e-gold is an electronic currency, issued by e-gold Ltd., a Nevis corporation. e-gold is 100% backed at all times by gold bullion in allocated storage. Basically, paying someone by e-gold is paying that person gold.

As with any payment processor there are fees involved. In case of e-gold there's a agio fee (basically a storage fee for the gold) and a spend fee which is automatically deducted from the receivers account. The e-gold Fee Schedule Overview can be found here.

Opening an e-gold account is free and you can open one online instantly here.

There's no credit on an e-gold account so if you want to spend, you need to fund your e-gold account first. To do that you'll need the service of a 'marketmaker', also called 'Exchanger'. They simply convert currency to e-gold and vice versa. Unfortunately they charge a fee as wel. Because the exchange fees vary quite a lot you'll have to check the current rates on their websites.

There are a lot of exchangers out there. I used quite a few of them and have good experiences with London Gold Exchange and AnyGoldNow.

e-gold used to be the undisputed nr. 1 currency for online investment programs but they lost their good name and position when the US government raided the main office in 2005. They were charged with money laundering and illegal Money Transmitting. An indictment followed, see als the press release.

e-gold restarted their business in July 2008 but finds itself competing against other success e-currencies like SolidTrustPay and AlertPay that are quite succesful.

One of the main disadvantages of e-gold is their lack of communication or onresponsiveness in case something is wrong. For example, quite a few people have found their accounts being frozen for one reason or another. You may assume that there is always a reason. But good or bad, you can at least expect some communication about it if something is wrong.

e-gold also has a name of not being friendly towards usage of their system for networking and investing programs. Although I have never had a bad experience with e-gold myself I have read enough forum postings of people that were very angry with e-gold for freezing their account and not telling them why. This also happened to program operators that even lost money this way because they couldn't free the funds. 

I find e-gold a convenient way to transmit money. It's fast and has a user friendly interface. The fact that it's backed by physical gold is also reassuring. e-gold is a real company. I wouldn't store a lot of money in an e-gold account though, for the reasons mentioned above.