Some observers regard the Internet as the driving force of the recent economic upswing. So far, each innovation has first been used to substitute for old technologies. Only over time people have started to find new applications for a specific innovation. Only gradually they did take full advantage of the new technology. The same might be true for electronic commerce. The first examples of e-commerce might have been very close to the brick and mortar shops they were intended to replace. Only gradually, e-commerce will take full advantage of the Internet's possibilities. The aim of this paper is to describe the characteristics of this new economy and to pinpoint economic challenges.