Re: E-cash's feasibility?

From: hal@finney.org
Date: Thu Jun 07 2001 - 16:51:39 MDT


Dan Fabulich writes:

> Last I'd heard, the feasibility of using a system derived from his
> blind signature protocol was limited, because Chaum had a patent on
> his algorithm which wouldn't expire until, IIRC, 2007 or so. Though
> I'm aware than various people have extended his idea, but AFAIK it
> would be illegal of me to sit down and write an open source Chaumian
> bank based on his blind signature protocol.

Yes, as you may know Chaum's company DigiCash went bankrupt. He sold
(licensed) his patents to ecashtechnologies.com which is apparently
pursuing a similar market model. Chaum's patents cover the basic
ingredient of most anonymous ecash protocols, the blind signature.

Zero-Knowledge Systems (www.zero-knowledge.com) is a Canadian company
which has been working on commercializing various cypherpunk technologies.
Their current product is Freedom, an anonymous communication system that
works like anonymous remailers for web browsing, newsgroups, etc. ZKS
hired Stephan Brands a year ago, a student of Chaum's who has developed
his own technologies which can do similar things. Brands approach appears
to evade Chaum's patents, but he has a full patent suite of his own,
so it would not be suitable as an open source approach. ZKS recently
sent out this job announcement, suggesting that they may be going into
the ecash business themselves.

: Director of Business Development - Cash & Credential Products
:
: http://jobs.zeroknowledge.com
: mailto:jobs@zeroknowledge.com
:
: Position Description & High Level Challenges:
:
: In this position you will oversee the development, marketing and positioning
: of ZKS's Cash and Credential patents and toolkits. You will establish and
: develop customer accounts, partnerships and alliances that support the
: deployment the Zero-Knowledge Cash & Credential toolkits. You will work with
: technology partners in the electronic payments, public key infrastructure,
: smart card and mobile payments space to develop opportunities for our
: toolkits as well as work with marquee customers on electronic cash and
: privacy enhanced authentication projects. You will feel comfortable leading,
: motivating and managing a small team of domain experts, developers and
: scientists who will work with you to develop, improve and market the
: product. In this role you will report to the General Manager Products and
: Services as the lead of the Cash & Credentials product team.

There are some other proposals for alternate mathematical formulations
of ecash, which could be the basis for an open source project.
Probably the most advanced is Lucre, by Ben Laurie, based on a
technique from cryptographer David Wagner. Ben's code is available
at http://anoncvs.aldigital.co.uk/lucre/. I think it does the basic
math but doesn't have the coin database that would be necessary for
double-spending detection, and there is no user-friendly interface.

I myself have been working in my spare time on an implementation of
another cash and credential system that was presented a few weeks ago
at Eurocrypt. (Credentials allow people to transfer certifications
among their keys without linkage, and are based on similar technology
to anonymous cash.) It's pretty complicated but I am hoping to give a
short talk about it at the Crypto conference in August. This will also
be just an implementation of the math, and much work would be needed to
turn it into a real system. It avoids the blind signature patents and
hopefully the others as well, and I've spoken with the authors and they
have no plan to patent it.

> In my article, I want to argue that it Chaum's algorithm COULD be the
> final blow to bring micropayments to everyone if it were distributed
> as a Free (as in speech) open-source program, but that past and
> current micropayment systems have failed because the organizations who
> have tried to push for them (including Chaum's DigiCash, now eCash
> Technologies,) have done so with a closed source system, with an eye
> towards taking a cut out of every e-transaction. Under an open-source
> Chaumian bank, on the other hand, anybody could be their own bank,
> rendering middleman business strategies like this impossible.

I would be interested in hearing more about how you see the "everyone is
a bank" model working. Would each person issue a different electronic
currency? How would these forms of cash acquire value?

> I also want to argue against Clay Shirky and others who claim that
> micropayments are a bad idea because they are bad for consumers. They
> DO benefit distributors at the expense of consumers, but they
> disadvantage consumers only a little, and benefit distributors quite a
> lot. The whole P2P idea is that the consumers ARE distributors (and
> even, more democratically, producers!) so, in a P2P environment,
> micropayments are a good idea.

Maybe so, at any rate it would be an interesting experiment to try.

> I've heard of Mojo Nation, but I'm also aware that they currently do
> not provide a means for trading Mojo for money, or vice versa.

No, I believe at one time they talked about that, but they seem to have
backed away since then. They will still give Mojo away to anyone who
asks, largely because the software is still under development and due
to crash or fraud you can lose it all. If they ever do stop "inflating
the currency" then Mojo might acquire intrinsic value and it could be
the basis for some kind of ecash eventually.

Hal



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