Chapter14.ppt

Chapter 14  Electronic Commerce 1
Electronic Commerce
 Electronic commerce:
o Growing popularity
o Billions of dollars at stake
o A major proving ground for computer, network,
and Internet security mechanisms
 Challenges that electronic commerce must
deal with:
o Protecting intellectual property on the Internet
o Guarding users’ online privacy
o Establishing acceptable electronic payment
systems

What is Electronic
Commerce?
 Electronic commerce (or e-commerce)
encompasses all business activities that are
conducted using computer-mediated networks
 Subcategories:
o Business-to-consumer (a.k.a B2C or e-retail) -
consumers purchasing goods and services (mostly over
the Internet)
 According to the Census Bureau, there was $8.7 billion in
e-retail sales in the last quarter of 2000 (~1% of the $856
billion in retail sales)
o Business-to-business (a.k.a. B2B) - transactions between
businesses over computer networks
o Support transactions (e.g. recruiting employees, holding
virtual meetings, managing inventory, etc.)

E-Commerce – Benefits and
Challenges
 Benefits:
o For businesses:
 Increased sales
 Decreased costs
o For consumers:
 Increased choice
 Increased convenience
 Decreased prices
 Challenges:
o Protecting intellectual property
o Guarding online privacy
o Establishing acceptable electronic payment systems

Copyright
 Copyright - the notion that the creator of an original work
has certain rights to restrict the work’s duplication or
distribution
 Copyright protects:
o Literary works
o Musical works
o Dramatic works
o Sculptures
o Photographs
o Movies
o Any other form expression conveyed using a tangible medium
 Copyright does not protect:
o Ideas, processes, concepts, principles, or other non-tangible
articles

Copyright (cont)
 Rational for copyright:
o In order to encourage people to create new and useful
works, creators must be granted protections that enable
them to control their work and profit from it
 Legal status of copyright (in the U.S.):
o Article I, Section 8 of the U.S. Constitution grants
Congress the power to “promote the progress of science
and useful arts, by securing for limited times to authors
and inventors the exclusive right to their respective
writings and discoveries.”
o The Digital Millennium Copyright Act (DMCA) of 1998
 Circumvention of technological measures employed by
owners to protect (restrict access and copying) their works
 Tampering with copyright management information

DMCA Controversy
 July, 2001, Dmitry Sklyarov, a Russian Ph.D.
student visiting Las Vegas for a computer
conference
 Arrested by U.S. authorities and charged with
violating the DMCA’s provision on circumventing
copyright protection mechanisms
 Sklyarov had developed Advanced eBook Processor
software for a Russian company, Elcomsoft
o Enabled users to convert digital files from Adobe
Systems’ protected “eBook” format to the unprotected
PDF
o Product was intended to allow blind people to access
eBooks using a text-to-speech program (which cannot
read eBook files but can read PDF files)

DMCA Controversy (cont)
 April 2001, a team of researchers led by Princeton
professor Edward Felten sought to publish their
findings on the weakness of the proposed SDMI
digital music access-control technologies
 The paper was withdrawn when the recording
industry threatened to pursue legal action under
the DMCA if the group published its methods for
circumventing the SDMI protections
 Sklyarov’s case and a challenge by Felten to the
DMCA on the grounds that it violates his First
Amendment rights to freedom of speech are still
pending

Intellectual Property
 Intellectual Property - the notion that creation of the
mind (whether tangible or intangible) also deserve
protection
 Issues:
o Value of intellectual property
 Some companies now sell ideas or other intangible products
 Depend on intellectual property rights to protect them from unfair
practices by their competitors
o Most countries have laws relating to copyright and intellectual
property, but there are substantial variations from country to
country
 The Internet makes protected works available everywhere
 Unfair use in countries with weaker protection
 Abuse in countries with strong protections

Intellectual Property (cont)
 Issues (cont):
o The ability of the Internet to widely distribute
digital works quickly and cheaply
 Consider analog music albums:
 Easy to copy
• Duplication process resulted in degradation of the
recording
 Hard to distributing copies widely
 Consider digital music files:
 Easy to copy
• An exact digital copy can be made which is
indistinguishable from the original
 Easy to distribute widely
• The Internet is well suited for wide distribution of
digital files

