If the Internet is a Community, Then Its Bank Must Be PayPal.com
In the beginning there was the Personal Computer. The PC was a nifty tool for students and business men. Because it was fun and relatively simple to use, it became incredibly popular. The PC is a device for storing and displaying information. When the Internet age arrived, it became simple to share information between PCs, and the people operating them. Sharing information is a basic definition of communication, and communication is a basic requirement for a community.
One of the first things that happens when people come together in a community is that they begin to trade.
We can imagine back through the depths of time a goat herder bringing his best goat into the village, and offering it for sale. Soon a crowd draws: "I'll give you ten shiny rocks for your goat." "I need a goat, and I have 15 shiny rocks!" Take my seventeen shiny rocks and a pair of leather sandals!" This may have been the first auction.
Jumping ahead through the eons we see the dawn of the Internet auction service, eBay. eBay's humble beginnings as a way to trade Pez dispensers is a story for another time, but the astonishing fact is that eBay grew into a giant of trade on the Internet. More than a few non-computer users became attracted to the Internet thanks to reports of the bargains on eBay. But the problem developed; with so many people buying and selling things, sometimes across international borders, how do they exchange money?
Old style paper methods such as checks and money orders were slow and expensive in and of them selves. Most electronic means, notably sending credit card information through an unencrypted Internet connection, was dangerously open to abuse.
In March, 2000, to web entities came together to form a solution: Confinity, which was designed to make payments using Palm Pilots, and X.com, which specialized in financial services and payments through email. Because of the new company's association with Stanford University, some of the best soft-ware and computer developers were attracted to the project, which renamed itself PayPal.
Ebay had purchased its own payment service which it named "eBay Payments" in 1999, but it couldn't compete with the convenience and security offered by PayPal. By Feb, 2000, there were an average of 200,000 auctions on eBay daily using PayPal, compared to only 4,000 using eBay's own service. In Oct, 2002, eBay acquired PayPal.com for $1.5billion.
Today PayPal operates in 190 markets with 24 different currencies. There are over 232 million PayPal accounts, more than 100 million of which are active.