pays the bill in full. Bob, Carol, and David each should then be able to transfer one-fourth of the total amount in digital cash to Alice.
The protocol between the two exchanging parties is executed off-line,meaning that neither is required to be host-connected in order to proceed. Availabilitymust be unrestricted. Alice can freely pass value to Bob at any time of day withoutrequiring third-party authentication.
The digital cash is well-known and accepted in a large commercialzone. With several digital cash providers displaying wide acceptability, Alice should beable to use her preferred unit in more than just a restricted local setting.
The digital cash should be simple to use from both the spendingperspective and the receiving perspective. Simplicity leads to mass use and mass useleads to wide acceptability. Alice and Bob should not require a degree in cryptographyas the protocol machinations should be transparent to the immediate user.
These are ideal properties, and no known system satisfies them all.
Categorization of payment systems
Implementations of payment systems that don't satisfy all the requirements may be convenientlyclassified according to these criteria:
Anonymous or identified.
Anonymous e-cash works just like real paper cash. Onceanonymous e-cash is withdrawn from an account, it can be spent or given away withoutleaving a transaction trail. This however, can be considered contentious. Identifiedpayment systems such as credit card payment, or payment by Paypal leave an audittrail, and the identity of the payee and the payer is known to the Bank, and (usually) toeach other.
Online or offline.
Online means you need to interact with a bank (via a network) toconduct a transaction with a third party. Offline means you can conduct a transactionwithout having to directly involve a bank.
Requiring a trusted platform.
Some protocols may require a trusted platform, such asa smart card. Smart cards are small plastic cards like credit cards, bearing a chip. Theyare tamper-resistant and can force Alice and Bob to adhere to the protocol. This isconvenient for the protocol designer, but threatens to tie users to proprietary interfacesand to remove transparency of the system. In contrast, internet protocols endorsed bythe IETF are open and can be interoperably implemented by anyone.
Two big problems
How can we guarantee anonymity? If the bank can see which coins it gives to A, and later it seesthe same coins coming back from B. it can infer that A has paid them to B (possibly via anintermediary).How can we avoid double spending? Because electronic files can be duplicated, a big challengefor digital cash is how to stop users spending money twice. On-line solutions achieve this by