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E-money can be used for payment transactions, with or without bank accounts. The great advantage of course is a cashless payment system that makes money transfers of any size quick and easy. Digital Currency Revolution A revolution has been taking place in the world during the past few decades, and it has nothing to do with political regimes or even economic systems. A new form of payment has been developed that is changing the way people buy and sell—probably forever.
Brief History of Money Mankind has used all sorts of payment forms during his brief time on this planet; cowrie shells, weights of silver, salt, and even knives are a few examples on the long list of payment methods. Although coins and banknotes are the most well-known payment instruments today, they are actually based on very old technologies.
Now a new technology has appeared on the horizon: electronic money, or e-money for short. As the name suggests, this new type of payment instrument exists only in computerized form, although in some cases it is backed by fiat currency.
What Exactly Is Digital Currency? The European Central Bank ECBthe major monetary authority of the European Union, defines e-money as: [A]n electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer.
The latter are backed by government-issued fiat currencies, while the former are not. And then there are lesser well-known forms of payment that fall into some other category. For example, Ven is a social networking currency whose value is determined by a basket of financial instruments, including carbon futures.
In all cases, the point is to develop a payment service that is user-friendly and has the capacity of sending funds in real-time to anyone in the world. Tipalti is one company that specializes in this form of global e-money products.
More make money on the exchange of electronic money speaking, digital currencies include the hardware and software required to create, store, and transfer electronic payments.
Advantages and Disadvantages of Electronic Cash With the new monetary landscape that has been built, e-money presents several advantages, including: The ability to move money quickly, literally at the speed of light.
Better recordkeeping. The ability to move large sums of money without any physical burden. But advantages always come with their own disadvantages.
These include: Cybercrime and new digital forms of money laundering. Users must have a minimum level of training and knowledge, especially with more complicated forms of electronic transfers.
Some types of e-money, most notably cryptocurrencies, are closely linked to criminal activity. Both hardware and software are required to perform transfers of electronic cash. Cryptocurrencies have thrown this model upside down by having no central bank at all.
It completely bypasses government, at least for the time being. According to CNBCsome central banks are considering developing their own cryptocurrencies. Although Venezuela has tried to create its own, its petro has not succeeded. If and when this revolution takes place, we will get hybrid currencies. For now, we have traditional cryptocurrencies, which can function as an electronic means of payment; although it does depend on the country.
The lack of regulation presents a new problem, which is actually quite old: money laundering.
To help mitigate this risk, Bitcoin transactions are recorded on a blockchain, which is a public ledger. Transactions can never be erased, which helps create a transparent form of regulation.
Electronic Money Transfers Money movement is where electronic cash really shines. Gold bars and even coins trading binary options on 24opton banknotes have to be physically moved and stored, and the more money there is to move, the larger the burden.
But e-money offers a completely different type of payment service, with the ability to move any amount without any freight. Payment can be performed in a number of ways: Debit cards, prepaid cards, and credit cards make paying at point-of-sale terminals quick and simple.
Bitcoin, Litecoin, Ethereum and other cryptocurrencies have been hitting the news for all the good reasons. However, understand that there are several risks involved before delving in. You normally start by holding some tokens in your compatible wallet. When the stipulated dividend period arrives, the account holding your coins receives a certain deposit. However, ensure you use the appropriate wallet type to avoid losing your dividends.
And chip cards and other forms of smart cards make these electronic transactions safer.