Electronic Currency

Introduction
Electronic money (also known as e-money, electronic cash, electronic currency, digital money, digital cash or digital currency) refers to money or scrip which is exchanged only electronically. Typically, this involves use of computer networks, the internet and digital stored value system. Electronic Fund Transfer (EFT) and direct deposit are examples of electronic money. Also, it is a collective term for financial cryptography and technologies enabling it.

While electronic money has been an interesting problem for cryptography, to date, use of digital cash has been relatively low-scale. One rare success has been Hong Kong's Octopus card system, which started as a transit payment system and has grown into a widely used electronic cash system. Singapore also has an electronic money implementation for its public transportation system (commuter trains, bus, etc), which is very similar to Hong Kong's Octopus card and based on the same type of card (FeliCa). A very successful implementation is in the Netherlands, known as Chipknip.

Alternative systems
Technically electronic or digital money is a representation, or a system of debits and credits, used (but not limited to this) to exchange value, within another system, or itself as a stand alone system, online or offline. Also sometimes the term electronic money is used to refer to the provider itself. A private currency may use gold to provide extra security, such as digital gold currency. An e-currency system may be fully backed by gold (like e-gold and c-gold), non-gold backed, or both gold and non-gold backed (like e-Bullion and Liberty Reserve). Also, some private organizations, such as the US military use private currencies such as Eagle Cash.

Many systems will sell their electronic currency directly to the end user, such as Paypal and WebMoney, but other systems, such as e-gold, sell only through third party digital currency exchangers.

In the case of Octopus Card in Hong Kong, deposits work similarly to banks'. After Octopus Card Limited receives money for deposit from users, the money is deposited into banks, which is similar to debit-card-issuing banks redepositing money at central banks.
Some community currencies, like some LETS systems, work with electronic transactions. Cyclos Software allows creation of electronic community currencies.
Ripple monetary system is a project to develop a distributed system of electronic money independent of local currency.

Off-line anonymous electronic money
In off-line electronic money the merchant does not need to interact with the bank before accepting a coin from the user. Instead he can collect multiple coins Spent by users and Deposit them later with the bank. In principle this could be done off-line, i.e. the merchant could go to the bank with his storage media to exchange e-cash for cash. Nevertheless the merchant is guaranteed that the user's e-coin will either be accepted by the bank, or the bank will be able to identify and punish the cheating user. In this way a user is prevented from spending the same coin twice (double-spending). Off-line e-cash schemes also need to protect against cheating merchants, i.e. merchants that want to deposit a coin twice (and then blame the user).

In cryptography anonymous e-cash was introduced by David Chaum. He used blind signatures to achieve unlinkability between withdrawal and spend transactions. In cryptography, e-cash usually refers to anonymous e-cash. Depending on the properties of the payment transactions, one distinguishes between on-line and off-line e-cash. The first off-line e-cash system was proposed by Chaum and Naor. Like the first on-line scheme, it is based on RSA blind signatures.

Future evolution
The main focuses of digital cash development are 1) being able to use it through a wider range of hardware such as secured credit cards; and 2) linked bank accounts that would generally be used over an internet means, for exchange with a secure micropayment system such as in large corporations (PayPal).

Furthering network evolution in terms of the use of digital cash, a company named DigiCash is at the focus of creating an e-cash system that would allow issuers to sell electronic coins at some value. When they are purchased they come under someone’s own name and are stored on his computer or under his online identity. At all times, the e-cash is linked to the e-cash company and all transactions go through it, so the e-cash company secures anything that is purchased. Only the company knows your information and will properly direct purchases to your location.

Theoretical developments in the area of decentralized money are underway that may rival traditional, centralized money. Systems of accounting such as Altruistic Economics are emerging that are entirely electronic, and can be more efficient and more realistic because they do not assume a zero-sum transaction model.

Issues
Although digital cash can provide many benefits such as convenience and privacy, increased efficiency of transactions, lower transaction fees, new business opportunities with the expansion of economic activities on the Internet, there are many potential issues with the use of digital cash. The transfer of digital currencies raises local issues such as how to levy taxes or the possible ease of money laundering. There are also potential macroeconomic effects such as exchange rate instabilities and shortage of money supplies (total amount of digital cash versus total amount of real cash available, basically the possibility that digital cash could exceed the real cash available). These issues may only be addressable by some type of cyberspace regulations or laws that regulate the transactions and watch for signs of trouble.

