Overview
Digital money or digital cash is a replacement for credit cards or cash, for online purchases, where privacy and personal safety are important. While it can provide a secure and efficient system of money, it may also lead to an increase in a variety of crimes, including money laundering and fraud. Digital cash can take two forms: online accounts or on smart card. An online account allows transactions on the Internet. A smart card can be thought of as an electronic purse people can carry with them.
A global, wireless digital cash system will be very complex to create. The worldwide integration of digital currency requires close evaluation of several key components, including privacy, user-friendliness, transferability, and methods of integration. Replacing physical money with cash kept in secure accounts on linking computer systems has a variety of advantages and a variety of disadvantages.
·
Money typically
replaces barter in most cultures after a time
·
Savings and
purchase were primarily done in cash until the 20th century
·
In 1920 credit
cards were used by individual firms
·
Checks and credit
cards replaced cash for many transactions
·
Now computerized
bank accounts are used as opposed to storing physical cash
·
In 1996 pvu
“private value unit” a universal monetary value system, was established, which
allowed money to be used in all countries for all purposes
·
A variety of
online/digital cash systems are now available
The key issues related to digital money are:
·
Security – keeping private information private
and not easily able to duplicate
·
Anonymity – being able to use the money without
being traced.
·
Portability – like cash.
Being able to bring it along without it taking up a lot of space
·
Infinite duration – digital
money should never expire.
·
Two-Way (unrestricted)- can it be transferred
easily from person to person.
·
Off-line capability – can
be used online and offline to purchase milk at the grocery store.
·
Divisible – can
it function like cash where I can leave .50 cents for a newspaper.
·
Wide Acceptability- is
it accepted all over the world and in most places?
·
User-friendly – is it self-explanatory?
No training should be necessary.
·
Unit of value freedom
(non-political)
Privacy is one of the hottest issue relative to this topic. How can we maintain the anonymity of purchase? Anonymity is important. Individuals who use digital money do not want to sell themselves to marketing companies or the government in the process. With sophisticated encryption, or digital coding devices, it would be possible for digital cash companies to offer untraceable transactions and purchase history. This offer would present a problem for the government by decreasing involvement in daily cash routines
The government has the ability to follow marked cash like small cookie crumbs dropped along the path by a suspected criminal. Another concern with untraceable transactions is that digital cash would give criminals the opportunity to store cash in hidden accounts and because the physical aspects have been removed, the criminal would not be traceable via marked cash, as is the case today.
Fans of digital cash hope it brings all the benefits of physical cash. Where physical cash, unless criminally suspected, presents no threat of traceability, digital cash can be followed like footsteps. The government and credit card agency, today, can collect credit card charges, into a neatly compiled file specifying every credit purchase of an individual revealing their associations and lifestyles.
What about digital cash thieves? Through the use of digital signatures, ecash companies hope to secure the authentication of sender and receivers. According to Digicash, private key encryption should also secure digital transactions and cash functions.
Just as physical cash can be placed into the palms of small children for allowance, digital cash also needs to have a high level of portability. Can it be used in vending machines, gas stations, as restaurant tips, given to friends and for Girl Scout cookies at the front door? Digital cash needs to have the ability to operate under such conditions. Digital cash token in a given amount should be subdivided into smaller pieces of cash. The cash must be fungible so that a reasonable portion of change can be made. The smaller the better, to enable high quantities of small-value transactions. Digital cash will not survive if it is reliant upon a physical location. Its success will depend greatly upon its ability to function both in the wallet and on-line similar to check card purchases.
The success of digital cash will also depend upon it transnational ability. Local boundaries should be nonexistent. All countries will need incentives to use digital cash, and currency restrictions will need to be addressed.
Also, digital money should be good money all the time, without an expiration date, similar to the characteristics of paper money.
In order for digital money to be accepted by the masses worldwide, the system must be easy to use. Since computer knowledge and skills vary, the digital money system must be at a level that most can comprehend and use. If the system fails in this area it will probably fail overall. The process must be easy to use for spending and receiving funds. How will those without computers be addressed and entered into the digital cash equation.
·
Digital money
is easy to use and secure
·
The owner is
the only person who can use the account
·
People are addicted
to a convenient technology
·
Some kind of
digital money will function like electronic checks
·
Even paper checks
are not going to be needed
·
Once again,
digital money is replacing wallets and purses full of credit cards
·
Its main obstacle
though to be successful is the number of people that are using it; not that
much are considering it as an option yet
·
While digital
money is considered very convenient and easy to handle; paper money is becoming
now very complicated to deal with it
·
Being handicapped,
naïve, or sophisticated person, you have the chance to use this card
·
When digital
money is widely used; it could disturb the financial system
·
It can facilitate
money laundering and fraud because some hackers might be able to steal the information
and uses them for their benefits
·
Law enforcement
suspects that it will be easy to trade drugs rather than smuggle them across
borders
·
Consumers are
not going to interact with their bank and its employees
·
Lack of relationship
between the consumers and the business people
·
Bankers are
afraid to lose their interaction with their consumers
·
Digital money
might also be untraceable and anonymous
·
Digital money
is considered as a serious competitor to central banks and their businesses
·
For some people
digital money is also considered as more effective than paper money
·
It could replace
the entire stock of central banks
A few cutting edge digital cash companies are currently marketing their services, including:
A list of e-Payment Options and Sites
The EFF Archive of Privacy/Online Commerce - Digital Money & Transactions Papers.
Paper: “Digital Money: A divine gift or satan’s malicious tool”
Digital Money: A View from the United States, by Vary Coates, Institute for Technology Assessment, Washington