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					Web Servers for Commercial
       The imperatives and the solution
       (EWP-001, March 1999)
Michael Rumsewicz

In this paper we discuss the imperatives for Web server solutions that are efficient,
scalable and reliable. We provide an initial, high level, set of requirements that such Web
servers need to fulfil in order to successfully support commercial Web applications.

We introduce Eddie, an Ericsson sponsored Open Source effort making multi- platform,
commercial grade Web server systems a reality. Eddie is a flexible web server
infrastructure that enables

 A web server to be distributed geographically across multiple sites, across multiple
continents, through the use of an Enhanced Domain Name Service platform.
 Maximisation of web server throughput, through the use of dynamic load balancing
across sites and between servers within a single site.
 Scalability via the straightforward addition of new servers to existing infrastructure,
allowing on-going support of user Quality of Service even as server usage increases.
 Reliability through the automatic detection and takeover of failed units.
 Flexibility through support for Solaris, Linux, FreeBSD and Windows NT, and third
party web server software, including Apache.

1 Introduction

2 Requirements for a commercial grade web server
3 The Eddie Solution

      3.1 Intelligent HTTP Gateway
              3.1.1 Load Balancing
              3.1.2 Scalability
              3.1.3 Performance Optimisation and Service Protection
              3.1.4 Quality of Service
              3.1.5 Reliability
      3.2 The Enhanced DNS Server
              3.2.1 Load Balancing Across Geographically Distributed Sites
4 Summary

More information


1 Introduction
The usage of the Internet and the World Wide Web is increasing at a tremendous rate and
the Web is providing a rapidly growing number of commercial services. Such
applications ranging from a simple information retrieval through to e-commerce.
However, the reliability of current offerings is typically much less than is required for
mission critical applications. It is critical to improve the performance of the Web to make
it as reliable as the telephone and hence a suitable medium for high volume business
critical applications.

Telecommunications networks have a set of well-established goals during periods of
congestion and partial system failure:

   Maintain good throughput, even during periods of extreme overload
   Assure tolerable user delays not much larger than those under normal load
   Assure that there is no breakdown due to overload
   Ensure system sanity and responsiveness
   Provide a graceful degradation in service, if degradation is inevitable.

Unfortunately, the Web has not reached a level of maturity capable of achieving these
goals. In fact, it is not clear whether comparable, generally accepted goals even exist for
the Web in general, and Web servers in particular.

While the use of Web servers is growing tremendously, their reliability has not improved
at the same rate. During periods of overload Web servers tend to allow requests from new
users even though this degrades the Quality of Service perceived by users already
accessing the system. There are numerous examples of overload resulting in severe
service disruption and financial loss.
A number of companies are attempting to address the issue of improving Web server
capabilities, especially in distributed environments. These companies range from recent
start ups, such as Resonate (www.resonate.com), Arrowpoint (www.arrowpoint.com),
and Coyote Point (www.coyotepoint.com) to major multinationals such as Hewlett
Packard (www.hp.com), Cisco (www.cisco.com) and IBM (www.ibm.com).

The solutions proposed by these companies span the range from pure software to pure
hardware solutions. These solutions suffer from one or all the following shortcomings:

 Inability to adjust to actual resource usage at the server. This results in either allowing
too many users access because the controls are set too loosely, or over-controlling
admission and artificially limiting capacity.
 Discarding a user after they first gain access. This prematurely ends the user
interaction with the server to the great detriment of the user's perceived quality of service
 Hardware based solutions require specialised equipment. This leads to scalability
issues and limits their potential for supporting geographically distributed web servers
over multiple sites.
 Geographically distributed web servers will become the norm for companies
successfully exploiting the commercial potential of the Web in a global marketplace.
 Requirement on the use of specific operating systems. This limits the flexibility of the
solution in terms of the applications they can be supported and locks the owner into a
particular growth path.

In this paper:

 We outline the requirements that should be met by any commercial grade web server
 We introduce Eddie, an Ericsson sponsored Open Source effort targeted to delivering
commercial grade web servers to the Internet community.

The Eddie team mission is to provide the tools which allow the construction of mission
critical internet sites providing a continual high level of service focused upon the
customer, attuned to the needs of the service provider.

Eddie provides:

 The ability to create a truly distributed web server infrastructure. Eddie supports web
servers spread over multiple physical sites, spread over many continents.
 Enhanced web server throughput. Eddie provides sophisticated load balancing
capabilities allowing full access to the entire capacity of a distributed web server. This in
turn delivers:
 Increased revenue for web servers supporting e-commerce applications.
 Improved personnel productivity for web servers supporting work group applications.
 Performance optimisation. Eddie allows web administrators to dedicate optimised
machines to particular tasks, thereby maximising the potential throughput of their
distributed web server.
 Long term scalability. Eddie provides a natural growth path for a distributed web
server, while continuing to give users quality of service.
 User quality of service. Eddie ensures that users accessing a web site receive rapid
response to each and every jump to a new link within the site for their entire interaction.
 Reliability. Eddie allows automatic detection of failed units within the distributed
server and automatic takeover of functionality by active units.
 Flexibility. Eddie supports Solaris, Linux, FreeBSD and Windows NT, and a range of
third party web server software, including Apache.

2 Requirements for a commercial grade
web server
To determine the requirements of a commercial grade web server, let's look at a simple
example of user interaction with the web server of a corporation with servers spread
across internationally distributed sites (see Figure 1).
From the user point of view, the world primarily consists of

 Themselves, using web browsers to navigate their way through the resources of the
 The Internet linking them to a wide range of resources.
 Web servers, accessed by typing an appropriate Universal Resource Location (URL)
into their web browser.

Users are typically unaware of the actual physical architecture of the web servers they are
accessing. In the following we shall refer to multisite web servers as distributed web
servers. This is to emphasise the notion that each site should be considered an integral
component of a single server as perceived by the user.

Being able to access the web server actually requires a number of steps to be completed.
In our example, the distributed web server consists of two geographically separated sites
(see Figure 2). Site 1 consists of a Domain Name Service (DNS) server and four servers
running web server software. Site 2 consists of a DNS server and three servers running
web server software.

A typical session between a user and a web server goes through the following steps:

       1. When the user types in the Universal Resource Location (URL) they are
       interested in, their Local Domain Name Service (Local DNS) attempts to resolve
       the domain name to an IP address.

       2. The Local DNS, unable to resolve the domain name, forwards the request to the
       Authoritative DNS of the domain name.

       3. The Authoritative DNS returns the IP address of the server that should be

       4. The user begins accessing web pages on the DNS specified server.

As mentioned earlier, users accessing the distributed web server are unaware of the server
particular configuration. The user will expect that on gaining access to the site, they will
 Continuity and consistency of service for the entire desired duration of interaction with
the server.
 Rapid response time for each page downloaded.

From the service provider perspective, the expectation is:

 That throughput will be maintained despite possibly severe overload conditions.
 Maximise throughput by using all of the server capacity within a particular site.
Moreover, that they will be able to use all of the available capacity of both sites
simultaneously, even if the sites are in different countries.
 The distributed web server should be easily scalable to ease future growth, while
continuing to support user quality of service.
 The distributed system will automatically detect server failure and transparently have a
failed server's tasks taken over by another server.
 To have the capability to optimise the performance of the individual servers for use as,
for example, Common Gateway Interface (CGI) servers, database machines, or image
repositories, and then exploit these performance optimisations.
 They should be able to run a variety of operating systems on the servers.
 They will not be locked into a particular hardware or software supplier which would
limit their future options.

