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'Minting' electronic cash

Electronic equivalents of traditional cash payment systems are being launched worldwide

16 min read
'Minting' electronic cash

The interest in electronic replacements for traditional forms of payment has exploded in recent years. In addition to many field trials for value stored in chips on plastic cards (smartcards), many major software, telecommunications, and financial services organizations are working on their own electronic payment techniques. While most of these aim at enhancing credit cards, a few companies have gone further and developed electronic replacements of traditional cash payment. However, the extent to which the different systems succeed in preserving the unique benefits of traditional cash and exploiting the new medium's advantages varies substantially.

Traditional cash money is a bearer instrument. It allows instantaneous payment from person to person. Cash payments are not normally traceable by a third party and therefore offer privacy. On the other hand, transporting, protecting, and refreshing coins and bank notes make them very costly for banks to handle. Bank notes can be forged on sophisticated color copier machines, coins are too heavy to carry around in any large number, and both are easily lost or stolen. Because coins are virtually indistinguishable, and coins and bank notes can be passed from person to person many times without the involvement of a bank or other third party, cash is the preferred method of payment in criminal activities like extortion, money laundering, and bribery. Another inherent shortcoming has become particularly confining of late: the requirement for physical proximity of payer and payee.

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Lang Zeng/Beihang University

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This is a sponsored article brought to you by 321 Gang.

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