The Electronic Money Myth

I do agree that it would be hard to create a new form of currency that is backed by nothing but faith, but with a universally-accepted currency as a foundation, I think a private currency could be possible.

Unfortunately, the problem of assuring people that it is impossible for someone to just "create" the currency is very difficult. With paper money, various tactics are employed to prevent counterfeiting, but it still happens. With digital currency, this problem would be multiplied. The solution would likely involve ensuring that the entire process is very transparent to those using the currency.

Quite real, I spent about a year being paid primarily in e-gold in the late 1990s as an experiment, and it was pretty cool. You can argue, of course, that in this instance the gold in the vaults is the money, and that it is not electronic, and you'd be right.