Electronic currency

Electronic currency also known as e-currency, e-money, e-cash, digital money, digital cash, digital currency, cyber currency. It is the money represents a system of debits or credits used to exchange electronically, to exchange value with another system. It involves the use of computer networks, Internet and digital stored value systems.

We have 3 kinds of electronic money systems:


1. Centralised electronic money systems - Quite a number of parties use centralized system, such as PayPal, WebMoney, cashU and others. They use this systems to sell their electronic currency directly to the end users, but other systems sell through third party by using digital currency exchangers. Some community currencies work with electronic transactions, such as local exchange trading systems and Community Exchange System.

Example is the Hong Kong Octopus card. The electronic money deposits work similar as regular bank deposits. When users of Octopus card deposit money, the money is deposited into the bank. It is similar to debit-card-issuing banks.


2. Decentralized electronic money systems - It includes the Ripple monetary system, which is a monetary system based on trust network. Bitcoin is also one of the decentralized systems that is a peer-to-peer electronic monetary system based on cryptography. The last one is loom, a commodity exchange system that is digitally encrypted.


3. Offline 'anonymous' systems - when using offline electronic money, before accepting the money from users, merchants do not need to interact with the bank. Merchants can collect money that users spent and deposit the money later. This could be done offline,which the merchant can go to the bank with his storage media to exchange e-money for cash. E-cash is usually refers to anonymouse e-cash in cryptography. The first offline e-cash system was proposed by Chaum and Naor.


Reference:
http://en.wikipedia.org/wiki/Electronic_money