eCash is an internet-based system that facilitates the transfer of funds anonymously. Similar to credit cards, eCash historically has been free to users, while sellers have paid a fee. Due to certain security concerns, however, eCash remains more of an idea and less of a fully realized, widespread payment system.
Breaking Down eCash
eCash uses blind signatures (a type of digital signature, in which the message's content is invisible prior to signing); no user is then able to create a link between withdrawal and spend transactions. The system was used by one bank in the United States, the Mark Twain bank; however, the system was dissolved in 1997 after the bank Mercantile Bank's purchasing it. eCash was a trademark of DigiCash, a firm that went bankrupt in 1998. Following this, eCash technologies purchased DigiCash. InfoSpace acquired eCash Technologies in 2002.
eCash began with a form of micropayments (smaller sized transactions).
eCash and Online Security
Financial information, stored on a computer or electronic device, or the Internet more generally (e.g., the cloud) is vulnerable to hackers. Threats to this data can come from:
- Backdoor attacks (e.g., an alternate method for assessing an organization’s system, which bypasses usual authentication methods). Some systems come with these backdoors by design, while others result from an error.
- Denial-of-service attacks. These prevent the correct users from accessing the system, a common method being entering a wrong password enough times so that the user’s account is locked.
- Direct-access attacks, including bugs and viruses. These forms of attacks can gain access to a system, copy its data, and/or modify it.
Forms of security to protect financial and other sensitive online data (e.g. which a financial technology or fintech company might store) could include multi-factor authentication (bringing in an additional tool, such as a one-time, time-sensitive text message, sent to a user’s phone for an extra layer of protection) and/or employing a password manager.
eCash and Other Forms of Online Financial Services
Many fintech companies now work with their customers exclusively online, without physical branch locations. These companies range from online wealth management platforms and advisors to quant-oriented trading platforms (employing strategies, similar to some hedge funds). Some traditional financial institutions offer the same services in both the physical and online realms, including checking and savings accounts, transfers, and more.
Some now use the term eCash to refer to the cryptocurrency Ethereum.