The threat of online security: How safe is our data?

Cyber attacks fall under several general categories: (1) accidental actions and (2) malicious attacks. Within this latter category there are numerous subgroups, including computer viruses, denial of service attacks and distributed denial of service attacks. A third area of cyber vulnerability, online fraud, comprises issues such as identity theft and data theft.

Accidental Actions
Accidental actions contribute to a large number of computer security risks. This category encompasses problems arising from basic lack of knowledge about online security concepts and includes issues such as poor password choices, accidental or erroneous business transactions, accidental disclosure, and erroneous or outdated software. Related problems occur as a result of
misconfigured security products and information leakage resulting from insecure information transfers. Education and prudence should be considered key defenses in limiting the frequency and extent of such events, since this form of cyber vulnerability is largely self-inflicted and avoidable.

Malicious Attacks
Attacks that specifically aim to do harm are known as premeditated or malicious attacks. They can be further broken down into attacks caused by malicious code and those caused by intentional misrepresentation. Misrepresentation is most often seen with regard to on line fraud and identity theft (see below). Malicious code, on the other hand, is at the root of so-called "crackings" and "hackings" - notable examples of which include computer viruses, data theft, and Denial of Service (DOS) attacks.
Computer Viruses
The most common form of malicious code is a computer virus -- a program or a fragment of code that replicates by attaching copies of itself to other programs. There are four main classes of viruses:
1. The first class consists of file infectors, which imbed themselves into ordinary executable files and attach to other system executables when the file is run.
2. The second category is system or boot-record infectors, which infect the first sector on a driver from which the operating system is booted-up. These viruses are not as prevalent now that floppy disks are less frequently used.
3. The third group of viruses is called macro viruses, which infect data files that include scripting "macros."
4. Finally, viruses that use more than one attack method are called multi-part viruses. The "Melissa" virus/worm of 1999, which caused about $80 million in damages worldwide, was malicious code imbedded in a Word® document that, when opened, would send itself out as an attachment to the first fifty people in an electronic mail client address book. The May 2000 "I LOVE YOU" virus was even simpler -- a small piece of code attached to electronic mail. Double-clicking on the executable caused it to send an e-mail to everyone in an address book, subsequently damaging victims' machines. Fast-spreading viruses like "I LOVE YOU" cause e-mail servers to overload and businesses to shut down email correspondence. For example, in one day, the "I LOVE YOU" virus caused over $100 million in United States damages and over $1 billion in worldwide losses.
Denial of Service Attacks
Denial of service attacks, another form of malicious code, are carefully crafted and executed. Denial of Service Attacks are not new, yet they are growing in sophistication. Traditional DOS attacks usually involve one computer attacking another, but the use of multiple computers in a highly organized attack is becoming increasingly common. Such attacks, known as Distributed Denial of Service attacks (DDOS), were witnessed in a number of large corporate computer shutdowns in 2000. Understanding the technical components of a DDOS attack is important, since these attacks precisely reveal the vulnerabilities inherent to the Internet. A DDOS attack functions by overwhelming a server with a deluge of messages that appear to be normal. The DDOS attacker strategically builds an army of key players including:
1. one client machine for coordinating the attack;
2. three to four host machines, which are battlefields under the attacker's direct control; and
3. potentially hundreds of broadcasters, which are the legions that run the code to generate the flood of packets that attack a target system (consisting of at least one machine). Broadcasters are recruited by port scanning software that determines the machines on which the attacker can gain root privileges. On these machines, the attacker can embed hidden programs that wait for instructions from the Host machines. The attacker sends a list of the Internet Protocol (IP) addresses of the target machines via strong encryption. With all components ready, the attacker then instructs each machine to simultaneously send data packets against the given IP addresses using false source addresses, in a process known as "spoofing." Since the attack contains too much information to be processed and originates from too many different machines with fraudulent IP addresses, the target servers can survive the attack only by disconnecting from the Internet or by denying service indiscriminately to all clients sending incoming data. Hence, the Distributed Denial of Service attack is so-named in order to describe the resulting consequences of a multi-machine attack. Not surprisingly, for any business on line, a DDOS attack severely restricts its ability to maintain the availability of its commercial service.