Intellectual Property
Protection
 The Paris Convention (1883)
o Protected only patents, trademarks, and industrial
designs
o 14 member states
 The Berne Convention (1886)
o Extended protection to various literary, musical, and
artistic works
 The World Intellectual Property Organization
(1970)
o A special agency of the United Nations
o Includes nearly ninety percent of the world’s nations as
members states
o Oversees the development and application of
international standards for the protection of intellectual
property

Cybersquatting
 Cybersquatting - register an Internet domain
name that is a trademark of other people or
companies in hopes of profiting:
o Attracting a large number of Internet users
o Selling the domain name to the rightful owner
 Rulings (by WIPO)
o October, 2000: evicted a cybersquatter from the domain
name madonna.com in response to a complain filed by pop
singer Madonna
 Other celebrities have won similar cases: Julia Roberts,
Nicole Kidman, and Jimi Hendrix’ estate
o February, 2001, rocker Bruce Springsteen failed in his
attempt to wrest the domain name brucespringsteen.com
from a fan

Case Study of Intellectual Property on the
Internet
 Napster is music-file sharing software
 Created in 1999 by Shawn Fanning
 More than 60 million users at it peak in
popularity
 Functionality:
o Locate songs
o Download and store a digital (MP3) copy for
free
o Listen to the song as often as desired

Case Study: Napster (cont)
 Ripping
o Using software known as a ripper, individuals can:
 Extract (or rip) tracks from commercial, copyrighted
compact discs
 Store them in the MP3 file format
 “Share” them with other Napster users
 Copyright violation
 Results:
o Artists and record companies do not realize a sale each
time one of their songs is transferred from one Napster
user to another
o Fewer people may buy CDs when they can obtain copies of
any song on them for free

File Sharers vs. RIAA
 July, 2000
o Recording Industry Association of America (RIAA), a
trade group representing most of the record companies
seeks an injunction against Napster in Federal court
o The injunction was granted with the judge ordering
Napster to eliminate all copyrighted material from its
service (Napster appeals)
 March, 2001
o Injuction takes effect – Napster ordered to block
trading of copyrighted songs
o Napster vows to comply with the judge’s order and to
continue serving uncopyrighted work while seeking a
settlement with the music industry

File Sharers vs. RIAA (cont)
 March, 2001 – June, 2001
o Filtering techniques become more effictive
o Napster usage declines markedly
o Napster announces plans to transform into a
paid-subscription service
 July, 2001 - present
o Napster song-swapping service defunct
o Other song-swapping services gain popularity
o RIAA sues song swappers

The Secure Digital Music Initiative
(SDMI)
 SDMI is a consortium of about 200
companies representing:
o The recording industry
o Consumer electronics
o Technology firms
 Goal: to develop a voluntary, open
framework for playing, storing, and
distributing digital music in a protected
form

SDMI (cont)
 Phase I
o Developing standards for SDMI-compliant devices and
watermarking of digital music files
 Digital watermarking technologies hide signals in digital
music files that encode copyright information for the song
 The watermark cannot easily be removed from the file and
appears in any copies that are made
 Phase II
o Adopt a screening technology to filter out pirated music
in SDMI-compliant devices
o New digital recordings will only be able to be played on
SDMI-compliant devices (which will not play pirated
copies of copyrighted songs)

Electronic Commerce -
Summary
 Electronic commerce encompasses all business
activities that are conducted using computer-
mediated networks
 Copyright - the creator of an original work has
certain rights to restrict the work’s duplication or
distribution
 Intellectual property - the ownership of creations
of the mind whether tangible or intangible
o Challenges:
 Cybersquatting
 Song swapping
o Proposed legal solutions: DMCA, WIPO, RIAA lawsuits
o Proposed technical solutions: SDMI

Online Privacy
 What is online privacy and why is it
important?
 Addressing online privacy issues
o Government regulation
o Self-regulation
 P3P
 TRUSTe
o Technical solutions
 The Anonymizer
 Crowds

Online Privacy
 Most people safeguard their:
o Medical history
o Financial records
o Other personal information
 In order to avoid:
o Loss of privacy
o Embarrassment
o Inconvenience
o Harm
 Legal status of individual privacy (in the U.S.):
o The fourth amendment of the U.S. Constitution grants citizens
the right “to be secure in their persons, houses, papers, and
effects, against unreasonable searches and seizures” by the
government
o Other statues

