Beenz vs Bitcoin

[the founder]

BEENZ:

The marketing and brand concept positioned Beenz as ‘the web's currency,’ global money that would challenge the world’s major currencies. The Beenz management team raised almost $100 million from venture capitalists including Apax/Patrickof, Larry Ellison of Oracle, Francois Pinault of PPR, Vivendi Universal, Italian financier Carlo de Benedetti and Hikari Tsushin of Japan.

http://en.wikipedia.org/wiki/Beenz.com

BITCOIN:

Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.

https://en.bitcoin.it/wiki/Main_Page


Other than the open source nature of bitcoin,  in general terms what is the difference and why will bitcoin succeed where Beenz failed with $100,000,000 in VC backing?

Understand I am asking this in hypothetical terms and not because I believe Bitcoin is going down the same path as Beenz.. but I want your opinions.

[iamzill]

Beenz was centralized and not anonymous. 

[DeathAndTaxes]

I think Beenz lacks any similarity to bitcoin.

Beenz was a centrally planned economy.

The Beenz corp was the only entity which could "sell Beenz" (give Beenz, collect dollars), and "buy beenz" (give dollars, take beenz).  The buy & sell rate were artificially fixed and a 3% spread was impossed.  The business model was that the company would make 3% on beenz -> dollar conversion.

Beenz served no purpose, had no advantage over credit cards or paypal.  It existed solely to allow the owner to profit.  It gave neither the merchant nor the consumer any advantages.    Worse it locked them into a propreitary monopolistic system.  While the vig was only 3% if beenz ever caught on the company could increase that any % and there would be absolutely nothing any entity could do (except stop using beenz). 

The company made it that they were the only entity who could exchange beenz for USD.  Imagine if the founder of bitcoin decided to design the system such that he and only he could exchange bitcoins for dollars.  Would you even be on this forum today?

The only similarility was that both bitcoin & beenz are  harder to use than CC/paypal as very few merchants accept them.  However w/ bitcoins one has the ability to trade to/from fiat currencies from any entity you wish.  

At least w/ bitcoin that "difficulty" is offset by advantages (p2p network, low fees, anonymous transactions, no central authority, self healing nodes, etc).  Beenz simply impossed additional cost & restrictions and offered absolutely no advantages.

Simply put beenz served no purpose and had no advantages and thus it failed.

Imagine tomorrow I started DeathPal.  It works just like Paypal except the fee is 300% of what Paypal charges.  It offers no advantages over paypal and keeps all the existing limitations.  Say I get $100M venture capital money. Do you think I am going to replace Paypal?

[BkkCoins]

My guess, from the wikipedia article:

"a professional economist was employed to model the behaviour of prices and flows of money in this micro-economy, and keep it healthy."

[the founder]

How about from a regulatory standpoint what's the difference?

[wareen]

How about from a regulatory standpoint what's the difference?

I'd say the major difference is that there's a (central) issuer/redeemer of the "currency". At least in a current German AML draft-law this is one of the defining properties of an e-currency which Bitcoin clearly does not possess.

From the Wikipedia-article:

However, at the time, this was fraught with difficulty as some countries (such as France) expressed a view that such alternative currency schemes were undesirable and that they would seek to prevent them from operating.

Interesting - especially in light of the current Mt. Gox trial in France. Does anybody know details about the statement above?

[Gabi]

why will bitcoin succeed where Beenz failed with $100,000,000 in VC backing?

Very easy, beenz was created in 1998. How many people had a connection to internet back then? Or better, how many people had a computer?? Or better, how many people knew what a computer is in 1998? (like oh it's the thing they have in universities and in nasa)

So you had no computer so you used beenz...mhh... no you couldn't.

And let's go buy something, i take my smartphone and i pay...no wait, smartphone in 1998? No.


I had a computer back then but no internet connection.

[evoorhees]

The primary Unique Selling Proposition of Bitcoin (as opposed to Beenz, or Paypal, or anything else) is the decentralized control structure. With Bitcoin, there is no "counterparty risk." No corp or organization or individual could be shut down in order to shut down Bitcoin. This advantage cannot be overstated. Consider egold... it had all the safety of gold, but it's weakness was that it was the liability of a company. The company shuts down, the system is gone.

