Many thanks goes out to Mark Herpel from the DigitalMoneyWorld.com Blog for putting together this brief but informative article about 9 myths that some people believe about e-currencies. I hope he doesn’t me scraping his content. Please don’t forget to visit his blog for more great content.
1 – Digital currency transactions are reversible and if I spend to the wrong account, I just notify the company and my funds are returned. If my PC gets compromised and my digital currency account hacked, I simply notify the company of the theft and the funds are returned to my account.
FALSE. Digital currency transactions are NOT reversible. Non refundable transactions are on distinguishing feature of all online digital currencies and separate them from online payment systems like PayPal. Digital currency companies like Liberty Reserve, Webmoney, e-gold, e-bullion, c-gold, Pecunix, e-dinar and a few others have strict terms-of-service that maintain all transactions are final. If you pay the wrong account, the company will not track down your mistake and reverse it. If your account is hacked and your balance stolen, the funds will not automatically get replenished as with a PayPal account.
2 – If I want to fund my account and buy some digital currency like e-gold, e-bullion, Pecunix, c-gold or Webmoney I can send my money directly to that company and like PayPal the company funds my account. I can buy digital currency directly from the company that issues it.
FALSE. Like E-gold Ltd. (e-gold.com) and all other digital currency models, the issuers do not accept any funds. You cannot buy digital currency directly from the parent company. Unlike PayPal and some other popular online payment systems, all digital currency account buying and selling must be completed through a third party independent agent and not through the parent company.
3 – Opening a digital currency merchant account, requires an application, non-refundable fees, credit check and approval by the company. This requires upfront money and the process can take as long as three days. Additionally, all digital currency accounts like a merchant account withhold a portion of each sale for chargebacks. If my credit is bad they can reject my new account.
FALSE. All digital currency accounts are identical and there is no distinction between a merchant account and a personal account. Accounts are always free to open and you can be up and running in a matter of 5-10 minutes. There is no waiting period, accounts are active the moment you open one. There are never any upfront fees for opening a digital currency account and finally since all sales are final there are no chargeback’s. ‘Get paid and stay paid’. There is never any reason to withhold a portion of any transactions.
4 – Transaction fees on a credit card merchant account are identical to digital currency accounts.
FALSE. Transaction fees for a credit card merchant account are much higher than a digital currency account especially for smaller amounts. On a one dollar transaction, e-gold charges about .05cents while PayPal charges about .35cents. There is a large saving on transaction fees when using digital currency.
5 – Just like PayPal, digital currency transactions are not permitted in certain jurisdictions. Users have to read the terms of service very carefully to find out what countries are permitted.
FALSE. Transactions using digital currency are allowed in all countries around the world. The currency company does not put restrictions on where their product can be used. (*Iran is one exception to this rule for certain US companies)
6 – As an online merchant accepting digital currency, there is a 24-48 hour waiting period after each sale before I can withdraw my funds. I have to wait for sale approval before the funds are clear.
FALSE. When you accept digital currency as an online merchant, 100% of your sale proceeds are available to you the instant you receive them. There is no ‘approval’ or waiting period like credit cards and no chargebacks.
7 – To open a digital currency account there is usually a minimum amount ($100-$500) I have to deposit into the new account. Like when I opened a checking account I had to deposit $500.
FALSE. There are no minimum balance requirement on digital currency accounts. You may open an account with a zero balance, advertise you accept digital currency and wait for customers to pay you!
8 – Digital currency funds cannot be exchanged for cash except through the issuing company. Just as I sell my PayPal units through PayPal and wait for them to send me the funds, I must return all digital currency to the issuing company in order to receive national currency in my bank account.
FALSE. While PayPal and other online payment systems such as Moneybookers, require their online money units ONLY be exchanged for cash though their company – digital currency is exactly the opposite. Independent agents around in the world can exchange your digital currency for national currency (Wire, Western Union, check, debit card etc). Agents can also exchange or swap your ‘brand’ of digital currency for another. As an example you can swap dollar-for-dollar e-bullion to Webmoney, then swap your Webmoney into Pecunix. There are no restrictions on how you use your funds. An independent agent handling the digital exchange will simply charge you a small fee per transaction. This type of exchange is not allowed with PayPal. Its important to understand that with digital currency, all transactions – buys, sells or exchanges – are handled by independent agents around the globe. You may find an agent in your home town or half way around the world. Each agent will offer different services with a competing schedule of transaction fees. Shop around for the lowest fees.
9 – I can recognize digital currency because I use it online like actual money. I shop using it and spend it between my friends. I consider PayPal to be one!
PARTIALLY FALSE. Digital currency can be distinguished from other forms of online payments by these 3 characteristics. (1) Transactions are non refundable – all sales are final. (2) To buy, sell or exchange your digital currency you cannot use the issuing company – you always use a third party independent agent. (3) Units from one company can easily be exchanged for other digital currency units. If you use digital money and you can apply these three rules to your online money, then you are using digital currency.