Procuring electronic cash

Generation of a random number by the consumer's computer and signing of that number by the bank as a note.

In exchange of money debited from the customers account, the bank uses its private key to digitally sign the note for the amount requested and transmits the note back to the customer. The network currency server in effect is issuing a note with a serial number and a currency amount. By digitally signing it, the bank is committing itself to back that note with its face value in real currency.

This method is safe as neither the customer nor the merchant can counterfeit the banks signature. Both of them can verify that the payment is valid, since each knows the banks public key. The bank is protected against forgery, the payee against the banks refusal to honor a legitimate note, and the user against false accusations and invasion of privacy. Let us now see how this process works in practice.

There are a number of proposals and implementations for e cash, as having said earlier. The basic concept behind all of them is the game. We will now look at one particular implementation, which could facilitate our understanding. You may come across some different implementation in other readings, but the basic concept will remain the same. DigiCash was a trailblazer in the electronic cash field. David Chaum started this company in the Netherlands in order to use an encryption technique that the United States banned from export. Later, Chaum. moved DigiCash to the Silicon Valley. DigiCash made software products that allowed users to buy from the Internet, and pay for them using anonymous electronic cash. The procedure here is:

Every person using e cash has to maintain an e cash account with a digital bank on the Internet. Using that account, people can withdraw or deposit e cash.

When an e cash withdrawal is made, the PC of the e cash user calculates how many digital coins of what denominations are needed to withdraw the requested amount.

Next, random serial numbers for those numbers will be generated and a random blinding factor will be included. The result of these calculations will be sent to the bank.

The bank will encode the blinded numbers with its secret key and at the same time debit the account of the user. The authenticated coins are now sent back to the user.

The user will take out the blinding factor that he had introduced earlier. The serial numbers along with their, signatures are digital coins, ready for use.

The 'blinding factor' may seem to be a, bit confusing to you. Well it is actually introduced to accomplish the much sought anonymity. Anonymity refers to freedom of use to do any sort of buying without revealing your identity. This is done through blinding. When the e cash software generates a note, it masks the original number or 'blinds' the note using another random number and transmits it to the bank. The 'blinding' carried out by the computer's software makes it impossible for anyone to link the payment to the payer. Even the bank cannot connect the signing with the payment since the customers original note number was blinded when it was signed. In other words, it is a way of creating anonymous, untraceable currency.

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