Digital cash aims to provide monetary freedom through digitally signed payments that can be used anonymously and without monitoring, though achieving true digital cash faces challenges around privacy, authentication, and preventing issues like double spending or technology failures that could undermine trust in the system. The document discusses the importance of digital cash, how it can be implemented through various technical approaches like electronic tokens or digital checks, and issues that must still be addressed around consumer resistance, dependability, and balancing anonymity with security.

1. Digital Cash
Dr Paras Kothari

2. Overview
►Monetary Freedom
►Digital Cash and its importance
►Achieving Digital Cash
►Disadvantages with digital cash
►Conclusion

3. Why Monetary Freedom?
► Monetary transactions
 Cash, Cheque, and Credit Card transactions
► Organizations keep records for purchases,
communication, financial history
► Can be against privacy
► Consumers need to trust that net will make
safeguard their privacy and transactions, while
continuing to make shopping easy and enjoyable
► Freedom from Unit of transaction

4. Digital Cash
►Digitally signed payment message
►Piece of information which is recognized as
having value
►This piece is then accepted by Merchants
►True digital cash stores and conveys
meaning in and of itself
 Not just represent value in bank account
►This is used in today’s e-commerce

5. Key Elements of Digital cash
► Minimum requirements
 Confidentiality
►Anonymity
►No monitoring
 Authentication
►Digital Cash is valid
►Banks can authenticate parties
 Integrity
►Should not be easy to alter a piece of digital cash
 Non-Repudiation
 Confirmation that the transaction was complete
 Settlement

6. Key Elements of Digital cash (contd.)
►Other characteristics
 Divisibility
 Off-line capability
 Peer-to-Peer transactions
 Scalability

7. Achieving digital cash
►Register Based Systems
 A counter is stored on a smart card
►E-cash
 Tokens storable on card/computer
►Digital Cheques
 Similar to paper Cheques+ digital signatures
►Electronic coupons
 Similar to digital Cheques but limited to one
issuer

8. Protocols for Digital Cash
► Withdrawal phase of
secure credit card
scheme
► Ram sends her public
key k to bank
► Bank returns a
signature for it

9. Protocols (contd.)
► Payment phase
► n-acct number
► Her public key k signed
by bank
► Shop can verify Ram’s
acct, pub key
► Shop can verify sign.
on the receipt, amount
► Receipt forwarded to
bank

10. Blind Signatures
►A bank can create a digital bank note by
signing a message which specifies the serial
number and value of the note
►Bank sends to Ram
►Ram sends it to Krishna
►Krishna deposits with bank account

11. Blind Signatures (contd.)
►Problem: Bank knows that Ram and Krishna
have just mad a transaction.
►Solution: Blinding signatures
 Multiply the note number by a random factor
before sending it to bank
 Divide the number after its signed by bank
►Double spending problem
►Verification with bank when a digital note is
used

12. Issues with Digital Cash
►Easy to do illegal transactions if forged/
technology failures
► Large amount transaction paper will be
heavy!!
► Consumer resistance: Lack of complete
trust
►Other issues:
 Power failures
 Loss of records
 Undependable software

13. Conclusion
►Promising Technology
►Monetary freedom
►Several issues to resolve before we can truly
achieve this

14. Query Session
More learning is required to solve
doubts …