The Difference Between Electronic Money
Comparison of electronic money and virtual money
There are several means of electronic payment; Such as electronic money and virtual money, and there are many fundamental differences between these two types, as follows:
By definition
Electronic money is money or money that is exchanged electronically, and is in the form of an electronic store or a technical device that stores monetary values, and is used in many fields; such as payment to parties other than the one that issued it, and it also acts as a prepayment tool.
As for virtual money, it is a type of unregulated digital currency, and it is available only in its electronic form, and virtual money can be stored and dealt with through dedicated programs, mobile or computer applications, or through dedicated digital wallets, and private cash transactions are It is obtained via the Internet using dedicated secure networks, also called cryptocurrencies.
In terms of means of production and ownership
Electronic money can be created in several steps; First, the buyer obtains a certain amount of it through one of the banks issuing it in the form of small monetary units called (Tokens), then the buyer gets a special program for the purpose of managing electronic money. This program is unpaid and provided by the company (Cyber ​​cash), and it protects the monetary units from Any erasure or copying, as for the seller who deals with this type of money; He must participate with one of the banks that issue electronic money, and he must acquire a special program from the same company (Cyber ​​cash) to secure and protect electronic money in the field of sales operations.
Also, any individual can create and own a new virtual currency by creating a (blockchain); It is one of the encryption techniques in one currency, and it is possible to use several online tutorials to learn how to create a virtual currency, and it should be noted that creating such a currency requires at least basic encryption skills and a deep understanding of (blockchain).
In terms of the type of control and supervision
In the event that electronic money is issued by the central bank, there is no kind of supervision over that, but if it is issued by regular banks or credit or non-credit institutions, then in this case electronic money must be subject to digital supervision and control by central bank; To avoid all the risks that arise from the issuance of this money by those institutions.
As for virtual money, it is not subject to any kind of censorship or control, whether by the Central Bank or any official agency in the country.
In terms of source
knows the source; That it is the entity responsible for issuing this type of money, and that the first source of electronic money is the central bank located in any country, and credit and non-credit institutions that carry out money business can be a source for it; Like the state of France, also banks and financial institutions; Like America, but on the condition that it is subject to the control and supervision of central banks.
As for virtual money, it is a type of unregulated digital money, as we mentioned earlier, and therefore it is not issued or controlled by the central bank. It is usually issued by private issuers or specific individuals, and it is used by specific virtual communities.
In terms of public opinion and degree of acceptance
One of the advantages that electronic money enjoys is that it is widely accepted by individuals or institutions, as its user can deal with it with several other parties or banks, and the degree of acceptance of electronic currency may depend on: the efficiency of the issuer, and confidence in the commercial field.
The opinions of contemporaries differed regarding virtual money, as previously dealing with virtual money was very limited, but at the present time the exchange of the new virtual currency has expanded significantly, especially Bitcoin, which has proven itself globally, and Germany is the first country to recognize that Bitcoin is a type of electronic money , However, virtual money still enjoys a lack of confidence among some, due to the consequences of it in terms of the issuing authority and the parties controlling it.
In terms of revealing the customer’s identity during transactions
From this aspect, a distinction must be made between two types of electronic money: nominal electronic money, and non-nominal electronic money. In the first type, the identity of the customer is revealed; Because it contains an electronic cash unit linked to all the people who trade it, as for the second type; The identity of the bearer is not disclosed during transactions, unless the same person spends it more than once,[10] and with regard to virtual currency; The identity of the customer is not disclosed during trading transactions.
In terms of transparency in trading
Electronic money enjoys high transparency in transactions, as the texts related to electronic money are very clear, as they show the rights and obligations of each of its parties, [12] As for virtual money, one of its distinguishing features is also transparency, according to what expert Primavera de Felipe, the researcher, said. At the National Center for Scientific Research in Paris.
For example, if a person owns a Bitcoin wallet, anyone else can know the number of his Bitcoin units, in addition to the number of transactions that have taken place, and thus anyone can view them with complete transparency.
In terms of legal status
As for electronic money, there is no legal basis for it. Also, there are no legislations that force the individual to deal with it, and legal discharge does not apply to it, and this means that the creditor can refuse to use it by the debtor for payment, and demand collection of the debt by cash payment in the traditional form, and therefore electronic money is only one of the electronic payment methods, It is not classified as a new type of money.
As for virtual money and the fact that it is not subject to any regulatory body, most countries of the world did not officially allow it, but rather warned some of them against dealing with it due to the lack of government supervision over it, and because of the unknown identity of its holder, fraud and fraud abound that make the process of legally claiming it difficult.
Examples of electronic money
A common example of electronic money is:
Electronic wallet: (in English: Electronic purse) An electronic wallet is a smart card that is used to store specific cash values, using a magnetic stripe or a computer chip (integrated circuit), through which electronic money can be transferred to another card without the need to link it to a central computer or any party. other.
Digital money: (in English: Digi cash) in which the monetary value is stored in computer disks, and used by the personal computer of the consumer, but it must connect its network to the international communications network.
Examples of virtual money
Common examples of virtual money are:
Bitcoin: (in English: Bitcoin) Bitcoin [1] is the first virtual digital currency; It is considered a cryptocurrency because cryptography facilitates the creation of bitcoin transactions, there are currently more than 18.5 million bitcoin tokens in circulation, against the currency’s current cap of 21 million.
Bitcoin Cash: (in English: Bitcoin Cash) was introduced in 2017 AD and it is one of the most popular types of cryptocurrencies in the market, and the fundamental difference between the original Bitcoin and Bitcoin Cash lies in the block size; The latter has a larger capacity, which means that Bitcoin Cash offers faster processing speeds than the original Bitcoin.
Litecoin: (in English: Litecoin) works as a method of using Bitcoin, created by Charlie Lee in 2011 AD, and was designed to improve the way Bitcoin works; In terms of shorter transaction times, and lower fees.
Ripple: (in English: Ripple) is a type of cryptocurrency, widely used by larger companies and institutions.
Stellar: (in English: Stellar) It was designed by Ripple co-founder Jed McCaleb in 2014 AD and is operated by a non-profit organization called (Stellar.org), and aims to promote its use in developing countries that do not have access to any conventional banks.[19]
Electronic money and virtual money are similar in that they are money that is dealt with electronically only, without the known traditional form of money, and both types differ in many matters; Such as the methods of producing and owning them, and the entities that issue them, but in general, it is not recommended to deal with them except when looking at all the provisions related to them in order to prevent fraud or fraud, Although legislation allows dealing with it, virtual money is not subject to any official regulatory authorities, and electronic money lacks many of the characteristics that traditional money enjoys, and electronic money is divided into two main types, namely; The electronic wallet that stores cash values ​​based on integrated circuits, and digital money that stores cash values ​​in computer disks.