Electronic Currency

What is electronic currency?

Electronic currency can be known as e-money, electronic cash, digital cash, digital currency and digital money. In other words, electronic currency is referring to money or scrip which is exchanged electronically with the use of computer network, the internet and digital stored value systems. Examples of the systems used to transfer electronic currency are Electronic Fund Transfer (EFT).

Electronic Fund Transfer (EFT)
This is a computer-based systems used to perform financial transaction electronically. It is a system that transfers money from one bank account directly to another without any paper transaction being done. The most common program that use electronic funds transfer is direct deposit where the payroll of an employee’s is deposited straight into their bank accounts. Besides that, the transfer of funds is done through an electronic terminal, including credit card, ATM, Fedwire and point-of-sales (POS).

Advantages of electronic currency:

Convenience

With the development of E-currency, it makes customers' life more convenient as there is no need for cash to be drawn out for any payment. Now, it is convenient to load the cash into a credit card size like “smart card” which is easy to be carried anywhere. Besides that, it also provides privacy for customer to shop online using credit card rather than original bank account. Banking industry has now adapted this program, which offers customers the ability to transfer funds, purchase stocks, contribute to their retirement plans ( for Canadian) and various services without the need to hand over physical cash or checks. It also makes it more convenient for the customers where they do not need to wait in line for hours and hours.

Security

With the use of E-currency, it makes it safer in this unpretictable world. As mentioned previously, users do not need to bare the risk of being robbed for carrying physical cash. With highly developed technologies such as security codes, the users' personal information is protected. As the E-currency is transfered in the internet, it is impossible to crack the digital sign with those developed technologies. Besides that, the electronic currency information is encrypted so it is impossible for the digital data to be read by unauthorised people.

Disadvantages of electronic currency:








Fraud

Although digital cash have some benefits, yet; it have disadvantages too. One of the disadvantages is fraud, such as incidents like bank accounts being hacked and illegal retrieval of banking records which can lead to a widespread invasion of privacy and identify theft.

Technology failure

Technologies may be very advance but they will definitely have some weakness. Reliance on technologies may lead to loss of record due to the power failure or incompetent software. All these problems may cause a major setback in the introduction of e-currency.

Privacy

Users may fear to use electronic currency such as debit card. This might be due to the reason where they are afraid that their privacy will be interfered and their private information will be widely spreaded.

Examples of those websites that allow people to do e-currency tradings are MG E-currency and JT GOLD.com.

Reference:

http://www.businesspme.com/uk/articles/trade/90/Electronic-money---advantages-and-disadvantages.html

http://www.iit.edu/~peacjen/cs485/ecash2.htm