Effect of the Internet on
Privacy
 Increase in the amount of available information
about individuals:
o Online people finders
o Electronic phone books
o Search engines
o E-mail directories
 Easy automation of data:
o Collection
o Correlation
o Analysis
o Use

Addressing Online Privacy
Issues
 Governmental regulation
o Example: library materials and video rentals
 Subject to laws which stipulate that records cannot be kept about
which titles (or even which types of titles) a particular person has
borrowed
o Online privacy has been studied by the Senate Judiciary
Committee
 Self-regulation
o P3P – a standard format in which a web site can represent its
privacy policy describing what personal information is being
collected and how it will be used
o TRUSTe - utilizes a trusted third party to certify that a web
site adheres to certain basic privacy principles
 Technical solutions
o The Anonymizer – protects privacy by acting as proxy for web
requests
o Crowds - simulates the anonymous nature of being part of a

The Platform for Privacy
Preferences Project (P3P)
 Project by the World Wide Web
Consortium
 Goal: to define a standard format in which
web sites can represent their privacy
policies:
o The entity stating the policy
o The types of data collected
o How the data will be used
o Other possible recipients of the data

P3P (cont)
 User agents:
o Automatically retrieve the privacy policy for sites that users
visit
o Make decisions based on the site’s policy and the user’s
specified privacy preferences
 Check that the type information requested is disclosed in the site’s
privacy policy
 Verify that requested information is consistent with the user’s
preferences and has been cleared for release
 User agents can be implemented:
o In a web browser
o Via a plugin
o With a proxy server
 Note: P3P does nothing to ensure that a site abides by its
stated policy

TRUSTe
 An independent, non-profit organization
founded by the Electronic Frontier
Foundation
 Privacy Seal Program:
o A trusted third party certifies that a web site
adheres to certain basic privacy principles
o Trusted third party issues a seal that member
sites can display
o Member sites are subject to ongoing oversight
by that third party for compliance

TRUSTe (cont)
 Privacy principles:
o Adoption and implementation of an acceptable privacy policy
o Notice and disclosure of information collection and use
practices
o Giving users the opportunity to exercise control over their
information
o Security measures to help protect the privacy and integrity of
personal information
 TRUSTe oversight:
o Initial and periodic reviews of the site by TRUSTe or other
third party firms
o Analysis of feedback and complaints from the Internet
community
o Seeding, whereby TRUSTe itself submits fictitious user
information to a member site to verify that the information is
not misused

Motivation for the
Anonymizer
 A web server learns quite a bit of information when a host
requests a web page:
o The host’s IP address, which could reveal:
 The identity of an individual user
 The user’s employer
 The user’s Internet Service Provider
 The user’s approximate physical location
o Other information about the host:
 Type, version, and settings of the browser
 Type and version of the host’s operating system
o Sometimes, the referring page and the next page the user
visits after leaving the current page
 Some people prefer not to reveal all of that information to
every web site that they visit

The Anonymizer
 A web site that provides a variety of privacy services to
subscribers by acting as proxy for their web requests:
TCP/IP
Intern
et
Client
Serv
er
I. Normal
Request/Reply
Anonymize
r
TCP/IP
Intern
et
Client
Serv
er
II. Request/Reply Using the
Anonymizer

The Anonymizer (con)
 Caveats:
o The communication channel between a user and the
Anonymizer is not secure
 Possible that a user’s ISP or a machine on the path between
the user and the Anonymizer can determine what sites a
user is visiting
 The Anonymizer offers a secure tunneling service at an
additional cost
o Subscribers must trust the Anonymizer
 It learns a lot about them (including all the sites that they
visit anonymously)
o Requests/replies may follow an inefficient route
o Anonymity can be circumvented by mobile code
 E.g. A java applet that opens a network connection from the
machine it runs on back to the server from which it was
downloaded

Crowds
 Collect users into a group called a crowd which
performs requests on behalf of its members
o User joins crowd by running a process (called a
jondo) on his/her local machine
 Learn other current members of the crowd and
cryptographic key shared by the crowd
 Current members of the crowd are informed of your
membership
o Crowd members can issue requests through the
crowd such that:
 Servers can’t determine which crowd member initiated
the request
 Other crowd members can’t determine which crowd
member initiated the request