3 The Eddie Solution
Eddie is an Ericsson sponsored Open Source effort aimed at delivering a solution
satisfying all of these user and service provider requirements.

Eddie is:

 A 100% software solution written primarily in the functional programming language
 Available for Solaris, Linux and FreeBSD, with Windows NT on its way.
 Able to support a range of Web server software, including Apache.
 Able to support web sites distributed across multiple servers, in multiple sites, in
multiple countries.

Eddie consists of two main software packages:

 An Intelligent HTTP Gateway.
 An Enhanced DNS server.

Figure 3 shows how our example corporation might deploy Eddie. At each site, two new
servers are installed with the Eddie Intelligent HTTP Gateway package. We will refer to
these as Front End Servers in the following discussion. These servers are responsible for
controlling incoming traffic and distributing this traffic to designated web servers, which
we refer to as Back End Servers in the following sections. At each site, the existing DNS
server software is replaced by the Eddie Enhanced DNS server package.

3.1 Intelligent HTTP Gateway
The functionality within the Intelligent HTTP Gateway package provides
 Load Balancing,
 Scalability,
 Performance Optimisation,
 User Quality of Service, and
 Reliability. within a single web server site.

3.1.1 Load Balancing

Eddie provides throughput maximisation within each site by using sophisticated load
balancing functionality.

Detailed server load information is passed by each Back End Server to each Front End
Server at a site. This information allows the Front Ends to effectively balance incoming
requests over all of the Back Ends. The Front End Servers take the load information and
continually adjust the fraction of accepted new client requests sent to each Back End
Server (See Figure 4). This load balancing is performed to keep each Back End Server
working at approximately the same fraction of its overall capacity. By avoiding static
load balancing schemes, such as Round Robin, we can efficiently use the full resources of
all Back End Servers within the site. This ensures that during periods of high load no
capacity is wasted by having underutilised servers. In other words, the throughput of the
site is maximised as a result of our load balancing scheme.

The Eddie approach to load balancing has been designed to make the distributed web
server as easy to manage and as future proof as possible to protect the service provider
investment. This is why we have ensured that the servers do not need to know about

 Brand,
 Model, or
 Processor speed.

It is also why Eddie does not require servers to:

   Be configured the same way,
   Have the same capacity,
   Perform the same functions,
   Be reconfigured if a server is upgraded, or
   Use the same operating system.

The capacity of each Back End Server is automatically learned in real-time and adjusts as
the mix of users requests changes. Therefore, change in user traffic profiles patterns are
detected and admission control and balancing adjusted without manual intervention.
3.1.2 Scalability

Eddie provides scalability by allowing new servers to be simply added to an existing

A website that can't be scaled is a nightmare to maintain, whether it be for forever
replacing equipment, juggling configurations or wasting time managing the network
rather than building the business.
Whenever more capacity is required, a new Back End or Front End Server can simply be
added to a site (see Figure 5). There is no requirement that the new server be the same as
existing servers at the site in terms of speed or operating system. After modifying the
Eddie configuration files, the capacity of the new server is immediately available. This
capacity is available not only to that site, but to the entire distributed server, even if it is
distributed internationally, through the use of the Eddie Enhanced DNS Server package.
Eddie therefore provides a natural growth path for service providers while allowing them
to maintain user quality of service at each stage of expansion.

3.1.3 Performance Optimisation and Service Protection
Eddie provides the capability to exploit performance optimisations in Back End Servers
and protect an existing system from potentially degraded performance due to deployment
of new functionality.

Web servers support a range of different functions, including

 Acting as image repositories,
 Database applications, and
 Common Gateway Interface (CGI) machines.

Tuning the performance of specific servers to perform such functions can obviously help
to increase the overall capacity of a distributed web server. Being able to place different
functions or information on different sets of servers allows a web server administrator to
physically isolate groups of functions and blocks of information from each other. When
the new functions have been proven in, they can be moved to join other functions on
other servers. This helps to minimise the risk of new functions having a deleterious
impact on an existing system.

The Eddie Intelligent HTTP Gateway package allows just such specialisation of function
and information on Back End Servers. The Front End Servers parse all incoming user
requests. This is done for two reasons:

 To split multiple requests within an HTTP 1.1 persistent connection into single
requests, and
 To be able to schedule HTTP 1.0 and the individual HTTP 1.1 requests to Back End
Servers assigned to such requests.

As illustrated in Figure 6 the web server administrator can, for example, dedicate certain
Back End servers to be CGI processing engines, while other machines may be dedicated
to act as image repositories. The various machines may then be tuned to optimise their
performance for such tasks. The Front End Servers take care of ensuring HTTP 1.0 and
HTTP 1.1 features are properly carried out. The allocation of functionality and
information to particular Back Ends is specified by the administrator in the Eddie
configuration files.
3.1.4 Quality of Service

Eddie provides user Quality of Service by providing advanced admission control
functionality. We adopt a simple philosophy to user Quality of Service for Web servers:

If a user receives the first page they request, they should be able to receive every page
they request from the server with rapid response time, until they have finished. If the
server cannot guarantee rapid response time, the user should either be queued until
sufficient resources are available and told they will be admitted as soon as possible, or
rejected and told to return later.

Eddie contains built-in real-time load monitoring routines to track the usage of each Front
End and Back End Server. Load information that can be passed includes CPU load,
memory usage, disk delays, page faults and run queue statistics. The web server
administrator sets thresholds on the usage of critical resources, which are then used by an
Admission Control function to decide bwhether or not a particular server is overloaded.
The load information of the Back End Servers is used by the Front Ends to estimate the
rate at which new users can be sent to Back Ends and receive rapid response.

When a Front End Server receives a user request, it checks to see if the user has recently
been granted access to the site (see Figure 7). If so, the request is passed directly to the
Back End Server that served the previous request from this user. In this way, any required
state information may be reliably maintained for the user.

If the user has not been seen recently, the Front End Server decides whether sufficient
Back End Server resources are available. If sufficient resources exist, the request is
forwarded to a Back End Server and the Front End Server creates a table entry noting the
time of the request. All data passing between the user and the Back End Server passes via
this Front End Server which updates the timing information. This is used to create a soft
session for the user. If the user ceases to interact with the server for a bconfigurable
period, say 10 minutes, the session is closed. Subsequent requests from the user are
subjected to admission control.

If there are insufficient resources to immediately serve the customer, the request is
queued by the Front End Server and a web page is returned informing them that they will
be admitted shortly. This page is automatically updated, providing feedback to the user
on the state of their request. As a side benefit, this discourages them from continually
clicking on the same URL and wasting server resources. The site therefore has more
capacity available for processing successful, and on hopefully satisfied, users.
3.1.5 Reliability

Eddie provides reliability by automatic detection of server failure and a combination of
traffic rerouting and IP address migration (see Figure 8).