Online Fraud
Online fraud is a broad term covering Internet transactions that involve falsified information. Some of the most common forms of online fraud are the sale via Internet of counterfeit documents, such as fake IDs, diplomas, and recommendation letters sold as credentials; offers of easy money, such as workat- home offers that claim to earn individuals thousands of dollars for trivial tasks; prank calls, in which dial-up connections lead to expensive long distance charges; and charity facades, where donations are solicited for phony causes.
Identity Theft
Identity theft is a major form of online fraud, or misrepresentation. Personal identity theft on the Internet is the newest form of fraud that has been witnessed in traditional settings for many years. For example, in traditional settings, thieves open credit card accounts with a victim's name, address and social security number, or bank accounts using false identification. In the online world, electronic commerce information can be intercepted as a result of vulnerabilities in computer security. Thieves can then take this information (such as credit card numbers) and do with it what they will. This is one of the reasons for which it is critical that consumers and organizations avail themselves of appropriate computer security tools, which serve to prevent many such interceptions. Identity theft can also be undertaken on a large scale, as in the case of a company or even a city. For example, in January 2001, the entire municipality of Largo, Florida lost e-mail service for over a week when an unknown company based in Spain compromised its identity. The company hacked into the city's e-mail relay system to steal the Largo.com identity. Soon enough, e-mail spam seemingly from Largo.com addresses flooded the net, and many Internet Service Providers blacklisted all incoming and outgoing electronic messages from the city.
Data Theft
Data theft is the term used to describe not only the theft of information but also unauthorized perusal or manipulation of private data. Examples of data theft abound. In 1996, a 16-year-old British youth and an accomplice stole order messages that commanders sent to pilots in air battle operations from the Air Force's Rome Laboratory in New York. The two also used the Air Force's own computers to obtain information from NATO headquarters and South Korea's Atomic Research Institute. In April 2001, two employees of Cisco Systems were indicted for obtaining unauthorized access to Cisco stock. These two men, who worked in the company's accounting division, broke into the computer system that handled stock distribution and were able to transfer stock shares to their private portfolios. The total value of their shares over two separate transfer attempts was nearly $6.3 million, according to the US Department of Justice. These are but a few examples. Anyone, young or old, whether inside or outside a company, can disrupt proper national and business activities by compromising systems in such a manner.

Examples and Prevention Methods of Phishing~

Phishing is a technique used to gain personal information for purposes of identity theft, using fraudulent e-mail messages that appear to come from legitimate businesses. These authentic-looking messages are designed to fool recipients into divulging personal data such as account numbers and passwords, credit card numbers and Social Security numbers.

PayPal and eBay were two of the earliest targets of phishing scams. This PayPal phishing scams tries to trick recipients by pretending to be some sort of security alert. Claiming that someone 'from a foreign IP address' attempted to login to your PayPal account, the email urges recipients to confirm their account details via the link provided. As with other phishing scams, the displayed link is bogus - clicking the link actually takes the recipient to the attacker's website. The eBay phishing email includes the eBay logo in an attempt to gain credibility. The email warns that a billing error may have been made on the account and urges the eBay member to login and verify the charges.

The following example is a phishing scam targeting SunTrust bank customers. The email warns that failing to comply with the instructions may result in account suspension. Note the use of the SunTrust logo. This is a common tactic with 'phishers' who often use valid logos they have simply copied from the real banking site in an attempt to lead credence to their phishing email.

Next, Citibank phishing example. The attacker claims to be acting in the interests of safety and integrity for the online banking community. Of course, in order to do so, users are instructed to visit a fake website and enter critical financial details that the attacker will then use to disrupt the very safety and integrity they claim to be protecting.

As seen with the previous Citibank phishing scam, the Charter One phishing email also pretends to be working to preserve the safety and integrity of online banking. The email also includes the Charter One logo in an attempt to gain credibility.

