How I Created My Own Virtual Currency

Last week, I made a posting on my blog about Bitcoin 2.0. It reminded me that years before Bitcoin was even invented, I created my own electronic currency. This is the story of the rise and fall of

Back in the late 1990s, virtual currencies such as E-Gold and CyberCash were a hot trend, offering alternative payment systems for consumers to use on e-commerce sites. This appealed to people who did not have a credit card, and to people who at the time did not trust giving their credit card info out online. Years later Paypal ended up winning the online payments battle, but before that (in 2002) I jumped on the bandwagon and started my own competing site: It was totally new type of payment service for websites that only sold digital goods (such as software downloads, eBooks, or memberships).

The way it worked was that people would make a purchase using the DigiCredit system and then pay for it later in real money. It was basically a promise to pay. No credit check, everyone was automatically approved to use it.   All they had to do was fill out their name, address, and email address and promise to pay the bill within 30 days, and their order was instantly processed. The DigiCredit system would then email them a bill, and if they didn’t pay after 15 days it would keep emailing them reminders until they paid. They could pay the bill by mail using a check or money order.

On my site I had a notice that said if they didn’t pay, their account would get sent to a collections agency and be reported to the credit bureaus. But, I made that up just to scare people into paying. After a few years, to make it sound even more official, I added a section to the payment form where it asked the customer for the last 4 digits of their Social Security number for verification purposes. That part was fake too.

To launch DigiCredit, I added it as a payment option on, which was a site I owned where users could see if they were owed unclaimed money by the government. It was free to do a search, but if their name was on the unclaimed money list, they had to pay $10 to find out how much they were owed and how to collect it. Since I was only selling data, my cost for each order was zero, so I had nothing to lose by trying DigiCredit as an alternative to accepting credit cards. The only potential problem with this test was that some of the people who paid by DigiCredit might have paid by credit card anyhow. But, as soon as I added the DigiCredit payment option to, overall sales increased significantly. That meant it was generating new sales.

None of that mattered though, unless people were actually paying their DigiCredit bills. Since this had never been done before, I had no way of estimating what percentage of customers would pay. I could tell a bunch of the sales were fraudulent because fake names and email addresses were used, and I knew some customers would not pay their bill because they weren’t happy with what they purchased. On the other hand, at least I no longer had to deal with credit card chargeback fees from these unhappy customers (chargeback fees were usually equal to 5%-10% of my sales, so it was significant).

In the end, approximately 20% of the DigiCredit customers paid their bills. Most paid within 30 days. Sending collections emails after that did not result in very many additional payments.

Even though 80% of DigiCredit customers did not pay, offering DigiCredit on my site still gave me a 10%-15% overall increase in my revenue, so I was happy with the results. I also saved paying the 2.5% credit card processing fees, although there was a little bit of work involved for me to process the payments (I had to mark each account as paid and sign each check and deposit it). I even used DigiCredit as a backup payment system for the times when my credit card processing was down (10 years ago things like that happened a lot more often), so that was basically free money since I normally would have lost all of those sales.

I later used DigiCredit as the exclusive payment option on a few of my other small sites, because it was almost instant for me to setup, and I did not have to pay the monthly fees of a merchant account or go through the painful application process for one. I also started work on using it as an in-game currency on my  virtual pet site, where users could buy upgrades with it (like extra food or clothes for their pet). And, I started building a premium section on where people would pay a one time $10 fee and then get lifetime access to special content. I was eager to do this because most of the users on the site were kids, so it would not have been effective to offer something like that using credit card payments. I envisioned giving kids a credit line at, and they could then spend this virtual money at participating sites ( would be one of those sites).   Due to all the programming needed to add the upgrades system and the premium content section to, I never got around to finishing this. I also received some interest from other sites who wanted to use DigiCredit, but because I don’t think the site owners would have liked the haphazard way I ran things (only collecting 1 out of 5 payments), I never followed up with them.

All of this is similar in some ways to what now offers, but Bill Me Later is for adults only and does real credit verification using the last 4 digits of your Social Security number, and they also charge you interest on what you owe. When started offering the Bill Me Later payment option, it soon became a hit and the Bill Me Later company was bought by eBay for $945 million in 2008.

Eventually I ended up selling the Findcash website, so when I did that I shut down DigiCredit because it was not worth the trouble to run it just for the few small sites it was still being used on. I might do some more development of DigiCredit in the future, but for now I am working on building several cryptocurrency (Bitcoin) related websites instead, as I see a lot of opportunity in that industry.


  1. Interesting.
    I always appreciate reading your insights and stories.
    I LOL’d when you mentioned the fake parts of the DigiCredit site —
    you’d be a good poker player 😀

    Good luck with the Cryptocurrency sites. Eager to hear what you come up with!

  2. Thanks for sharing this, Eric. Another great learning experience along the way. You have more of them than most and inevitably more successes to go along with it.

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