Whether we like it or not, computers occasionally fail and the applications running on
them may of die, lock up or otherwise malfunction. The Intelligent HTTP Gateway
package comes with built-in mechanisms for minimising the impact of failed servers.
The Front End Servers within a site monitor the operational status of every Back End
Server. If a Back End Server fails, the failure is detected and the Front End Servers
immediately re-direct user . requests to other Back End Servers running the same

Failure of a Front End Server is also automatically detected and the IP address migration
capability of the Intelligent HTTP gateway package ensures that another Front End
Server within the site immediately takes over the IP address of the failed unit. When the
failed unit is repaired and brought back into service, its original IP address is
automatically migrated back to it. Thus, Eddie provides seamless continuity of service in
the event of failures.
3.2 The Enhanced DNS Server
The functionality within the Enhanced DNS Server package provides:
 Load balancing across geographically distributed sites.

3.2.1 Load Balancing Across Geographically Distributed Sites
Eddie provides throughput maximisation across the entire distributed web server by using
sophisticated network load balancing functionality.

For server sites distributed over a city, a country, or even the world, Eddie's Enhanced
DNS enables maximum throughput to be achieved by making the entire processing
capacity of all servers available. The individual sites may have different numbers of
servers, different vintages of computer, even different operating systems.

The load information passed to each Front End Server within a site is processed and then
summary information of the Front End and Back End Servers in each site is passed to
each Eddie Enhanced DNS server, across the Internet if necessary (Figure 9). The load
information also includes information on the active / failure state of each Front End
server and so Eddie is able to route traffic away from failed servers. Each Enhanced DNS
then autonomously processes the received information.

There are also times when no information may be received by an Enhanced DNS from a
site for a period. For example, if the link from the Internet to the site fails, or if a failure
occurs within the Internet effectively isolating some sites from some Enhanced DNSs. In
such situations, each Enhanced DNS independently infers the availability of the site.
Traffic is immediately routed away from failed sites considered failed or inaccessible.
When information is again received from a site, the site is brought back into use by the
Enhanced DNS.

The Enhanced DNS package dynamically balances client domain name resolution
requests across all accessible sites in the distributed web server, and more specifically,
across each Front End within each site. The balancing is performed to keep each site
working at approximately the same fraction of its overall capacity. This ensures
maximum efficiency of Front End Server resources within each site.

To further ensure that requests are effectively distributed across all sites, a short Time To
Live is applied to all domain name resolutions returned. This means that a user accessing
the distributed server on different days uses only the most up to date information.
4 Summary
The Eddie team mission is to provide the tools which allow the construction of mission
critical internet sites providing a continual high level of service focused upon the
customer, attuned to the needs of the service provider.

We have demonstrated that Eddie delivers:
 The ability to create a truly distributed web server infrastructure. Eddie supports web
servers spread over multiple physical sites, spread over many continents.
 Enhanced web server throughput. Eddie provides sophisticated load balancing
capabilities allowing full access to the entire capacity of a distributed web server.
 Performance optimisation. Eddie allows web administrators to dedicate optimised
machines to particular tasks, thereby maximising the potential throughput of their
distributed web server.
 Long term scalability. Eddie provides a natural growth path for a distributed web
server, while continuing to give users quality of service.
 User quality of service. Eddie ensures that users accessing a web site receive rapid
response to each and every jump to a new link within the site for their entire interaction.
 Reliability. Eddie allows automatic detection of failed units within the distributed
server and automatic takeover of functionality by active units.
 Flexibility. Eddie supports Solaris, Linux, FreeBSD and Windows NT, and a range of
third party web server software, including Apache.

And, by the way, it's free.

More information
For more information on the Eddie Open Source effort and to download the Eddie code,
visit the Eddie Web site at www.eddieware.org.

[1] J. Armstrong, R. Virding, C. Wikstrom, Concurrent Programming in ERLANG,
Second Edition, Prentice Hall, 1996.

[2] M. Castro, M. Dwyer, and M. Rumsewicz, A load balancing and control algorithm for
a distributed World Wide Web server, to appear in Proceedings of 1999 IEEE
International Conference on Control Applications, Hawaii, August 1999.

[3] Australian provisional patent application, no. PP3082, Access Control Method and
Commercial use of Proxy Servers

In a commercial environment, a Proxy Server can provide many
advantages of the NAT alternative. The two systems act similar, and
although NAT support gives you far simpler setup, it doesnt always
provide the solution you need.

In this environment, as a member of the IT department, you would
want to log request activity of employee's, detect any worms inside
the network, and basically just provide some controlled flow to the

Considering a large number of employees all trying to make use of the
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meg. A NAT setup would not allow you to limit peoples speeds. A Proxy
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Managed Switches and Email monitoring Software. The possibilities are
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Historically, it was the grassroots support of the developer community that
propelled open-source J2EE into IT departments but rarely into a production
environment. This is changing. In the current economic environment IT
executives are taking a close look at free, open source J2EE application servers,
where the standard allows them to move applications from one Java application
server to another, with little modification. Librados adds enterprise class
functionality to the JOnAS application server. This helps reduce costs associated
with application integration and makes J2EE more accessible to a wider range of

                                                       1-18-6 Shinkiba, Koto-ku,
                                                       Tokyo 136-8608 - JAPAN
NEC                                          Contact: vobsenhydra@necsoft.com
Ltd.                                      Phone:             +81 3 5569 3300
                                                         Fax: +81 3 5569 3210
NEC Soft delivers commercially packaged products based on the Enhydra open
source project to the Japanese and Asian markets. Some of the key benefits that
you will find in VOBSEnhydra 5 Standard Edition(SE) that are not available
from the open source Enhydra project:

       Commercially packaged, tested, and certified under a wide range of
       Comprehensive documentation for developing Enhydra applications,
       including the Getting Started Guide, Developer's Guide and Wireless
       Application Developmer's Guide.
      VOBSEnhydra includes free online access to product and documentation
       updates, knowledgebase, optional availability of technical support, and
       training courses.
      VOBSEnhydra Extended Library is included
           o Library to make application development using VOBSEnhydra
               easier which contains, for example, the XMLC extended library
               that can be use to operate DOM even without a good
               understanding of DOM hierarchy and many other useful libraries.
           o Installation guide, examples, javadoc of the library are also
      XMLC Runtime Kit is included
           o Runtime component to make applications developed using
               XMLC run on BEA WebLogic Server.
           o Installer and installation guide are included.
      Comprehensive support for developing wireless applications
           o The Wireless Application Developer's Guide provides an
               introductory overview of wireless technology and devices and
               drills into the issues involved in designing and developing
               wireless applications with VOBSEnhydra.
           o The AirSent application is a field dispatch and delivery sample
               application that shows how a single application can support
               HTML, Flash, WML (WAP), cHTML (i-mode), XHTML, and
               J2ME clients.

Additional Enhydra support, training, and consulting services are also available
from NEC Soft. NEC Soft also delivers commercially packaged J2EE
application server products "VOBSEnhydra 5 Enterprise Edition".

Red Hat, Inc.

Leader of Byline                                                  Corporate HQ:
                                                              1801 Varsity Drive
Red Hat is the world's                                        Raleigh, NC 27606
leading provider of Linux                                     UNITED STATES
and open source                                                          Contact
solutions, offering a wide                                      www.redhat.com
range of enterprise
products and services.
Red Hat is the world's most trusted provider of Linux and open source
solutions. Providing extensive support for commercial applications and system
hardware from all major vendors, Red Hat Enterprise Linux is the first
operating system for open source computing.
Additionally, Red Hat provides a number of open source applications, including
Red Hat Application Server. Based on ObjectWeb technologies (JOnAS,
JOTM, JORAM and more), Red Hat Application Server provides a highly
functional, fully supported standards-based application server development and
deployment environment.

