1mdc
Encyclopedia
1mdc was a digital gold currency
(DGC), originally founded in 2001. Similar to other DGCs, 1mdc allowed for the instant electronic transfer of gold
between user accounts. Unlike other DGC providers 1mdc was backed by the reserves of e-gold
, rather than their own physical bullion reserves.
The website appeared to switch between various offshore hosting locations, and used software designed by Interesting Software Ltd, an Anguilla
company.
As of April 27, 2007, a US court order has forced e-gold to liquidate a large number of e-gold accounts totalling some 10 to 20 million US dollars worth of gold. A small part of this seizure was 1mdc's accounts and assets http://www.usdoj.gov/opa/pr/2007/April/07_crm_301.html. If the court order in the USA is reversed, a user's e-gold grams remaining in 1mdc will "unbail" normally to the user's e-gold account. Ultimately e-gold is owned and operated by US citizens, so, 1mdc users must respect the decisions of US courts and the US authorities regarding the disposition of e-gold and the safety and security of US citizens. Even though 1mdc has no connection whatsoever to the USA, and most 1mdc users are non-USA, ultimately e-gold is operated from the USA.
and avoid inflationary risks associated with them. To open an account, 1mdc required the user to have a functioning e-mail address
, an e-gold account, a password, initials and a PIN
.
1mdc charged 0.05 gold gram
s per spend for accounts that receive 100 or more spends (total over 500 grams) to their account in any given calendar month. There were no spend fees for accounts that receive 99 or less spends in a calendar month, and no storage fees on all accounts. This was in sharp contrast to e-gold, which charges a storage fee of 1% per annum. Coupled with the quick and easy transfer of funds between e-gold and 1mdc accounts, 1mdc was attractive to persons with large amounts of e-gold, whose balances gradually shrink due to e-gold's storage fees. 1mdc also offered virtually fee free exchange from Pecunix
gold to 1mdc, and a 5% fee to exchange from 1mdc to Pecunix gold. It was often said that most or all heavy users of e-gold are 1mdc users, although of course there was no way of confirming this.
Also, since 1mdc was backed by e-gold
, events that affect e-gold also affected 1mdc. Once e-gold Ltd. was instructed by the US government to freeze and liquidate all 1mdc accounts, 1mdc became insolvent by default along with all other e-gold accounts seized in the April 27 action.
Digital gold currency
Digital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
(DGC), originally founded in 2001. Similar to other DGCs, 1mdc allowed for the instant electronic transfer of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
between user accounts. Unlike other DGC providers 1mdc was backed by the reserves of e-gold
E-gold
e-gold is a digital gold currency operated by Gold & Silver Reserve Inc. under e-gold Ltd., and allowed the instant transfer of gold ownership between users until 2009 when transfers were suspended due to legal issues. e-gold Ltd...
, rather than their own physical bullion reserves.
The website appeared to switch between various offshore hosting locations, and used software designed by Interesting Software Ltd, an Anguilla
Anguilla
Anguilla is a British overseas territory and overseas territory of the European Union in the Caribbean. It is one of the most northerly of the Leeward Islands in the Lesser Antilles, lying east of Puerto Rico and the Virgin Islands and directly north of Saint Martin...
company.
As of April 27, 2007, a US court order has forced e-gold to liquidate a large number of e-gold accounts totalling some 10 to 20 million US dollars worth of gold. A small part of this seizure was 1mdc's accounts and assets http://www.usdoj.gov/opa/pr/2007/April/07_crm_301.html. If the court order in the USA is reversed, a user's e-gold grams remaining in 1mdc will "unbail" normally to the user's e-gold account. Ultimately e-gold is owned and operated by US citizens, so, 1mdc users must respect the decisions of US courts and the US authorities regarding the disposition of e-gold and the safety and security of US citizens. Even though 1mdc has no connection whatsoever to the USA, and most 1mdc users are non-USA, ultimately e-gold is operated from the USA.
Features
As with any digital gold currency, one used 1mdc to keep assets away from fiat currenciesFiat money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.Fiat money originated in 11th...
and avoid inflationary risks associated with them. To open an account, 1mdc required the user to have a functioning e-mail address
E-mail address
An email address identifies an email box to which email messages are delivered. An example format of an email address is lewis@example.net which is read as lewis at example dot net...
, an e-gold account, a password, initials and a PIN
Personal identification number
A personal identification number is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system...
.
1mdc charged 0.05 gold gram
Gold gram
A gold gram is the amount of value represented by exactly one gram of gold. It is a unit of account frequently used for digital gold currencies. It is sometimes denoted by the symbol "gg", "AUG", or "GAU"....
s per spend for accounts that receive 100 or more spends (total over 500 grams) to their account in any given calendar month. There were no spend fees for accounts that receive 99 or less spends in a calendar month, and no storage fees on all accounts. This was in sharp contrast to e-gold, which charges a storage fee of 1% per annum. Coupled with the quick and easy transfer of funds between e-gold and 1mdc accounts, 1mdc was attractive to persons with large amounts of e-gold, whose balances gradually shrink due to e-gold's storage fees. 1mdc also offered virtually fee free exchange from Pecunix
Pecunix
Pecunix is a digital gold currency founded in 2002 by Simon Davis. Similar to competing systems such as e-gold, Pecunix allows for the instant transfer of gold between user accounts....
gold to 1mdc, and a 5% fee to exchange from 1mdc to Pecunix gold. It was often said that most or all heavy users of e-gold are 1mdc users, although of course there was no way of confirming this.
Criticisms
1mdc's e-gold was held in unallocated (pooled) storage (in several e-gold user accounts) which allowed for extra privacy from e-gold's administrators. However this increased storage risk, as the client had no precedence on the e-gold they entrusted 1mdc to hold, and there was virtually no way for a user to ensure that 1mdc is maintaining full reserves of their e-gold. The amount of e-gold held in the 1mdc system was undisclosed.Also, since 1mdc was backed by e-gold
E-gold
e-gold is a digital gold currency operated by Gold & Silver Reserve Inc. under e-gold Ltd., and allowed the instant transfer of gold ownership between users until 2009 when transfers were suspended due to legal issues. e-gold Ltd...
, events that affect e-gold also affected 1mdc. Once e-gold Ltd. was instructed by the US government to freeze and liquidate all 1mdc accounts, 1mdc became insolvent by default along with all other e-gold accounts seized in the April 27 action.
External links
- 1mdc Homepage (defunct)
- Web archive for 1mdc (2001–2007)
- The Indomitus Report covering 1mdc (Jan 2005)