Prevention methods of Phishing Scams
1.Be suspicious of any email with urgent requests for personal financial information
-unless the email is digitally signed, users can't be sure it wasn't forged or 'spoofed'
-phishers typically include upsetting or exciting (but false) statements in their emails to get people to react immediately
-phishers typically ask for information such as usernames, passwords, credit card numbers, social security numbers, date of birth, etc.
-phisher emails are typically NOT personalized, but they can be. Valid messages from users’ bank or e-commerce company generally are personalized, but always call to check if users are unsure

2.Don't use the links in an email, instant message, or chat to get to any web page if you suspect the message might not be authentic or the users don't know the sender or user's handle
-instead, call the company on the telephone, or log onto the website directly by typing in the Web adress in users browser

3.Avoid filling out forms in email messages that ask for personal financial information
-users should only communicate information such as credit card numbers or account information via a secure website or the telephone.

4.Always ensure that users are using a secure website when submitting credit card or other sensitive information via your Web browser
-Phishers are now able to 'spoof,' or forge BOTH the "https://" that users normally see when users are on a secure Web server AND a legitimate-looking address. Users may even see both in the link of a scam email. Again, make it a habit to enter the address of any banking, shopping, auction, or financial transaction website users themselves and not depend on displayed links.
-Phishers may also forge the yellow lock users would normally see near the bottom of users’ screen on a secure site. The lock has usually been considered as another indicator that users are on a 'safe' site. The lock, when double-clicked, displays the security certificate for the site. If users get any warnings displayed that the address of the site users have displayed does NOT match the certificate, do not continue.

5.Remember not all scam sites will try to show the "https://" and/or the security lock. Get in the habit of looking at the address line, too. Were users directed to PayPal? Does the address line display something different like "http://www.gotyouscammed.com/paypal/login.htm?" Be aware of where users are going.

6.Consider installing a Web browser tool bar to help protect users from known fraudulent websites. These toolbars match where users are going with lists of known phisher Web sites and will alert users.
-The newer version of Internet Explorer version 7 includes this tool bar as does FireFox version 2
-EarthLink ScamBlocker is part of a browser toolbar that is free to all Internet users - download at http://www.earthlink.net/earthlinktoolbar

7.Regularly log into users’ online accounts
-don't leave it for as long as a month before users check each account

8.Regularly check users’ bank, credit and debit card statements to ensure that all transactions are legitimate
-if anything is suspicious or users don't recognize the transaction, contact users’ bank and all card issuers

9.Ensure that users’ browser is up to date and security patches applied

10.Always report "phishing" or “spoofed” e-mails to the following groups:
-forward the email to reportphishing@antiphishing.org
-forward the email to the Federal Trade Commission at spam@uce.gov
-forward the email to the "abuse" email address at the company that is being spoofed (e.g. "spoof@ebay.com")
-when forwarding spoofed messages, always include the entire original email with its original header information intact
-notify The Internet Crime Complaint Center of the FBI by filing a complaint on their website: www.ic3.gov/

How to safeguard our personal and financial data

Nowdays, computer are very common to everyone. We use computer to save our data and do some financial transaction such as online banking in order to save time. Therefore, have you done a proper safeguard of ur data? How do you safeguard your personal and financial data?

There are some suggestions and ways to safeguard your personal and financial data:

Password-protect your access
-Use a strong password or pass-phrase to protect access to your data.

Limit physical access
-Whenever possible, store confidential data on devices that are physically secured.Allow only authorized individuals access to those devices, and monitor access to those devices whenever possible.

Encrypt stored confidential data
-Whenever possible, encrypt stored confidential data, whether it is being permanently or temporarily stored. This can help prevent unintended disclosure even if your system has been compromised. Data can be protected by encrypting the entire storage drive (whole disk encryption) or as selectively as you need, such as by folder or even individual files. Be sure to only use the method or tool your organization has approved. If the encryption key or password is lost, access to the data may be lost as well. There are many products or options available, so be sure to carefully select one that is right for you and your organization.

Install anti-virus software and a firewall
-Protect yourself against viruses and Trojan horses that may steal or modify the data on your own computer and leave you vulnerable by using anti-virus software and a firewall.

Regularly scan your computer for spyware
-Spyware or adware hidden in software programs may affect the performance of your computer and give attackers access to your data. Use a legitimate anti-spyware program to scan your computer and remove any of these files.

Avoid accessing financial information in public
-Resist logging on to check your bank balance when working from a coffee shop that offers wireless access. These systems are convenient, but also unknown. Casual users have no way of assessing how sturdy their firewalls are.

