The availability of ecash opens a range of new possibilities for commercial activities on networks such as the Internet or any broad band network. It is estimated that 30 to 40 million people already use the Internet to communicate and predictions indicate that the potential market for ecash will continue to expand rapidly through the end of the century.

Ecash is a fully anonymous electronic cash system, using numbered bank accounts and blind signatures. Electronic cash is the electronic equivalent of real paper cash, and can be implemented using public-key cryptography, digital signatures, and blind signatures. In an electronic cash system there is usually a bank, responsible for issuing currency, customers who have accounts at the bank and can withdraw and deposit currency, and merchants who will accept currency in exchange for goods or a service. Every customer, merchant, and bank has its own public/private key pair. The keys are used to encrypt, for security, and to digitally sign, for authentication, blocks of data that represent coins. A bank digitally signs coins using its private key. Customers sign bank deposits and withdrawals with their private key, and the bank uses the customer's public key to verify the signature.

Ecash coins are actually very long strings of characters sent from a bank to its account-holders over the Internet in such a way that the serial numbers are not known to the bank. The ecash coins, each of which has a specified value, are stored on the user’s hard disk and can be transferred in email or as data files exchanged online between payer and payee. To receive the value, the payee confirms the validity of the coins by depositing them online into an ecash account. This transaction will not reveal the name or address of the payer unless the payer has added this information.

 The ecash technology offers significant advantages over other forms of electronic payment. Most other existing systems use credit cards, where small value transactions are not cost-effective. In contrast, each ecash coin is secured by high-level encryption which includes the name of the payee, making it impossible for any other party to deposit the payment and obtain cash value. Unlike other systems, ecash also protects users from losses when their PC crashes.

Withdrawing Ecash Coins Securely

To make a withdrawal from the bank, the user's cyberwallet software calculates how many digital coins of what denominations are needed to withdraw the requested amount. The software then generates random serial numbers for these coins. The serial numbers are then blinded using the blind signature technique. This is done by multiplying the coins by a random factor. The blinded coins are then packaged into a message, digitally signed with the user's private key, encrypted with the bank's public key, and then sent to the bank. The message cannot be decrypted by anyone but the bank. When the bank receives the message, it checks the signature. The withdrawal amount can then be debited from the signature owner's account. The bank signs the coins with a private key. After signing the blind coins, the bank returns them to the user, encrypted with the user's public key. The user can then decrypt the message, and unblind the coins by dividing out the blinding factor. Since the bank couldn't see the serial numbers on the coins it was signing there is no way to now trace these coins back to the user who withdrew them. In this way the cash is fully anonymous.