Emphasis mine:

About 20 percent of all online transactions now take place over so-called alternative payment systems, according to consulting firm Javelin Strategy and Research. It expects that number to grow to nearly 30 percent in just three years.

But perhaps nobody is as ambitious as PayPal. In November, it further opened up its code, giving anyone with rudimentary programming skills access to the kind of technology and payment-industry experience that Ivey used to build Twitpay. The move could unleash a wave of innovation unlike any we’ve seen since self-publishing came to the Web. Two months after PayPal opened its platform, 15,000 developers had used it to create new payment services, sending $15 million through the company’s pipes. Software developer Big in Japan, whose ShopSavvy program lets people find an item’s cheapest price by scanning its barcode, used PayPal to add a “quick pay” button to its app. LiveOps, a call-center outsourcing firm, built a tool that streamlined payments to its operators, turning what had been a nightmare of invoicing and time-tracking into an automated process. Previously, anybody who wanted to create a service like this would have had to navigate a morass of state and federal regulations and licensing bodies. But now engineers can focus on building applications, while leaving the regulatory and risk-management issues to PayPal. “I can focus on the social side of the business and not on touching money,” as Ivey puts it.

Wired: The Future of Money: It’s Flexible, Frictionless and (Almost) Free

See also:

The New Currency War

And Technoccult posts tagged altcurrency.

From now until the first of March, OurGoods, an online barter network, is running a pop-up storefront on the Lower East Side of Manhattan called Trade School, where entry into classes is based not on money or talent, but on meeting the needs of a particular teacher. And while some classes like grant writing and butter making have already filled up, there’s still plenty of room to learn more about irrational decision-making and chair-bound pilates, not to mention composting and improvisation.

Read More – Good.is: Trade School: Will Barter for Skills

(via Kristin Wolff)

The Supreme Court acquitted two defendants in a case related to the legality of using cash to buy and sell cyber money for online games.

The court conditioned its ruling on the fact that the cyber money was earned through skill, not luck.

Supreme Court Justice Min Il-young ruled in favor of the suspects surnamed Kim and Lee.

The two allegedly purchased “Aden,” cyber money in an online multiplayer role-playing game “Lineage,” worth 234 million won ($207,558), which was lower than market price, through game item-trading Web sites.

JoongAng Daily: Supreme Court acquits two in cyber money game case

(via Theoretick)

Health insurance industry trade groups opposed to President Obama’s health care reform bill are paying Facebook users fake money — called “virtual currency” — to send letters to Congress protesting the bill. [...]

Instead of asking the gamers to try a product the way Netflix would, “Get Health Reform Right” requires gamers to take a survey, which, upon completion, automatically sends the following email to their Congressional Rep:

“I am concerned a new government plan could cause me to lose the employer coverage I have today. More government bureaucracy will only create more problems, not solve the ones we have.”

Business Insider: Health Insurers Caught Paying Facebook Gamers Virtual Currency To Oppose Reform Bill

(via William Gibson)

I’m curious whether the answers to the survey have any impact on whether it sends a letter to congress.

Asked to name the single biggest benefit of America’s invasion, many Iraqis fail to mention freedom or democracy but instead praise the advent of mobile phones, which were banned under Saddam Hussein. Many Iraqis seem to feel more liberated by them than by the prospect of elected resident government.

In the five years since the first network started up, the number of subscribers has soared to 20m (in a population of around 27m), while the electricity supply is hardly better than in Mr Hussein’s day. That is double the rate for Lebanon, where a civil war ended two decades ago and income per head is four times higher. [...]

They also became a tool of commerce. Reluctant to risk their lives by visiting a bank, many subscribers transferred money to each other by passing on the serial numbers of scratch cards charged with credit, like gift vouchers. Recipients simply add the credit to their account or sell it on to shops that sell the numbers at a slight discount from the original. This impromptu market has turned mobile-phone credit into a quasi-currency, undermining the traditional informal hawala banking system.

Economist: Better than freedom?

(via Chris Arkenberg)

The in-game currency of EVE Online is the ISK. That’s right, the Icelandic króna. And where most multiplayer games have attempted to ban the translation of in-game assets to and from real-world money, EVE Online has not only permitted it but actively embraced it – so much so that daily speculation on world/game financial leverage is conducted openly on the official game web boards. As a result, the EVE Online ISK has remained fairly stable against virtually all the real currencies of the world for a few years now, fluctuating but not spiking, not crashing. There are people out there making an income, a real-life income, just handling the trades on the “floor”.

