Legal Definitions - digital cash

Digital cash, also commonly known as e-money or electronic money, refers to monetary value that is stored and transferred exclusively in electronic form. Unlike physical currency like banknotes or coins, digital cash exists only as data and is typically issued by a financial institution or payment service provider. It represents a claim on the issuer for an equivalent amount of traditional currency and can be used to make payments, transfer funds, or store value electronically.

• Example 1: Mobile Payment for Groceries

  A shopper uses their smartphone's mobile wallet application to pay for groceries at a supermarket. Instead of handing over physical bills, they tap their phone on the payment terminal, and the funds are digitally transferred from their linked bank account or a pre-loaded balance within the app to the store's account.

  This illustrates digital cash because the transaction involves no physical currency. The money exists as electronic data, transferred instantly and securely from the shopper's digital balance to the merchant's, representing a digital equivalent of a cash payment.

• Example 2: Online Gaming Credits

  A user purchases credits for an online video game using their debit card. These credits are stored within their game account and can be used to buy in-game items or unlock features. While not directly convertible to physical cash by the user, these credits represent a stored monetary value that was acquired using traditional currency and can be spent within the digital ecosystem.

  Here, the gaming credits function as a form of digital cash within the game's economy. They are an electronic representation of value that was purchased with real money and can be used for transactions solely within that digital environment, without any physical exchange.

• Example 3: Freelancer Receiving Payment via Online Platform

  A freelance writer completes a project for an international client and receives payment directly into their online payment service account (e.g., PayPal, Wise). The writer then uses this balance to pay for a monthly subscription to a professional software tool.

  In this scenario, the funds held within the online payment service account are digital cash. They are not physical banknotes but an electronic balance that can be received, held, and spent for various goods and services online, demonstrating its function as a digital equivalent to physical money.