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FAQ
What is e-dinar?
e-dinar is an exchange system
enabling the electronic transfer of gold and silver between accounts.
e-dinar Ltd. is a Labuan Corporation which issues e-dinar and e-dirham 100% backed by physical gold and silver.
A quantity of e-dinar / e-dirham constitutes title to a precise weight of this
physical gold/silver.
e-dinar FZ-LLC is a Dubai Corporation which operates the e-dinar system.
The primary function of the e-dinar system is to render payments,
in gold (e-dinar) and silver (e-dirham), from one customer account to another.
A secure, convenient interface is provided for customer entry of transaction orders.
All cleared transactions entail an increment or decrement of one's e-dinar / e-dirham balance.
The system calculates exactly how much metal belongs to each particular customer.
*** To obtain or use e-dinar you must create an e-dinar Account. ***
All gold and silver is held free of lien
or encumbrance. e-dinar does not engage in future contracts or any form of
leveraged derivatives. No physical gold/silver is listed unless e-dinar
has rendered payment for it.
e-dinar is highly divisible
Since ancient Babylonian times,
paying for a pizza with gold coins has been impractical. All physical coins come
in fixed sizes. There is a limit as to how small a coin can be. e-dinar,
in contrast, is computerized; precise to 0.000001 oz (troy).
e-dinar provides automated conversion between fine weight of gold / silver and other
accounting units.
Quantities of gold/silver are accounted
by weight and purity. With e-dinar/e-dirham, weight units - decimal fractions of
(troy) ounces or grams - are the ultimate units of accounting. The transactional
unit, however, is discretionary. Transactions using e-dinar/e-dirham as medium of exchange -
buying, selling - are priced using whatever unit of accounting the parties to
the transaction mutually agree upon. If the price of a merchandise or a services is specified
in terms of national currency units, such as US$, an automated calculation,
using e-dinar's posted exchange rate, determines the equivalent weight and
value of gold.
Right of redemption is unconditionally guaranteed
To redeem means to relinquish some e-dinar/e-dirham by taking delivery of physical
gold and silver coins.
e-dinar is not negotiable
A quantity of e-dinar can
only be transferred directly from one customer to another. The payer enters a
payment order, which is effected by e-dinar's automated order processing program.
An e-dinar payment order differs from bank-issued negotiable instruments,
such as checks or negotiable orders of withdrawal, which become drafts when endorsed
by the recipient. e-dinar offers no mechanism for honoring a draft,
that is, no one can draw upon another person's account.
Is e-dinar not simply a return to banking as it was practiced under the
gold standard?
No. The defining act of banking is to circulate more demand-claims to cash than there is
cash to back the claims.
Under the classical gold standard,
the ultimate cash which people were entitled to was gold. The circulating forms
of money - bank notes, non-gold coins, and checkable (demand) deposits - were
all supposedly payable on demand, in gold coins. At no time, however, could banks
redeem all their bank notes in the gold they entitled people to, analogous to
an airline overbooking flights.
How do I create an e-dinar Account?
Review the e-dinar User Agreement and fill out the on-line Open Account form.
Is there an account creation fee?
Opening an account entails no fee
or obligation. Fees are only charged for buying gold and silver, for
transactions between accounts, and for storage based on average account balance
(see Fees).
How do I fund my e-dinar account?
You can exchange national currencies for gold/silver or receive
e-dinar/e-dirham payments from other e-dinar account holders.
What if I enter a transaction order accidentally?
Accidental entry is highly unlikely.
The system gives you a preview of all transaction orders prior to confirmation.
Preview allows you to review applicable Exchange Rates, calculations, and other
order information, to be certain the details are acceptable to you before committing the transaction.
After preview, you are presented with an explicit confirming button to commit the transaction.
How do I check my balance?
An e-dinar/e-dirham Account holds
a certain amount of gold/silver. Balance is expressed in e-dinar/e-dirham, where one e-dinar is
the equivalent of 4.25 grams of Gold of 22 karat purity, and one e-dirham is the
equivalent of 3 grams .999 silver.
To check your balance, click Balance after you logon to your account.
How do you spend e-dinar/e-dirham?
Entering an e-dinar Payment Order is similar to writing an (online) check: specify recipient
and amount. There are some differences:
- amount can be expressed
as e-dinar/e-dirham or in terms of more familiar national currencies,
and
- you must know your
recipient's e-dinar Account number.
To spend e-dinar, click Spend after you logon to your account.
Incidentally, you do not need to worry about making an accidental overdraft...
the system will not let you.
Where can I spend e-dinar ?