All of which is to say: Iceland has collapsed so thoroughly that at this point, its only economically viable export may very well be an internet spaceship game, and that internet spaceship game’s króna is for all intents and purposes a more real and valid and valuable currency than the actual country’s actual money.

Crisper: Signpost Says: “Welcome to the 21st Century”

(via Technovelgy via Theoretick)

Jackson et al. very clearly made some serious mistakes in how they ran (or didn’t run) their business. But compare the history of PayPal with that of E-Gold. Did E-Gold deserve to fall so hard?

Timberlake, the economics professor, is convinced that Jackson’s radical dream, his goal of upsetting the economic status quo and overturning the government’s monopoly on money, is what really got E-Gold targeted.

“No matter how innocent a person is you can always find a law that government agents can use to convict him of something,” Timberlake says, “And this is a perfect example of it. Any time anybody tries to produce money, the federal government is going to be on their tail.”

Threat Level: Bullion and Bandits

Meanwhile: Head of Asheville Liberty Dollar operation arrested.

Wendy McElroy notes “The Dollars do not resemble fed-issued coins except for in being round and flat;moreover the website made it very clear that the Dollars were a means of exchange among like-minded individuals who rejected Federal Reserve Notes as monopoly money” and suggests that the indictment is worded in such a way that the government could conceivably be planning on seizing all Liberty Dollars in circulation: “They seem to be giving themselves the legal muscle to steal caches of precious metal from individuals/businesses.”

See The New Currency War for more background.

Futurist Douglas Rushkoff, famous for correctly predicting the rise of social media, is trying to convince Craigslist’s Craig Newmark to create “craigbucks.” He thinks it’s the obvious next step in the evolution of money. “People could buy and sell things exclusively on Craigslist using craigbucks,” Rushkoff enthuses. “Sure they’ll want to keep their Visas and their MasterCards, but they’ll want a specialized, alternative form of cash too.”

The idea is not as far-fetched as it may seem. Economists already have a term for this kind of community-specific money; they’re called “complimentary currencies” and they naturally take root when conditions are right. For example, in 2006, a Chinese online social network called QQ produced “QQ coins” that became widely traded, used for almost a billion dollars a year in transactions. Even though the currency was designed just to buy things on the QQ network, other websites started accepting QQ coins for payment of even non-virtual goods, and a black market sprung up to convert QQ coins directly to Yuan. The Chinese government cracked down: They feared that QQ could trigger inflation of the Yuan by increasing the total money supply in China.

Portfolio: The Future of Money: DIY Currencies

(via Disinfo)

In his book The Future of Money, Lietaer points out – as the government did yesterday – that in situations like ours everything grinds to a halt for want of money. But he also explains that there is no reason why this money should take the form of sterling or be issued by the banks. Money consists only of “an agreement within a community to use something as a medium of exchange”. The medium of exchange could be anything, as long as everyone who uses it trusts that everyone else will recognise its value. During the Great Depression, businesses in the United States issued rabbit tails, seashells and wooden discs as currency, as well as all manner of papers and metal tokens. In 1971, Jaime Lerner, the mayor of Curitiba in Brazil, kick-started the economy of the city and solved two major social problems by issuing currency in the form of bus tokens. People earned them by picking and sorting litter: thus cleaning the streets and acquiring the means to commute to work. Schemes like this helped Curitiba become one of the most prosperous cities in Brazil.

But the projects that have proved most effective were those inspired by the German economist Silvio Gessell, who became finance minister in Gustav Landauer’s doomed Bavarian republic. He proposed that communities seeking to rescue themselves from economic collapse should issue their own currency. To discourage people from hoarding it, they should impose a fee (called demurrage), which has the same effect as negative interest. The back of each banknote would contain 12 boxes. For the note to remain valid, the owner had to buy a stamp every month and stick it in one of the boxes. It would be withdrawn from circulation after a year. Money of this kind is called stamp scrip: a privately issued currency that becomes less valuable the longer you hold on to it.

One of the first places to experiment with this scheme was the small German town of Schwanenkirchen. In 1923, hyperinflation had caused a credit crunch of a different kind. A Dr Hebecker, owner of a coalmine in Schwanenkirchen, told his workers that if they wouldn’t accept the coal-backed stamp scrip he had invented – the Wara – he would have to close the mine. He promised to exchange it, in the first instance, for food. The scheme immediately took off. It saved both the mine and the town. It was soon adopted by 2,000 corporations across Germany. But in 1931, under pressure from the central bank, the ministry of finance closed the project down, with catastrophic consequences for the communities that had come to depend on it. Lietaer points out that the only remaining option for the German economy was ruthless centralised economic planning. Would Hitler have come to power if the Wara and similar schemes had been allowed to survive?

