<\/span><\/h2>\n\n\n\nThe simple answer is that the company was ahead of its time. But as is often in life, the answer isn\u2019t as simple as that.<\/p>\n\n\n\n
Let\u2019s take a look at the different factors.<\/p>\n\n\n\n
Raising funds<\/h3>\n\n\n\n
DigiCash required both innovative financial software and a robust platform for conducting financial transactions. That takes a lot of money.<\/p>\n\n\n\n
Chaum initially got the company off the ground with private investment. It\u2019s believed that he raised early funds from family and friends to the tune of a few million dollars.<\/p>\n\n\n\n
But the company could only survive with a much larger injection of investment. Chaum brought in an experienced CFO (chief financial officer), but he retained tight control on negotiations.<\/p>\n\n\n\n
It seems that the cryptographer wasn\u2019t as adept at this part of management.<\/p>\n\n\n\n
One investment company was prepared to pump $10 million into DigiCash. But Chaum was simultaneously negotiating with other investment firms. The initial company wasn\u2019t happy with proceedings and pulled the plug.<\/p>\n\n\n\n
Lengthy negotiations<\/h3>\n\n\n\n
ING, one of the big Dutch banks, was also interested. But the negotiations went on too long for their linking.<\/p>\n\n\n\n
Bill Gates wanted to bundle eCash into Windows 95. That could have been a game-changer in terms of take-up, and Microsoft was offering a large chunk of change.<\/p>\n\n\n\n
But apparently, Chaum wasn\u2019t happy with the details. Microsoft eventually moved on.<\/p>\n\n\n\n
Slow take-up of banks<\/h3>\n\n\n\n
Perhaps the biggest downfall was that DigiCash relied on banks to use their platform.<\/p>\n\n\n\n
They certainly got a lot of initial interest. Citibank, Credit Suisse, and Deutsche Bank got involved in running tests.<\/p>\n\n\n\n
Unfortunately, these projects didn\u2019t result in the banks launching Cyberbucks to their customers.<\/p>\n\n\n\n
First use of DigiCash<\/h3>\n\n\n\n
By the end of the company, only one bank had rolled out the payment system. That honor fell to the Mark Twain bank in St Louis, Missouri.<\/p>\n\n\n\n
But even though there was only one independent rollout, this marks the point in history where real customers used cryptocurrency to pay for online goods and services.<\/p>\n\n\n\n
Internal issues<\/h3>\n\n\n\n
It\u2019s said that there were significant communication issues within the senior management levels.<\/p>\n\n\n\n
Staff started leaving the company, and some established payment firms of their own.<\/p>\n\n\n\n
The problems came to a head in 1996\/97 when Chaum was challenged by a group of senior management. This led to him withdrawing from day-to-day operations and returning to the United States.<\/p>\n\n\n\n
However, ousting Chaum like this didn\u2019t lead to a turnaround in fortunes.<\/p>\n\n\n\n
Big spending<\/h3>\n\n\n\n
The company secured a big investment in 1997 from a subsidiary of Rabobank. The new investors promptly appointed a new CEO who came from Visa.<\/p>\n\n\n\n
David Chaum was still on the board. So was an enthusiastic Nicholas Negroponte, the noted tech visionary from MIT.<\/p>\n\n\n\n
It seems that the new CEO changed the company direction towards a more traditional financial enterprise \u2013 and less of a start-up.<\/p>\n\n\n\n
He opened an office in Palo Alto and hired a second team of Silicon Valley engineers. Of course, this meant that costs sky-rocketed. The company was running out of road. They needed a major bank to adopt the platform.<\/p>\n\n\n\n
Withdrawal of Citibank<\/h3>\n\n\n\n
DigiCash had been involved in lengthy negotiations with Citibank. If they had come on board, this story may have been different.<\/p>\n\n\n\n
Unfortunately for the payment platform, Citibank merged with the Traveler Group in 1998. This put any deal on the backburner.<\/p>\n\n\n\n
The investors needed to make some cost savings. To the chagrin of the original developers, the investors shut down the development team in the Netherlands. Meanwhile, efforts limped on for a few months in Palo Alto.<\/p>\n\n\n\n
Bankruptcy<\/h3>\n\n\n\n
DigiCash filed for bankruptcy in 1998.<\/p>\n\n\n\n
This was the demise of a genuinely innovative company. However, the experiences would have a big influence on the development of other cryptocurrencies.<\/p>\n\n\n\n