Virtual Currencies Overview
With the influx, growth and continuing evolution of internet or online banking, online business, debit cards, online bill payments, and online games and other such activities, there is now a trend gearing towards electronic money. It is also known as electronic cash, electronic currency, e-currency, digital money, digital cash, digital currency, scrip, or virtual currency. As it is, this trend may eventually make hard cash a thing of the past.
Nowadays, banks provide various services allowing customers to move and transfer funds, buy stocks, even put money into retirement plans, and avail of a host of other similar services, all without the use of tangible money. Similarly, debit cards and online bill payments enable customers to immediately transfer funds from a personal account to a business account without handling physical money, such as when they purchase goods and services.
Also, virtual currency has become popular among today’s youth, chiefly because it allows them to buy items and accessories they use for online games and other activities such as instant messaging, blogs and the like, as when they purchase electronic greeting cards and anti-virus software. Specific virtual currencies also enable customers to watch feature length movies on particular websites and to download music, while some can also be used to buy actual merchandise from some stores or vote in real talent contests.
Specific examples of the use of electronic money would be Hong Kong’s Octopus card system which was originally intended to be a public transportation payment system but which has evolved to become an extensive electronic cash system, Canada’s Interac network which exceeded cash as a payment method in Canada as of 2000, and Singapore’s public transport electronic payment scheme which is very similar to Hong Kong’s Octopus card.
The growing popularity of electronic money is mainly due to its convenience, particularly the fact that waiting in line is done away with, and the relative ease it provides in making transactions. Furthermore, they have expanded local markets beyond international boundaries, allowing individuals and businesses to run their operations on a larger scale.
As opposed to hard cash, electronic money is a system of debits and credits which is used to trade or purchase within itself or what is referred to as a stand alone system, or within another system. This can be done both online and offline. Moreover, electronic money may be fully gold-backed such as e-gold, non-gold backed such as eeeCurrency, or both gold- and non-gold backed such as e-Bullion and Liberty Reserve.
E-gold is an electronic gold-backed currency, and it is a system which enables the immediate transfer of the ownership of gold between customers. It is run by Gold & Silver Reserve Inc. under e-gold Ltd., which runs its operations mainly in Nevis, Lesser Antilles. Founded in 1996, the e-gold system has seen remarkable growth since 2005. Currently, the e-gold system is coming close to the size of the national gold reserves of smaller countries, with over three tonnes of gold bars. E-gold now makes more than one million USD annually from so-called spend and storage fees.
On the other hand, eeeCurrency is a non-gold back electronic currency used mostly by exchangers, investors and value builders. The three e’s stand for “everything, everywhere, electronic.” Based in Panama City, Panama, it is free to use, store and spend, unlike e-gold. Because it is not backed by gold or any other regular currency, eeeCurrency is based purely on the worth of its demand as determined by its users and exchangers. This gives eeeCurrency the advantage of being affected only by the intensity of its demand and not by debt. Furthermore, it can be traded into regular currency or other electronic currencies.
Like e-gold, e-Bullion is also gold-backed. However, aside from gold, it also allows for the transfer of silver between customers. Incorporated in 2000 and launched in 2001, its primary servers are based in Switzerland, although it is a legal corporate body registered in Panama.
Electronic money is subject to certain disadvantages, however. One of these would be fraud, which could lead to hacking, illegal repossession of banking records, and identity theft. Still another would be failure of technology, as represented by power failures, unreliable software, and loss of records. There is also concern over the possible loss of privacy, as this may lead to tracking of individuals, as well as the issue of loss of human interaction.