Issuing Requests Through the
Crowd
 All requests are sent to the jondo
 Jondo randomly chooses another member of the crowd and
sends the request to them
 Whenever a crowd member receives a request from another
crowd member it chooses either:
o With probability p (where p>1/2): to send the request to
another randomly selected member of the crowd
o With probability (1-p): to submit the request to the server
 Request does not change from one jondo to the next
o Each jondo can tell which other jondo sent it the request
o Each jondo cannot tell whether its predecessor initiated the
request or is just forwarding it
 All communications between jondos is encrypted with the
crowd key

Receiving a Reply Through the
Crowd
 Every request takes some path through the jondos to the
server
 Reply follows the same path (in reverse) back through the
jondos and to the initiator
 Example:
o Jondo4 joins the crowd consisting of jondo1, jondo2, jondo3,
and jondo5
o Jondo4 constructs a request and sends it to jondo3
o Jondo3 receives the request and sends it to jondo1
o Jondo2 receives the request and sends it to the server
o The server’s reply goes to jondo2, jondo4, jondo1, jondo3, and
finally to jondo4

Crowds Paths
 Paths through the crowd remain static as long as
possible
o One path through the crowd for each jondo
o Each jondo keeps track of its predecessor and successor
for a given path
o Each jondo knows where to send a request next based on
its path identifier and the jondo from which it was
received
 Subsequent requests initiated by the same jondo follow the
same path through the crowd even if the request is bound
for a different server
 Example:
 Jondo4 generates a new request to a new server
 It still travels to the server through jondos 3, 1, 4, and 2
 Paths through the crowd only change when jondos join
or leave the crowd at which point all paths are

Crowds – Anonymity Properties
 No single point at which a passive eavesdropper
can compromise all users’ anonymity
 Server obtains no information about who initiated
a request (except that it came from a member of
the crowd)
o Jondo originating the request always forwards it to a
randomly chosen member of the crowd
o Server receives each request from any member of the
crowd with equal likehood
o Sender of request is beyond suspicion (no more likely
than any other member of the crowd to have originated
the request)

Crowds – Anonymity Properties
(cont)
 No jondo can learn the initiator of a request
(unless it initiated the request itself)
o Messages received from a predecessor on a particular
path may have been originated by the predecessor or
may have just been forwarded
o Sender is probably innocent (no more likely to have
originated a given request than to have not originated it)
 No local eavesdropper who can observe all (and
only) communication involving a user’s machine can
determine the eventual destination of a request
(unless the initiator winds up submitting the
request itself)
o Messages are encrypted and cannot be read by the
eavesdropper

Crowds – Risks and
Limitations
 If your jondo is the last on some path requests
you did not initiate may be attributed to you
o Plausible deniability
 No mechanism in crowds to protect the privacy of
the request contents from other crowd members
o E.g. username and password, credit card number
 Can be circumvented by mobile code that opens a
network connection back to the server
o E.g. java applets and Active X controls
 Increases response times and network traffic

Online Privacy - Summary
 Problem – privacy and personal information must
be protected
 Possible solutions:
o Government regulation
o Self-regulation
 P3P – a standard format in which a web site can represent
its privacy policy describing what personal information is
being collected and how it will be used
 TRUSTe - utilizes a trusted third party to certify that a
web site adheres to certain basic privacy principles
o Technical solutions
 The Anonymizer
 Crowds

Electronic Payment Systems
 Needed for electronic commerce to
thrive
o Desirable properties
o Systems based on credit cards
 SSL-encrypted credit card numbers
 CyberCash
o Systems based on digital money
 Ecash
 NetCash
 Millicent

Desirable Properties
 Secure – resistant to forgery or alteration
o Checks – bad; cash – good; credit cards – in between
 Buyer anonymity
o Checks and credit cards – bad; cash – good
 Two-way – anyone can make or receive payment
o Credit cards – bad; checks and cash – good
 Off-line - neither the buyer nor the seller must
communicate with a third party at the time of the
transaction
o Credit cards – bad; cash – good; checks – in between

Using SSL and Credit Cards
 Advantages:
o Built on an existing infrastructure already used by
merchants and customers)
o Good protection against theft of credit card information
in transit
 Disadvantages:
o Not anonymous
o Not off-line
o Not two-way
o Does not support micro-payments
o Merchant learns customer’s credit card number
 Used by unscrupulous employees
 “Accidental” charges by the merchant
 Theft from merchant’s database by an intruder

