10 Tech Start-Ups Whose Sizzle Fizzled
The implementation of a standardized Internet currency has long been a frustrating effort for companies.
Facebook Credits, a monetary unit pushed by the social media giant, have been slow to gain popular acceptance, angered many game developers and led some to accuse the system as violating antitrust laws.
Traveling back in time to the era of the dot-com bubble, Flooz was among the start-ups making a play as an online-only currency and alternative to credit card transactions. Hiring Whoopi Goldberg as a spokeswoman and pocketing an estimated $50 million-plus in investor-backed funding weren't enough to keep Flooz from fizzling by 2001. Its demise was hastened by an FBI investigation into a Russian crime syndicate that was using stolen Flooz data for an international money laundering scheme.A Flooz competitor, Beenz, despite $80 million in funding (Oracle's (ORCL) Larry Ellison was among the investors) was also a failure. An intriguing alternative once seen as possibly succeeding where Beenz and Flooz failed is Bitcoin, a "peer-to-peer digital currency" platform first proposed in 2008. Although it too failed to gain wide acceptance, in large part due to hacking exploits that devalued the worth of its lucre, Bitcoin has seen new awareness through an unlikely source: presidential candidate Ron Paul. Paul champions an end to "fiat currency" and a return to a gold-backed monetary standard in the United States. Bitcoin, which uses a computer algorithm to steady its "mining," is increasingly viewed as a worthy alternative by those who object to a politically manipulated money supply. It has also gained traction as an underground currency, used for illegal purchases in the secretive "dark net" of Web sites that lie off the grid, accessible only through anonymizing software such as Tor. A recent article in Wired touted Bitcoin's return from the dead with a headline that asked, "Should Western Union (WU) Be Afraid?" A wiki page maintained by Bitcoin supporters addresses some of the common complaints that have dogged the exchange (proponents support it for online and real world transactions). "Bitcoins are illegal because they're not legal tender," is cited as one myth that earns a response: "Chickens aren't legal tender either, but bartering with chickens is not illegal." "There are a number of currencies in existence that are not official government-backed currencies," it adds. "A currency is, after all, nothing more than a convenient unit of account." Other criticisms dismissed by proponents are that "Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency," and that it "will only enable tax evaders, which will lead to the eventual downfall of civilization."
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