You can spend e-dinar to
any recipient who opens an e-dinar account. Any payment which you might
ordinarily make by cash, check or with a credit card can be done through an e-dinar
transaction.
e-dinar is not limited to spends to payees with e-dinar accounts
e-dinar is about costs and
safety. There is no fee for you, the payer, when you click an e-dinar payment
to someone. A processing fee is deducted from the recipient, but it is a fraction
of the fees which credit card companies or banks charge. For instance, for a $1000 (equivalent)
payment, the fee for receiving payment in gold is less than one twentieth the
cost of accepting credit cards.
There is also another option. You can direct the proceeds of Selling Gold/Silver
to any recipient, in any major national currency. Enter the Sell Gold/Silver order, tell us who/where
to wire the funds to.
It is not nearly as efficient as using e-dinar for payment, since fulfillment
of such orders involves the banking system. You, the payer, are charged fixed wire fee covering our costs.
This option enables you to protect yourself from the credit and systemic risks of the banking
system. You can keep a higher proportion of your net worth in e-dinar.
What are the advantages of holding and using e-dinar, compared
to existing forms of money?
Advantages for businesses who accept payment in e-dinar
- Nearly instantaneous clearing and availability of funds
- Low processing fee - 1% or
max. 0.015 e-dinar (for e-dinar transactions)
max. 0.5 e-dirham (for e-dirham transactions)
Credit card payment processing fees are considerably higher, and the money received
cannot be spent immediately. Personal cheques often take a week to clear and some
of them bounce. Furthermore it is impossible to generate an overdraft with the
e-dinar system.
Advantages of using e-dinar vs. physical gold
- divisibility
If a shirt costs $41.35 (including sales tax) you cannot pay for it with physical
gold, without taking your change in some other medium. Gold coins can only be
made so small (less than 1/10th of an ounce is impractical). Our computer calculations
of e-dinar quantities round off to 4 decimal places. All non-integer numbers
in memory are DECIMAL(20,6), and all floating point arithmetics use DOUBLE precision.
You could pay for the shirt with precision, even if it cost $41.3487
- security
Physical possession of gold (or any other form of cash), especially a large amount,
can be risky. As an e-dinar account holder you are relieved of this direct
personal risk - e-dinar Ltd. and Emirates Gold DMCC are responsible for safeguarding
your gold and silver in the bullion repository. (You must still safeguard your passphrase).
- portability
If you accept payment in physical gold from a counterpart thousands of miles away,
delivery is cumbersome, expensive and slow. An e-dinar payment is cleared
in a few seconds - the gold stays put, only ownership changes.
- fungibility
e-dinar itself is fungible and homogeneous.
e-dinar/e-dirham can be redeemed for gold/silver coins.
There is an unambiguous, mathematically precise 1:1 correlation of your e-dinar/e-dirham holding
and the physical gold/silver backing it.
By contrast, "Federal Reserve notes are IOU's
from the Fed to the bearer and are also liabilities, but unlike most, they promise
to pay back the bearer solely with Federal Reserve notes; that is, they pay off
IOU's with other e.o.m.'s. Accordingly, if you bring a $100 bill to the Federal
reserve and demand payment, they will give you two $50s, five $20s, ten $10s,
or one hundred $1 bills."
Mishkin, FS. The Economics of Money, Banking, and Financial Markets, 2nd Ed.
Scott, Foresman and Company. Glenview, Illinois. 1989.
It was not always like that. All familiar
national currency names were originally designations for gold or silver
coins of precise weight and specified purity. Over time they have been transformed,
first into pseudo-receipts, eventually into fiat national currencies. Fiat
means arbitrary or discretionary - some person or group of persons must decide
how much money to create. These decisions are ultimately political. Historically,
the political process tends to skew money creation in an inflationary direction,
and many irredeemable national currencies issued by political states have ended up worthless.
e-dinar has no "monetary
policy" - the choices of our customers will be the only factor determining
total quantity of e-dinar/e-dirham in circulation.
e-dinar is not Legal Tender, is it?
No, e-dinar is not legal tender as of today, and you cannot force
anyone to accept it.
Where is the gold and silver stored?
The e-dinar system is designed to
be absolutely free of any financial risk. There can be no debt, contingent liabilities
or exchange risk associated with e-dinar. Pursuant to the e-dinar Account Agreement,
the physical bullion that comprises the value backing e-dinar must be insulated
from physical, legal and political risks.
The bullion is held in the
form of certified good delivery bars in allocated storage at the Emirates Gold DMCC
Company in Dubai, UAE. The bullion is held free of any lien or encumbrance
whatsoever and explicitly may not be attached related to any liabilities of e-dinar
or any other entity. No metal may be removed from storage unless to cover
outexchanges and redemption orders from e-dinar customers.
Is e-dinar a bank?
