Optimally Anonymous and Transferable Conditional E-cash

Transferable conditional electronic-cash (e-cash) allows a payer to spend an e-cash based on the outcome not known in advance. It also allows a payee to spend the e-cash to others, or deposit the e-cash to a bank based on the future outcome. Among security properties, the anonymity of the payer has been widely studied. However, the payer is linkable in the existing conditional e-cash schemes. This paper presents the first optimally anonymous and transferable conditional electronic-cash (e-cash) system based on two recent cryptographic primitives, i.e., the Groth-Sahai(GS) proof system and the commuting signatures, to obtain the user\u27s unlinkability and optimal anonymity. A publisher is introduced to publish the conditions, and is firstly formalized. By dividing the deposit protocol into two parts, the anonymity of the user is obtained in the deposit protocol. Compared with the existing conditional e-cash schemes, this scheme has the constant size for the computation and communication. Finally, we give the security proof in the standard model

The foundations of money, payments and central banking: A review essay

The purpose of this paper is to understand the economics behind the evolution of payments where by payments I mean the ‘transfer of monetary value’ (in return for goods, services, or real or financial assets). It is clear from this definition of payments that, in order for there to be payments, there first needs to be money. So, the paper first discusses why money might evolve as a result of some frictions inherent in real-world economies. It then discusses the evolution of banks, arguing that banks developed in order to provide payment services (making ‘money’ work more efficiently). The paper then discusses how banks can save on the use of collateral to make payments – collateral that they can convert into loans to earn a return – by the development of ‘payment systems’. Such systems will involve some form of netting of payments (clearing) and final settlement in some asset. ‘Central banks’ fit into this picture by providing, in their liabilities, a settlement asset that the other banks are happy to use. In so doing, they are incentivised to worry about monetary and financial stabilityMoney, banks, payment systems, central banks

The economics of payment finality

Payment finality is critical to decentralized exchange. By specifying how the transfer of one type of claim extinguishes another, the rules governing finality minimize opportunities for default along credit chains and allocate other risks. ; The authors provide a basic analysis of finality and its role in facilitating exchange. They first present a simple, historically based model of transferable debt and finality. The discussion demonstrates the desirability of transferable debt and why rules governing payment finality are needed to sort out who will bear the losses in the event of default. Over time, the introduction of such rules helped establish the concept of negotiability, which greatly increased the efficiency of trade. ; A second model shows how a more modern payment system works. The large volume and scope of payments in modern systems have resulted in disparate sets of finality rules. For example, the finality of check payments is generally tentative, and the risks are often concentrated on a single party. Credit and debit card payments are generally more final, and the liability for potential losses tends to be shared among participants. Choosing the degree of finality for a given situation involves a trade-off between the benefits of finality and the costs of an erroneous or fraudulent transfer. The introduction of new technologies for payments may improve these trade-offs, but finality will remain the essential service provided.Payment systems ; Credit cards ; Checks

Liquidity Traps: How to Avoid Them and How to Escape Them

The paper considers ways of avoiding a liquidity trap and ways of getting out of one. Unless lower short nominal interest rates are associated with significantly lower interest volatility, a lower average rate of inflation, which will be associated with lower expected nominal interest rates, increases the odds that the zero nominal interest rate floor will become a binding constraint. The empirical evidence on this issue is mixed. Once in a liquidity trap, there are two means of escape. The first is to use expansionary fiscal policy. The second is to lower the zero nominal interest rate floor. This second option involves paying negative interest on government 'bearer bonds' -- coin and currency, that is 'taxing money', as advocated by Gesell. This would also reduce the likelihood of ending up in a liquidity trap. Taxing currency amounts to having periodic 'currency reforms', that is, compulsory conversions of 'old' currency into 'new' currency, say by stamping currency. The terms of the conversion can be set to achieve any positive or negative interest rate on currency. There are likely to be significant shoe leather costs associated with such schemes. The policy question then becomes how much shoe leather it takes to fill an output gap? Finally the paper develops a simple analytical model showing how the economy can get into a liquidity trap and how Gesell money is one way of avoiding it or escaping from it.

Inflation, Prices, and Information in Competitive Search

We study the effects of inflation in a competitive search model where each buyer’s utility is private information, and money is essential. The equilibrium is efficient at the Friedman rule, but inflation creates an inefficiency in the terms of trade. Buyers experience a preference shock after they are matched with a seller, and thus they have a precautionary motive for holding money. Sellers, who compete to attract buyers, post non-linear price schedules. As inflation rises, sellers post relatively flat price schedules, which reduce the need for precautionary balances. These price schedules induce buyers with a low desire to consume to purchase inefficiently high quantities because of the low marginal cost of purchasing goods. In contrast, buyers with a high desire to consume purchase inefficiently low quantities as they face binding liquidity constraints. The model fits historical US data on velocity and interest rates.Publicad

