Over the years, money as we know it has been undergoing transformation. The shape and form of money has changed from precious metals to metal coins and paper money with no intrinsic value and today it presents us with a formless form in the name of digital or e-currency. E-currency refers to money or scrip which is exchanged only electronically. The digitization of money appears to be inevitable in the light of the recent developments with regards to the Internet and the various e-commerce opportunities presented by the World Wide Web.

There are several benefits of using e-currency:

Using Online

1. The e-currency can be used on the internet related commercial applications such as shopping on the internet and doing personal investment via internet.

2. The using of the e- currency services for example e-gold and PayPal brings people a new way not to use their credit card as the only payment method on the internet since sometime there exists a big risk to provide your credit card information to the merchant you do not know them very well and most of them are far away in the other side of the earth.

3. The e-currency service companies such as e-gold and PayPal can provide both the buyers and merchant the convenient way to send and receive the payment just by clicking the confirm button and the deal is done. None of the payment methods in the world right now can provide this kind of efficiency capability.

Using Offline

1. The user is anonymous unless he commits a double expenditure.

2. The bank can effectively detect a double spender.

3. The bank doesn't need to synchronize its servers very often. This is mostly done via batch updates.

There are several disadvantages of using e-currency:

Using Online

1. Security and anonymity cost become a bottleneck of the system. This can happen at times during real-time verifications.

2. The bank will have to maintain a detailed and confidential database.

3. The bank needs to synchronize its server every time transaction is made. It would be insanely impractical to maintain.

Using Offline

1. Double spending may not be prevented effectively and immediately.

2. The implementation expenditure is high. The required additional hardware is quite costly to install.

Types of e-currency

There are two major types of e-currency in the world. The major different is their backed base.

One is backed by precious metal such as e-gold is backed by gold.

Another type of e-currency is backed by hard currency like Paypal.

Both of them are all called e-currency. Digital Gold Currencies (DGCs) are a form of Internet money denominated in gold weight. The typical unit of account for such currencies is the gold gram or the troy ounce, although other units such as the gold dinar are sometimes used. Due to its rarity and durability, gold has long been used as a means of payment. The exact nature of the evolution of money varies significantly across time and place, though it is believed by historians that gold's high value for its utility, density, resistance to corrosion, uniformity and easy divisibility made it useful both as a store of value and as a unit of account for stored value of other kinds.

In several countries there is electronic currency equal to real paper money. This kind of currency is very easy in use and it does not need any bills, checks or other bank documents. The main advantage of such money, comparing with its real equivalent, is very low costs of transactions, especially inner (from one account to another). These low costs allow using e-currency for small transactions where usual cashless funds are not comfortable. This plus during time becomes more and more important.

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.

The Octopus card is a rechargeable contactless stored value smart card used to transfer electronic payments in online or offline systems in Hong Kong. The Octopus card is also used for payment at convenience stores, supermarkets, fast-food restaurants, on-street parking meters, car parks, and other point-of-sale applications such as service stations and vending machines.

Making or recording a payment using the card for public transport or purchases at Octopus-enabled retailers can be done by holding the card against or waving it over an Octopus card reader from up to a few centimetres away without the user taking out the card. The reader will acknowledge payment by emitting a beep sound, and display the amount deducted and the remaining balance of the card.

In Malaysia, the first attempt at e-currency implementation was in 1999 with the introduction of MEPS cash in the Klang Valley. The initial response was not encouraging at all. The facilities to reload the cards with cash was limited, the outlets where MEPS cash was accepted was also few in numbers. However, the situation is quite different today where almost every ATM machine in the country is equipped with the ability to reload MEPS cash.

Another effort in implementing electronic money in Malaysia came in the form of the Touch and Go cards offered by Rangkaian Segar which is a private company. Touch ‘n Go cards were originally intended for toll payments along the Malaysian highways. The cards may either be linked to ones credit or bank card with automatic reload facilities to a stipulated maximum level once the amount on the cards fall to a predetermined minimum level. The cards may also be reloaded at some of the toll booths or at some banks ATM terminals. Despite the availability of these cards, it is not surprising to find long queues during peak hours along the cash booths along the local highways. Nevertheless, it is interesting to note that today the Touch ‘n Go cards are also used for other payments such as parking bays and train and bus fares.

As the allegro expansion of internet economical applications, the using of e-currency will be the trend in the coming future just like credit card application before. But however there is no unified definition to the e-currency service industries .For example ,Will we define a e-currency company as the bank service or just a financial service firm ? This question remains gray area.

