Is Digital Cash Something To Fear?

Is Digital Cash Something To Fear?

I. INTRODUCTION

In today's society, cash is quickly becoming obsolete. The vast majority of transactions can now be completed without cash. If a person has direct deposit, they can directly deposit their paycheck into their bank account. Using their home computer, that person can pay their monthly bills electronically by using a third-party bill paying system authorized by their bank. Credit cards, once reserved for major purchases, are now accepted at grocery stores, fast food restaurants, pay phones, and coffee shops. Debit cards are quickly replacing checks for many of our day-to-day purchases. There are quite a few transactions that cannot be completed with cash, including renting cars, many mail order purchases, and subscribing to an Internet service provider.

In a typical day, cash is really only necessary for very small transactions, such as purchasing a morning paper, or buying a candy bar out of a vending machine. These "micro-transactions"{1} do not represent a significant enough exchange of value to cover the transactional costs of accepting credit or debit cards. A person still needs to carry enough cash for these micro-transactions. Currently, the way to get cash is to personally go to an automatic teller machine (ATM) for a withdrawal. "Digital cash,"{2} stored on "smart cards"{3} or personal computers, promises to make micro-transactions possible in both the everyday world and in cyberspace.

II. IS DIGITAL CASH NECESSARY?

The need for digital cash closely parallels the need for regular cash. Most people do not use regular cash to make major purchases. Carrying large amounts of cash can be very insecure. Carrying credit cards is more secure because, at least in th...

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...urden on the bank to prove that a transaction was by the consumer. See Sandberg, supra note 3.

{8} Compare the use of encryption technology in making a credit card purchase (see CyberCash, Six Steps of a Secure Internet Credit Card Payment (visited Oct. 5, 1977) ), with the use of encryption in making a digital cash purchase, (see DigiCash, An Introduction to Ecash (visited Oct. 5, 1977) ).

{9} Of course, the consumer protection laws will limit the consumer's losses to $50. If the digital cash transmission was for a micro-transaction, a consumer would still prefer to lose 1¢ to $50.

{10} Jim Miller, E-money mini-FAQ (release 2.0) (visited Oct. 5, 1977) .

{11} Id.

{12} Id.