In its current state electronic cash is a necessary innovation in the financial markets. However, it is highly doubtful that E-Cash will actually replace paper currency. This paper defines the concept of E-cash, how it differs from currency as we now know it, and what significant issues are arising during its advent. This section explores the different types of e-cash products and how each functions. The pros and cons of e-cash versus competing products is also examined.
Security is of extreme importance when dealing with monetary transactions.
Faith in the security of the medium of exchange, whether paper or digital, is essential for the economy to function. Transactions involving paper currency are difficult to trace. If digital money is to replace paper currency, it must retain certain aspects of this quality. A new medium of exchange presents new challenges to existing laws. Largely, the laws and systems used to regulate paper currency are insufficient to govern digital money.