Electronic Currency

Electronic Currency is also known as e-money, electronic cash, digital money, digital cash or digital currency which refers to money that can only be exchanged electronically. Computer networks, internet and digital stored value systems are needed in order to use electronic currency and we can buy goods and services online by using it. On the other hand, e-currency does contribute some benefits and disadvantages to the online users.

Advantages of Electronic Currency Payment System

Privacy and confidential

The most attractive part of the e-currency is that it’s anonymous. When a customer is transferring some amount of e-currency to a merchant, there’s no one who can obtain the information of the sender. It’s unlike a credit card company who can collect information about the customers’ spending behavior and then sells this data to a third party. Electronic currency payment system is fully protecting the customers’ privacy right because even the banks do not have a record when there is an electronic currency transaction.

Strong security

The security of e-currency is provided through encryption. With the use of RSA cryptography, breaking the digital signature’s code is almost impossible. By developing longer keys, the risk of code breaking may be removed.

Disadvantages of Electronic Currency Payment System

Fraud

If private key is misplaced by the consumer and used by a perpetrator to withdraw funds, the bank wouldn’t even know and the consumer would be considered liable.

Peer to peer double spending

If the consumers choose a peer-to-peer transaction, they might be exposed under some potential drawback. Bank can check the serial number of every coin in transaction against the database of spent coins. So, the transaction can be denied if the coins have been spent.

Examples of Electronic Currency

The first example of e-currency given is Peppercoin. Peppercoin is a cryptographic system for processing micropayments. The system was developed by Silvio Micali and Ron Rivest. The core idea is to bill one a lump sum of money for transactions rather than bill every transaction into a small amount. It totals up all the transactions over users, merchants as well as payment service providers. The random selection is cryptographically secure which means it cannot be influenced by other parties. Peppercoin collects 5-9% of transaction cost from the merchant.

Second example is Click and Buy. There are more than 14,000 merchants from about 26 countries are benefit from this complete service. This service eases users in buying and selling online. Click and Buy internet payment and billing system enable it to become the market leaders in the Europe. Normally, it is used by msn, Skype, ScanDisk, Apple iTunes.

References:-
http://en.wikipedia.org/wiki/Peppercoin
http://www.latestbusinessupdates.com