Advantages And Disadvantages Of Electronic Money

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Electronic money, or e-money, is the money balance recorded electronically on a stored-value card. These cards have microprocessors embedded which can be loaded with a monetary value. Another form of electronic money is network money, software that allows the transfer of value on computer networks, particularly the internet. Electronic money is a floating claim on a private bank or other financial institution that is not linked to any particular account.[1] Examples of electronic money are bank deposits, electronic funds transfer, direct deposit, payment processors, and digital currencies.Electronic money can either be centralized, where there is a central point of control over the money supply, or decentralized, where the control over the…show more content…
Below Fig shows the monthly standard deviation of daily log returns of bitcoins on the three exchanges. There clearly have been months when prices and returns have been volatile. Compared to the well-known one-percent per day typical standard deviation of broad stock return indices in the United States, the standard deviation is quite high. The mean standard deviations across months are 7.2 percent per day for Mt. Gox, 5.1 percent per day for btce and 5.5 percent for Bitstamp.30 The standard deviations are very skewed, with lower medians of 5.2, 4.7 and 4.4 percent per day, respectively. While this is lower, it is not low relative to holding a broad portfolio of stocks. The minimum values of the standard deviations are quite a bit lower, being 1.1, 0.9 and 1.0 percent for the three exchanges respectively. To some extent, the volatility can be attributed to extraordinary developments, with maximum standard deviations of 17.0 percent in June 2011 for Mt. Gox, 16.2 percent in April 2013 for btce and 16.2 percent in October 2011 for Bitstamp. There are high correlations of the standard deviations, even though the differing dates of maximum volatility might suggest
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