2. David Chaum
• Digital cash was invented by David Chaum in 1988.
• In 1990, he founded Digicash, a pioneering firm in the area, but
attracted only $160 US dollar in two years.
• Declared bankruptcy in 1998, and was bought by e-Cash
Technologies .
• Now e-Cash is having its own troubles and has been bought by
another company Called Info Space.
3. What is Digital Cash?
Digital cash is a system of purchasing cash credits in
relatively small amounts, storing the credits in your
computer, and then spending them when making
electronic purchases over the Internet.
A payment message bearing a digital signature which
functions as a medium of exchange or store of value.
Need to be backed by a trusted third party, usually the
government and the banking industry.
Examples- e-coins, E- wallet, Transfer money
4. Properties of a Digital Cash
System
Monetary value
Interoperability
Retrievability
Security
Portable
Two-way
6. HOLDING ELECTRONIC CASH: ONLINE
AND OFFLINE CASH
Two approaches to holding cash: online storage and offline storage.
Online cash storage means that an online bank is involved in all transfers of
electronic cash.
Offline cash storage is the virtual equivalent of money you keep in your wallet.
However, it must prevent double or fraudulent spending.
7. ADVANTAGES OF ELECTRONIC CASH
Electronic cash transactions are more efficient and less costly than other methods.
The distance that an electronic transaction must travel does not affect cost.
The fixed cost of hardware to handle electronic cash is nearly zero.
Electronic cash does not require that one party have any special authorization.
8. DISADVANTAGES OF ELECTRONIC CASH
Electronic cash provides no audit trail.
Because true electronic cash is not traceable, money laundering is a problem.
Electronic cash is susceptible to forgery.
So far, electronic cash is a commercial flop.
9. Past and Present E-cash Systems
E-cash not popular in U.S., but successful in Europe and
Japan
Reasons for lack of U.S. success is not clear
• Manner of implementation too complicated
• Lack of standards and interoperable software that will run easily on a variety of
hardware and software systems
