E-CASH PAYMENT SYSTEM 1

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E-COMMERCE IT430

Lesson 26

E-CASH PAYMENT SYSTEM

A company, DigiCash, has pioneered the use of electronic cash or e-cash. Anonymity of the buyer is the key

feature of this system. There are three participants in it, namely, buyer, merchant and bank. Both, symmetric

and asymmetric type of cryptography is used in this system.

Buyers and merchants, both, have accounts in the E-cash bank. Buyers withdraw coins against their

account and store them in e-cash wallet software (Cyber wallet) on their computer. Cyber wallet stores and

manages coins and records every transaction. Merchant forwards coins to e-cash bank which ensures that

these have not already been spent and credits the account of the merchant.

E-cash Coins

The currency used in this payment system is called an e-cash coin or simply coin. A coin consists of three

elements or parts - serial #, key version and serial no. signed by the secret or private key of a certain

denomination of the e-cash bank. In other words, a coin of one dollar would consist of the following:

Coin = Serial#, keyversion, {Serial #}SK bank's $1 key

Each coin has a unique value, partly minted by the client and partly by the e-cash bank.

Minting of the coin

A long serial no. is randomly generated by the client's Cyber wallet in order to mint a coin. This serial no. is

blinded, which means that it is multiplied with a blinding factor "r" and sent to the e-cash bank for

signatures. Thus, the e-cash bank cannot see the serial no. it is signing. Key version (corresponding public

key of the bank) is also part of the coin, and is sent usually at the time of account opening. An e-cash bank

may have 1 dollar signature, 5 dollar signature or 10 dollar signature etc. If the client wants to mint a coin of

2 dollars then e-cash bank would use its private or secret key of 2 dollars to sign the serial no.

How bank signs blindly?

Cyberwallet generates a serial # and a blinding factor `r'. This blinding factor "r" is only known to the client.

It is used in the following mathematical expression which is sent to the bank for signatures.

Serial # . re2 (mod m)

Public key of the bank consists of modulus `m' and a no. `e'. Bank signs with its secret key of 2 dollars (d2)

such that:

(Serial #. re2)d2(mod m)=Serial#d2.re2d2(mod m)

(Serial #. re2)d2(mod m)=Serial#d2.r(mod m)

The product of e2 and d2 cancel out each other due the property of inverse relationship of keys. Bank

cannot see serial # it is signing since it does not know `r'. The expression "Serial#d2.r(mod m)" is sent back

by the bank to the client, who divides it with "r" to get the third part of a valid 2 dollar coin as follows:

Serail#d2.r(mod m)/r=Serial#d2(mod m)

Thus, minting of a 2 dollar coin is completed. In a similar fashion one can withdraw or mint coins of

different denominations. E-cash bank signs the serial nos. and debits the account of the client. A client must

maintain his account with the bank. So, if a client has $ 50 in his account with the e-cash bank and requests

for the coins of a total value of $ 10, the amount left in his account after bank's signatures on the serial nos.

would be $ 40.

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E-COMMERCE IT430

Working of the E-cash model

Fig. 1 below shows the e-cash model:

E-cash Model

· signs coins

· user accounts

· database

EccashBaank

E ash B nk

Withdraw/

Deposit

Valid indication

coins

New Coins,

Validate

statement

+deposit

coins

Pay coins

Meerchant

M rchant

Clileent

C i nt

Softtware

Sofware

Waalleet

Wl lt

Goods, Receipt

· sells items

· stores coins

· accepts payments

· makes payments

· accepts payments

Fig. 1

Client wallet or cyber wallet can generate serial nos., store coins, make and accept payments. It can

withdraw (get the coins minted) from the e-cash bank, and deposit coins at the payment stage to the bank.

E-cash bank can issue new coins and send account statement to the client. On the merchant side, there is

special merchant software. Thus, a merchant can sell items, accept payments from clients and also make

payments. E-cash bank signs the serial nos., maintains accounts of the client and the merchant and also

maintains a database in which the serial nos. of all such coins sent for payment are recorded. The client

makes the payment to the merchant for the items bought. The payment is made through e-cash coins. Note

that these coins are earlier got minted with the help of e-cash bank and remain stored in the cyber wallet.

The coins are encrypted with the public key of the bank and are forwarded to the merchant for onwards

deposit to the bank. The merchant cannot, therefore, view these coins. E-cash bank decrypts the coins

using its corresponding private key and compares the serial nos. , thus revealed, with its database of spent

coins to check the validity of the coins. If a revealed serial no. is not contained in the database, it proves that

the coin is valid and unspent. The bank then sends the valid indication to the merchant and adds that

particular serial no. in its database to prevent any chance of its being consumed in the future. The merchant

then sends the goods and receipt of payment to the client.

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