The advancement of digital technology opens unprecedented avenues for e-commerce, aided by digital currency systems. In addition to online credit cards and other forms of payment, technology has developed to the point where individuals can carry digital wallets within their smartphones and complete transactions with near-instantaneous payment. This Forbes India article provides a description of digital wallet systems.
Stored-value digital currency systems promote efficiency and decrease processing costs, but they carry risks. Measures aimed at increasing data security and deterring fraud and counterfeiting are essential in the promotion of these systems.
Digital currency systems use electronic forms such as e-tokens, digitally stored cash, or e-vouchers. As a result, they feature low transaction processing costs, fast payment, and centralized digital storage in a single electronic medium.
In theory, the use of digital cash is as simple as waving or tapping a cellphone at a checkout register. "Consumer devices for e-commerce access are getting smarter day by day offering features to users they never imagined," two professors from India's Nagpur University wrote in a study (PDF) published this year in the International Journal of Engineering Science and Technology. Yet practical concerns may offset the inherent benefits of digital currency. Some types of digital cash allow for anonymous transactions, raising the specter of illicit transfers, money laundering, and even aid to terrorism.
Insufficient security of digital currency information may also permit counterfeiting and fraud. A cellphone containing a digital wallet could be lost or stolen easily. As a result, these systems require strong data security measures.
A tradeoff arises, however, between data security and the efficiency and speed of the digital cash system. This study from Japan (PDF) says that online payment systems can lead to a "bottleneck" in banking, but an "offline anonymous electronic cash system" presents risks of impersonation, collusion, and fraud.
Credit card funding of digital cash transactions may offer higher levels of protection in the event a digital wallet is compromised. Such funding typically allows all the protections that normally attach to traditional credit card purchases, including liability caps, purchase limits, and notice procedures when suspicion of impropriety arises. Alternate forms of funding, such as prepaid cards, generally carry lower levels of protection but limit exposure to the amount deposited on the card.
The market may eventually offer an array of digital cash systems, and consumers may choose the levels of security and convenience they prefer. As the New York Times observed this month, the market for digital cash systems has been "fragmented."
New security applications may heighten the range of consumer options. Recently developed software allows a digital wallet holder to erase the cellphone's memory remotely if the phone is lost or stolen. Password protection and data encryption have also become standard features.
But there remain gaps in consumer education and awareness of the need for caution when using tools that may encourage identity theft and other abuses.
[Disclosure: The author is a partner in the New York City offices of Jones Day. David Katz, a summer associate at the firm, assisted in the preparation of this article. The views expressed are solely those of the author and should not be attributed to the author’s firm or its clients.]
Some of their digital currency varients are already in the market. If we talk about credit cards, e-commerce, debit cards etc...somehow or the other ..the are facilitating digital transactions. I think the concept is progressing and would keep spreading for a good time to come. Some of the under-developed countries across the world are lagging behind in this aspect but most the developed countries have already embraced the idea of digital currency. Self service check out offer convenience and ease to a great number of people. I understand....digital currency has lots of snags associated to it also ...which includes frauds, hacking , money laundering and illegal transferences.
Actually, some of the systems of digital currency are meant to be as anonymous as "hard cash" transactions. Some regulators object to such systems, as they might foster crime, money-laundering, etc. And, who knows, given that younger and younger kids these days get access to cel phones and other electronic devices, maybe little Susie will start taking digital cash at her lemonade stand !
haven't worked all that well. It'd have to be simpler than those -- and yet still be secure, especially if it's attached to an actual money account.
That said, there's always going to be a market for cash. I can't imagine the farmer's market, garage sales, or the kids down the street selling lemonade being willing to take a card. And there's some things people spend money on that they don't want a record of.
I agree, Kim. Don't you think we are getting better educated as well?
Also, contributing factors seem to be better measures to detect and correct error so that the damages from security threats are minimized. In other words, if we can control the affects, we may continue to feel more comfortable about the use.
Perfect security is impossible - we can reduce the vulnerability to an infintesimal level for an exponentially increasing cost, but we cannot guarantee complete security. Because of this, the cost of security / expected cost of damage tradeoff is in many ways the only one that matters in security. Of course, when we calculate them, the costs that we trade off are typically not inclusive of the externalities and other effects, but that doesn't mean that they are not part of the bargain.
As in the example that Kim suggested, credit cards are hacked, but the damage is weighed against the cost of further security, and the balance struck is near optimal for the decision makers, in this case the credit card companies. Of course, when externalities are considered, it's probably not socially optimal, since much of the cost of that type of fraud is shifted onto retailers, even though many of the easiest ways to reduce risk belongs to the card holder and the credit card companies.
davidmanheim - That's very interesting. This would certainly not be the first time that the cost of security outweighed the cost of just accepting the damage.
Databases of credit card information get hacked almost routinely, but we haven't given up on credit cards. Maybe we're more accustomed to them; and of course, you can't really get by without them.
Perhaps you could not ban all the malefactors from the store, but you could ban them from using the "walk away" system of purchase. That is, if you are not pre-cleared, you have to go through the regular check-out line. And, if you are not pre-cleared, and you walk out of the "walk away" exit with merchandise, you will be stopped.
For online systems, this online system of trust based on trust/reputation works because the systems require verification to enter the systems; you cannot bid on ebay until you login with an account. The problem with physical stores is that you cannot normally only let in people who provide identification. (Sam's Cub would be an interesting exception.)