CyberCash
 Participants:
o Customer
o Merchant
o CyberCash server (CC)
 Overview:
o Customer creates a message containing credit card
number and authorization to charge a specific amount:
 (12345678, $37.17)
o Encrypts message using the public key of the CC server:
 Encrypt((12345678, $37.17),CCPublic)
o Customer sends encrypted message to the merchant

CyberCash (cont)
 Merchant receives encrypted message from
customer:
o Encrypt((12345678, $37.17),CCPublic)
 Merchant adds identification information to the
message, signs it, and sends it to the CC server:
o Encrypt((M, Encrypt((12345678, $37.17),CCPublic)),MPrivate)
 CC server decrypts message, verifies the credit
card number, and returns authorization to the
merchant
 The merchant returns a receipt to the customer
 Issues:
o Merchant never learns the customers credit card
information
o Does not operate off-line

Digital Money
 Cash can be:
o Spent anonymously
 Buyer need not reveal his/her identity to a merchant
 Issuer cannot track where people are spending their money
o Carried out off-line and without authorization from a
third party
o Accepted by anyone as payment (and subsequently use to
make other purchases)
o Used without transaction fees
 2-5% for credit cards
 1-2% for checks
 Problem:
o Currency issued by most governments (paper bills and
metal coins) do not lend themselves easily to electronic
exchange

Ecash
 In 1990, David Chaum (creator of blind signatures)
founded a company, DigiCash, which developed
digital money called Ecash
 Overview:
o Banks convert currency to ecash (and vice versa)
o User has an account with an ecash-enabled bank
o User withdraws ecash from his/her account
o Customer sends ecash to merchant
o Merchant sends ecash to bank for validation
o Merchant sends customer receipt

Withdrawing Ecash Coins
 Assume:
o Alice has $100 deposited in an Ecash-enabled bank
o Alice has a unique public/private key pair (APublic and APrivate)
o The bank has a unique public/private key pair (BPublic and BPrivate)
 Alice wants to withdraw $50 (ten $1 Ecash coins, two $5
coins, and three $10 coins)
 Alice generates a random serial number for each coin: s1, s2,
…, s15
o Coin1 = (one dollar, s1) Coin11 = (five dollars, s11)
o Coin2 = (one dollar, s2) Coin12 = (five dollars, s12)
o . Coin13 = (ten dollars, s13)
o . Coin14 = (ten dollars, s14)
o Coin10 = (one dollar, s10) Coin15 = (ten dollars, s15)

(cont)
 Alice chooses a blinding factor, b, and uses it to
blind the serial number of each coin:
o Coin1 = (one dollar, b*s1)
o …
o Coin11 = (five dollars, b*s11)
o Coin12 = (five dollars, b*s12)
o Coin13 = (ten dollars, b*s13)

(cont)
 Alice signs each coin with her private key and
encrypts the result with the bank’s public key:
o Coin1 = Encrypt(Encrypt((one dollar, b*s1), APrivate), BPublic)
o Coin2 = Encrypt(Encrypt((one dollar, b*s2), APrivate), BPublic)
o …
o Coin10 = Encrypt(Encrypt((one dollar, b*s10), APrivate),
BPublic)
o Coin11 = Encrypt(Encrypt((five dollars, b*s11), APrivate),
BPublic)
o Coin12 = Encrypt(Encrypt((five dollars, b*s12), APrivate),
BPublic)
o Coin13 = Encrypt(Encrypt((ten dollars, b*s13), APrivate),
BPublic)
o Coin = Encrypt(Encrypt((ten dollars, b*s ), A ),

(cont)
 Alice transmits the blinded, signed, encrypted
coins to the bank
o Each coin is encrypted with the bank’s public key so only
the bank will be able to decrypt it
 The bank decrypts each coin and checks Alice’s
signature
 The bank adds up the value of all the coins
requested, and deducts that amount from Alice’s
account
 The bank signs each coin with its private key and
encrypts each signed coin with Alice’s public key

(cont)
 The bank sends the blinded, signed, encrypted coins to Alice:
o Coin1 = Encrypt(Encrypt((one dollar, b*s1), BPrivate), APublic)
o …
o Coin11 = Encrypt(Encrypt((five dollars, b*s11), BPrivate), APublic)
o Coin12 = Encrypt(Encrypt((five dollars, b*s12), BPrivate), APublic)
o Coin13 = Encrypt(Encrypt((ten dollars, b*s13), BPrivate), APublic)
 Each coin is encrypted with Alice’s public key so only she will
be able to decrypt it