Inflation, Prices, and Information in Competitive Search

We study the effects of inflation in a competitive search model where each buyer's utility is private information, and where money is essential in facilitating trade. The equilibrium is efficient at the Friedman rule, but inflation creates an inefficiency in the terms of trade. Buyers experience a preference shock after they are matched with a seller, and thus they have a precautionary motive for holding money. Sellers, who compete to attract buyers, post non-linear price schedules to screen out different types of buyers. As inflation rises, sellers post relatively flat price schedules which reduce the need for buyers to hold precautionary balances. These price schedules induce buyers with a low desire to consume to purchase inefficiently high quantities because of the low marginal cost of purchasing goods. In contrast, buyers with a high desire to consume purchase inefficiently low quantities as they face binding liquidity constraints. The reduction of precautionary balances as inflation rises allows the model to fit historical US data on velocity and interest rates.inflation; precautionary money demand; competitive search; private information.

A Real World Identity Management System with Master Secret Revocation

Cybersecurity mechanisms have become increasingly important as online and offline worlds converge. Strong authentication and accountability are key tools for dealing with online attacks, and we would like to realize them through a token-based, centralized identity management system. In this report, we present a privacy-preserving group of protocols comprising a unique per user digital identity card, with which its owner is able to authenticate himself, prove possession of attributes, register himself to multiple online organizations (anonymously or not) and provide proof of membership. Unlike existing credential-based identity management systems, this card is revocable, i.e., its legal owner may invalidate it if physically lost, and still recover its content and registrations into a new credential. This card will protect an honest individual's anonymity when applicable as well as ensure his activity is known only to appropriate users

Electronic money and the derived applications: anonymous micropayment, receipt-free electronic voting and anonymous internet access.