You can find Red Hat Application Server information here:

Scalagent Distributed Technologies
                                                     1 rue de Provence - BP 208
Leader of JORAM                                     F - 38432 Echirolles Cedex -
ScalAgent Distributed Technologies is a                   Contact: Roland Balter
start-up company spin-off from INRIA and
Bull, which aims at developing and          Phone:             +33 (0)4 76 29
marketing advanced mediation solutions                                 79 77
for large-scale Internet infrastructures in         Fax: +33 (0)4 76 33 87 73
the telecommunication and industrial                      www.scalagent.com
To support the development and deployment of operational solutions based on
JORAM, ScalAgent delivers high-level professional services.

      Professional support
       You are deploying JORAM in a critical business environment. Scalagent
       provides high quality support with guaranteed quality of service.
      Consulting, advanced studies and prototyping
       You intend to use JORAM in a large-scale application environment.
       Architecture choices, platform configuration and sizing, and integration
       with the outside world are key and complex issues to solve in order to
       design the JORAM platform that fits your requirements. Scalagent can
       help you on this task, based on deep knowledge of the product as well as
       on his high level expertise in distributed architectures.
      High level training
       You are designing an enterprise messaging system based on JORAM.
       Through his unique training session, ScalAgent delivers the necessary
       information to allow you to start using the JORAM system to build JMS
       applications on your own.
      Custom software development and integration
       We build on demand the JMS application that meets your business
       requirements. We deploy this solution on your networked infrastructure
       and we integrate it with your business environment. Based on your
       schedule of conditions, we deliver in aggressive time-scale the solution
       that exactly fits your demand and that better exploits the capabilities of
            the JORAM product.

    Together Teamlösungen

    Leader of Enhydra Director,
    Enhydra DODS, Enhydra
    Kelp, Enhydra JaWE, Enhydra
                                                     Corporate HQ: Elmargasse 2-4
    Octopus, Enhydra Oyster,
                                                         1191 Vienna - AUSTRIA
    Enhydra Server, Enhydra
                                                      Contact: Robert Zachajewicz
                                                       Phone: +43 (0)5 04 04 - 871
                                                      Fax: +43 (0)5 04 04 - 11 871
    Company Mission Statement:
    optimal solutions for labour-
    sharing processes with the
    targeted use of workflow,
    groupware, document
    management and database

    Together Teamlösungen GmbH has been active for many years primarily in
    the area of database, workflow and document management solutions. Today, the
    development of optimal solutions under Windows and/or Linux based on
    Together Groupware, Microsoft .NET, Kofax and Oce as well as the open
    source Java environments Together Object Server, Together Enhydra Server,
    Together Workflow Server and the open source J2EE Server JOnAS, is part of
    Together's absolute core competence.

    Services offered by Together Teamlösungen GmbH:

           Application Design and prototyping
           J2EE and client/server application development
           Business Process Optimization
           Support and Training up to 24 hours per day, 7 days per week
           System Operation

These companies are only listed here for convenience, but are in no way certified by
ObjectWeb and do not fund the consortium in exchange of advertising. ObjectWeb does
not endorse any responsibility nor liability for these vendors activities, nor in the
description of their activities including the use of trademarks in these descriptions.
Issues Of Electronic Commerce
Even if a supplier of goods and commerce services follow strictly the before-mentioned
16 “key” to implement a strategy of selling online, but can also rise to difficulties.
Among the major include:

1. Defects of understanding of customer behavior, ie how and why buy a certain product.
If the producers and sellers are unable to grasp the buying habits of consumers as well as
expectations and motivations, also a product titled or famous can not meet sales targets
set. Electronic commerce could avoid this potential problem with market research and
targeted more aggressive, similar to those undertaken by traditional sales channels.

2. Lack of analysis of the competitive scenario. You can have the technical capacity to
create a business selling books online, but may be missing the will to compete with

3. Inability to predict the reactions in the environment in which the company operates.
What will the competitors? Introduce our brands to compete with or even could achieve
similar websites to ours and compete with us. Broaden the services offered? They will try
to sabotage a competitor’s site? Price war will break out? How will the government? To
mitigate these potential impacts is recommended analyzing competition, industry sectors
and markets involved, just as you would in the case of a traditional activity.

4. Overestimation of business skills. The employees, the system hardware, software
adopted and information flows among these actors, they can master the strategy all
along? The on-line merchants are able to properly train its employees and to develop the
skills needed?. These issues may require a more detailed resource planning and training
of employees expanded.

5. Lack of coordination. If the controls and reporting are not enough, you can change the
organizational structure by adopting a more flexible, reliable and straightforward,
although it is said that this change makes it possible to achieve a better internal

6. Inability in securing the commitment of top management. Often, the main consequence
is reflected in the impossibility of reaching a certain target company because of scarce
resources allocated to it. It is advisable to involve from the outset in the new venture top
management of electronic commerce.
7. Inability in securing commitment from employees. If the developers do not translate
clearly their strategy to undergo, or fail to outline to them the whole picture in which they
were at work, a remedy may be to offer a course dedicated to training, as well as to
establish an incentive scheme for employees.

8. Underestimating the time required to achieve business objectives. The implementation
of an e-commerce may require a considerable expenditure of time and money, and
inability to understand the proper sequence and timing of business processes relating to
these transactions may lead to significant cost increases, compared to budget.

A basic project planning, analysis of such critical path, critical chain, or PERT can
alleviate the discomfort. The ability to generate profits may be sacrificed to achieve a
certain market share.

9. Poor monitoring of the targets set initially as well as reduced scrutiny of corporate
performance than is assumed in planning may give rise to difficulties in conducting
business. You can mitigate these problems with typical enterprise management tools:
benchmarks (indicators of the competitors taken as reference), internal performance
targets, analysis of the variation of quality indicators, establish penalties for the
attainment of negative performance or, conversely, rewards for achieving business goals,
and, finally, measures to realign the business.

The Problem Of Security
One of the deepest issues in the world of e-commerce is definitely safety in terms of
payment. To date, the most common ways are the bank, marking and pay with your credit
card, certainly more affected by this problem. Initially, the transfer of information and
personal data between vendor and client occurred in the clear.

This was a huge security problem, since data transfers are likely to be intercepted and
then used by third parties for operations outside of the commercial practice in place.
Today, this practice of data transfer has been abandoned in favor of safer practices that
ensure greater confidentiality of personal information and thus ensure the soundness of

In particular, the majority of e-commerce sites today use high levels of encryption, such

* Transport Layer Security (SSL / TLS). The combination of the normal HTTP protocol
that allows obtaining a new protocol: HTTPS. These ensure that your personal
information in the form of encrypted packets. In this way, the transmission of information
takes place in a secure manner, preventing intrusions, tampering and forgery of messages
from third parties. The HTTPS protocol ensures it all the transmission of confidential
data, because their integrity.
Commercial Vendors
The power, flexibility, and reliability of FreeBSD attract a wide variety of users and
vendors. Here you will find vendors offering commercial products and/or services for

For your convenience, we have divided our growing commercial listing into several
sections. If your company supports a FreeBSD-compatible product or service that should
be added to this page, please fill out a problem report for category www. Submissions
should be in HTML and a medium-sized paragraph in length.

