Chapter Two deals with the technology that underlies electronic commerce. Specifically, we discuss the methods that computers use to communicate with each other. We compare and contrast:
- the Internet (which is global in nature and has the potential to communicate with multiple stakeholder groups);
- the intranet (which focuses on internal communications within the organization–such as communication with employees);
- the extranet (which concentrates on exchanges with a specific business partner).
At present, the majority of electronic commerce concerns business-to-business relationships and is strongly linked to this last category (the extranet, where organizations can conduct exchanges with other channel members). Chapter Two also introduces the security issues associated with electronic commerce. Security is important both for organizations and for consumers.
As the Internet is used to facilitate exchanges, it has the potential to create new forms of money (e.g., electronic money). When the Spanish conquistadors discovered the gold mines of the New World and transported that gold (and silver) back to their home country, the amount of currency in Europe expanded dramatically. The result was an economic boom across all of Western Europe. Similar periods of economic prosperity followed the expansion of the money supply that resulted from the popularization of checks and, later, credit cards. As new forms of money are created in cyberspace, a similar phenomenon may transpire. That is, the expanding money supply (through the acceptance of digital money) is another reason that electronic commerce has the potential to transform the modern economy in a way that benefits both consumers and business owners.
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