Electronic currency
Jul
02
Over the years, money as we know it has been undergoing transformation. The shape and form of money has changed from precious metals to metal coins and paper money with no intrinsic value and today it presents us with a formless form in the name of digital or e-currency. E-currency refers to money or scrip which is exchanged only electronically. The digitization of money appears to be inevitable in the light of the recent developments with regards to the Internet and the various e-commerce opportunities presented by the World Wide Web.
There are several benefits of using e-currency:
Using Online
1. The e-currency can be used on the internet related commercial applications such as shopping on the internet and doing personal investment via internet.


2. The using of the e- currency services for example e-gold and PayPal brings people a new way not to use their credit card as the only payment method on the internet since sometime there exists a big risk to provide your credit card information to the merchant you do not know them very well and most of them are far away in the other side of the earth.

3. The e-currency service companies such as e-gold and PayPal can provide both the buyers and merchant the convenient way to send and receive the payment just by clicking the confirm button and the deal is done. None of the payment methods in the world right now can provide this kind of efficiency capability.


Using Offline
1. The user is anonymous unless he commits a double expenditure.
2. The bank can effectively detect a double spender.
3. The bank doesn't need to synchronize its servers very often. This is mostly done via batch updates.
There are several disadvantages of using e-currency:
Using Online
1. Security and anonymity cost become a bottleneck of the system. This can happen at times during real-time verifications.
2. The bank will have to maintain a detailed and confidential database.
3. The bank needs to synchronize its server every time transaction is made. It would be insanely impractical to maintain.
Using Offline
1. Double spending may not be prevented effectively and immediately.
2. The implementation expenditure is high. The required additional hardware is quite costly to install.
Types of e-currency
There are two major types of e-currency in the world. The major different is their backed base.
Both of them are all called e-currency. Digital Gold Currencies (DGCs) are a form of Internet money denominated in gold weight. The typical unit of account for such currencies is the gold gram or the troy ounce, although other units such as the gold dinar are sometimes used. Due to its rarity and durability, gold has long been used as a means of payment. The exact nature of the evolution of money varies significantly across time and place, though it is believed by historians that gold's high value for its utility, density, resistance to corrosion, uniformity and easy divisibility made it useful both as a store of value and as a unit of account for stored value of other kinds.
In several countries there is electronic currency equal to real paper money. This kind of currency is very easy in use and it does not need any bills, checks or other bank documents. The main advantage of such money, comparing with its real equivalent, is very low costs of transactions, especially inner (from one account to another). These low costs allow using e-currency for small transactions where usual cashless funds are not comfortable. This plus during time becomes more and more important.
One rare success has been Hong Kong's Octopus card system, which started as a transit payment system and has grown into a widely used electronic cash system. Singapore also has an electronic money implementation for its public transportation system (commuter trains, bus, etc), which is very similar to Hong Kong's Octopus card and based on the same type of card (FeliCa). There is also one implementation in the Netherlands, known as Chipknip.




As the allegro expansion of internet economical applications, the using of e-currency will be the trend in the coming future just like credit card application before. But however there is no unified definition to the e-currency service industries .For example ,Will we define a e-currency company as the bank service or just a financial service firm ? This question remains gray area.
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2 comments:
Although in Malaysia we have Touch N Go, but the usage is limited. Just like in Hong Kong, hope that we can use Touch N Go to buy foods and so on. By using e-currency, we need not bring money out and need not worry about losing the money. E-currency is very useful and hope that in the future we can use it anywhere.
Good post about E currency.I agree that the digitization of money appears to be inevitable in the light of the recent developments with regards to the Internet and the various e-commerce opportunities presented by the WWW.Developments in this area are done at really very high pace
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