Electronic Currency

What is Electronic Currency?

Electronic currency, also known as e-money, electronic cash, electronic money, digital money, digital cash or digital currency, refers to money or scrip which is exchanged only electronically. Typically, this involves use of computer networks, the internet and digital stored value systems. Electronic Funds Transfer (EFT) and direct deposit are examples of electronic money. Also, it is a collective term for financial cryptography and technologies enabling it.

Electronic currency allows its holder to buy the goods and services that the vastness of the internet offers. An e-currency system may be fully backed by gold (like e-gold and c-gold), non-gold backed, or both gold and non-gold baked (like e-Bullion and Liberty Reserve).

Electronic currency trading can let you to do business and earn only few dollars of investment. In fact, some of the experts will suggest the beginners to start with only a few dollars so that they can first learn the ropes of electronic currency. Besides that, electronic currency trading has a low transaction cost. Unlike other businesses that will eat up your profit with a huge amount of fees, it allows you to do business with minimal fees and give you more profit and money. There are few websites examples that can let people to do e-currency tradings such as MG E-currency, JT GOLD.com.

While electronic money has been an interesting problem for cryptography, to date, use of digital cash has been relatively low-scale. One rare success has been Hong Kong's Octopus card system, which started as a transit payment system and has grown into a widely used electronic cash system. Singapore also has an electronic money implementation for its public transportation system (commuter trains, bus, etc), which is very similar to Hong Kong's Octopus card and based on the same type of card (FeliCa). There is also one implementation in the Netherlands, known as Chipknip.

Major Electronic Currency Vendors

Firstgate's Click and Buy

In 1999 Norbert Stangl founded FIRSTGATE Internet AG. The Internet payment system ClickandBuy, a full-service solution for e-payment and billing, was launched in 2000. After a successful start - ClickandBuy saw numerous launches in other markets - ClickandBuy is now available all over Europe, in the US and in Asia. ClickandBuy International Limited is headquartered in London.

Firstgate works with about 3,000 providers of articles, information, games, and other content and has 2.5 million customers, mostly in Europe.For security, Firstgate uses passwords and secure sockets layer (SSL) encryption and also records the IP addresses of buyers' machines for reference in case problems occur.

The company charges content providers an up-front fee—which varies based on the complexity of the project—for set-up, integration, and consulting. Firstgate then tailors its systems with business rules for each participating merchant.The company bills buyers' credit cards, debit cards, or phone accounts, once they have accrued a few dollars in charges. North American customers can buy material via a charge to their bank accounts.

Firstgate aggregates consumer micropurchases across merchants to enable a single processing of multiple transactions, explained Chief Operating Officer Ed Burrell. "This reduces processing costs, per-purchase credit card fees, and administration," he explained. Firstgate then remits money to merchants via checks or bank transfers.

Payloadz

PayLoadz is a leading online marketplace for digital downloadable goods.They enable tens of thousands of customers to sell digital goods such as videos, video games, ebooks, software and templates to a large audience of buyers from our online store. Payloadz play a leadership role in this exciting market and continually strive to provide a dynamic and seamless selling experience for their users.

The explosive growth in online commerce has moved into the realm of digital goods and assets. Demand is increasing for digital goods such as videos, ebooks, music, video games, software, design templates, etc. Payloadzgoal is to create a dynamic online marketplace and platform in which users sell their digital goods to interested buyers in a seamless efficient way.

They have made substantial progress in the past four years and today they are one of the leading “go to” sites for downloadable digital goods. Simplicity, Simplicity, Simplicity is our motto. Their site is easy to use (for both buyers and sellers) and offers a straight forward pricing model.

PayLoadz works with about 1,000 merchants and generates about $3 million per year in revenue, explained founder and lead developer Shannon Sofield.

Rather than having prepaid accounts with PayLoadz, users pay sellers directly through PayPal, which also verifies that the buyers have enough money in their accounts to make the purchase. Merchants pay PayLoadz a flat monthly fee based on their sales levels, rather than a percentage of each transaction.

PayLoadz delivers files via a secure server to the customer using PayPal's Instant Payment Notification system, which lets vendors integrate PayPal with their back-end operations. Buyers never see a PayLoadz interface.

The PayLoadz system consists of an application server that hosts the Web site and handles transaction processing, a file storage and delivery server, and a database server. Separating the components into servers tuned for specific roles improves performance and reliability, Sofield said.For security, PayLoadz uses SSL with 128-bit RC4 encryption.

Paystone Technology

Customers in North America, Australia, New Zealand, and parts of Europe can access Web content after setting up prepaid Paystone accounts by mailing funds directly to the company using their bank's bill payment service or by depositing cash at any Bank of America branch.
Merchants that sell content via Paystone create links to the e-micropayment system. Customers follow the links, enter their Paystone password, and are redirected back to the content they want to purchase. For security, Paystone uses 128-bit SSL encryption.