(cont)
 Alice decrypts the coins, checks the bank’s
signature, and unblinds them:
o Coin1 = Encrypt((one dollar, s1), BPrivate)
o …
o Coin11 = Encrypt((five dollars, s11), BPrivate)
o Coin12 = Encrypt((five dollars, s12), BPrivate)
o Coin13 = Encrypt((ten dollars, s13), BPrivate)

Spending Ecash Coins
 Alice selects goods she wishes to purchase at an online
merchant who accepts Ecash as payment
 Alice selects a set of Ecash coins with which to pay
 Example:
o Alice’s bill comes to $7
o Alice selects a set of Ecash coins valued at $7:
 Coin12 = Encrypt((five dollars, s12), BPrivate)
 Coin2 = Encrypt((one dollar, s2), BPrivate)
 Coin8 = Encrypt((one dollar, s8), BPrivate)
 Alice encrypts this set of coins with the merchant’s public
key, MPublic, and transmits them to the merchant:
o Encrypt((Coin12, Coin2, Coin8), MPublic)

Spending Ecash Coins (cont)
 The merchant receives the coins and:
o Uses his private key to decrypt them
o Checks to see that their value equals the amount owed by
Alice
 The merchant attempts to redeem the coins with
the issuing bank:
o The merchant encrypts the coins using the bank’s public
key and sends them to the bank:
 Encrypt((Coin12, Coin2, Coin8), BPublic)
o The bank decrypts the message and checks each coin:
 Its signature is valid
 Checks its database of serial numbers for all coins it has
issued that have already been spent

Spending Ecash Coins (cont)
 Double spending - a common problem with many
digital money schemes)
 A bank must insure that a user cannot spend the
same coin twice (in payments to two different
merchants)
o A bank maintains a database of serial numbers for all
coins it has issued that have already been spent
o When a merchant attempts to redeem coins (before
accepting them as payment), the bank checks to see that
each coin’s serial number is not already in the database
 Yes – add the serial numbers to the bank’s database, credit
the merchant’s account for the value of the coins, notify
the merchant that the payment has been accepted
 No – notify the merchant that the payment has not been
accepted

Ecash - Properties
 Ecash coins are:
o Secure - users have very little chance of forging coins that a
bank will accept or of altering coins issued by the bank to
increase their value
o Valid - anyone can use the bank’s public key to verify the
signature on them
o Unlinkable - the bank cannot link any coin to a blinded coin that
it signed
o Anonymous - when coins are returned to the bank it will not be
able to determine:
 Buyer is not required to disclose his or her identity to the seller
 The issuing bank cannot link a payment to a specific user
 No merchant, bank, or other third party can link two separate
payments to the same user
 Limitations:
o Does not operate off-line
o A bank must maintain a database of the serial number of every

NetCash
 Developed by Information Sciences Institute of
the University of Southern California
 Overview:
o Currency servers (CS) convert between anonymous
electronic currency and non-anonymous instruments
o Each CS has a unique public/private key pair and a
certificate for minting currency
o CS services:
 Conversion between coins and non-electronic currency
 Coin verification
 Coin exchange (for untraceability)

NetCash – Coin Verification
 Encrypt((CS_name, CS_addr, exp_date,
serial_num, value),CSPrivate), where
o CS_name is the name of the issuing currency server
o CS network address is the IP address of the issuing CS
o Exp_date is the expiration date
o Serial_num is the unique serial number of the coin
o Value is the denomination of the coin
 CS keeps track of serial numbers of all
outstanding coins to prevent double spending:
o Serial number in database = coin is valid (remove serial
number from database)
o Serial number not in the database = coin is invalid

NetCash – Coin Exchange
 Anonymity
o An issuing CS could store identity of the person to whom a coin
was issued along with the coin’s serial number
o When a merchant redeems coins the CS could determine who
spent them
 NetCash addresses this problem by allowing users to
perform coin exchange:
o Users can go to any currency server and anonymously exchange
valid coins for new ones (issued by that CS)
 CS1 issues coins to Alice
 Alice takes those coins those coins to CS2
 CS2 contacts CS1 to make sure the coins are valid (CS1 doesn’t tell
CS2 to whom the coins were issued)
 CS2 issues Alice new coins

