Black Unicorn <unicorn@access.digex.net> writes:

So has anyone tried to solve the problem of double spending and the online requirement of digital cash? Is there any way to take cash offline? Or is this merely the copy protection problem rehashed?

Double spending is one of the main problems digicash systems try to solve, since digicash can obviously be copied easily. Online systems make the double-spending relatively easy to prevent, but, besides inconveniences, the online transaction has a transaction cost that may make the system unusable (e.g. a 5 cent telephone message unit costs too much for a newspaper, though it may be fine for paying for contraband tobacco at $5/pack.) There are two main approaches to off-line systems that I've seen: - making the hardware expensive or contractually limited (e.g. subway farecards, phone cards, postage meters) (It's intellectually unexciting, but works fine economically for small transactions.) - using tamperproof trusted hardware that embeds enough information about its identity in each digicoin that double-spending reveals the identity, or multiple spending reveals the identity with increasing probability. Much of this work has been done by Chaum's folks in the Netherlands, using "observer" smartcards; somebody posted a paper about it on sci.crypt recently. It's harder to use these approaches for applications like emailing credit card numbers, but they're ok for tollbooths. I worry somewhat about the privacy issues - in order for revealing a cheating userid to be effective, either the bank needs to have a registry of who the user is, which is a privacy problem for people who really want anonymous money, or else there needs to be some system for distributing bad userids, analagous to the inconvenient books of bad credit-card numbers that small shops used to use before phone verification became widespread. (Obviously they'd be digital, but I'd rather not have to carry a CDROM drive or gigabyte hard disk in my wallet...