Electronic Money (Electronic Currency)

Electronic Money (Micromoney)

Hukumov Oblomurot

Agenda

• Concept
• First and Current Implementations
• Smart Card Based Systems

- Open System

- Close System

• Alternative Systems
• Software Based Systems
• Evolution, future approaches
• General Issues
• Conclusions

Concept

• Money exchanged eletronically

involving microprocessors

computer networks,

internet and digital stored values.

• Two General Forms
• Card Based
• Software Based

First and Current Implementations

• Smart Cards

Generally defined as a portable data storage device with intelligence (chip memory) and provisions for identity and security.

First and Current Implementations

• Some History…
• 1970 - First implementation of microelectronic devices in plastic substrate (Kunitaka Arimura)
• 1974 - First patent “An independent electronic object with memory” (Roland Moreno).
• 1979 – First smart card by Honeywell Bull
• 1980’s First Trials in France
• French Bank Card Association (Blue Card, Green Card, TA)
• University Cards in France

Date Information took from The Changing Face of Money, Good Barbara

First and Current Implementations

• Smart Card (Open System)
• The scheme allows the value on the card to be used in the same manner as any other payments method or form currently in the specific place.
• Promblems for wide development: Need for terminal to process transactions, clearing and settlement system.

First and Current Implementations

• Unaccounted Electronic Money Model
• Transactions closely proximate to cash ones
• Aim to provide universal cash replacement
• Without a full audit trail
• Mondex Card

First and Current Implementations

• Accounted Electronic Money Model
• Provide a general audit trail
• Archiving Functions
• Does not permit the anonymity of incorporate it into the Web browsers

First and Current Implementations

• Graph took from The Changing Face of Money, Good Barbara

First and Current Implementations

• Smart Cards (Closed System)
• A stored-value card that only can be used for one purpose or only in one determined environment.

First and Current Implementations

• Octopus Card
• Singapore

(Public Transportation payment)

• Chipknip

Octopus Card

• Rechargeable without contact stored value smart card (mass transit system in Hong Kong)
• Nowadays convenience stores, supermarkets, parking meters, vending machines, etc.

Off-line Electronic Money

• The merchant does not need to interact with the bank before accepting a user’s coin.
• Merchant guaranteed that the user’s e-coin will be accepted by the bank (the bank is able to identify cheating user).

Off-line Electronic Money

• Blind Signatures to achieve unlikability between withdrawal and spend transactions.
• Using cryptography

Anonymous e-cash was

Introduced by David Chaum

Alternative Systems: Software Based Systems

• Main Topic: Internet
• Several Schemes devised to make purchases secure over the Internet
• Security: Main concern for the method developers
• Open Network
• MasterCard and Visa agreement for SET (Secure Electronic Transactions) standard (1996)

Alternative Systems: Software Based Systems

• Digital Gold Currency
• Paypal
• Liberty Reserve

Evolution, future approaches

• Objectives
• Turn it able to use it through wider range of hardware such as secured credit cards
• Linked bank accounts for exchange with a secure micropayment system (Paypal)

In General…

• Advantages:
• Convenience
• Privacy
• Increased efficency of

transactions

• Lower transaction fees
• New business opportunities

In General…

• Disadvantages
• How to levy taxes
• Possible facility of money

laundering

• Exchange rate instabilities
• Shortage of money supplies

Conclusion

• At the end, it is necessary to search the more suitable cyberspace and microprocessor use regulations or laws that manage the transactions and watch for signs of trouble to help this new concept that seems to be the next step in business development, generally speaking.

THANK YOU

FOR YOUR

ATTENTION