers who can assist you with a secondary market transaction. The digital product is exchangeable with other digital currency such as Pecunix.

Any user can easily have their silver balance (as little as one ounce) delivered right to their front door for just a few dollars over the spot price. The physical silver one ounce disks and bars are very beautiful and I happen to own several.

The bars and disks can be used as payment between any person as a method of barter. While some of these items may look like money, its important to note that The Phoenix Silver Bullion Products are NOT “legal tender” and NOT “current money” nor are they endorsed by any sovereign government, country, city or state. While the designs are great, both the silver and paper designs do not look like government issued currency. Paper designs? Yes, the company is soon offering SilverBacks® which is a series of Authentic Paper Silver Certificates. More on that below.

Today I’m interviewing Gordon Hayes designer, creator and operator of the The Phoenix Dollar.

(Q) Can you tell us your current position with the Phoenix Dollar company and how long has it been operating?

(A) I am the President. We opened to the public in October of 2005. The concept was in development for a couple years before that.

(Q) Who came up with the design for the silver bullion products? How about those new silver certificates?

(A) I have two very special artists that I collaborate with who shall remain nameless for security reasons. I create the concepts and they come up with the artwork for them. Sometimes I am able to pick a piece out of their extensive portfolio for certain things and apply them to the silver without any modifications. Having a high caliber art team has enabled us to exceed in designing silver pieces that never fail to win people over for their sheer beauty.

(Q) Out of all the successful businesses you have been involved with over the years, why did you create the Phoenix Dollar? What were your reasons for coming out with a private barter currency backed by silver?

(A) The world simply needs to know that what I am doing is possible. My ultimate goal is to create a currency that actually improves the lives of its owners. This would take a bit of explaining to get across properly, but to summarize, today we have a world that contains all sorts of fiat currencies. Not a single one of them have any real value except that which is derived from the end of a gun. I set out to build a currency that actually protects the wealth of its users, that improves how people interact and do business with one another and that creates more freedom and success in the world. This is the sort of philosophical background information that is not really necessary to know when using the currency. The results of using it speak in subtle ways.

(Q) I have seen the pictures of your new SilverBacks® paper silver certificates which are now on the way. What do these certificates offer users that the bars and disks don’t already provide?

(A) This product conflicts with my personal beliefs to some extent, but its main benefits are that you can carry it in your pocket in quantity without being weighted down so much that you cannot walk. Silver bullion is very heavy and cannot easily be transported in quantity. The SilverBacks® address that problem thus enabling the currency to gain more use in the everyday over the counter market. I expect this product line to be a curiosity in the market for some time, but I am doing it anyway, just in case things rapidly change.

(Q) Your bullion products look fantastic.

(A) Thank you.

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