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Like a lot of crypto protocols, the legal status of digital cash has not been tested. The new EC Directive 2000/46 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions describes electronic money (what we have called ‘digital money’, ‘e-money’, or ‘e-cash’) as “an electronic surrogate for coins and bank notes, which is stored on an electronic device such as a chip card or computer memory and which is generally intended for the purpose of effecting electronic payments of limited amounts”. In other words, the Directive regards digital money as an alternative to payment by cash.
More commonly, digital cash is often described as “stored-value” products (“SVPs”). On each such product, a record of the value available to the consumer is stored on an electronic device kept in the consumer’s possession. Typically, a card-based product provides the consumer with an integrated-circuit (IC) card containing a microprocessor chip, namely a “smart card”, which is used at public access terminal, such as an ATM/ABM or at a point of sale (POS). For example, the smart card of Visa Cash( developed by Visa Interlational,1995), Mondex (which was first introduced to the UK in 1995), and Proton (developed by Banksys of Belgium). Smart card is different from debit card, credit card and other plastic cards, because it is embedded the chips, not only can it store data and value as those plastic cards, but can also perform complex calculations. At the same time, a software-based product operates via a personal computer, namely, a terminal to which the consumer has proprietary access. Both of them allow payment to be made simply by transferring digital information directly between debtor and creditor so that the value is transferred immediately upon delivery. In some systems the recipient of electronic money can immediately use it to pay for other goods or services. Other systems require the token to be deposited in a bank account or with the issuer who will then issue a token of equivalent value or credit the value to account.
There are various types of digital money systems, in addition to Smart card electronic money and Computer software electronic money two basic systems. It may either be single or multi-purpose, may operate in either closed of open systems, may or may not be restricted to geographic area, may be single or multi-currency, and may be issued by either a single or multiple-issuer. Generally, the theory of digital money is based on “open” systems. In an open system, the issuer of the electronic money is not the seller or supplier of the goods or services that are purchased by the holder of the money. An example of a “closed” system would be where prepaid telephone cards are issued by a telephone company to pay for calls made on its system. As well, it may be offline unaccountable, offline accountable, or online accountable. When neither transaction information nor resulting balance is transmitted from the product to a central facility, the product is offline accountable. Where transmission to a central facility occurs, the product is accountable; it is online accountable when transmission is simultaneous with each use and is offline accountable when information is transmitted to the central facility only periodically.
III. Does digital money continue money, or is it only a payment mechanism?
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