Full Story: The Guardian

(via Recession Hacking Wiki)

Interesting: my article on alternative currency, first in OVO: Money then here at Technoccult, has been reprinted at Digital Gold Currency Magazine.

Digital Gold Currency Magazine January 2009

Meeting more people
Indoor gardening
Excercise & ergonomics
Start using local currency
Committing to solving global problems

Full Story: Klintron’s Brain

Clay tablets existed in ancient Mesopotamia. Specie, that is coinage, did not. This is an invention of the ancient peoples of Asia Minor and the Greek Islands. Here we see money gaining a more explicit religious and magickal quality. Gold was plentiful in this area, and is also a malleable metal easy to imprint with both words and images. When temple sacrifices of the local bull cults became so popular that not everyone could get a piece of bull, an ingenius method was reached to give every pilgrim a symbol of involvement in the ritual- the temple token. Rather than a piece of bull, pilgrims were given a small piece of gold with a bull impressed on one face. The two sided coin comes later with an image on one side and a caption on the other. Money becomes qualitatively more magickal with this step, uniting the image and the word into a talismatic object which has a value unrelated to its real value as commodity. It is no longer simply a magickal document recording debt and / or wealth. It is a magickal object whose value comes from belief. As Peter points out: All money is fiat money. Gold has no inherent value. It’s shiny, and makes cool jewelry and all that, but it is not what the anarcho-capitalist types will have you believe, a universal medium of exchange. Sure, it holds value over millenia (particlarly with regard to silver), but there is not reason to use gold more than say, diamonds or uranium or coal or any other commodity in limited supply. Quoth Mr. Wilson: “Money is proof that magick works, it is perhaps the only proof.”

Full Story Glack Sun Gazette

I did my Five potential business models for Twitter article without searching the web for other ideas deliberately, mostly as an exercis. So now that it’s done I’ve spent some time researching other ideas. Mostly the same old things: ads or selling the company. Here are a couple other ideas I liked:

Charge for having more than 1,000 followers

Charge for business use of the API.

I still like the payment system idea the best.

Twitter has famously decided to create a giant user base before even coming up with a business model. This is a hazardous plan, and one that’s earned them a lot of mockery. But one advantage to growing a platform, with an open API, first and retrofitting a business model later is the opportunity to observe how users use and hack the system themselves. Twitter has paid attention to how users use the system, such as using @ signs for replies and hashtags for topic tagging and implemented them into the system.

Additionally, hundreds of Twitter clients and applications have been built. Companies like Microsoft, Adobe, and Apple have long looked to 3rd party developers for innovation. There’s quite an opportunity to steal implement some of the ideas already in use and build revenue streams from them.

I’ll start off with a couple of obvious ones that have been discussed, and move into less obvious, and in my opinion, more lucrative ideas.

Ads on search pages

This is something Twitter’s talked about doing before. Twitter is rightly cautious about serving ads on their pages, but they could probably get away with selling PPC ads on search results pages. They could build their own platform, or use someone else’s. If I were Chitika or Yahoo!, I’d be courting Twitter for this contract right now.

Premium services for business users

This is has been specifically mentioned by Evan Williams before. So here’s a”sub top five” of specific services they could offer.

1. Validated account names to prevent public embarrassment. Also, mirror accounts for variants on a name (ie, @exxon, @exxonmobil, @exxonsucks, @exxonrules, @XOM, etc.)

2. Cross posting – Allow users to post the same tweet across multiple accounts (ie, post to both @sergeybrin and @google at the same time). This can be done now with various clients.

3. Autofollow users who follow you. This can be done with bots, but it’s just one of those things that would be nice to have included in a premium package. This should be done across accounts as well (such as the @sergeybrin and @google example noted above).

4. Filtering. Let business users, who will be following thousands of people, trim their lists to read only who they want. This can be done with TweetDeck now but LiveJournal style filterting is sorely needed. (Really, this feature should just be added for free for everyone.)

5. Geo-locative services – Yes, the idea of sending a coupon to someone’s mobile as they pass a store is now cliche. That doesn’t mean that there isn’t money to be made doing it. Twitter should add some geo-locative features for GPS users eventually, and it would only make sense for them to allow opt-in location based promotions.

Premium services for users

This is my least favorite idea, mostly because I think it’s hard to convince consumers to pay for web services, especially when they can get these services for free. That said, there are some opportunities.

1. Charge for text message delivery. One of Twitter’s biggest costs is sending tweets out as text messages. There’s an opportunity to change this expense into a revenue stream.