Absolutely not. It differs from banks in two fundamental ways:
- Deposits in a bank are legally regarded
as loans to the bank. A bank is permitted to make investments (loans) using the
money belonging to their depositors. Metal entrusted to e-dinar is not a
deposit at all: it is held as a bailment (like grain in a grain elevator). e-dinar
may not allow any encumbrance or lien to be placed on customer metal. e-dinar
is not borrowing it from you but rather safeguarding it for you for a fee.
- Banks in general operate on a fractional reserve basis.
It is just like in the old days when banks issued more banknotes (purportedly
redeemable in precious metal coins) than they had coins to back it up. In contrast,
any metal entrusted to e-dinar constitutes a spendable bailment - every gram
of e-dinar/e-dirham is backed 100% by physical gold/silver.
How does e-dinar differ from other precious metal dealers?
- e-dinar is not a precious metal
dealer. Our primary business is administering the monetary (payments) system:
e-dinar. We offer currency exchange (Buy gold/silver, Sell gold/silver) services
only as a convenience, a method for funding your e-dinar Account. If you
compare you will find e-dinar is very competitive in terms of spreads and
commissions.
- Some precious metal dealers profit
primarily by loaning money to customers, often at interest rates similar to what
credit card companies charge. Customers are encouraged to leverage their purchases;
to "control" a larger quantity of metal than they could afford to purchase
outright. With favorable timing a customer may realize large speculative profits.
On the other hand, with adverse market movement, a customer may be unable to meet
a margin call and lose their entire position. E-dinar does not borrow from
or lend to customers.
- Minimum transaction size at many
bullion dealers is too large for people of modest means. Often these minimums
are set high so as to encourage leverage. At e-dinar there is no minimum
size for any transaction. If a customer wants just $5 worth of gold we'll execute
the exchange (without hidden surcharges or exorbitant commission).
What is an exchange transaction?
If you have traveled abroad you
likely exchanged money, obtaining some of the local national currency. Exchanging national currencies
for e-dinar is similar, except e-dinar is universal and international.
What national currencies does e-dinar accept?
At present, e-dinar accepts USD, EUR and AED in exchange for e-dinar/e-dirham and will
add other major national currencies in the future.
In addition to supporting new national currencies,
e-dinar will enable credit card orders making it easier to buy e-dinar.
To facilitate trans-national e-dinar payments between account holders,
you may price your goods and services in e-dinar/e-dirham or in terms of
the various national currencies supported.
Who can certify the copy of my passport or ID card?
Any of the following entities can certify the copy of your passport or ID card:
- a bank or regulated financial services business in your country of residence;
- a lawyer or notary public who is a member of a recognised professional body;
- an accountant who is a member of a recognised professional body;
- a member of the judiciary, a senior civil servant, or a serving police or customs officer;
- an actuary who is a member of a recognised professional body;
- an officer of an embassy, consulate or high commission of the country of issue of documentary evidence of identity;
- any individual that is qualified to undertake certification services in your country of residence.
I have sent my documents by regular mail. How long will it take until my documents are processed?
It can take up to two weeks for postal mail to reach our offices. Once we have received your documents, we generally process them within one business day of receipt.
As soon as your documents have been processed, we will email you a confirmation note including the bank wire instructions to transfer USD, Euro or AED to our
e-dinar account at Emirates Bank International in Dubai.
Is e-dinar's Customer Acceptance Policy required for all customers?
Yes, all customers regardless of the size of their e-dinar accounts are required to fulfil the Customer Acceptance Policy. E-dinar must comply with established
"know-your-customer" regulations for financial institutions which need to verify the name and address of their customers and the source of the customer funds used in
transactions with them. The above will help prevent e-dinar from being used in illegal activities.
What documents are acceptable for the photo ID requirement?
We only accept a certified copy of your current passport or ID card.
Please make sure that:
the picture is clearly viewable on the photocopy
your passport or ID card is still valid and has not expired
Can I send scans of my CAP documents by email?
We accept scanned copies of certified passport or ID card only from small account holders who plan to buy less than 1000 USD worth of gold and silver.
Large account holders who plan to buy more than 1000 USD worth of gold and silver must send their documents by postal mail. If you wish to expedite document
submission, you can use a courier service.
What is the purpose of e-dinar's Customer Acceptance Policy?
Although e-dinar is not a bank, most of the same personal information that you need to open a bank account is required to open an e-dinar account.
This prevents abuse of the e-dinar system from being used in criminal activity. This is achieved by requiring personal information from new customers which we then
verify.
Where do you keep the personal information I send to you?
Your information is kept safe and secure by a Swiss accounting firm (BC-IT AG) which has been retained by e-dinar for that purpose.
Your personal information will remain confidential and will not be released for marketing purposes.
Who can be given access to my personal information?
Your personal information will be kept strictly confidential and will not be disclosed without your express consent except when e-dinar is required to provide
information pertaining to you in order to ensure compliance with the laws and regulations of Dubai and the UAE.
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