Don't open mystery attachments

-Never open an attachment or click on a link sent to you by an unknown party. Attachments can contain viruses and links can lead unsuspecting users to dummy sites where they are asked to input financial information.

The application of 3rd party certification programme in Malaysia.

Nowadays, the top application of 3rd party certification program on Malaysia is provided by the MSC (Multimedia Super Corridor) Trustgate .com Sdn Bhd. MSC Trustgate.com Sdn Bhd was incorporated in year 1999 and it had the licensed Certification Authority in Malaysia since 1999. Besides that, that is also some famous application of 3rd party certification program in Malaysia such as Verisign trust network. The VeriSign trust network is the leading Secure Sockets Layer (SSL) Certificate Authority enabling secure e-commerce, communications, and interactions for Web sites, intranets, and extranets.

Furthermore, MSC Trustgate.com Sdn Bhd provide trusted and encryption technology that secure customers online communication, hence protect customer vital business information from prying eyes.MSC Trustgate.com Sdn Bhd are also is the first Malaysian Internet trust solutions company authorized to offer 128-bit SSL Server ID that is now used in financial institutions, insurance companies, e-government, healthcare organizations and other online trading. MSC Trustgate.com Sdn Bhd also offers Digital ID for MyKad (Malaysian National Identity Card) that is now used in online tax filing, e-procurements and others.

In addition, VeriSign’s global infrastructure provides a critical layer of intelligence and security that enables key transactions, protects data, and safely delivers information across myriad protocols and devices. Besides that, in a billion of times each day, companies and consumers rely on the Internet infrastructure to communicate and conduct commerce with confidence. The infrastructure also provides core services that allow the Internet to function smoothly and reliably, everyday. Moreover, it’s also providing layered security solutions that protect an organization’s consumers, brand, Web site, and network. The digital certificates protect over 900,000 Web servers worldwide, so the users do not have to concern about it. VeriSign offers a comprehensive spectrum of products and services that help a growing number of organizations and individuals to communicate and conduct commerce with confidence; it is a good service for everyone.

By using the digital certificates can improve the users trust in order to secure the users online business. Besides that, people must to be a smart users when conduct an online business. First,the users must identify the online business website is trustable and the website is prove by the licensed and qualified for conduct the business. Moreover, MSC Trustgate.com Sdn Bhd are provide trusted and encryption technology that secure customers online communication, it can avoid the customer’s confidential information to be disclosed. Furthermore, the digital certificates can assist the development of greater internet based activities.

An example of an E-Commerce failure and its causes

Electronic commerce, commonly known as e-commerce, consists of the buying and selling of product or services over electronic systems such as the Internet and other computer networks. There are some e-commerce failure. Kozmo.com is 1 of them.

Kozmo.com was founded by young investment bankers Joseph Park and Yong Kang in March 1998 in New York City.You could order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour.The model was criticized by some business analysts, who pointed out that one-hour point-to-point delivery of small objects is extremely expensive and were skeptical that Kozmo could make a profit as long as it refused to charge delivery fees. The company countered in part that, in their target markets, savings due to not needing to rent space for retail stores would exceed the costs of delivery.

The company raised about $250 million, including $60 million from Amazon.com. It entered a five-year co-marketing agreement with Starbucks in February 2000, in which it agreed to pay Starbucks $150 million to promote its services inside the company's coffee shops. Kozmo.com ended its deal in March 2001 after paying out $15 million. In July 2000, at the height of its business, the company operated in Atlanta, Chicago, Houston, San Francisco, Seattle, Portland, Boston, New York, Washington, San Diego and Los Angeles.

While popular with college students and young professionals, the company failed soon after the collapse of the dot-com bubble, laying off its staff of 1,100 employees and shutting down in April 2001. It was clear that it cost too much to deliver a DVD and a pack of gum. 18 locations nationwide and their Memphis distribution center were liquidated by a veteran entertainment wholesaler from Florida. Kozmo had filed an IPO with Credit Suisse First Boston before the layoffs, but it never went public. According to documents filed with the Securities and Exchange Commission, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million.

From the failure of Kozmo.com we know that we must have a good market plan before doing E-Commerce. We must come out with a good marketing strategy. We oso know that not every product can sell in the internet. Offering a costly home-delivery service for free although can attract many customers but it was also the main reason to cause failure in Kozmo.com.

