NCJ Number
169679
Journal
Byte Volume: 21 Issue: 6 Dated: (June 1996) Pages: 74-84
Date Published
1996
Length
11 pages
Annotation
This article identifies and discusses the four technology issues that must be resolved before consumers and merchants give "electric money" the same real and perceived value as tangible bills and coins.
Abstract
The most sweeping change induced by an electronic economy is the loss of control of money by central authorities, such as the U.S. Treasury, that are tied to individual political systems. In its place will be digital currency "minted" by companies responsible for keeping it secure and valuable. Four technology issues must be addressed before an electronic economy is embraced, however. First, there must be security for on-line transactions, transferring funds, and minting electric currency. In the process of sending credit-card information to an electronic merchant, the message passes through multiple network hubs. Along the way, criminals can scan messages to steal the information. In digital commerce, thieves can sweep thousands of credit-card numbers from a single database. Commercial research and development departments and university labs are currently developing measures to address security for both Internet and private-network transactions. Second, there must be authentication so buyers and sellers can verify that the electric currency they receive is real. Third, there must be anonymity to ensure that consumers, merchants, and the transactions themselves remain confidential. Fourth, electric money must come in cent or less denominations that can make high-volume, small-value transactions on the Internet practical. Both consumers and merchants will benefit if these problems are solved. This article outlines these benefits, describes the status of efforts to address these four problems, and advises that market demand will eventually lead to bits replacing paper as the most trusted medium of exchange.