Related Links:
1. http://en.wikipedia.org/wiki/Electronic_money

2. http://projects.exeter.ac.uk/RDavies/arian/emoney.html

3. http://www.persiox.com/2009/04/methods-of-using-perfect-money.html

4. http://www.digitalibrary.my/dmdocuments/malaysiakini/266_20Dr_Balachandher.pdf

5. http://www.buzzle.com/articles/advantages-and-disadvantages-of-electronic-cash.html

eBay is one of the success example for e-commerce. It is a well known website for everyone. How eBay started? eBay was born over Labor Day weekend in 1995, eBay founder Pierre Omidyar, in an experiment, put a broken laser pointer up for sale online, and to his surprise, found a buyer. When he told the buyer the item was broken, the buyer said: "I' m a collector of broken laser pointers." It was then that Omidyar knew anything was possible. It has around 14 years of history.

eBay is The World’s Online Marketplace, enabling trade on a local, national and international basis. With a diverse and passionate community if individuals and small businesses. Besides that, eBay also offers an online platform where millions of items are traded each day. There are about 276 million registered eBay users worldwide until year 2008. More than US$2,039 (RM6,490) worth of goods are traded every second.

Since its initial public offering in 1998, the company has continued to innovate and connect people and not just through its marketplaces. Two critical acquisitions have made eBay Inc. a global leader in online payments (PayPal- acquired in October 2002) and communications (Skype- acquired in October 2005) as well.

PayPal enables any individual or business with an email address to securely, easily and quickly send and receive payments online. Acquired by eBay Inc. in October 2002, PayPal builds on the existing financial infrastructure of bank accounts and credit cards and uses the world's most advanced proprietary fraud prevention systems to create a safe payment solution. Today, PayPal is a global leader in online payment solutions: It has 149 million registered users and is accepted by millions of merchants worldwide - on and off eBay. PayPal's Q1 2008 global total payment volume of $14.4 billion accounted for nearly 9 percent of worldwide eCommerce.

Acquired by eBay Inc. in October 2005, Skype is an Internet communication company that has revolutionized the way people talk online. With more than 309 million registered users as of early 2008, Skype allows people everywhere to make unlimited voice and video calls online for free using its software. Skype is available in 28 languages and is used in almost every country on Earth. This business unit generates revenue through its premium offerings, such as calls (using its software) made to and from landline and mobile phones; voicemail; call forwarding; and personalization, including ringtones and avatars. In addition to its presence on eBay, Skype has relationships with a growing network of hardware and software providers.

Other key acquisitions have strengthened eBay Inc.'s portfolio of ecommerce companies, including shopping.com, a pioneer in online comparison shopping; Stubhub, a leading online marketplace for the resale of event tickets; rent.com, the most visited online apartment listing service in the U.S.; StumbleUpon, an online solution that helps people discover and share content on the web; and market-leading online classifieds sites including LoQUo.com, Intoko, and Netherlands-based Marktplaats.nl. The company has also grown its classifieds business through Kijiji, which launched in the U.S. in 2007.

Causes of its success:

(a) eBay's success is based on its ability to transform many fragmented, primarily local markets into global ones at a relatively low cost to its users. People have always had a need and an interest in buying and selling used, surplus, and collectible items. Traditionally, they have done so through garage sales, classified advertising in local newspapers, and flea markets.

(b) For a price comparable to advertising an item in the classifieds section of their local newspaper with three or four lines of text, users can post lengthy descriptions and pictures available to a worldwide audience. Concerns about fraud have been mitigated through a user feedback system escrow services. The company's ability to bring a large number of buyers and sellers together is what has driven its growth. The more buyers there are, the more sellers want to participate. Conversely, the more sellers there are, the more items are to buy, and the greater the attraction of the service to buyers. eBay has allowed many people to become entrepreneurs with little upfront expense or overhead and provides a method for companies and even governments to dispose of unwanted items.

(c) eBay makes money by charging listing fees and collecting a percentage of the selling price of items sold through the site. eBay also owns PayPal, which makes money through investing its clients' assets and from transaction fees. eBay's growth has been remarkable.

(d) eBay appears to have significant growth potential. It has successfully introduced new markets, such as car sales, which many thought would not be adaptable to its business model. Besides that, it is so successful because it meets its customer's needs better than any competing service. No one else has accumulated such a large number of buyers and sellers in a single marketplace.

(e) According to the interview with the spokesperson of eBay, Kevin Pursglove, he thinks that people really enjoy the experience of the shopping bazaar. They enjoy the hunt. They enjoy looking around for merchandise.

(f) The other component is that Kevin Pursglove believes they really enjoy the competition of the bidding process. Everybody likes to get a bargain, and everybody, I think, in some way, shape, or form, likes to haggle a little bit over the price. Their auction format allows users to do that.

Video Clips:

1)Brief introduction of eBay



2) eBay music video (Have fun XD)


Related Links:
1. http://www.ebay.com/
2. http://www.ecommercetimes.com/story/2127.html?welcome=1213184390
3. http://answers.google.com/answers/threadview?id=245309
4. http://www.neowave.com.my/malaysia_ecommerce_radar.asp
5. http://www.youtube.com/watch?v=Pt0qIPAeLXM - source from WatchMojo
6. http://www.youtube.com/watch?v=3YXHcbX36Ao - source from dps001