Given this, the question is whether the stores can pre-identify malefactors. I suspect that physical identification isn't quite sophiticated enough yet, but it may be close, and is geting closer, at which point banning known shoplifters might become feasible.
To a degree, isn't much of the Internet system of exchange based on trust (and crowd sourced verification)? Think of the Amazon / Ebay systems, with buyers and sellers commenting on each other's performance, and forms of supervision of entry into the system (and expulsion). One can actually imagine a scenario where security is increased by identifying malefactors (especially repeat malefactors), and banning them from certain parts of the system.
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
A recent Michigan case -- Ahmed v. Finley's Mfg. Co. -- concerned the settlement of class action claims that "halal" products offered at fast food restaurants in Dearborn did not comply with Islamic dietary restrictions.
The United States has no single national privacy protection agency. Over the past 20 years, however, the Federal Trade Commission (FTC) has taken a leading role in education, outreach to consumer and industry groups, and enforcement in the area of privacy and data security. The FTC’s Division of Privacy and Identity Protection, within its Bureau of Consumer Protection, enforces several federal statutes, regarding “unfair or deceptive” practices, fair credit reporting, and confidentiality of financial information. Further, the FTC takes principal responsibility for enforcement of the Children’s Online Privacy Protection Act (COPPA), which aims to place parents in control over what information is collected from their young children online.
Social media platforms have greatly transformed personal interactions in the work environment. But the trend toward daily use of social networks, at work and elsewhere, has generated legal controversy as to what is protected worker activity and what is grounds for termination.
Google is reportedly working on a pair of Android glasses that will use a low-resolution built-in camera to monitor the world in real time and overlay information about locations, surrounding buildings, and friends who might be nearby. Interested?
Google Maps 6.0 helps users navigate indoor locations like IKEA and airports. While this sounds good, Nicole fears it will also breed dumber humans who bump into each other a lot, or something.
Tom wants a Google 'unlocked handset' for the holidays because he thinks they could just break the telco monopoly on handset distribution and thus empower the Internet as the driver of mobile broadband now and forever.
Techies are going crazy over the possibility that Google might design and sell its own Android phone. Some writers say it's a very big deal. Reiter questions whether it will happen and, if it does, whether it even matters.
In the final episode of this series about the death of Internet anonymity, Saunders describes how the Internet of the future will start to attain a level of intelligence that requires no human intervention. Scary.
What can users today do to protect their online privacy? The simplest and most obvious option is to not use the Internet – at all. However, once all digital information is consolidated over the Internet, trying to protect digital identity by simply unplugging from the Internet becomes impossible – a fact that has manifest implications for civil liberties, Saunders says.
By 2011 the number of Internet-connected sensors will exceed 1 trillion, making your chances of doing anything or going anywhere unnoticed pretty much zero. Saunders talks about how the 'sensortization' of the Internet is eliminating the traditional divide between online and offline populations.
The 20th Century Internet was characterized by the ability to interact with other people and information on the Internet largely without anyone knowing who you were. The Internet of this century, conversely, will be defined by identity. Saunders explains how Internet users are unwittingly contributing to the demise of the anonymous Internet.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
The automotive website uses propensity modeling to target ads and customer registration forms, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
Ushering in a new era of cognitive computing systems, IBM announced today the IBM Watson Engagement Advisor, a technology breakthrough that allows brands to crunch big data in record time to transform the way they engage clients in key functions such as customer service, marketing, and sales.
Expert Integrated Systems: Changing the Experience & Economics of IT In this e-book, we take an in-depth look at these expert integrated systems -- what they are, how they work, and how they have the potential to help CIOs achieve dramatic savings while restoring IT's role as business innovator. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
M2M: Rise of the Machines? Not Yet David Weldon In the 1970 science fiction thriller Colossus: The Forbin Project, two giant supercomputers from the United States and Soviet Union secretly join forces to take control of the collective nuclear might of the two countries. In the film, the two machines discover each other's existence, communicate back-and-forth, share their collective data, and cut their human creators out of the process. It is the ultimate example of machine-to-machine communications, or M2M. CLICK FOR MORE
M2M: Rise of the Machines? Not Yet David Weldon In the 1970 science fiction thriller Colossus: The Forbin Project, two giant supercomputers from the United States and Soviet Union secretly join forces to take control of the collective nuclear might of the two countries. In the film, the two machines discover each other's existence, communicate back-and-forth, share their collective data, and cut their human creators out of the process. It is the ultimate example of machine-to-machine communications, or M2M. CLICK FOR MORE
M2M: Rise of the Machines? Not Yet David Weldon In the 1970 science fiction thriller Colossus: The Forbin Project, two giant supercomputers from the United States and Soviet Union secretly join forces to take control of the collective nuclear might of the two countries. In the film, the two machines discover each other's existence, communicate back-and-forth, share their collective data, and cut their human creators out of the process. It is the ultimate example of machine-to-machine communications, or M2M. CLICK FOR MORE
M2M: Rise of the Machines? Not Yet David Weldon In the 1970 science fiction thriller Colossus: The Forbin Project, two giant supercomputers from the United States and Soviet Union secretly join forces to take control of the collective nuclear might of the two countries. In the film, the two machines discover each other's existence, communicate back-and-forth, share their collective data, and cut their human creators out of the process. It is the ultimate example of machine-to-machine communications, or M2M. CLICK FOR MORE
Email This