Peppercoin

Peppercoin is a cryptographic system for processing micropayments. Peppercoin Inc. was a company that offers services based on the peppercoin method.The peppercoin system was developed by Silvio Micali and Ron Rivest and first presented at the RSA Conference in 2002 (although it had not yet been named.) The core idea is to bill one randomly selected transaction a lump sum of money rather than bill each transaction a small amount. It uses "universal aggregation", which means that it aggregates transactions over users, merchants as well as payment service providers. The random selection is cryptographically secure -- it cannot be influenced by any of the parties. It is claimed to reduce the transaction cost per dollar from 27 cents to "well below 10 cents."

Peppercoin, Inc. was a privately held company founded in late 2001 by Micali and Rivest based in Waltham, MA. It has secured about $15M in venture capital in two rounds of funding. Its services have seen modest adoption. Peppercoin collects 5-9% of transaction cost from the merchant. Peppercoin, Inc. was bought out in 2007 by Chockstone for an undisclosed amount.

Buyers at participating Web sites who want to use Peppercoin see the e-micropayment technology's interface, which looks like a common credit card interface, noted Bob Nix, the company's vice president of engineering.

The application's new version, Peppercoin 2.0, doesn't require pre-enrollment or predeposit of funds. Consumers just enter their credit or debit card information with the merchant online as usual, and Peppercoin processes the transaction.As picture below shows, the application uses a universal aggregation technique to efficiently process many small interactions between multiple consumers and merchants as a few large transactions.

The company uses RSA BSAFE software to provide encryption and digital signing capabilities for the security of a buyer's information and the transaction's integrity. Digital signatures can authenticate a message's sender's identity and verify that no one has altered the original content.To reduce overhead on small transactions, Peppercoin uses an online self-service customer-service module.

Digicash

The name of one man stands out way above anyone else in the history of DigiCash: David Chaum, US citizen, born into a wealthy family, brilliant mathematician and one who had to always have things his own way. After travelling around the world he ended up in Amsterdam in the late 80's. Here, he became head of the cryptography department of the CWI (Centre of Mathematics and Information Science). Cryptography is the science of encoding and decoding of data, in order to maintain privacy. Chaum had built a big reputation in this field in the previous few years. Insiders estimated he was in the top 5 of the world at the time.

At the CWI, they also worked on electronic payment systems. In the early 90s, Rijkswaterstaat became interested as they were thinking about introducing automatic toll-collection roads. Chaum got together a few researchers, mainly from earlier contacts with the university of Eindhoven. All guys who knew each other through a "young researchers" programme sponsored by Philips. They had all spent their youth programming behind a computer. Enthusiastically they started, and within little over a week the job was done.

Rijkswaterstaat was satisfied and the team got another assignment. That was the moment when Chaum smelt money. Why couldn't he turn the patents he claimed in the 80s into money? On the 21st of April, 1990, the company DigiCash first saw light of day. Unfortunately Rijkswaterstaat decided to put the advanced system on the shelf and to continue with the old standby, number plate recognition. Chaum could have divested himself of the company and continued his work at the CWI, but he had apparently tasted the forbidden fruit of business. He decided to market his research other ways: smart cards, point-of-sale applications, cash registers and tele-banking. Of course, he had to quit his job at the CWI because of the risk of conflict of interest.

Financing of the company was done privately by the American. Former DigiCash employees agree that Chaum and his wealthy family had at least contributed a few million.

It all started out quite nicely. The brand new company sold a smart card for closed systems which was a cash-cow for years. It was at this time that the first irritants appeared. Even if you are a brilliant scientist, that doesn't mean you are a good manager. David Chaum was a control freak, someone who couldn't delegate anything to anyone else, and insisted upon watching over everybody's shoulders. "That resulted in slowing down research," explains an ex-DigiCash employee who wished to remain anonymous. "We had a lot of half-finished product. He continuously changed his mind about where things were headed."

This drove a few people crazy and it didn't take long before the first few turned their back and started their own company. In 1992 Boudewijn de Kerf and Eduard de Jong quit the company and went to Silicon Valley where they invented and sold an operating system to Sun Microsystems for a substantial sum.

Digicash’s mission is to create a new personalized dimension to the shopping experience. They transform online incentives into powerful new tools, establishing a strong, high-value connection between consumers and ecommerce companies. The Digicash Wallet, Digicash first product, gives merchants a revolutionary new approach for initiating real-time, value-creating coupons and promotions to increase sales, margins, and customer loyalty.

Consumers are embracing the Digicash Wallet because it’s fun, easy, convenient and personalized to their shopping needs. Capture the benefit of rising coupon usage without sacrificing profits!

Related links:
1.http://en.wikipedia.org/wiki/Peppercoin
2.http://en.wikipedia.org/wiki/Electronic_money
3.http://ecommercesite.wordpress.com/2008/06/24/electronic-currency/
4.http://www.clickandbuy.com/US/en/company/firmenprofil.html
5.http://www2.computer.org/portal/web/csdl/abs/html/mags/co/2004/08/r8019.htm
6.http://www.digicash.com/index.php#
7.http://www.jya.com/digicrash.htm
8.https://www.payloadz.com/aboutus.asp