Cryptographic Protocols - Codes: The Guide to Secrecy from Ancient to Modern Times - page 231

Background : David Chaum is the pioneer in digital cash. He invented
the notion of digital coins and the basic protocols for digital cash. In fact,
the seeds of ECash can be found in Chaum's works, [53] and [54]. Chaum was
also a pioneer in ensuring that the (now world-renowned) CRYPTO meetings at
U.C. Santa Barbara, and the EUROCRYPT meetings in Europe, would become
an annual affair under a single organization, the International Association for
Cryptologic Research . Chaum was a pioneer of protocols for using PKC to
ensure anonymity of electronic users. In fact, it is not even certain when he was
born, since his desire for anonymity runs deep. It is known that he was raised
in Los Angeles, and ultimatelygot his undergraduate degree at U.C. San Diego,
and did his graduate work at U.C. Berkeley. By 1979 he was already creating
ideas for using PKC for authentication via digital signatures. Ultimatelythis
led him to anonymous untraceable schemes embodied in ECash.
Chaum's idea of assigning a unique number to each coin guaranteed the
authenticityof the “virtual” mone. His idea for “blinding” a digital signature
was the keynotion to protect a user's anonymit, since even a bank which
issues the cash, does not know who has it, and so cannot trace it. He is also
responsible for the above notion of preventing double spending while, at the
same time, providing anonymity for legitimate users.
In those pioneering days, Chaum did not find a lot of support among col-
leagues, so he eventuallyopened his own companyto spread his ideas. Thus
in 1990, he founded Digicash in Amsterdam, Holland, while working for the
Centre for Mathematics and Computer Science (CWI). His companyworked on
smart card applications, including the world's first automated road toll collec-
tion scheme, and held patents on his anonymous digital cash schemes, including
ECash, which Digicash invented in 1990. However, as Visa and other credit
card companies failed to strike deals with Digicash for use of those patented
ideas, theyeventuallydeveloped their own. ByMayof 1997 Visa and Master
Card completed their own e-commerce standard, SET TM (Secure Electronic
Transmission) that allows for security, privacy, integrity, as well as authenticity
in the protection of cards used in Internet e-commerce. We will revisit SET in
Section 6.3.
Even the so-called “cyberpunks” (see page 159) used an idea of Chaum's for
“remailers”. These are information launderers, so to speak. One sends a message
to some Internet site (having what is called an anonymous server or remailer ),
maintained by the cyberpunks who remove all identifying characteristics from
the message, and send it on, ultimately, to its final destination without any
return address or identifying information.
While Digicash was still trying to get its patents to be used by mainstream
business, a former student of Chaum's, Stefan Brands, came up with a compli-
cated but nearlyideal digital cash scheme, and although Chaum claimed that
Brands' ideas were derivative of his own, Brands obtained his own patents.
(See page 536 in Appendix D for a complete description of Brands' scheme.)
Although Digicash did have some limited success, it finallycame crashing down
in 1998, when Chaum filed for bankruptcyand lost his patents, et another
pioneer who came up short in terms of recognition for his (real-world) efforts.