Internet Service Providers
Active Domain
       Active-Domain.com has been providing domain name registration service since
       2001. We are utilizing FreeBSD exclusively on all our mail, web and DNS
       servers. The stability and security of FreeBSD has enabled us to provide
       consistently DNS service for over hundred thousand domain names. We fully
       recommend and support the development of FreeBSD.
Active Venture Pte Ltd
       Active-Venture.com strives to provide one of the most feature-packed and
       affordable web hosting services on the market. We offer an extensive range of
       FreeBSD-based virtual hosting plans to meet the needs of any webmaster for
       personal, professional, or ecommerce web hosting requirements.
All My Data
       We offer several shared, reseller and shell hosting plans on FreeBSD platform
       that will meet and exceed all of your web presence needs from small personal
       family web sites to full blown online e-commerce solutions.
       Aplus.Net is a facilities based provider located in San Diego, CA since 1995. We
       provide Web Hosting, Dedicated Servers, Domain Names, Web Design, and E-
       Commerce solutions. We offer to our customers the power and stability of the
       FreeBSD Operating System with our Web Hosting and Dedicated Servers.
       Aplus.Net, everything for your online business.
Association Kazar
       Association Kazar, located in Paris, France, is a non-profit organization that
       provides for everybody the ability to host servers in our co-location, but also to
       use our co-location services for web, email, ftp, and databases. We are online
       since 1996, and use FreeBSD for almost everything. We provide as well
       connectivity and many other services for people located in Paris. We host mailing
       lists for free if a member uses at least one of our services. We are fans of
       FreeBSD and use it on intel/amd64/sparc64 machines.
Astute Hosting Incorporated
       Astute Hosting provides advanced high-availability semi-managed dedicated
       hosting with all the flexibility of co-location but at a better price point than most
       unmanaged dedicated solutions. FreeBSD is our OS of choice, and what we run
       on our own servers and workstations. Our bandwidth consists of 4 Tier 1's, and
       hundreds of peers across North America, Europe, and Asia.
Bay Hosting
       UK based FreeBSD hosting in secure, resilient facilities. Customised firewalls,
       managed servers, website hosting, e-mail hosting with virus/spam-scanning.
       English company in Munich, Germany. Bilingual consultancy & hosting. Virtual
       & physical domain hosting on diverse servers, and customer's own local & ISP
       hosted servers.
Bewide Internet Service Provider
       Bewide is an Internet Service Provider focussing on all forms of hosting, domain
       registration and development of internet applications. We are a company
       demanding a high level of quality, using high quality hardware. FreeBSD is the
       operating system of our choice, powering our systems with a high quality
       operating system, perfectly suited for our company. For more information about
       Bewide, please visit our website http://www.bewide.com
Black Point Arts Internet Solutions GmbH
       We offer flexible solutions and serve our customers needs with compentent and
       fast support. Our services include website hosting, virtual Servers (VPS) and
       server homing (e.g. managed servers)/colocation for all kinds of companies. We
       are located in Germany.
Blue Gravity
       Providing FreeBSD based web/email/database hosting since 1997. Dedicated,
       Semi-Dedicated, co-located, and virtual hosting solutions to fit any needs. Unlike
       many hosts, we custom build servers in house with the highest quality hardware to
       reduce costs and pass those savings on to you.
BSD Virtual Machines
       Our company offers virtual private servers on the most stable in the world BSD
       platform. This includes operating systems from BSD family such as FreeBSD,
       OpenBSD and NetBSD.
       BSn.Com is Munich, Germany based company providing ISP remote hosting &
       net services on FreeBSD (i386 & Sparc architectures).
bytecamp GmbH
       We run a homogenic FreeBSD environment in our own datacenter located in East
       Germany near Berlin since 2000. Our developers contribute code to many open
       source projects. bytecamp is the home for desktopbsd.net and both biggest
       German BSD communities, bsdforen.de and bsdgroup.de. bytecamp offers
       professional hosting on a FreeBSD cluster, enterprise email solutions, domain
       name registration, dedicated and virtual servers. We offer several shared, reseller
       and shell hosting plans on FreeBSD platform that will meet and exceed all of your
       web presence needs from small personal family web sites to full blown online e-
       commerce solutions.
Claryss Networks
       Claryss Networks provides secure and dependable technologies backed with years
       of experience. Based in France, we provide shared and dedicated hosting,
       housing, consulting and outsourcing.
 Learn more about the Digital Currencies
  (e-gold, e-bullion, Pecunix, c-gold and
             Liberty Reserve)
Basically all digital currencies are in fact “online payment systems” allowing you to
transfer instantaneously some value to an individual or a company located anywhere in
the world. This transfer could be a simple gift or a payment for an object or a service that
you want to get.

Main advantages:
      They are borderless. A transfer can be sent to anyone in the world.
      Transfers are instantaneous, no waiting for checks to clear or credits to be made
      Transactions fees are lower than credit cards and banks.
      Payments are irrevocable. So no chargeback anymore. "Get paid, stay paid"
       unlike credit card payments.

Who can use them? Simply people who use money:
      e-commerce
      Business-to-business payments
      Point of service sales
      Person-to-person payments
      Payroll
      Bill payments
      Charitable donations

What is the main difference between digital currencies?
The main difference between digital currencies is the way they are accounted. Some are
simply accounted in a specific national currency and some others are accounted in weight
of metal like gold or silver.

For example “E-bullion e-currency” and “Liberty Reserve USD” are accounted in USD.
So if you have an “E-bullion e-currency” account with a balance amount of 500 then your
account value is 500$USD. However if you have an e-gold, e-bullion gold, c-gold or
Pecunix account which is accounted in weight of metal then its balance amount is a
number of units of metal not a number of a national currency. That is to say that if you
have an e-gold account with a balance amount of 500 it means that you have 500 troy oz
of gold. The equivalent current fiat (national currency) values are displayed for reference
only, and will fluctuate with the current market price

Although digital metal currencies are accounted by weight, their payment system allows
a value transfer to be expressed in terms of different national currencies. For example, it
is possible to:

        Transfer 5 troy oz worth of e-gold
        Transfer 4.3 grams worth of e-gold
        Transfer US $300.00 worth of e-gold
        Transfer CHF 985.88 worth of e-gold

This means that an American can pay an Australian or a Japanese can pay an Spanish the
correct weight of gold for a good or service as easily as if the price had been quoted in his
own national currency.

Advantages of Digital Gold Currencies over national
By definition Money is anything that functions as a medium of exchange that is socially
and legally accepted in payment for goods and services and in settlement of debts.

But, what makes a money better than another one? Simple, its capacity to keep its
purchasing power. Therefore Gold is still the best money in the world. It exists for nearly
three thousand years as a medium of exchange and on a long period of time it keeps its
purchasing power contrarily to any other national paper currencies that see their
purchasing power reduce by inflation.

So keeping your assets in Gold in the best way to protect it against inflation and thus
keep your purchasing power year after year.

However carrying gold in not practical as a form of payment, but thanks to internet and
digital gold currencies that brought us the possibility exchange tiny amount of gold for a
tiny fee.