Bitcoin being a decentralized peer-to-peer protocol makes it vastly more powerful, flexible, and perhaps unstoppable. That's why I own it.

[the founder]

evorhees,  that however doesn't answer the question...   in 1998 France came down on Beenz... and now over a decade later.. first bitcoin lawsuits are in France again..  with our luck same judge..  lol

[DonnyCMU]

Can Beenz payment be reverse/ chargeback?

[Gabi]

And a lot of the dot com bubble things went poof for the same reason: nice idea but very few ppl able to use it

The same ideas today, with pc, netbook and smartphones all connected to internet, would work much much better

[greyhawk]

Very easy, beenz was created in 1998. How many people had a connection to internet back then? Or better, how many people had a computer?? Or better, how many people knew what a computer is in 1998? (like oh it's the thing they have in universities and in nasa)

[evoorhees]

evorhees,  that however doesn't answer the question...   in 1998 France came down on Beenz... and now over a decade later.. first bitcoin lawsuits are in France again..  with our luck same judge..  lol

This illustrates the point perfectly. Let's assume France outlaws Bitcoin entirely. What office do they seize? Which servers do they shut down? Who's bank account do they raid?

Certainly this would hurt Bitcoin, and in the specific case you're referencing it would hurt MtGox, but it can't kill Bitcoin.

The Office of Bitcoin cannot be closed. This makes it fundamentally (and that word deserves extra emphasis) different than something like Beenz, Paypal, or egold.

[Anonymous]

Beenz: The value is guaranteed only by one fallible entity. Adoption and use is only as good as the marketing budget and software team. Value is not guaranteed.

Bitcoin: Tool that creates and stores value like precious commodities such as Gold and Silver through decentralized digital adoption. Software is directly regulated and modified by the public at large. It's literally as good as gold. Value is guaranteed.

[the founder]

Value is guaranteed.

I have to admit the "value is guaranteed" is open to debate on 40% swings in price every 12 hours.

[Anonymous]

Value is guaranteed.

I have to admit the "value is guaranteed" is open to debate on 40% swings in price every 12 hours.

Well the value has grown over 1000x since the inception of Bitcoin two years ago. I think it's safe to say it's still ahead albeit going through a growing pain.

[DeathAndTaxes]

Value is guaranteed.

I have to admit the "value is guaranteed" is open to debate on 40% swings in price every 12 hours.

Well the value has grown over 1000x since the inception of Bitcoin two years ago. I think it's safe to say it's still ahead albeit going through a growing pain.

That isn't a guarantee.  Those that bought BTC @ $30+ can they exchange them back for $30 cash ea?  If not then there is NO guarantee of value.

[Anonymous]

Value is guaranteed.

I have to admit the "value is guaranteed" is open to debate on 40% swings in price every 12 hours.

Well the value has grown over 1000x since the inception of Bitcoin two years ago. I think it's safe to say it's still ahead albeit going through a growing pain.

That isn't a guarantee.  Those that bought BTC @ $30+ can they exchange them back for $30 cash ea?  If not then there is NO guarantee of value.

There is enough support for Bitcoin at the moment in terms of computing power and adoption that it can be said that it will reach $30 and beyond eventually. The Bitcoin source code has been examined over and over and there is millions of dollars put into the blockchain. If there is a major flaw that's going to stop this thing dead cold, it would of happened already.

You can say that a return in their value is highly probable.

[evoorhees]

You can say that a return in their value is highly probable.

That is very different than a "guarantee of value"... 

Gold doesn't have a guarantee of value either. Guarantees are actually only possible with an attached liability of a counter-party. The fact that Bitcoin has no guarantor is, like gold, one of its strengths. The claim of a guarantee is both factually incorrect and wholly unnecessary.

[Anonymous]

Yeah, I now agree. It is a poor choice of wording. However, it can be said commodities hold their value historically well. Bitcoin is likely to show the same trait.