What Is eCash?
eCash was a digital-based system that facilitated the transfer of funds anonymously. A pioneer in cryptocurrency, its goal was to secure the privacy of individuals that use the Internet for micropayments. eCash was created by Dr. David Chaum under his company, DigiCash, in 1990. Though there was interest in the platform from large banks, eCash never took off and DigiCash filed for bankruptcy in 1998. DigiCash, along with its eCash patents, was eventually sold off. In 2018, Chaum launched a new startup focused on cryptography.
- eCash was an electronic platform created to transfer funds anonymously. It was a pioneer in cryptocurrency.
- eCash was created by Dr. David Chaum and implemented via his company, DigiCash, in 1990.
- eCash worked on the premise of blind signatures where message content is invisible before signing, resulting in no user being able to link withdrawal and spend transactions.
- Despite the initial interest and bringing large banks on board to use the system, eCash never fully took off and DigiCash filed for bankruptcy in 1998.
- Chaum launched a new startup in 2018 focused on cryptography.
The idea for eCash came from Dr. David Chaum in 1983. He was ahead of his time in thinking about privacy concerns in the age of the Internet. And not only did he advocate for privacy but he took it a few steps further in creating an anonymous based payment system for the digital age. This was even before the Internet was available for public use. In 1990, Chaum created the company, DigiCash, to realize his idea for eCash.
The core concept behind eCash was blind signatures. A blind signature is a type of digital signature in which the message's content is invisible prior to signing. In this manner, no user is able to create a link between withdrawal and spend transactions. The money used in the system was called "CyberBucks."
eCash's Rise and Fall
DigiCash gained a lot of traction in the 1990s when Internet companies were taking off. The company signed deals with many banks that intended to use the platform. These banks included Deutsche Bank (DB), Credit Suisse (CS), and other banks across the globe. Microsoft was also interested in eCash for Windows 95 but the two companies couldn't agree to a deal.
The banks that decided to implement eCash started testing the platform but never sold it as a viable product to its customers. The only bank that actually used the platform was Mark Twain Bank in St. Louis, Missouri. The service was free to buyers, but sellers had to pay a transaction fee. Mark Twain Bank had signed up 300 businesses and 5,000 individual users but the platform never gained traction. According to Chaum, "As the Web grew, the average level of sophistication of users dropped. It was hard to explain the importance of privacy to them."
DigiCash eventually filed for bankruptcy in 1998. It was sold off to eCash Technologies along with its patents for eCash. The trademark for the name is now with Due Inc. Due was founded in 2015 and is ranked one of the top 10 e-wallets in the world.
eCash and Online Security Today
Despite the failure of DigiCash and with it eCash, online security is an ongoing issue in the digital realm to this day. Financial information, stored on a computer or electronic device, or the Internet more generally (e.g., the cloud) is vulnerable to hackers. Cryptocurrencies are extremely popular today and owe their foundations to eCash. The most popular cryptocurrency is Bitcoin, which was created in 2009 by an anonymous creator and had a better luck gaining traction quickly. Overall, many consider Dr. Chaum to be the father of digital currency.
In 2018, Chaum launched a new startup called Elixxir, whose purpose is to create a cryptography network focused on communication anonymity, that is controlled by users to protect their information, as opposed to the current setup, where companies have detailed access to consumer information and use it for targeting ads to generate revenue.