Different methods of electronic currency payments (existing or in trial phase) make their target to wholesale or retail markets, fund transfers and small-scale nickel and dime transactions. These methods have some advantages and disadvantages as well. Three top advantages and disadvantages of the electronic currency payment system are as under.
Advantages of Electronic Currency Payment Systems:
The existing electronic currency systems have different effects on privacy and confidentiality which vary from total anonymity to audited systems in which almost every aspect of each transaction is collected. Unlike real cash, electronic currency is anonymous and this is considered its most attractive feature. If some electronic currency amount is sent from a customer to a merchant, it is almost impossible to obtain information about the sender. Credit card companies seem to collect information related to customer’s spending habits and sell this data to third parties. When the parties involve in the electronic currency transactions, bank has no record of the customer. So, we can say electronic payment systems adequately protect the privacy rights of the customer.
Furthermore, the banks have to follow the federal laws related to financial privacy, but it’s not clear whether these laws directly apply to electronic currency or not. It seems that consumers will have to wait for further legislation to find whether these laws applicable to electronic currency transactions.
The security of electronic currency is provided by using encryption. Some experts seem to weary about the online transactions security, but with the help of RSA cryptography, it becomes somewhat impossible to break digital signature’s code. Some commentators identify that cryptographic technology may remove code breaking risks by developing longer keys. Though there are questions about the internet security, electronic currency systems are more secure than the traditional ways of making transactions.
Disadvantages of Electronic Currency Payment Systems
Fraud is counted a major disadvantage of electronic currency system. If private key is misplaced by the consumer and used by a perpetrator to withdraw funds, the bank wouldn’t even know and the consumer would be considered liable. No doubt, fraud is a potential drawback of electronic currency, but such sort of risk is even greater in traditional forms of payment.
Another potential disadvantage of electronic currency is the double spending of digital coins, but this is no more a potential drawback and can occur only if the consumer chooses a peer-to-peer transaction. In other sort of transactions in this system bank can check the serial number of every coin in transaction against the database of spent coins. The transaction can be denied if the coins have been spent.
The consumer can include an intermediary in the transaction but if the consumer doesn’t include an intermediary, often the coins are intercepted or can be sent to the wrong recipient and the real consumer has no other option against it.
Electronic payment system has a great opportunity to transform today’s economic world This system provides higher security and privacy than the present traditional forms of payment. However, the risks that are involved in the transactions are of such kind as they have to bear by the consumers. Some methods have already been developed in the current operation systems to avoid fraud and double spending. Speedy transaction, availability to the consumer, privacy and security are such aspects of electronic currency as far outweigh the possible risks.
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