
Y Combinator Challenge #17 - New Payment Methods - toffer
http://astartupaday.wordpress.com/2008/08/12/y-combinator-challenge-17-new-payment-methods/
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ROFISH
The biggest problem in this space isn't a transaction system, the coding, or
even the idea. I highly doubt that companies are willing to 'share' their
virtual currency since they work closer to gift cards. It's getting big
companies like Microsoft and Amazon and Zappos to convert from their virtual
fun bucks back into real money. The barrier to entry to work with those guys
are HUGE.

The closest thing you can have is an automated system that keeps enough gift
certificates from different places to allow exchanges for a fee. (ie. exchange
$50 Amazon gift card into $50 Zappos gift card for a buck or so.) Even then,
some places like the Xbox 360 points don't have any way of giving to people
once it's on your account.

This doesn't even count the fact that some systems, like WoW gold, makes it
illegal via usage contract to convert virtual money into real cash.

~~~
arockwell
Not to mention isn't a lot of the advantage of selling gift cards that they go
unclaimed?

I'm not really sure what is the real advantage of a virtual currency system. I
don't want to put any substantial amount of money in virtual currency. Also in
order to buy something with a virtual currency there has to be a market for
the currency, and the virtual currency is always going to be worth
(substantially) less than regular cash. Maybe I'm missing something big here,
but I don't see how this could ever be workable.

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immad
"Well, as my grandpappy used to say: “When life gives you lemons, make a
consolidated online virtual currency gateway and payment system”. I never
quite understood what he was talking about. Until today."

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Amusing

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emmett
This is my favorite of these ideas so far. It's one of those inevitabilities -
eventually, someone will build a virtual currency exchange.

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jkent
This is really clever. Even if you could get just two large virtual currencies
(where points win prizes) and exchange those, it would be beneficial. Perhaps
even from the same publisher.

You could encourage the companies by offering to take a rake on the
transaction and sharing it with them. It'd probably be against their T&Cs if
you didn't ask permission.

Other posts about loyalty are true. But if the points are transferrable,
people will trade them. Far better the publishers get control over it - but
you'd have to pursuade them.

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sachinag
Flooz. Beenz.

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jkent
Both flooz and beenz are famous failures which tried to introduce a new global
reward scheme.

The OP and myself are talking about is a trading market between various
existing (and assumedly succesful) point reward systems.

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sachinag
Points.com?

I guess maybe I'm just not following.

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dangoldin
Ithaca, NY has a concept called "Ithaca Bucks" which are accepted by local
merchants. I believe the purpose was to keep the money supporting local
businesses instead of letting it leave the area.

It's been a while since I've heard of it but I recall the fact that this makes
taxes difficult to keep track of since it becomes similar to bartering.

Anyone else have heard of this? I'm trying to find an article about this but
am having some trouble.

~~~
agru
[http://www.mail-
archive.com/libertarianisland@yahoogroups.co...](http://www.mail-
archive.com/libertarianisland@yahoogroups.com/msg00593.html)

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albahk
The issues with virtual currencies are not technical, rather it is a social
issue of trust. You trust that a $100 note will be accepted and exchanged for
goods or services according to the note's face value in the general economy.
This is backed up by laws and businesses must accept this as payment, hence
"legal tender". So, our economies can function by exchanging these notes
instead of each of us carrying around three pigs, a sack of wheat and some
chickens to pay for goods and services.

I would never take my universally accepted "legal tender" and convert it into
a less liquid form of currency that is not universally accepted in the
economy, that is backed only by a company and not by law.

Even if it could get universal acceptance and was backed/supported by law, it
would then be the same as our current system of currency, so why bother?

I have had hundreds of thousands of frequent flyer points disappear due to an
airline collapse. This would be my biggest fear of adopting any virtual
currency.

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dkasper
I was confused when I saw the title of the idea: "MyVC"

For some reason I think of MyVentureCapitalist rather than
MyVirtualCurrency...

~~~
kleneway
Yeah - the name is bad. Although it was better than my original name:
MyCOVCG&PS

