U.S. gold dealer launches first digital currency backed by bullion

NEW YORK Thu Jul 17, 2014 2:06am IST

24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton/Files

24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013.

Credit: Reuters/Shannon Stapleton/Files

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NEW YORK (Reuters) - U.S. precious metals dealer Anthem Vault Inc said on Wednesday it has launched the first digital currency backed by physical gold, with an aim to increase the use of bullion as an accepted form of electronic money.

Las Vegas-based Anthem said it will launch 10 million "INNCoins" backed by 100 grams (3.5 ounces) of gold, with all coins expected to be in circulation by July 2015.

"It should make gold more acceptable as a form of currency by combining its appeal as a store of value and a much more efficient medium of exchange," said Anthem Blanchard, chief executive of Anthem Vault, who previously worked at online precious metals market GoldMoney.

Blanchard said Wednesday's launch was a promotional offering, and the company has plans to offer a full suite of virtual currencies backed by a larger amount of gold as well as other precious metals at the end of September.

INNCoin is a form of cryptocurrency - with the most notable one being bitcoin, which operates on a decentralized, peer-to-peer network, meaning no government, bank or administrator regulates the currency.

The system reward computers that solve complex mathematical problems by the occasional payoff of new bitcoins in a process known as bitcoin mining.

The launch comes at a critical time for online currency markets after the failure of Mt. Gox, once the world's biggest bitcoin exchange, and increased regulatory scrutiny shook investor confidence in digital currency.

The market is also crowded, with Anthem competing against established players, including Namecoin (NMC), Litecoin (LTC), Dogecoin (Doge), Peercoin (PPC) and Mastercoin (MSC).

(Reporting by Frank Tang; Editing by Marguerita Choy)

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