Comprehensive analysis of electronic currency security, privacy and legal issues

Electronic currency plays an increasingly important role in the modern financial system. However, its widespread use is also accompanied by a series of security, privacy and legal issues that need to be resolved.

Security issues

Security is a core concern for electronic money systems, especially within the banking industry and externally. The adoption of electronic money increases security risks, transforming traditionally siled systems into an open and risk-laden environment. All retail payment systems are vulnerable to some degree, and electronic money introduces new security challenges such as authentication, recognition and integrity.

Security failures can occur at any level: consumer, merchant, or publisher. Potential security factors include: stolen devices, counterfeit devices, and alteration of data stored or transmitted between devices. Security attacks are often motivated by financial gain, but may also be aimed at compromising the system itself. The causes of such crashes can be roughly divided into three categories: criminal sabotage, accidental hacker attacks, and vulnerabilities in system design or installation.

Privacy issues

With the popularity of electronic money and electronic banking, how to effectively protect user privacy has become a prominent issue. Although electronic transactions are conducted under certain controls, consumers are still concerned that their property, credit and consumer information may be leaked. In addition, as transaction and savings information is “disseminated”, criminal activities related to it have gradually increased. Although many users would like the option of anonymous transactions, it is difficult to achieve truly anonymous economic transactions due to security concerns and concerns about money laundering.

Congestion problem

Electronic currency and its related financial services rely heavily on strong Internet support, but this structure also brings problems such as network congestion and content control. Although the point-to-point communication characteristics of the Internet have advantages, it also causes network congestion and uneven information. Hackers usually exploit system vulnerabilities to attack, causing massive network congestion, thereby rendering electronic money and electronic banking useless.

Legal issues

The use of electronic money also raises a series of legal issues. First, electronic currency has a particularly obvious impact on monetary policy. As electronic money becomes more popular, the demand for cash decreases, making the operations of central banks in regulating money markets more complex. The widespread use of electronic money may lead to a reduction in central bank revenue, which will affect its normal operations.

Secondly, improper use of electronic currency, such as black market transactions and money laundering activities, also poses regulatory challenges. Preventing and combating these behaviors requires a huge investment of time and resources, and the anonymity of using electronic currencies may provide convenience for tax evaders and increase the difficulty of supervision.

Finally, the global nature of electronic money makes cross-border payment and legal application issues increasingly prominent. When electronic currency payments cross national boundaries, it becomes extremely complex to formulate effective regulatory solutions. How to use computer networks to simplify international payments and the applicable legal issues in the event of disputes all need to be discussed by the industry.

To sum up, there are many problems in electronic currency in terms of security, privacy protection and legal compliance, which urgently need to be solved by the joint efforts of the industry and regulators.