Because gold has an internationally agreed value, Digital Gold Currencies system are
perfectly suited to the specific demands of e-commerce.


e-gold is a digital currency, issued by e-gold Ltd., a Nevis corporation, 100% backed at
all times by gold bullion in allocated storage. Other e-metals are also issued and 100%
back by the corresponding metal: e-silver, e-platinum, and e-palladium.
e-gold is integrated into an account based payment system that empowers people to use
gold as money.


e-Bullion.com is legally registered as a corporate entity in the Republic of Panama.
All reserve bullion backing the e-Bullion.com system is allocated and remains the
property of the e-Bullion® Company and e-Bullion® account holders.


Commerce Gold (c-gold.com) is a project of Private Gold Equities Exchange Limited, a
Seychelles company (est. 2005, cert. 024795) that specializes in the development and
operation of online market places and e-commerce platforms.

Liberty Reserve

Liberty Reserve is incorporated in Costa Rica. It is a 100% irrevocable payment system
allowing you to send or receive money to or from anyone in the world.
An offshore Trust protects Liberty Reserve and is always backed 100% by U.S. dollars
for LR-USD accounts, and by gold for LR-gold accounts, etc.


Pecunix is a gold based digital currency and payment solution that allows people to
securely make and receive payments instantly via the Internet.


V-Money is a 100% irrevocable payment system allowing you to send or receive money
to or from anyone in the world. The V-Money units are always backed 100% by U.S.
dollars or gold.

Why use Digital Currencies? - Why use Digital Currencies? - Digital Currencies
are able to provide privacy to their customers, and still be able to guarantee that
they are not being used for money laundering. Digital Currencies are "orthogonal" to
the traditional financial world. As long as all the money coming in and out goes
through banks with anti-money laundering practices in place, then money
laundering is impossible. Furthermore, all of the Digital Currencies in business at
this time are firmly committed to discouraging crime and money laundering, while at
the same time protecting the privacy of their account holders. This means you can
use Digital Currencies to do business with confidence that you are in good company!
The International Gold Community -The International Gold Community -
Converted into bits in this way, gold once again becomes a viable -- some would say
vastly superior -- kind of money. Conceptually, it works like this: You transfer some
dollars or euros or whatever to a firm that buys gold for you and deposits it in a
super-safe vault. You then make payments from this account via credit card or PC,
and the gold -- without ever leaving the vault -- is credited to the recipient's
The Big Picture: The Importance of Digital Currencies in the 21st Century -
The Big Picture: The Importance of Digital Currencies in the 21st Century -
International trade requires money to lubricate the gears of market transactions. The
Internet now makes it possible for private companies or individuals to offer asset-
backed digital currencies from small friendly countries that desire to attract capital.
These digital currencies transcend political borders and will facilitate a new era of
international mercantilism while simultaneously freeing businessmen from the
tyranny of national fiat currencies and the draconian controls that go along with

The Fastest and Cheapest Way to Send Money Back Home - The Fastest and
Cheapest Way to Send Money Back Home - The cost of an international bank wire
runs between $20 and $70 and may take up to two weeks to clear. A Standard
Transactions Instant World Account costs $4 a month, plus $5 for each ATM
withdrawal. Funds can be transferred to another Standard Transactions Account
instantaneously. The recipient can then log onto the Standard Transactions web site
and move the funds to his or her ATM card. The funds are available for withdrawal on
the card the following day. This means that you can move money across the globe in
24 hours and convert it into local cash, for a maximum cost of $5. Compare that to
Western Union!
International ATM Cards for Minors - International ATM Cards for Minors - Send
money anywhere in the world via the internet and soon via check in a local country ·
Obtain money from over 400,000 ATMs anywhere in the world where the Plus or
Interlink network is used · Sell goods and services to anyone, anywhere (you do not
have to be a qualified merchant) · Spend funds online at any merchant who accepts
Standard Transactions currency. · Transfers to another Standard Transactions
account for withdrawal by another party using another Standard Transactions
account and card. The funds transferred to the other party are available

E-Money (That's What I Want)

The killer application for electronic networks isn't video-on-demand. It's going to
hit you where it really matters - in your wallet. It's, not only going to revolutionize
the Net, it will change the global economy.

By Steven Levy

Clouds gather over Amsterdam as I ride into the city center after a day at the
headquarters of DigiCash, a company whose mission is to change the world through
the introduction of anonymous digital money technology. I have been inundated with
talk of smart cards and automated toll takers and tamper-proof observer chips and
virtual coinage for anonymous network ftps. I have made photocopies using a digital
wallet and would have bought a soda from a DigiCash vending machine, but it was
out of order.
My fellow passenger and tour guide is David Chaum, the bearded and ponytailed
founder of DigiCash, and the inventor of cryptographic protocols that could catapult
our currency system into the 21st century. They may, in the process, shatter the
Orwellian predictions of a Big Brother dystopia, replacing them with a world in which
the ease of electronic transactions is combined with the elegant anonymity of paying
in cash.

He points out the plaza where the Nazis rounded up the Jews for deportation to
concentration camps.

This is not idle conversation, but a topic rooted in the Chaum Weltanschauung - state
repression extended to the maximum. David Chaum has devoted his life, or at least
his life's work, to creating cryptographic technology that liberates individuals from
the spooky shadows of those who gather digital profiles. In the process, he has
become the central figure in the evolution of electronic money, advocating a form of
it that fits neatly into a privacy paradigm, whereby the details of people's lives are
shielded from the prying eyes of the state, the corporation, and various unsavory

Fifteen years ago, David Chaum seemed a Don Quixote in Birkenstocks, a stray
computer scientist talking of a technology that appeared more rooted in science
fiction than high finance. Today, still bearded, but wearing a well-tailored suit, he
stands in the thick of a movement that seems unstoppable - the digitization of
money. His passion now is to explain that the change need not be oppressive. He
travels among bankers and financiers, he runs a company, he proselytizes. And he
hopes somebody listens, because the wild card in the era of digital money is
anonymity, and David Chaum thinks we're in trouble without it.

Dollar Bills or Bill Dollars

The next great leap of the digital age is, quite literally, going to hit you in the wallet.
Those dollar bills you fold up and stash away are headed, with inexorable certainty,
toward cryptographically sealed digital streams, stored on a microchip-loaded "smart
card" (a plastic card with a microchip), a palm-sized "electronic wallet" (a calculator-
sized reader and loader for those cards), or the hard disk of your computer, wired for
buying sprees at the virtual mall.

Of course, real money - the trillions of dollars handled each day by banks, other
financial institutions, and government clearinghouses - is already digital. No physical
tokens are exchanged: all transactions are conducted using streams of bits. But
digitizing the final mile of electronic money, where the coin and dollar bill go the way
of the vinyl LP, will make all the difference in the world. It will not only change the
physical way you spend your money, it will alter the way you view your own
economic being. And depending on the manner in which it is implemented, digital
money might allow others to view your financial status with a decidedly discomfiting

Is e-money really going to happen? Inevitably. Hard currency has been a useful item
for a few millennia or so, but now it has simply worn out its welcome. A recent paper
by several cryptographers at the Department of Energy's Sandia National Labs in
Albuquerque, New Mexico, begins by enumerating what all e-money advocates
identify as the fatal flaws of cold hard cash: "The advent of high-quality color copiers
threatens the security of paper money. The demands of guarding it make paper
money expensive. The hassles of handling it (such as vending machines) make paper
money undesirable. The use of credit cards and ATM cards is becoming increasingly
popular, but those systems lack adequate privacy or security against fraud, resulting
in a demand for efficient electronic-money systems to prevent fraud and also to
protect user privacy."

