Properties of e-cash in e-commerce

2 Properties

To purchase items over the internet, people currently use credit cards as the prevailing form of

payment. For years, however, people have asked "Why not use Electronic Cash?" These are the

properties that would be necessary for such a scheme:

1. Financial Infrastructure: There is a big di?erence between bits and atoms. People have used

atoms, gold, bills, etc. as money. Behind the bits in E-cash, there must be financial infrastruc-

ture that the money represented by the instructions in the bits from one account to another.

A transaction is an instruction to move money from a consumer's account to a merchant's

account.

2. No Double-Spending and Non-forgeability: Bits can be easily duplicated but atoms cannot.

So copies of cash should not be spendable. Nor should one be able to forge or create e-cash

and spend it.

3. Security: Account information should be kept secure. Transfers should be kept secure.

4. Immediate Verifiability that Payment is OK Online vs. O?ine systems: Every time you receive

a payment, you could instantly relay it to the bank to verify it. Or there could be an intrinsic

property that lets you know the money is good if a bank is not readily available.

5. Persistence: Atoms stick around better than bits do. If your computer crashes, you should not

be bankrupted. A backup of your wallet to record your wealth should not be spendable.

6. Exclusive Ownership

7. Anonymity: There are di?erent types of anonymity, payer, payee, and even bank anonymity.

The merchant may accept money without knowing who the payer is. Also you should be able

to deposit money without the bank knowing where the transaction comes from. There are

issues of money laundering. People can transfer money without the bank knowing.

8. Transferability: A can pass money to B and then to C easily and anonymously.

9. Amounts: It would be nice to support a variety of "coin sizes".

10. Traceable to issuer: We should know who backs each bit of money. E.g., We can tell by

inspection that U.S. money is issued by the U.S. treasury.

11. Divisibility and Combination: If you have an instrument worth 1 dollar, you should be able

to divide it into two instruments each worth 50 cents.

12. Compatibility with existing systems: An electronic payment system should interface smoothly

with existing payment systems. (To what extent a monetary system actually depends on

others is an interesting open question; can you have e.g., a Galactic System with no central

Government authority?)

13. Efficient for small amounts

14. Scalability

15. Competition between Issuers: Free banking before the Gold Standard