Saturday, June 28, 2008

What is Electronic currency? its advantages and disadvantages??

With each passing day, new developments in electronic currency are emerging. As a result, novel buzzwords such as smartcards, online banking and electronic currency are being used to discuss money.

Now, less than a hundred years after the first bank note was issued, technological progress has undoubtedly created a new direction in the means of payment. The Internet and E-commerce have become an increasingly commercial area, where daily payments are rendered for goods, information and services. As a result, electronic payments are becoming the central part to online business between customer and seller. Traditional applications of rendering payment include credit cards, private label credit/debit cards and charge cards.






Confidentiality
Privacy Current electronic currency systems vary in their effects on privacy from total anonymity, in which personally identifiable records are not created (blinded coins), to audited systems that collect and store every aspect of each transaction. One of the most attractive features of electronic currency is that, unlike real cash, it is anonymous. That is, when a electronic currency amount is sent from a customer to a merchant, there is no way to obtain information about the customer.




Security
As previously mentioned, the security of electronic currency is provided by the use of encryption. Some experts are weary about the security of online transactions. However, the use of RSA cryptography makes it almost impossible to break the code of a digital signature. Additionally, the enacted digital signature statutes require a certification authority to use a trustworthy system. Therefore, even though there is speculation about the security of the Internet, electronic currency consumers are probably more secure in their transactions than the more traditional ways of doing business.





Fraud

A major disadvantage to electronic currency is fraud. If a consumer somehow misplaces his private key and a perpetrator uses it to withdraw funds, the bank would never know and the consumer would be liable. Additionally, if the security code is broken and the message is intercepted, the hacker will be able to perpetrate fraud on the recipient of the message.

Peer-to-peer double spending

Double spending of digital coins is another potential disadvantage of electronic currency. However, this is only a potential drawback if the consumer chooses a peer-to-peer transaction. In all other transactions in the electronic currency system, the bank is able to check the serial number of each coin in a transaction against its database of spent coins, and if the coin has been spent, the transaction will be denied.


3 comments :

  1. Anonymous said...

    This is the first-ever year-over-year drop in e-commerce spending in US since the e-commerce category was established, the same study reveals. Such a drop is the result of low consumer confidence in online shopping, as well as a "tight disposable income". http://www.infyecommercesolution.com/

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  3. esign said...

    You are right that most of people using internet think electronic currency handling a boon.You compared advantages and disadvantages of this which is itself explanatory but as i think with passage of time and technology development the scenario will change sooner than expected