e-Cash
- E-Cash was a digital-based system that facilitated the transfer of funds anonymously.. Its objective, as a pioneer in cryptocurrency, was to protect people’s anonymity when they used the Internet to make small payments. Dr. David Chaum founded DigiCash in 1990, the firm that would eventually become eCash. Large banks expressed interest in the technology, but eCash never gained traction, and DigiCash declared bankruptcy in 1998. Eventually, DigiCash and its eCash patents were auctioned off. Chaum established a brand-new cryptography-focused firm in 2018.
- Dr. David Chaum came up with the concept for eCash in 1983. When it came to considering privacy issues in the Internet era, he was ahead of his time. In addition, he went above and beyond advocating for privacy by developing an anonymous payment mechanism suitable for the digital era. This occurred even before the general public could use the Internet. Chaum founded DigiCash in 1990 in order to implement his eCash concept.
- Blind signatures were eCash’s central idea. A digital signature known as a blind signature is one in which the contents of the communication are not accessible before the signature is made. No user is able to connect withdrawal and spend transactions in this way. The “CyberBucks” were the name of the currency utilized in the system.
- The Rise and Fall of E-Cash
- DigiCash had significant growth throughout the 1990s Internet company boom. Numerous banks that planned to utilize the platform were signed to agreements by the firm. Among these banks were Credit Suisse (CS), Deutsche Bank (DB), and other international banks. Microsoft also expressed interest in eCash for Windows 95, but the two businesses were unable to come to an agreement.
- The banks who made the decision to adopt eCash began testing the system but never presented it to their clients as a workable offering. The Mark Twain Bank in St. Louis, Missouri, was the only bank to really make use of the platform. While vendors had to pay a transaction fee, customers may use the service for free. Despite having 5,000 individual users and 300 companies signed up, Mark Twain Bank’s platform never took off. Chaum claims that “users’ average level of sophistication decreased as the Web grew.” It was challenging to convey to them the value of privacy.
- In 1998, DigiCash finally declared bankruptcy. Its patents for eCash were also sold to eCash Technologies. Due Inc. now owns the trademark for the name.
- Today’s E-Cash and Online Security
- Even with the demise of DigiCash and eCash, internet security remains a problem in the digital world. Hackers may access financial data that is kept on a computer, other electronic device, or the Internet more broadly (such as the cloud). The origins of cryptocurrencies, like Bitcoin, may be traced back to eCash. Chaum is really regarded by many as the founder of digital money.
- In 2018, Chaum founded a new company named Elixxir with the goal of building a user-controlled cryptography network for communication anonymity. This is in contrast to the current system, in which businesses have full access to customer data and use it to target ads in order to make money.
- The purpose of the electronic currency system is to help the retail industry gradually replace money. The payment assurance provided by the issuing bank after the effective authorization is one of its appealing features from the merchant’s point of view. Electronic currency is poised to expand due to its efficiency, even in the face of competition from other point-of-sale systems. Electronic cash transactions are free for cards.
- Because users may deposit money in any currency into their virtual wallet, e-cash really helps to globalize the economy. A merchant will take any currency and, when the cybercash is posted to the bank account, convert it to the local currency.
- Smart card technology is all that is required if a user requires E-cash offline. After the money is placed into the smartcard, it may be transferred to other smartcards or an online system using specialized electronic wallets. For many years, smartcards have been successfully utilized for various transactions, including phone calls, in several nations.
- The four main components of an electronic payment system are:- Publishers
- Dealers
- Customers and Regulators
- We intend to go through at least three steps for E-Cash dealing:- Account creation
- Acquire verification
- E-Cash payment methods may be grouped as follows:- Systems based on accounts
- Systems based on tokens
- Systems of notation
- methods for notation based on smart cards.
- Benefits and drawbacks of the electronic cash system
- Pros: As long as the bank offers these services online, we may transfer money, buy stocks, and provide a range of other services without having to deal with real currency or cheques.
- Funds may be sent instantly from a person’s personal account to a company account using debit cards and online bill payment, regardless of the location specified.
- Customers who use electronic money instead of traditional credit cards for online purchases will enjoy more privacy.
- Cons:
- The main concerns are e-cash and the security of e-cash transactions.
- E-Cash fraud has increased in the last several years.
- Hackers with high levels of expertise who can breach bank accounts and get financial information unlawfully have encouraged identity theft and caused a broad violation of privacy.
- There are also alternative techniques, including as using emails and phishing websites associated with certain banks.
- As e-cash continues to expand, the government’s capacity to track and collect taxes will be weakened by the rapid movement of money into and out of nations without any trace.
- Characteristics of Electronic Money:
- Digital currency must be backed by cash, bank-approved credit, or a cashier’s check that has been validated by a bank and has a monetary value.
- When digital currency generated by one bank is accepted by another, there must be no issues with reconciliation.
- In order to be used as payment for other digital currency, paper currency, products or services, credit lines, deposits made into bank accounts, bank notes or other obligations, electronic benefit transfers, and the like, digital currency must be interchangeable or interchangeable.
- Digital money has to be able to be saved and retrieved.
- While digital currency is being transferred, it shouldn’t be simple to replicate.
- Digital currency duplication and double-spending should be detectable or prevented.