RealTime IT News

Show Me The Money

[SOUTH AFRICA] Beenz, the digital currency company, said on Tuesday that it would be cutting 25 employees from its New York and San Francisco payroll, and closing some of its other offices. Although no specific offices were mentioned, a company memo said 'marginal and non-strategic' operations would be closed.

Beenz -the name of the currency as well as the company- is an incentive-based universal currency. You earn beenz by clicking on beenz icons on participating stores or for filling out surveys.

Its chief competitor, Flooz, can be bought and markets itself as an online gift certificate service "accepted at more than 60 stores." It's similar to eBucks, our homegrown e-currency that is backed by FNB Rand Merchant bank.

None have been particularly successful.

Their biggest problem is credit cards. Visa and MasterCard have both been aggressively marketing their products to the Internet community - and they've got the advantage. People are used to credit cards; credit cards are already a universal currency: it doesn't matter where you buy something, you pay in whatever currency is required, but the purchase reflects in local currency on your statement.

Another problem is that beenz and Flooz aren't really currency - they're not legal tender, backed by a government; you can't exchange them for cash in hand, you have to spend them on the Internet. And they're only accepted at a limited number of stores, while credit cards are welcome internationally - with the built-in safety mechanism of having your bank reverse illegitimate charges.

Internet currencies already exist: the numbers frozen in the mainframes of banks, our balances and credit limits -actual currency. We can make direct transfers between accounts through Internet banking - potentially turning your Internet-enabled cellphone into a wallet.

Just as banks offer check books, debit cards and credit cards offline, they will begin to supply a range of financial tools online, from credit cards to anonymous and fluid fund transfers between accounts, seamless and irreversible - just like cash.

Digital currencies initially sounded like a good idea, but they're a solution to a problem that never really existed, and an inadequate solution at that. When it comes to spending money on the Net, my money's on the banks and credit card companies.