2. Limit number of tweets per day, and charge for anything over. This will probably sound horrible to most Twitterers, but it could work out. Craig’s List charges for certain types of ads. This has the dual effect of creating a revenue stream while preventing abuse of the ad system. Metafilter charges $5 for a lifetime membership to keep out the riff-raff. So charging people a small fee before they can flood your Twitter feed with up to the second details about their laundry washing might actually benefit everyone.

3. Filters and protected tweets. Same as the possible package for business users. But again, I definitely think this should be free. Currently, Twitter only gives you the option of having all tweets hidden except to people you follow, or having all tweets visible to everyone. I’d like LJ-esque granularity here.

Professional services: license the technology to companies and government agencies

Twitter could build custom microblogging applications for businesses, and perhaps more lucratively, government agencies. Twitter’s use for emergency coordination and disaster relief is much touted – they should capitalize on this. They can offer secure microblogging services behind the firewall, custom tailored to an organizations needs. Competition: Laconica, an open source Twitter clone that powers identi.ca.

Digital payment system

This is my favorite: compete head-on with PayPal. There are a few PayPal competitors out there (ePassporte, Revolution Money Exchange, Google Checkout), but Twitter seems like the perfect platform for a payment system. There’s already a third party solution trying to do this: TwitPay. I’m not ready to hand my bank account info over to TwitPay, but I would to Twitter. If Twitter can make it easier to transfer money amongst users, and take a little off the top, this could be their killer revenue stream.

Crazy idea: Twitter could become a virtual free bank, offering their own digital currency that can be traded through Twitter. Give a certain amount of starting credits to verified users, and let the market determine the actual value. Hey, maybe if they limit the number of tweets per day they could make “tweet credits” tradable – a la cell phone minutes in Africa.

Related: Four other Big Brothers

(BTW, you can follow me on Twitter at: @klintron)

If you’re in NYC, don’t miss this. This is an exceedingly rare opportunity.

The Libertarian Book Club/Anarchist Forum presents…

Tuesday, December 16, at 7:00pm

PETER LAMBORN WILSON’s CHAOS DAY of 2008
THE MAGIC OF MONEY AND THE FUTURE OF CAPITALISM

“The History of Money since Sumeria to its Apotheosis as Pure Imagination in the 21st Century”

Peter Lamborn Wilson on finance as a form of gnosticism, a long historical view of the current crisis, and the prospects for resistance and revolution in the 21st century.

The event will take place at The Living Theatre, 21 Clinton Street, Manhattan (just south of Houston St) (212-792-8050). Coming from uptown, take the F or V train to “2nd Avenue” (exit front of train on 1st Ave, walk east along Houston and turn right on Clinton) or coming from downtown, take the F, V, M or Z train to “Delancey – Essex” and walk east on Delancey three blocks and turn left on Clinton for 2 and a half blocks.

Everybody is welcome and invited to come and to have their say.

There is no set fee for the presentation, but a contribution to aid the LBC is suggested.

If you have questions, contact the Libertarian Book Club/Anarchist Forum, 212-475-7180 or e-mail: roberterler (at) erols.com

Peter Lamborn Wilson is an American political writer, essayist, and poet, known for first proposing the concept of the Temporary Autonomous Zone (TAZ), based on a historical review of pirate utopias. He sometimes writes under the name Hakim Bey.

Via Arthur

I was a little surprised at the hostility towards complementary currency over at Cryptogon, and since I can’t comment there I will comment here.

The Milwaulkie Community currency thing is obviously nothing new, LETS and Hours programs have been around for years (and Time Banking even longer than that). Like Kevin points out, you still have to pay taxes on your currency. And although I don’t think paying taxes is the worst thing in the world, the need to pay taxes in fiat causes the biggest obstacles for these currencies: you can’t pay your property taxes with ‘em. You also can’t pay your mortgage. So getting food producers and landlords to accept alternative currencies is tough, and I’d wager food and rent are most people’s biggest expenses.

So what’s the point then? First of all, LETS and similar systems are a time tested recession-survival tactic (read this and this). They reduce (but don’t eliminate) dependence on fiat and the central banking system, and have enabled economies to keep doing business when fiat currency dries up. Establishing alternative systems now, and not after true systemic collapse (a la Argentina) is wise.

The more individuals and businesses in a community adopt an alt. currency, the more useful it becomes, Metcalf’s Law style. So over time getting food producers and perhaps even apartment complexes on board is plausible. I’d encourage people starting alternative currencies to target small time gardeners and people w/ basements for rent as starting points.

Of course, the real draw backs can/will come when governments feel their monopoly on currency is threatened. Read my article “the New Currency War” to find out more.