Auditable, anonymous electronic cash

Abstract

Most anonymous, electronic cash systems are signature-based. A side effect of this is that in these systems the bank has the technical ability to issue unreported, valid money. It has been noticed in the past that this may lead to a disaster if the secret key of the bank is compromised. Furthermore, the above feature prevents any effective monitoring of the system. In this paper we build a fully anonymous, auditable system, by constructing an electronic cash system that is signature-free, and where the bank needs to have no secret at all. The security of the system relies instead on the ability of the bank to maintain the integrity of a public database. Our system takes a completely new direction for meeting the above requirements, and, in particular, it is the first to do so without the necessity of making individual transactions potentially traceable: payers enjoy unconditional anonymity for their payment transactions. The system is theoretically efficient but not yet practical.