From Wikipedia, the free encyclopedia

Jump to: navigation, search

DigiCash Inc. was a pioneering electronic currency corporation founded by David
Chaum in 1990. DigiCash transactions were unique in that they were anonymous due to a
number cryptographic protocols developed by its founder. DigiCash declared bankruptcy
in 1998, and subsequently sold its assets to eCash Technologies, another digital currency
company, which was acquired by InfoSpace on Feb. 19, 2002.

Electronic money (also known as e-money, electronic cash, electronic currency,
digital money, digital cash or digital currency) refers to money or scrip which is
exchanged only electronically. Typically, this involves use of computer networks, the
internet and digital stored value systems. Electronic Funds Transfer (EFT) and direct
deposit are examples of electronic money. Also, it is a collective term for financial
cryptography and technologies enabling it.

While electronic money has been an interesting problem for cryptography (see for
example the work of David Chaum and Markus Jakobsson), to date, use of digital cash
has been relatively low-scale. One rare success has been Hong Kong's Octopus card
system, which started as a transit payment system and has grown into a widely used
electronic cash system. Singapore also has an electronic money implementation for its
public transportation system (commuter trains, bus, etc), which is very similar to Hong
Kong's Octopus card and based on the same type of card (FeliCa). There is also one
implementation in the Netherlands, known as Chipknip.


        1 Alternative systems
             o 1.1 Off-line 'anonymous' electronic money
        2 Future evolution
        3 Issues
        4 See also
        5 References
      6 External links

[edit] Alternative systems
Technically electronic or digital money is a representation, or a system of debits and
credits, used to exchange value, within another system, or itself as a stand alone system,
online or offline. Also sometimes the term electronic money is used to refer to the
provider itself. A private currency may use gold to provide extra security, such as digital
gold currency. Also, some private organizations, such as the US military use private
currencies such as Eagle Cash.

Many systems will sell their electronic currency directly to the end user, such as Paypal,
WebMoney and Wirex, but other systems, such as Liberty Reserve, sell only through
third party digital currency exchangers.

In the case of Octopus Card in Hong Kong, deposits work similarly to banks'. After
Octopus Card Limited receives money for deposit from users, the money is deposited into
banks, which is similar to debit-card-issuing banks redepositing money at central banks.

Some community currencies, like some LETS systems, work with electronic transactions.
Cyclos Software allows creation of electronic community currencies.

Ripple monetary system is a project to develop a distributed system of electronic money
independent of local currency.

[edit] Off-line 'anonymous' electronic money

In the use of off-line electronic money, the merchant does not need to interact with the
bank before accepting a coin from the user. Instead he can collect multiple coins Spent by
users and Deposit them later with the bank. In principle this could be done off-line, i.e.
the merchant could go to the bank with his storage media to exchange e-cash for cash.
Nevertheless the merchant is guaranteed that the user's e-coin will either be accepted by
the bank, or the bank will be able to identify and punish the cheating user. In this way a
user is prevented from spending the same coin twice (double-spending). Off-line e-cash
schemes also need to protect against cheating merchants, i.e. merchants that want to
deposit a coin twice (and then blame the user).

Using cryptography, anonymous ecash was introduced by David Chaum. He used blind
signatures to achieve unlinkability between withdrawal and spend transactions.[1] In
cryptography, e-cash usually refers to anonymous e-cash. Depending on the properties of
the payment transactions, one distinguishes between on-line and off-line e-cash. The first
off-line e-cash system was proposed by Chaum and Naor.[2] Like the first on-line scheme,
it is based on RSA blind signatures.
[edit] Future evolution
The main focuses of digital cash development are 1) being able to use it through a wider
range of hardware such as secured credit cards; and 2) linked bank accounts that would
generally be used over an internet means, for exchange with a secure micropayment
system such as in large corporations (PayPal).

Theoretical developments in the area of decentralized money are underway that may rival
traditional, centralized money. Systems of accounting such as Altruistic Economics are
emerging that are entirely electronic, and can be more efficient and more realistic because
they do not assume a zero-sum transaction model.

[edit] Issues
Although digital cash can provide many benefits such as convenience and privacy,
increased efficiency of transactions, lower transaction fees, new business opportunities
with the expansion of economic activities on the Internet, there are many potential issues
with the use of digital cash. The transfer of digital currencies raises local issues such as
how to levy taxes or the possible ease of money laundering. There are also potential
macroeconomic effects such as exchange rate instabilities and shortage of money
supplies (total amount of digital cash versus total amount of real cash available, basically
the possibility that digital cash could exceed the real cash available). These issues may
only be addressable by some type of cyberspace regulations or laws that regulate the
transactions and watch for signs of trouble.

(1) See digital money.

(2) An earlier Web payment service originally developed in the 1990s by Amsterdam-
based DigiCash, Inc., which used a blind signature encryption method and required an
active account from an eCash member bank. Digital coins were stored in the eCash Purse
digital wallet on the customer's computer, and coins were deducted from the wallet when
a purchase was made at eCash-compliant sites. The system was regulated by adding a
serial number to each coin. When the merchant received the coins from the customer, the
coins were sent to the customer's bank for verification. If a coin matched the serial
number of a coin that had already been spent, fraudulent activity was detected.

Despite this innovative system, not enough banks participated for its success, and in
1999, eCash Technologies, Inc. acquired DigiCash. In turn, eCash was bought in 2002 by
InfoSpace, Inc., Bellevue, WA and absorbed into its payment solutions unit. See Web
payment service.
digital money
Electronic money used on the Internet. In order to turn the Internet into a giant cybermall
(online shopping center), companies have developed software that provides complete and
secure order fulfillment over the Internet. These software packages support various
payment schemes that fall into two categories.

Credit Card Processing
The first category is the traditional credit card. Most Web browsers and Internet Service
Providers (ISPs) support one of the major security protocols such as Secure Socket Layer
(SSL). For example, on Netscape's browser, if the transmission between browser and
server is secure, the key icon at the lower left side of the screen is connected. Otherwise,
it is split in half to signal an unsecure transmission. More elaborate methods, such as
CyberCash's credit card system, prevent the merchant from seeing the credit card

Digital Coins
The second type of digital money is like travelers checks. Called "e-money" and "e-cash,"
it is downloaded as "digital coins" from a participating bank into the user's computer, or
an account is set up within the bank. Either the digital coins or the transactions that debit
the account are transmitted to the merchant for payment. All transactions are encrypted.

Many had believed that digital money would fuel a new online information industry that
would allow customers to pay in smaller increments, such as five cents a lookup or 10
cents per download; even a fraction of a cent for more trivial transactions. However, the
digital coin concept has yet to take off.

The Credit Card Is the Winner
In the meantime, although trillions of dollars are routinely transferred around the world
via the private banking network, money traversing the public Internet would seem like
easy pickings for the hacker. However, thus far, traditional credit card transactions have
won out as users have become more comfortable making purchases on the Internet. See
Web payment service, First Virtual, Open Market, cybermall and smart card.

Web payment service
A facility that manages the transfer of funds from a customer to the merchant of an e-
commerce Web site. The money may come from a digital wallet inside the user's
machine, from a credit card stored on a server of the digital wallet service or from a
prepaid account stored in the payment service's server. See PayPal, digital money,
Brodia, CyberCash, eCash, eCharge, InternetCash, iPIN, Qpass, Windows Live ID, WISP
and 1ClickCharge.