An example of an E-commerce success and its causes

In just a few years, online auction company eBay went from a little dot.com company to one of the biggest business stories in America while some others aution company went into bankcruptcy.

Two years ago, there were an estimated 50 million people worldwide using the Web site. Two years later, no one could have predicted that within two years , the number of eBay users would more than double, to more than 125 million worldwide today. Those people are buying and selling more than $1,000 worth two years ago, there were an estimated 50 million people worldwide using the web site of goods every second. It makes alot of them amaze and curious about the success of eBay.

There are reporters interviewed Pierre Omidyar(founder of eBay) about the success story of eBay. He told the press that eBay really allows people to often times connect with some very fond and special early childhood memories. It could be anything from collecting baseball cards to toy soldiers to Barbie dolls to doll houses, and so forth. It also allows people to make that connection and relive a lot of those very vivid and very fond memories that they have from an earlier period of time. Another factor to consider, he thinks, is that people really enjoy the experience of the shopping bazaar. They consumers enjoy the hunt. The consumers enjoy looking around for merchandise. The other component is that he believes the consumers love the competition of the bidding process. He further said that everybody likes to get a bargain, and everybody in some way, shape, or form, likes to haggle a little bit over the price. And the eBay auction format allows users to do that.The other thing is that as it has grown and become a very practical place to buy and sell collectibles or commodities.

But what about the views from others. To most of the eBay user, eBay trust and safety team is dedicated to making eBay a safe and reliable place to trade. eBay works behind the scenes to develop the technology and skills to fight fraud and empower the community to understand and conduct safe trading practices. eBay also strives for a level playing field and information transparency, enabling economic opportunity for the community and encouraging open, honest and accountable transactions. Feedbacks obtained proved that products on sales are of good quality and in very reasonable price. One customer, in the name of Reverend Steve Hance claimed " I got an album for a lot less than I would have paid for it in a second-hand shop in London".

Besides that, cost control is also the main factor of success. eBay’s founder, Pierre Omidyar and his team were the operators. They manage the enterprise with their own skills in order to keep their overheads low. Meanwhile, profits are generated from commission on sales.

Furthermore eBay is also a success legend because it can reach globally to hundred thousands of people enabling them to make a business of their own. eBay who gains access to a global market place can reach to more potential buyers than locally and with profits keep pouring in.

Other s factor is that the fees systems practiced by eBay that makes all sellers and buyers love this website. The listing fees charged is to keep the items in eBay fresh. It also enables sellers to sell their items, similar to an auction. Starting from the lowest price to let each bidder offer higher price, this will prevent sellers from pricing items too high or too low. While the auction fees charged are charged by eBay only at each successful sales and charged slightly higher then the item’s minimum charge.

In the nutshell, eBay is believed to continue to perform well and profit keep pouring in for the next few years and continue to become the dominant company in the e-commerce world.

The followings are the additional information for eBay:

The weird world of eBay:
- eBay is the number one e-commerce site in the world, receiving 121,520 'hits' a minute and 175m searches a day. Every day it receives 10m bids and accounts for a third of all British internet traffic.
- Manchester United players are no longer allowed to sign shirts at the gates of the training ground because so many were being sold on eBay.
- eBay was founded nine years ago by Frenchborn computer-systems developer Pierre Omidyar who was trying to find plastic spring-loaded Pez sweet dispensers for his collector girlfriend Pam. He put an advert on the internet, got a huge response, and today they're both multimillionaires.
- Bristol University student Rosie Reid, 18, auctioned her virginity on eBay last year. She received 400 bids and accepted one of £8,400.
- More than 21 million items are on sale worldwide on the site at the moment, with three million new ones offered for auction every day. Goods are traded in more than 45,000 categories, ranging from antiques to stamps and video games.
- A man from Sevenoaks, Kent, sparked uproar when he put his own kidney up for sale on eBay to raise money for treatment for his daughter, who has cerebral palsy. He was spared when a group of fundraisers promised him £30,000. Several other eBayers have tried selling organs but have been stopped by eBay.
- £1bn worth of clothes and accessories were sold on eBay last year.
- A man once sold his own soul for £11.61. He promised to send the buyer an ownership document.
- A car is sold on eBay every four minutes.

http://www.ebay.com/