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Digicash in the media

Hal <[email protected]>:
> I think it would be interesting and helpful to our cause if reports
> about Cypherpunks were able to say something like, "An informal form of
> 'digital cash', based on cryptography and providing complete anonymity,
> has been used experimentally within the group to buy and sell
> information and other services.  Based on the success of these
> experiments, plans are being developed for more widespread deployment
> of this 'crypto cash'."

This reminded me that I haven't seen any article on our type of digital cash
(as different from charge cards, smartcards...) for a lay readership. I wrote
a piece in my column in The Asian Age, a business-oriented daily published in
Delhi, Bombay and London. Here it is.

PS. I excuse myself for the bandwidth used (6k) in the knowledge that there 
have been several larger posts in the past ;-)
Cypherpunk-relevant responses to the list, flames to alt.dev.null please!

Electric Dreams
Weekly column for The Asian Age by Rishab Aiyer Ghosh
#6, 28/March/1994: Cyberbanking and Digital Cash

Intro: The currency of cyberspace will be electronic tokens that
cannot be forged.

If information wants to be free, will we still need money?
Definitely. More than ever, in fact. The reason we use money at
all, rather than barter, is because money has definite value.
Perhaps with no real value whatsoever, currency fills the role of
a reference, against which the value of goods can be measured. In
the information age, when knowledge may be the most valuable
commodity to be traded, there will be a real need for a reference
of the relative value of varying pieces of data. Note the use of
the future tense; so far, on the Internet, information has by and
large succeeded in being free. Though much of it will hopefully
remain so, with the Net's increasing commercialization, large
amounts of material are bound to become major sources of income
for data vendors.

For future-aware businesses, from small digital entrepreneurs
marketing their unique expertise to colossal database tycoons,
information is the key to high-growth industries of the next
millennium. However great the Internet era has been, with free
access to services and information, it is already becoming
something for nostalgia -- not for long will the Net remain
hugely subsidized by industrial-age economies, and information
will inevitably be entrapped once more. If activists for freedom
in cyberspace are successful, this time information will not be
caged by authority in the form of governments; but by the power
of money and corporations.

When information is distributed as a valuable commodity, the
process is quite different from goods as we traditionally think
of them. Information does not need to be manufactured for each
customer. Once created, it can be transferred with ease in an
instant. The power of information is when it is accurate and up-
to-date. It must be communicated on demand, at the time of
demand. This means that any method of payment must be instant,
and secure. Unlike mail order and other time-delayed forms of
shopping of the present, where there is no urgency to process and
verify cheques or credit card balances, the information market is
like the corner drugstore. You get instant service, and you pay
in instant (and presumably secure) cash. Cyberspace needs a means
of transferring cash across the world in an instant -- in
exchange for the data that comes electronically at the speed of

There are various experiments underway in corners of the Net
populated by concerned cybercitizens to create this means; to
create digicash. To be communicated at the speed of information,
cash must be able to travel at that speed. This leads us to an
interesting conclusion. Digital money is not just electronic
banking records, or smart debit cards; digicash must be
information. Initially backed by real money, convertible to
paper, digicash is distributed, like paper cash, in units that
can be combined, unlike cheques, where a total value is filled
into a form. These tokens of information are unique (enumerating
each digital 'banknote'), and are generated using techniques
similar to those used in public-key cryptography. The
mathematically generated tokens can be matched with their issuing
bank, ensuring through digital signatures that they are genuine.
Unlike conventional signatures or watermarks, new notes cannot be
forged -- it would take a roomful of supercomputers several
centuries to break through the complex mathematics involved in
ensuring the uniqueness of signed tokens.

Being information, though, these tokens of cash can be simply
copied. Note that with paper money, all banknotes are (excepting
the serial number) virtually identical. The protection against
forgery is that it is difficult to duplicate a single note. With
digicash, a single note can easily be duplicated; but all notes
are significantly different. The signatures can be authenticated,
ensuring that a note is definitely from the signing bank. This
implies that invalid notes cannot be created; a forged digital
banknote has to be an exact copy of a real one. The protection
against this elementary type of forgery is that transactions are
in real-time; between customer and seller, and between seller and
bank. The bank ensures in that the cash is genuine, and will only
honour one copy of any token. As all digicash transactions are
done this way, there will only be one copy of any token in use at
any time. For the sake of privacy, these transactions, whether
through smartcards, on-line access or e-mail, will be anonymous.
Digicash will be like real cash. The methods of anonymity planned
so far do include exceptions whereby double-spending, attempting
to use a token more than once, will greatly reduce anonymity,
making forgery more difficult.

Digicash systems are currently in experimental use. They work.
The only problems are the authorities and the law, who are, as
usual, well behind the times.

Rishab Aiyer Ghosh is a freelance technology consultant and
writer. You can reach him through voice mail (+91 11 3760335) or
e-mail ([email protected]).
Rishab Aiyer Ghosh                                          [email protected]
Voicemail +91 11 3760335; Vox/Fax/Data 6853410
H-34C Saket New Delhi 110017 INDIA

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