But the digital liberation of money turned out to be easier said than done, as the first wave of cyber-currencies came and went without much of an impact. eCash, for instance, was an encrypted, anonymous payment system that allowed anyone anywhere to send and receive instant payments. But it relied on the existing banking infrastructure, and because "anonymous" meant "money laundering" to the police, it faced extreme pushback from authorities who viewed such currencies as primarily empowering drug dealers - and from banks that saw no point in encouraging the competition. Only one small bank ever accepted eCash, and the currency died a quiet death a few years after its introduction.
A larger impact was made by e-gold, which offered accounts denominated in grams of gold from which owners could make and receive payments. It generated some buzz, peaking at five million users and $2 million of transactions in 2009. But here again, the fact that much of this action was apparently money laundering by parties with good reason to stay anonymous led to legal pressure that eventually led to its failure.
James' company, GoldMoney, was originally designed to operate as a gold-based payment system based on several digital currency patents. It avoided the money laundering stigma by requiring users to register under their own names, and also met with early enthusiasm. But other logistical and legal barriers proved to be insurmountable, and GoldMoney's payment system was deemphasized in favor of offshore gold storage. By the late 2000s, purely digital currencies looked, to most observers, like a near-impossibility in a world where governments and banks had the power to prevent such competition.
- Source, James Turk via the Market Oracle: