Digital Money World

An ‘Online Currency’ is a privately issued electronic unit of value similar to the units previously discussed which were lower on the pyramid such as ‘Online Payment Systems’.

There are two huge differences which distinguish this third level from the lower levels of our currency pyramid.

First, ‘Online Currency’ transactions are final. They are non refundable and cannot be reversed. That means no chargeback’s.

Now…Internet retailers, please say this out loud, “If today I sell then ship a product and accept ‘Online Currency’, there is NO chance a month from now that charge will be reversed”.

Second, some ‘Online Currency’ units can be bought and sold from the issuing parent company plus third party independent exchange agents may also sell the units.

However, and slightly different, other types of ‘Online Currency’ units can only be purchased from third party independent agents. The parent company makes it their only priority to accurately maintain the ‘Online Currency’. All sales both small and large are transacted through thrid party independent agents.

Two fine examples of ‘Online Currency’ which can only be bought from third part independent exchange agents are Webmoney and Liberty Reserve. As long as the transactions in these ‘Online Currencies’ are final - just about any reputable exchange agent has no problem, accepting and exchanging these popular units.

Use your common sense and try to understand this example of a ‘bad’ transaction. Imagine if an independent exchange agent accepted $1000 in PayPal (a reversible ‘Online Payment System’) in exchange for $1000 USD in Webmoney (a non reversible ‘Online Currency’). A week goes by and agent gets a surprise email from PayPal saying they are reversing the transaction and the funds have now removed from his account! He is out of luck, the Webmoney is now gone and that transaction ($1000 Loss) is final.

‘Online Currency’ transactions are not reversible and this is much of what separates them from their lower cousins on our currency pyramid.

Since most ‘Online Currency’ is pegged to a local government currency such as the USD or euro, third party exchange agents also consider this larger group of popular ‘Online Currencies’ to be interchangeable between other units of the same value. Consequently, $100 USD in one kind of ‘Online Currency’ usually can be exchanged into another type of ‘Online Currency’ valued at around $100 or the equivalent in foreign exchange (remember the agent also charges a fee for his service). Some web sites such as AutoCambist are fully automatic and the exchange between different currencies is instant! You should visit this web, it is quite an achievement.

Since these ‘Online Currencies’ are considered interchangeable units of money in an effort to expand retail sales many online companies will generally accept several brands in order to provide their customer base with more payment options.

‘Online Currency’ users can operate their account just like any other retail form of electronic money. Shoppers can accumulate units through online business consulting or retail sales, spend those units in online shopping sprees or simply transfer funds to other parties with the same type of account. ‘Online Currency’ units can also be easily exchanged right back into cash at anytime.

Remember, all of these accounts are free to open.

Transactions between different types of ‘Online Currency’ can be accomplished through most independent online agents. These experienced web sites specialize in exchanging and maintaining surplus amounts of online money to ensure a liquid market plus loyal customers. Some good examples of ‘Online Currency’ are Webmoney and Liberty Reserve.

If you are an online merchant and want to begin accepting these ‘Online Currencies’ the accounts are free to open, it takes just a minute and does not require any merchant application. There is no ‘rolling fraud reserve’ fund - because there are no chargeback’s.

In addition to credit cards and PayPal, you can also be accepting several types of popular ‘Online Currency’ in just a matter of minutes. Many online shops today will simply add one or two digital currencies as payment methods to expand sales for those of us who do not always use or own credit cards.

There is no rule which says you have to stop accepting credit cards when you begin selling with ‘Online Currency’. So don’t be bashful, get with the program and start expanding your global sales!

This type of ‘Online Currency’ is now very popular and it’s growth has exploded over the past several years. The parent companies are domiciled in many countries around the globe and are not generally as regulated as other forms of online money. Consequently, consumer awareness, acceptance and market saturation is much smaller than than ‘Online Payment Systems’ such as PayPal.

Necessity being the mother of all invention, it can generally be said that each of these ‘Online Currencies’ was created to fill a specific group or nationality’s online commerce needs. Webmoney was created in Russia and is predominantly used in that area of the world. Online companies such as Roboxchange.com, allow local WM users to pay bills online such as mobile phone, satellite TV and even local Internet service.

The powerful Webmoney system offers several types of WebMoney currency units. WMR is the equivalent of Russian Roubles and the online term for this is ‘R purse’, WMZ equals US Dollars (Z purse), WME is the equivalent of the Euro (E purse), WMU equals the Ukrainian Hryvnias (U purse). [purse=electronic wallet]

On the other hand, Liberty Reserve is operated out of Panama. While this is not geographically significant for the local population, Liberty Reserve offers many new exciting advantages over other similar products. Once again, we have an ‘Online Currency’ (Liberty Reserve) created to fill a very large niche market and it is flourishing.

When demand for this type of financial product exists, experienced ‘Online Currency’ operators and independent exchange agents will create the legal services and fill the ever growing needs of the online consumers.

Putting all of this online commerce into into perspective, PayPal did over 20 Billion in transactions last year and according to the American Banker Online, PayPal today has only about a 10% of market share in the U.S. for e-commerce. (February 15, 2006 American Banker by Daniel Wolfe)

Some other popular ‘Online Currencies’ include: e-Ls - Latvian, FriendlyPay - Canadian, e-Bullion e-Currency^® - Panama e-Currency^® is an electronic currency that is tied directly to the USD national currency and the value does not fluctuate with bullion prices.

A very respectable global cottage industry of independent exchange agents has grown over the past several years. A bonus to this growth is that reputable agents have been able to dramatically increase the speed of transactions and lower their fees! Just in the past year exchange rates have fallen and dozens of new agents have formed making this type of ‘Online Currency’ inexpensive and accessible to many more users worldwide.

‘Online Currency’ is identified by these factors:

• Non refundable transactions, no chargeback’s
• Smaller operations
• Globally located
• Less regulated
• Fills a niche (usually geographic)
• Exchangeable between each other by unit of value
• Backed by and pegged to a local currency usually the USD.
• At risk to inflation, devaluation, currency exchange rates and other common Internet problems

Stay tuned because tomorrow we will discuss the pinnacle of our pyramid ‘Digital Gold Currency’.