DigiCa$h:DigiCa$h:Money of the Future?Money of the Future?

ororan Electronic Disaster?an Electronic Disaster?

By:By:EDWARD EDWARD ARTECHEARTECHE

MARLON MARLON EVANGELISTAEVANGELISTA

Introduction- Online money transactions are

increasing exponentially- Over the past few years, online

shopping has gained popularity- One website in particular comes to

mind as far as e-commerce goes…

www.eBay.com

www.paypal.com

Brief History• David Chaum and a colleague

Rijkswatarstaat founded the company DigiCash

• Early success with the use of smart cards• 1990 – Chaum developed eCash, which is

synonymous with digicash• 1995 – Mark Twain Bank: First and only U.S.

bank to accept eCash• 1998 – DigiCash files for bankruptcy

Definition and Applications• Electronic store of monetary value• Usually stored on a technical device

such as a smart card• Also sometimes stored in software

Types of DigiCash

• Software-based product: digicash is stored on the hard disk memory of a computer

• Card-based product: value is stored on a hard physical device, such as a smart card– Software for using these smart cards are currently being

made to be downloaded onto cellular phones and PDAs

Types of DigiCash (cont’d)• Online

• two interacting parties must be online• A third party, usually a bank or a digicash

distributor is required to complete the transaction

• Offline• No bank or other third party required to be the

intermediary• This is what digicash should be and it is what is

being aimed at as the future goes

How does it work?

Checks and Balances• The buyer

• Protected against false accusations and invasion of privacy

• The bank• Protected against forgery

• The seller• Protected against the bank’s refusal to

authenticate a note

Benefits/Positives

• For consumers– Convenience

• No need to go to actual store• Easy to set up

– Smart cards– Universal– Person 2 person– security

Benefits/Positives (cont’d)• For businesses

– Bring in new customers• Customers that are impatient• Increase chances of “impulse buys”

– Small businesses can run their business completely online

• No need for physical space

Drawbacks/Negatives

• Double spending– Possibility of duplicating money– “spending money twice”

• Fairly new concept– Many companies have tried and failed– People are skeptical

Conclusion• Must convince people to try something new• Must undergo a LOT of experimentation to

ensure security and so that "good guys" stay ahead in the game

• Possibility of replacing paper money• Universal currency would make international

transactions easy• In order for digicash to hold up, every

transaction must be flawless with no errors from sender to receiver

• Convenience will win people over

Links to sites that use eCash

• www.ecashdirect.net• www.casinoaustralia.com• www.tcbk.com• www.49ercasino.com• www.cryptologic.com