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Chapter 15. Payment Systems > Electronic Cash

Electronic Cash

Generally speaking, electronic cash is a class of technologies that provides an analog of cash represented in electronic form. Electronic cash systems attempt to replicate many of the properties of cash for online transactions: convenience, low (or nonexistent) transaction costs, anonymity, and so on. Although not all electronic cash systems try to satisfy all of these properties, most of them try to enable quick and easy online transactions for small amounts of money.

Some electronic cash systems require smart cards (plastic cards with processors and memory) for operation; others operate entirely in software (although use of smart card hardware may provide an extra degree of security). When smart cards are used, losing the card means losing the money, just as losing a 20-dollar bill means the money is lost. The card is just like cash, so the story goes, and it should be treated as such. Software systems may provide for backup of the value represented in storage, but losing all copies still means that the value is lost.


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