Electronic Currency

With the tremendous development of the internet, many transactions have been made available online. These online transactions involve the exchange of goods and services with payment made through the internet, in an electronic form. When this takes place, there is then an electronic currency transaction. In other words, electronic currency refers to money which is exchanged only electronically, typically thru the use of computer networks like the internet.

For example, with online banking, banks are now able to offer services whereby a customer may transfer funds, purchase stocks, and a variety of other services without having to handle physical cash anymore.

As an implication to the above and with the emergence of e-commerce, the use of tangible cash is reducing from day to day as a result of the increasing usage of money in the electronic form.

In our country, the implementation of the “Touch N’ Go” card is among one of the success for the cashless environment that engages in electronic currency. “Touch N’ Go” is a contactless stored value smart card used to transfer electronic payments online for public transportation such as the LRT and KTM.

Advantages

Convenience and Privacy
Transfer of funds from an individual's personal account to a business's account is made without any actual paper transfer of money. This clearly provides convenience and a lower-hassle environment to many people and businesses alike.

Increased Efficiency of Transactions
Through the electronic currency, complicated calculations and large figures are computed with the help of computer. Also, there is no need to handle paper currency and thus, this reduces the possibility of you losing your money from carelessness or theft.

Lower Transaction Fees
Lower cost can be achieved because electronic currency eliminates the use of man power which could be costly. This result in lower transaction fees compared to fees charged to a walk-in customer.

New Business Opportunities
With the expansion of economic activities on the Internet, there is the emergence of new business opportunities. For instance, Paypal deals with electronic currency transactions by engaging in service of securing and transfer of funds.

Disadvantages

Fraud
Fraud over electronic currency has been one of the major concerns. With the lack of security and monitoring of the internet transactions, hacking into bank accounts and illegal retrieval of banking records has led to a widespread invasion of privacy and has promoted identity theft.

Failure of Technology
There is also a crucial issue regarding the technology involved in electronic currency such as power failures, loss of records and undependable software which could often cause a major setback in promoting the technology.

Risk of Global Exchanging Electronic Currency
There are also potential macroeconomic effects such as exchange rate instabilities. Besides, there is the possibility that digital cash would exceed the real cash available and this might lead to unfavorable consequences such as the shortage of money supplies.

Loss of Human Interactions
Transactions are made online, through the internet. Any necessary interaction needed might not be attained. In addition, some people still prefer to deal with humans rather than computers.