Comparison of Ecash and
NetCash
 Anonymity
o Ecash uses blind signatures
o NetCash uses coin exchange (must trust issuing
CS)
 Storage requirements
o Banks must store serial numbers of all ecash
ever spent
o Currency server must store serial numbers of
all outstanding NetCash

MilliCent
 Developed by Compaq Computer Corporation
 A micropayment scheme for transactions involving
less than one cent:
o Examples: stock quotes, online news stories, search
engine queries
 Based on scrip, currency that has intrinsic value
but only with a particular merchant
o Example: a pre-paid phone card has a set value, but it
cannot be used to buy a hamburger or anything other
than phone time from the issuer

MilliCent Scrip
 MilliCent scrip has the following fields:
o Merchant_name – identifies the merchant that created the
scrip
o Value – the value of the scrip
o Serial_number – unique identifier for this piece of scrip
o Owner_ID – used to ensure that scrip can only be spent by the
rightful owner
o Expiration_date – the date on which the scrip expires
o Properties – some general properties of the customer (e.g. age,
state of residence, etc.)
o Certificate – allows validation of the scrip
 A one-way hash of the contents of the scrip and a secret known
only to the merchant
 Certificate = Hash(Merchant_name, Value, Serial_number,
Owner_ID, Expiration_date, Properties, Scrip secreti)

Scrip Secrets
 A merchant may have many different scrip secrets
 Some group of bits in the serial number determine
which scrip secret to use to create the certificate
 Example:
o Merchant has four different scrip secrets:
scrip_secret0, scrip_secret1, scrip_secret2,
scrip_secret3
o The first two bits in the serial number select which
secret to use to generate the certificate:
 00 = scrip_secret0

Generating Scrip
 Merchant generates a serial number
o Assume that the first two binary digits in the
serial number are 10
 Merchant generates a certificate:
o Certificate = Hash(Merchant_name, Value,
Serial_number, Owner_ID, Expiration_date,
Properties, Scrip_secret2)
 The merchant records the serial number in
its database of outstanding scrip

Using Scrip
 Customer purchases a certain amount of scrip
 The merchant generates the scrip and sends it to
the customer:
o Scrip = (Merchant_name, Value, Serial_number,
Owner_ID, Expiration_date, Properties, Certificate)
 Later, the customer submits scrip to the merchant
as payment:
 Merchant checks that the customer has not
tampered with the scrip
o Use the scrip’s serial number to select the proper scrip
secret
o Recreate the certificate and check for a match

Using Scrip
 Merchant checks that the scrip has not
already been spent:
o The merchant checks to see that the serial
number for that piece of scrip is in its
database:
 Yes – removed the serial number from the database
and accept the scrip
 No – scrip is not accepted (it has already been spent
or has expired)

Brokers
 Customers would not normally buy scrip directly
from merchants
 Customers would buy scrip from intermediaries
called brokers
o Customers buy broker scrip from brokers
o Brokers buy merchant scrip in bulk (and at a discount)
from various merchants
o Customers exchange broker scrip for scrip issued by a
specific merchant
 Result - the total number of accounts required is
greatly reduced (especially for customers and
merchants )

MilliCent - Properties
 Secure
 Somewhat anonymous (brokers know what
merchant a customer is requesting scrip for)
 Lower overhead costs = better suited for
micropayments
o The signature on scrip is created by a merchant, and its
authenticity and integrity need only to be verified by
that same merchant
o A merchant need not communicate with any third party
to validate the digital money being spent by a customer
o A one-way hash function (rather than a public-key
cryptosystem) can be used to produce the signature

Electronic Payment Systems -
Summary
 Desirable properties – security, buyer anonymity, two-
way, off-line
 Using credit cards:
o SSL-encrypted credit card numbers
 Some security, but merchant learns customer’s credit card
number
o CyberCash
 Merchant does not learn customer’s credit card number, but
requires transaction to be cleared by a CyberCash server
 Using digital money:
o Ecash – a digital money scheme based on blind signatures
o NetCash – a digital money scheme based on currency
servers
o Millicent – a micropayment scheme based on scrip

Chapter14.ppt

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Chapter14.ppt