by Chan Yuen Yan.Thesis (M.Phil.)--Chinese University of Hong Kong, 2000.Includes bibliographical references (leaves 91-[97]).Abstracts in English and Chinese.Chapter 1 --- Introduction --- p.1Chapter 1.1 --- Transition to a New Monetary System --- p.3Chapter 1.2 --- Security and Cryptography --- p.3Chapter 1.3 --- Electronic Cash: More than an Electronic Medium of Transaction --- p.4Chapter 1.4 --- Organisation of the Thesis --- p.5Chapter 2 --- Cryptographic Primitives --- p.7Chapter 2.1 --- One-way Hash Functions --- p.7Chapter 2.2 --- The Bit Commitment Protocol --- p.8Chapter 2.3 --- Secret Splitting --- p.8Chapter 2.4 --- Encryption / Decryption --- p.9Chapter 2.4.1 --- Symmetric Encryption --- p.10Chapter 2.4.2 --- Asymmetric Encryption --- p.10Chapter 2.5 --- The RSA Public Key Cryptosystem --- p.11Chapter 2.6 --- Blind Signature --- p.12Chapter 2.7 --- Cut-and-choose procotol --- p.13Chapter 2.8 --- The Elliptic Curve Cryptosystem (ECC) --- p.14Chapter 2.8.1 --- The Elliptic Curve Discrete Logarithm Problem --- p.15Chapter 2.8.2 --- Cryptographic Applications Implemented by ECC --- p.15Chapter 2.8.3 --- Analog of Diffie-Hellman Key Exchange --- p.15Chapter 2.8.4 --- Data Encryption [11] --- p.16Chapter 2.8.5 --- The ECC Digital Signature --- p.17Chapter 3 --- What is Money? --- p.18Chapter 3.1 --- Money --- p.18Chapter 3.1.1 --- The History of Money [17] --- p.19Chapter 3.1.2 --- Functions of Money --- p.20Chapter 3.2 --- Existing Payment Systems --- p.22Chapter 3.2.1 --- Cash Payments --- p.22Chapter 3.2.2 --- Payment through Banks --- p.22Chapter 3.2.3 --- Using Payment Cards --- p.23Chapter 4 --- Electronic Cash --- p.24Chapter 4.1 --- The Basic Requirements --- p.24Chapter 4.2 --- Basic Model of Electronic Cash --- p.25Chapter 4.2.1 --- Basic Protocol --- p.26Chapter 4.2.2 --- Modified Protocol --- p.27Chapter 4.2.3 --- Double Spending Prevention --- p.30Chapter 4.3 --- Examples of Electronic Cash --- p.31Chapter 4.3.1 --- eCash --- p.31Chapter 4.3.2 --- CAFE --- p.31Chapter 4.3.3 --- NetCash --- p.32Chapter 4.3.4 --- CyberCash --- p.32Chapter 4.3.5 --- Mondex --- p.33Chapter 4.4 --- Limitations of Electronic Cash --- p.33Chapter 5 --- Micropayments --- p.35Chapter 5.1 --- Basic Model of Micropayments --- p.36Chapter 5.1.1 --- Micropayments generation --- p.37Chapter 5.1.2 --- Spending --- p.37Chapter 5.1.3 --- Redemption --- p.38Chapter 5.2 --- Examples of Micropayments --- p.39Chapter 5.2.1 --- Pay Word --- p.39Chapter 5.2.2 --- MicroMint --- p.40Chapter 5.2.3 --- Millicent --- p.41Chapter 5.3 --- Limitations of Micropayments --- p.41Chapter 5.4 --- Digital Money - More then a Medium of Transaction --- p.42Chapter 6 --- Anonymous Micropayment Tickets --- p.45Chapter 6.1 --- Introduction --- p.45Chapter 6.2 --- Overview of the Systems --- p.46Chapter 6.3 --- Elliptic Curve Digital Signature --- p.48Chapter 6.4 --- The Micropayment Ticket Protocol --- p.49Chapter 6.4.1 --- The Micropayment Ticket --- p.50Chapter 6.4.2 --- Payment --- p.51Chapter 6.4.3 --- Redemption --- p.52Chapter 6.4.4 --- Double Spending --- p.52Chapter 6.5 --- Security Analysis --- p.52Chapter 6.5.1 --- Conditional Anonymity --- p.53Chapter 6.5.2 --- Lost Tickets --- p.53Chapter 6.5.3 --- Double Spending --- p.53Chapter 6.5.4 --- Collusion with Vendors --- p.53Chapter 6.6 --- Efficiency Analysis --- p.55Chapter 6.7 --- Conclusion --- p.56Chapter 7 --- Anonymous Electronic Voting Systems --- p.57Chapter 7.1 --- Introduction --- p.57Chapter 7.2 --- The Proposed Electronic Voting System --- p.58Chapter 7.2.1 --- The Proposed Election Model --- p.58Chapter 7.3 --- Two Cryptographic Protocols --- p.60Chapter 7.3.1 --- Protocol One - The Anonymous Authentication Protocol --- p.61Chapter 7.3.2 --- Protocol Two - Anonymous Commitment --- p.64Chapter 7.4 --- The Electronic Voting Protocol --- p.65Chapter 7.4.1 --- The Registration Phase --- p.66Chapter 7.4.2 --- The Polling Phase --- p.66Chapter 7.4.3 --- Vote-Opening Phase --- p.67Chapter 7.5 --- Security Analysis --- p.68Chapter 7.5.1 --- Basic Security Requirements --- p.68Chapter 7.5.2 --- Receipt-freeness --- p.71Chapter 7.5.3 --- Non-transferability of Voting Right --- p.72Chapter 7.6 --- Conclusion --- p.72Chapter 8 --- Anonymous Internet Access --- p.74Chapter 8.1 --- Introduction --- p.74Chapter 8.2 --- Privacy Issues of Internet Access Services --- p.75Chapter 8.2.1 --- Present Privacy Laws and Policies --- p.75Chapter 8.2.2 --- Present Anonymous Internet Services Solutions --- p.76Chapter 8.2.3 --- Conditional Anonymous Internet Access Services --- p.76Chapter 8.3 --- The Protocol --- p.77Chapter 8.3.1 --- ISP issues a new pass to Alice using blind signature [1] scheme --- p.77Chapter 8.3.2 --- Account Operations --- p.78Chapter 8.4 --- Modified Version with Key Escrow on User Identity --- p.79Chapter 8.4.1 --- Getting a new pass --- p.79Chapter 8.4.2 --- Account operations --- p.82Chapter 8.4.3 --- Identity revocation --- p.83Chapter 8.5 --- Security Analysis --- p.83Chapter 8.5.1 --- Anonymity --- p.83Chapter 8.5.2 --- Masquerade --- p.84Chapter 8.5.3 --- Alice cheats --- p.84Chapter 8.5.4 --- Stolen pass --- p.84Chapter 8.6 --- Efficiency --- p.85Chapter 8.6.1 --- Random number generation --- p.85Chapter 8.6.2 --- Signing on the pass --- p.86Chapter 8.6.3 --- Pass validation --- p.86Chapter 8.6.4 --- Identity recovery --- p.87Chapter 8.7 --- Conclusion --- p.87Chapter 9 --- Conclusion --- p.88Bibliography --- p.9

Making Financial Markets: Contract Enforcement and the Emergence of Tradable Assets in Late Medieval Europe

The emergence of medieval markets has been seen in the literature as hampered by lack of contract enforcement and institutions like merchants’ communal responsibil-ity. Merchants traveling to a different marketplace could be held liable for debts in-curred by any merchant from their hometown. We argue that communal responsibility was effective in enforcing credit contracts and enabled merchants to use bills of ex-change in long distance trade even if reputation effects were absent. We implement this in the Lagos and Wright (2005) matching model of money demand, assuming that preference shocks follow a two-state Markov chain. We derive conditions under which cash and credit in the anonymous matching market coexist. For fixed but suffi-ciently low cost of credit, agents will pay with cash in low-quality matches, and use cash and credit in high-quality matches. The use of credit reduces the money holdup in the matching market and thus leads to Pareto improvementsCommunal responsibility, matching, money demand, credit