Almost every modern person uses electronic money to one degree or another. They are increasingly replacing the usual paper bills and are gradually becoming the main method of payment for goods and services. However, only relatively few people know how electronic money came to be. The origins of such a currency go back centuries.

 

How electronic currency was born

Humanity has long been looking for ways to simplify money transfers. Already in the thirteenth century, deposit transfers were practiced. But the buyer, who wanted to carry it out, had to personally meet with a bank representative and provide a verbal authorization to carry out such an operation. Lets make a reservation that the then financial institutions only remotely resembled modern lending institutions, but successfully coped with the main functions of banks. Later, paper checks appeared, on which the buyers will was confirmed by his written signature. They have become widespread since the seventeenth century.

The direct progenitor of electronic currency was the telegraphic transfer. With its help, the interested person could remotely, without unnecessary paperwork, transfer money from one account to another. This begs a quite natural question, where did electronic money appear? For the first time in history, a wire transfer was carried out in 1918 by the Federal Reserve Bank of America. Actually, the emergence of electronic money is associated with the use of wire transfer. Pretty soon, it was transformed into an electronic telegraph, which was actively used by individual entrepreneurs. People were able to perform the necessary operations - money transfers in any direction using a computer or a debit card. The spread of electronic transfers has opened up access to a new type of payment system for the general population.

 

Stages of development

Before electronic money appeared, the first magnetic credit cards (the middle of the last century) of the Visa type were issued. At that time, there were already credit cards made of metal. They were available only to wealthy customers who, during the purchase process, put the card into a special device and the letters embossed on it were transferred to a paper check. It was only in the sixties that the first plastic cards with a magnetic stripe appeared, where electronic money was stored. Another breakthrough dates back to 1975, when the Frenchman Roland Moreno created an electronic memory card.

The next stage in the development of electronic currency falls on 1990-2000. During this period, there is an active introduction of the so-called smart cards with an embedded miniature chip. They can be called one of the most common electronic payment tools. But it cannot be said that magnetic or smart cards have completely replaced the familiar and so popular paper money. They only gave users the opportunity to use their resources much more efficiently. With the advent of electronic money, ordinary paper banknotes do not disappear from circulation. Yes, their share in the total money supply has significantly decreased, but users continue to actively use paper bills to carry out mutual settlements. This is mainly due to the privacy that cash settlement provides. Fiduciary currencies are especially often used in third world countries, but technical progress in the banking sector is gradually spreading throughout the planet and the number of people using electronic systems and currencies for mutual settlements is steadily growing.

The third, the last stage of development at the moment, began in 2000. A new milestone in the development of electronic payments was the emergence of the so-called network money. They enable users to make payments in real time. This service became available thanks to software that was specially developed for making online payments.

 

What contributed to the development of electronic money

Electronic money owes its appearance to the development of the Internet. As the popularity of the world wide web grew, new markets opened up. Online stores and platforms of various types for the sale of goods and services have become widespread. In them it was possible to make a purchase online. But the question of payment immediately arose. After all, if the store was located in another country, then how to quickly and safely pay for the purchased goods? And the solution came in the form of electronic money.

For the first time their release was established by the doctor of sciences from California David Chaum. In 1994, he founded DigiCash, within which he began issuing an electronic currency called eCash. He also developed a payment system of the same name, which was adopted by some banks. The first year of the companys activity brought it a thousand users and cooperation with 90 retail outlets. Today these numbers seem ridiculous, but then they meant a good result. However, DigiCash never managed to gain the confidence of the mass consumer and the company ultimately declared itself bankrupt. However, David Chaum acquired the status of the father of electronic currency.

Subsequent attempts became more successful and in America, the state where electronic money first appeared, world-famous services began to operate - MoneyBookers, PayPal and others. The post-Soviet states, where such payment systems as Yandex.Money and WebMoney are widespread, were no exception. David Chaums idea has served as the basis for the creation of dozens of more successful projects. And after some fifteen years, e-commerce has become commonplace, which has become a worthy competitor to even the most reputable banking institutions.

At the present stage, electronic money is widely used in almost all spheres of life. With their help, you can pay not only for the necessary purchases in the online store. Payment systems make it possible to pay off debts for utilities, pay fines and state fees without leaving home. Thanks to electronic payments, people can quickly send funds to their family and friends both within one state and abroad. The main advantages of electronic money over traditional paper notes are:

The convenience of use.
Efficiency of transactions.
High level of payment security.
In the future, they will finally displace traditional fiduciary banknotes from the financial Olympus.