Flooz.com

Flooz.com's 2001 collapse demonstrated that digital currency concepts predated cryptocurrency by a decade—and failed for reasons blockchain enthusiasts should study. The company created 'Flooz,' a digital currency that could be sent as gifts and redeemed at partner retailers. Whoopi Goldberg advertised it; $35 million in funding backed it. But Flooz had no advantage over gift cards, which didn't require creating accounts or learning new systems. The mechanism failure was solution without problem. Flooz solved a friction that didn't meaningfully exist—sending money online was already possible, and gift cards were already familiar. Flooz added complexity (new currency, new accounts, limited redemption) without adding value. This is costly signaling without honest signal—the company's marketing budget couldn't obscure that the product had no reason to exist. Flooz also became a vehicle for fraud. Russian organized crime used stolen credit cards to purchase Flooz, then redeemed it for merchandise—laundering money through the platform. The fraud accelerated Flooz's death by consuming resources in chargebacks and investigations while damaging partnerships. The company that raised $35 million sold for pennies, another dot-com casualty of solutions searching for problems.