Technology Note prepared for Management 274A
Anderson Graduate School of Management at UCLA

Patrick G. Goshtigian
Spring 1996

     Electronic Money, E-Cash, is changing the way currency is perceived. While the change seems as revolutionary as the conversion from value-based mediums of exchange (e.g. gold, silver) to paper currency, it is actually only an evolution from current paper-based mediums. There are a number of benefits of E-Cash over greenbacks, but there are also new issues with which to contend. In addition to new issues, there are also new forms of old problems which E-Cash will not solve. In its current state electronic cash is a necessary innovation in the financial markets. However, it is highly doubtful that E-Cash will actually replace paper currency.

     This paper defines the concept of E-cash, how it differs from currency as we now know it, and what significant issues are arising during its advent. The paper is organized as follows:

  1. What is E-Cash?: E-Cash represents several different types of products. This section explores the different types of e-cash products and how each functions. The pros and cons of e-cash versus competing products is also examined.

  2. Security: Security is of extreme importance when dealing with monetary transactions. Faith in the security of the medium of exchange, whether paper or digital, is essential for the economy to function.

  3. Privacy: Transactions involving paper currency are difficult to trace. If digital money is to replace paper currency, it must retain certain aspects of this quality.

  4. Regulation: A new medium of exchange presents new challenges to existing laws. Largely, the laws and systems used to regulate paper currency are insufficient to govern digital money.

  5. Sources

[E-Cash]  [Definition]  [Security]  [Privacy]  [Regulation]  [Sources]

Questions, Comments, or Concerns: pgoshtigian@ag-inc.com
Patrick G. Goshtigian
Copyright June, 1996