E-Gold's Rise and Fall

Summary: A former oncologist dreamed of creating the first digital currency entirely backed-up by silver and gold. It was successful for a few years until it fell due to money laundering-related crimes. Now, the founder is struggling to revive a dying dream.

The story began in 1995 when Douglas Jackson, the founder of E-Gold, was still treating patients with cancer.

Jackson was an economic history longtime student. He was convinced that gold is a superior currency compared to paper money. He believed this despite professional economists’ consensus that gold-standard has prevented governments to respond quickly to monetary crisis because treasuries couldn’t manufacture gold bars easily.

In 1971, when the U.S. dropped reliance on Gold , Jackson thought that e-commerce needs a monetary system transcending time zones and borders. As a result, he launched E-Gold in 1996.

As Jackson envisioned, E-Gold is an international, private currency independent of government controls and would stand resistant to market’s highs and lows. So in the next few years, he sold his medical practice, charged credit cards, and drained his retirement accounts to nurture the venture.

His commitment paid off when huge growth continued until 2001 – customer accounts expanded to almost 288,000 holding values of about $16 million. At its peak, E-Gold currency was backed up by more than $85 million in value (3.8 metric tons gold).

Fate turned around in 2008, when he pleaded guilty to operating an unlicensed service for money transmission. E-Gold has been used as a form of currency by most wanted hackers and credit card thieves since these criminals can transfer huge money without confirming their identity.

Today, Jackson is finishing his six-month house arrest with a tracking device strapped to his ankle. He’s trying to bring E-Gold back, only this time, he’s deliberately working with regulatory agencies.