Commercial Applications of Electronic Currencies

Abstract

Digital payment systems, also known as digital money, digital currency, or electronic money, have come a long way since the invention of computer-based communication systems. From the requirement of human-to-machine monetary transactions, it has evolved. E-money is a virtual cash model that is making its way in the online and virtual transfer domain. The authorization transaction is conducted through traditional banking systems between the payer and the payee, which issues e-money accounts for these transactions. After this amount is booked and stored by banks, it can be verified and transferred to payers/payees as e-money. One important challenge in this domain is to reduce reliance on the identifying authority, and the corresponding e-money transactions should be as simple and secure as cash transactions. Bitcoin – the electronic currency introduced in 2009 by an anonymous author and designed to work independently of a central authority – is unique and often considered news. This ignores the general history of electronic currencies. In 1998, Wei Dai introduced B-money, an efficient product of minimizing communication that serves as a method of fees and rewards for providing limited resources. Also in 1998, Adam Back introduced Hashcash – a currency that ties real computing costs to solve increasingly difficult computational puzzles. In 1999, Nick Szabo introduced bit gold – a product offering small chained proof of work and conducted via broadcast. David Chaum’s eCash, based on blind signatures, was a technical principle in the paper in 1983, and in 1990 with Amos Fiat and Moni Naor in addition known as related technology.