A Web payment processing service from PayPal, San Jose, CA (www.paypal.com).
Founded in 1998 and acquired by eBay in late 2002, PayPal operates as an independent
brand. Customers with PayPal accounts can pay for merchandise by bank account or
credit card on any PayPal merchant site, and their financial data are not revealed to the
merchant. Anyone else may use credit cards on PayPal sites; however, their financial data
are sent to the merchant.

An E-Commerce Solution for Small Sites
PayPal's Web Payments Standard service hosts the processing on PayPal servers.
Merchants add buttons on their order forms that link the customer to PayPal, which
performs the credit card processing and returns the customer to the merchant's site with
an approval or denial. Although the logo of the merchant is on the page, customers are
well aware they have been transferred to an external PayPal service.

Gateways to Credit Card Merchant Services
For large, online retail sites that wish to display credit card forms with their own site's
custom look, PayPal's Web Payments Pro offers gateways to PayPal credit card services
or to a merchant's existing credit card service provider.

Send Money Free
Individuals with PayPal accounts can send money to anyone with a bank account and e-
mail address. If recipients do not have a PayPal account, they are asked to open one when
they receive notification that funds have been sent and are pending.

A Huge Success
In 2002, the company went international, allowing its customers to accept payments in
euros and pounds. It operates throughout the world with more than 140 million PayPal
account holders.

A web payment processing service from CyberCash, Inc., Oakland, CA that allowed
merchants to process credit cards and initiate direct transfers from customer checking
accounts. Merchant transactions were sent to CyberCash servers which accessed the
credit card networks and Automated Clearing House (ACH). In addition to its back-end
payment processing, CyberCash also provided the InstaBuy digital wallet service that
fills in the forms at any online shopping site.
One of the earliest (1995) payments systems on the Internet, CyberCash itself ran into
financial trouble and declared bankruptcy in early 2001. Its North American payment
services operations were quickly acquired by VeriSign, Inc., while its software assets
were acquired by First Data Merchant Services Corporation. VeriSign planned to
integrate CyberCash's financial processing components and customer base into its own
core payment services unit. See Web payment service.

A Web payment service from eCharge Corporation, Seattle, WA (www.echarge.com).
Initially specializing in digital content and monthly ISP charges, eCharge bills customers
via a 900 number on their telephone bills. It later added a revolving line of credit just like
a credit card and a prepaid account to support micropayments. Funds can be transferred
from the customer's bank via the Automated Clearing House (ACH) system. eCharge
uses digital certificates on the user's PC, at the merchant site and at eCharge, and all three
are verified before a transaction is completed. See Web payment service.

A now defunct Web payment service from Spendcash.com, New York that provided a
payment method for people without credit cards. Prepaid InternetCash cards were
purchased in retail establishments and activated at a participating Web site. See Web
payment service.

First Virtual
A pioneer in digital money, founded in 1994 by First Virtual Holdings, Inc., San Diego,
CA. As the first online payment company, customers had to establish an account with
First Virtual using a credit card. To make an online purchase, the customers sent their
First Virtual ID number to the participating vendor, who in turn e-mailed First Virtual
and the customer for confirmation. The money was then transferred to the vendor via the
Automated Clearing House (ACH).

In 1998, First Virtual exited the online payments business to concentrate on e-mail
services and Internet messaging. The company's e-commerce merchants and relationships
were inherited by CyberCash, its former rival, which lasted until bankruptcy trouble in
2001 and was acquired by VeriSign, Inc. The messaging solutions part of First Virtual
was renamed MessageMedia, Inc., which DoubleClick acquired in 2002.
smart card, small device that resembles a credit card but contains an embedded
microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and
control circuitry required to interpret and execute instructions from a computer program .
..... Click the link for more information. to store and process information. Magnetic-
stripe cards, which store a very small amount of information (most typically used to
identify the owner) and have no processing capability of their own, can be thought of as
primitive smart cards. A true smart card contains 80 or more times as much memory, and
the microprocessor allows information to be read and updated every time the card is used.
Contact cards, which must be swiped through card readers, are less prone to
misalignment and being misread but tend to wear out from the contact; contactless cards,
which are read by holding the card in front of a low-powered laser, can be used in mobile
applications, such as collecting tolls from cards as drivers pass through toll booths
without stopping.

Developed in 1973 by the Frenchman Roland Marino, the smart card was not introduced
commercially until 1981, when the French state telephone system adopted it as an
integral part of its phonecard network. This led to widespread use in France and then
Germany, where patients have health records stored on the cards. A large-scale pilot
program involving 40,000 people and 1,000 retail merchants and using smart cards as
stored value, or electronic purse, cards—in which the card contains a stored monetary
value that is decremented with each purchase and incremented by loading additional
value onto the card through automated teller machines automated teller machine (ATM),
device used by bank customers to process account transactions. Typically, a user inserts
into the ATM a special plastic card that is encoded with information on a magnetic strip.
..... Click the link for more information. (ATMs) or public telephones—was initiated in
Swindon, England, in 1995. Smaller pilots were held in Canberra, Australia; in the
Atlanta, Ga., metropolitan area in conjunction with the 1996 Summer Olympic Games; in
New York City; and in Guelph, Ontario. All of these achieved only limited customer
acceptance and were shut down by 1998. Another major problem is that these and other
smart card ventures do not have a common technology; global acceptability will come
only after international standards are adopted.

As memory capacity, computing power, and data encryption capabilities of the
microprocessor increase, smart cards are envisioned as replacing such commonplace
items as cash, airline and theater tickets, credit and debit cards, toll tokens, medical
records, and keys. Suggested government use of a single smart card to replace driver's
licenses, passports, social security and welfare documentation, and the like has caused a
debate concerning the civil liberty implications of such uses of the smart card.

automated teller machine (ATM), device used by bank customers to process account
transactions. Typically, a user inserts into the ATM a special plastic card that is encoded
with information on a magnetic strip. The strip contains an identification code that is
transmitted to the bank's central computer by modem fax modem enables a computer to
send and receive transmissions to and from a fax machine (see facsimile ) or another fax

Modems were first used with teletype machines to send telegrams and cablegrams.
..... Click the link for more information. . To prevent unauthorized transactions, a
personal identification number (PIN) must also be entered by the user using a keypad.
The computer then permits the ATM to complete the transaction; most machines can
dispense cash, accept deposits, transfer funds, and provide information on account
balances. Banks have formed cooperative, nationwide networks so that a customer of one
bank can use an ATM of another for cash access; by 1997 there were more than 160,000
ATMs across the United States. Some ATMs will also accept credit cards credit card,
device used to obtain consumer credit at the time of purchasing an article or service.
Credit cards may be issued by a business, such as a department store or an oil company,
to make it easier for consumers to buy their products.
..... Click the link for more information. for cash advances. The first ATM was installed
in 1969 by Chemical Bank at its branch in Rockville Centre, N.Y. A customer using a
coded card was dispensed a package containing a set sum of money.

A shopping mall on the Internet. Cybermalls are online shopping centers that link a home
page to hundreds or thousands of online storefronts. The cybermall generally handles the
financial transactions for all the merchants so that a customer does not have to enter
duplicate name and address information at each store. Items can literally be placed into
an online shopping cart and paid for at once by credit card, ecash or other digital money
method. See digital money.

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