What are the economic consequences of digital money? What are its implications from the see of economics? In recent years, several plans for electronic cash have made an appearance in cyberspace. In several cases, forms of electronic cash are already in use. The economic consequences of these transactions have not however been fully examined. To some observers, one important economic consequence associated with electronic cash is the free issue of private currency by industrial banks or other non-firms. Nevertheless , if we look at the history of money, it can be difficult to make privately issued currency credible in the eyes and wallets of the public.
As long as there is competition between banks, private banks will sometimes become bankrupted. Nothing is more incapacitating to the credibility of privately released currency than bankruptcy. The most important characteristic of digital cash is its Trans-nationality.
Digital cash does not identify national borders. It is not controlled simply by any central bank of any national state. The unprecedented efficiency of international payments with digital cash may indeed increase the instability of the global monetary system. This particular efficiency indeed may lead to conflicts in between digital cash providers and users and the central banks of nation-states. There are over a dozen proposals with regard to electronic payment systems on the Internet.
Compared to using cash in the real world, transmitting credit cards number over the Internet might lead to the following troubles. First, there is the entire question associated with security. Credit card numbers may be viewed by unauthorized individuals because the Internet is an open system. In the real life, there are a number of means to minimize scams. A customer using such a card will usually opt to carry out transactions at reliable or familiar facilities, stores, and markets. Second, those cards may be used only at authorized stores. Illegal small businesses or individuals generally can not carry out transactions with these plastic-items. Quite simply, credit cards cannot be used for peer-to-peer transaction.
Cash encourages peer-to-peer payments. Third, such electronic payments usually charge a small fee. Although the cost is lower, it can be significant when the payment alone is very small, such as less than 1 Dollar. As a result, those electronic products can not be used for micro-payments. A cash payment is used for even the littlest financial transactions.
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Finally, receipts out there card payments leave residual information of expenditures. Those who issue digital cash know exactly what kind of services and goods have been purchased, as well as where and when they were acquired. In other words, user’s costs by using debit cards can be traced whilst cash payments are untraceable. Digital payment systems, more or less, try to deal with the above issues. According to the extent that those systems cope with these problems,