E-cash

From Isopedia

1 Technical Information
2 Historical Information
3 References and Sources
4 Group Members

Technical Information

General Information

E-cash, also known as electronic money or electronic wallets, is a legal form of electronic payment that has seen an explosion in its use over the last decade. It is a computer-generated and databased system that allows for items to be purchased by credit card, debit card, check, or money order. E-cash users are provided with private and secure on-line transactions and processings and provides for access to rapid, secure, reliable, and real time payment and processing worldwide.

There are two forms of E-cash: online E-cash and offline E-cash. Online E-cash allows for the completion of all types of Internet transactions and effectively globalizes the economy. If somone in Japan wants to sell a Brazilian a Playstation2 over the Internet, the currency can easily be converted into Japanese yen to make the transaction successful. The most common example of online E-cash is Paypal, an online service accompanying eBay. Direct deposit and electronic funds transfer (EFT) are additional examples of online E-cash. On the other hand, offline E-cash exists in smartcards that are similar to debit/credit cards or gift cards. Money can be added to these cards with ease. Forms of offline E-cash are currently in place on Norweigan Cruiseline ships. Each guest is given his or her own smart card at the beginning of the voyage and the bill is received by the user when the trip is over. No cash changes hands on the ship.

Security

The main line of defense of E-cash transactions against hackers is various forms of encryption and the use of unique serial numbers and passwords. Banks that issue E-cash can quickly verify and authenticate transactions involving E-cash. In online E-cash, the encryption methods are equal to those used to protect nuclear weapons systems. In offline E-cash there is a problem of double spending. Double spending is the use of cash more then once and the processes of making your money grow without having the money to support it. This problem happens because bits and pieces of being sent and those bits and pieces can be duplicated. You can not tell the difference between the original and the copy so the user can take those copy of the E-cash and used them over and over and make there money grow. Offline E-cash is set up to detect and prevent this problem from happing by structuring the system and cryptographic protocols to show that the user is double spending by the time the bank receives the information. With these systems protecting offline E-cash the and the user knows they will get caught it will minimize the uses of double spending. Also E-cash coin, smartcards are being protected against theft, loss, or tampering through the installation of user passwords that only authorized users have knowledge of. These measures have been put in place to protect those who use E-cash and will contribute to the future success of this technology.

Regulation Issues of E-cash

The United States government has raised a number of concerns of the implementation of E-cash. Concerns regarding taxing and currency issues have lagged the full-fledged adoption of the technology in everyday life. Customer liability over the use of bank cards needs to be addressed as some people may not be able to handle the responsibility of possessing E-cash. As E-cash removes the presence of banks from monetary transactions, the ability to regulate these transactions has been hampered. It is also difficult for the government to prevent tax evasion at income and consumption levels. Surprisingly enough, the rise of E-cash has made it easy for individuals to create and utilize private currencies. These issues certainly disrupt the smooth adoption of E-cash into today’s world.

Historical Information

The concept of electronic money has existed for more than ten years. The idea of check-writing is the basis for the development of E-cash. When a bank client writes a check to someone of another bank branch, the bank uses electronic funds to transfer the money from one individual to the other. The check itself serves as a request by the customer for the bank to transfer funds. Instead of this method, E-cash users can transfer money to each other without needed the bank as an intermediary. Its use is becoming more and more common in today’s business world.