DigiCa$h: Money of the Future? or an Electronic Disaster? By: EDWARD ARTECHE MARLON EVANGELISTA

Introduction -Online money transactions are increasing exponentially -Over the past few years, online shopping has gained popularity -One website in particular comes to mind as far as e-commerce goes…

Brief History David Chaum and a colleague Rijkswatarstaat founded the company DigiCash Early success with the use of smart cards 1990 – Chaum developed eCash, which is synonymous with digicash 1995 – Mark Twain Bank: First and only U.S. bank to accept eCash 1998 – DigiCash files for bankruptcy

Definition and Applications Electronic store of monetary value Usually stored on a technical device such as a smart card Also sometimes stored in software

Types of DigiCash Software-based product: digicash is stored on the hard disk memory of a computer Card-based product: value is stored on a hard physical device, such as a smart card –Software for using these smart cards are currently being made to be downloaded onto cellular phones and PDAs

Types of DigiCash (cont’d) Online two interacting parties must be online A third party, usually a bank or a digicash distributor is required to complete the transaction Offline No bank or other third party required to be the intermediary This is what digicash should be and it is what is being aimed at as the future goes

How does it work?

Checks and Balances The buyer Protected against false accusations and invasion of privacy The bank Protected against forgery The seller Protected against the bank’s refusal to authenticate a note

Benefits/Positives For consumers –Convenience No need to go to actual store Easy to set up –Smart cards –Universal –Person 2 person –security

Benefits/Positives (cont’d) For businesses –Bring in new customers Customers that are impatient Increase chances of “impulse buys” –Small businesses can run their business completely online No need for physical space

Drawbacks/Negatives Double spending –Possibility of duplicating money –“spending money twice” Fairly new concept –Many companies have tried and failed –People are skeptical

Conclusion Must convince people to try something new Must undergo a LOT of experimentation to ensure security and so that "good guys" stay ahead in the game Possibility of replacing paper money Universal currency would make international transactions easy In order for digicash to hold up, every transaction must be flawless with no errors from sender to receiver Convenience will win people over

Links to sites that use eCash