Electronic Money Supervisory Commission

What is e-Money

What is e-Money

Electronic Money is often called e-money. This refers to digital cash or electronic cash. It is intangible and it is entirely digital (or virtual), unlike the actual money that has physical appearance. E-money still exhibits value or properties similar to physical currencies. Since e-money is considered digital, the money balance is recorded electronically on a stored-value card or other device such as prepaid payment card, personal computer, online storage and a plastic card that uses magnetic stripe technology.

The Father of e-Money

David Lee Chaum (born 1955) is the inventor of many cryptographic protocols, as well as ecash and DigiCash. His 1981 paper, “Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms”, laid the groundwork for the field of anonymous communications research.

Life and Career

Chaum gained a doctorate in computer science and business administration from the University of California, Berkeley in 1982. Also that year, he founded the International Association for Cryptologic Research (IACR), which currently organizes academic conferences in cryptography research. Subsequently, he taught at the New York University Graduate School of Business Administration and at the University of California. He also formed a cryptography research group at the National Research Institute for Mathematics and Computer Science (CWI) in Amsterdam, The Netherlands. He founded DigiCash, an electronic cash company, in 1990. Chaum received the Information Technology European Award for 1995. In 2004, he was named an IACR Fellow. In 2010, he received the RSA Conference award for excellence in the field of mathematics.

Notable Research Contribution

1. Digital Cash

Chaum is credited as the inventor of secure digital cash for his 1982 paper, which also introduced the cryptographic primitive of a blind signature. These ideas have been described as the technical roots of the vision of the Cypherpunk movement that began in the late 1980s. Chaum’s proposal allowed users to obtain digital currency from a bank and spend it in a manner that is untraceable by the bank or any other party. In 1988, he extended this idea (with Amos Fiat and Moni Naor) to allow offline transactions that enable detection of double-spending. In 1990, he founded DigiCash, an electronic cash company, in Amsterdam to commercialize the ideas in his research.

The first electronic payment was sent in 1994. In 1999, Chaum left the company.The first electronic payment was sent in 1994. In 1999, Chaum left the company.

2. New Types of Digital Signature

In the same 1982 paper that proposed digital cash, Chaum introduced blind signatures. This form of digital signature blinds the content of a message before it is signed, so that the signer cannot determine the content. The resulting blind signature can be publicly verified against the original, unblinded message in the manner of a regular digital signature.

In 1989, he (with Hans van Antwerpen) introduced undeniable signatures. This form of digital signature uses a verification process that is interactive, so that the signatory can limit who can verify the signature. Since signers may refuse to participate in the verification process, signatures are considered valid unless a signer specifically uses a disavowal protocol to prove that a given signature was not authentic.

In 1991, he (with Eugene van Heyst) introduced group signatures, which allow a member of a group to anonymously sign a message on behalf of the entire group. However an appointed group manager holds the power to revoke the anonymity of any signer in the case of disputes.

3. Anonymous Communication

In 1981, Chaum proposed the idea of an anonymous communication network in a paper. His proposal, called mix networks, allows a group of senders to submit an encryption of a message and its recipient to a server.

Once the server has a batch of messages, it will reorder and obfuscate the messages so that only this server knows which message came from which sender. The batch is then forwarded to another server who does the same process. Eventually, the messages reach the final server where they are fully decrypted and delivered to the recipient. A mechanism to allow return messages is also proposed. Mix networks are the basis of some remailers and are the conceptual ancestor to modern anonymous web browsing tools like Tor (based on onion routing). Chaum has advocated that every router be made, effectively, a Tor node.

In 1988, Chaum introduced a different type of anonymous communication system called a DC-Net, which is a solution to his proposed Dining Cryptographers Problem. DC-Nets is the basis of the software tool Dissent.

4. Trustworthy Voting System

Chaum has made numerous contributions to secure voting systems, including the first proposal of a system that is end-to-end verifiable. This proposal, made in 1981, was given as an application of mix networks. In this system, the individual ballots of voters were kept private which anyone could verify that the tally was counted correctly. This, and other early cryptographic voting systems, assumed that voters could reliably compute values with their personal computers. In 1991, Chaum introduced SureVote which allowed voters to cast a ballot from an untrustworthy voting system,proposing a process now called “code voting” and used in remote voting systems like Remotegrity.

In 1994, Chaum introduced the first in-person voting system in which voters cast ballots electronically at a polling station and cryptographically verify that the DRE did not modify their vote (or even learn what it was). In the following years, Chaum proposed (often with others) a series a cryptographically verifiable voting systems that use conventional paper ballots: Pret a Voter, Punchscan, and Scantegrity. The city of Takoma Park, Maryland used Scantegrity for its November, 2009 election. This was the first time a public sector election was run using any cryptographically verifiable voting system.

In 2011, Chaum proposed Random Sample Elections. This electoral system allows a verifiably random selection of voters, who can maintain their anonymity, to cast votes on behalf the entire electorate.

5. Near Eye Display

A near eye display patent application authored by David Chaum has been updated. “PERSPECTIVA – All styles of eyeglasses can be upgraded to overlay, anywhere you can see through them, digital imagary that is of unbeatable quality.”

“Invented then founded and led an effort that has demonstrated feasibility of a new paradigm for delivering light that digitally deconstructs images so that they can be reconstructed on the retina with dynamic focus and exquisite clarity.” This augmented reality technology seems similar to Magic Leap, Hololens, and Oculus.

6. Other Contributions

In 1979, Chaum proposed a mechanism for splitting a key into partial keys, a predecessor to secret sharing.

In 1985, Chaum proposed the original anonymous credential system, which is sometimes also referred to as a pseudonym system. This stems from the fact that the credentials of such a system are obtained from and shown to organizations using different pseudonyms which cannot be linked.

In 1988, Chaum with Gilles Brassard and Claude Crepeau published a paper that introduced zero-knowledge arguments, as well as a security model using information-theoretic private-channels, and also first formalized the concept of a commitment scheme.

1991, with Torben Pedersen, he demonstrated a well-cited zero-knowledge proof of a DDH tuple. This proof is particularly useful as it can prove proper reencryption of an Elgamal ciphertext.

Chaum contributed to an important commitment scheme which is often attributed to Pedersen. In fact, Pedersen, in his 1991 paper, cites a rump session talk on an unpublished paper by Jurjen Bos and Chaum for the scheme. It appeared even earlier in a paper by Chaum, Damgard, and Jeroen van de Graaf. The scheme is widely used as it is a simple perfectly hiding commitment, that is binding assuming the hardness of the discrete logarithm problem.

Other Definitions

Electronic money is a recent invention which means that currency with real value can be exchanged for traditional cash; it is instead entirely virtual or digital. It is a new invention in the history of money and commerce.

Electronic money only exists in digital format and is primarily based on the internet or smart cards that have a record of their stored value. The transactions which are electronically done are known as electronic money. Similar names for electronic money are electronic cash, e-money, digital money, digital currency or digital cash.


Electronic money (e-money) is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.

– ecb.europa.eu/stats/money_credit_banking/electronic_money

Electronic money is exchanged electronically over a technical device such as a computer or mobile phone. E-money in circulation operates as a pre-paid bearer instrument. The best known example of e-money is the Bitcoin, which can be bought with real money and traded on an exchange like any other currency.


Electronic money is money which exists only in banking computer systems and is not held in any physical form. In the United States, only a small fraction of the currency in circulation exists in physical form. The need for physical currency has declined as more and more citizens use electronic alternatives to physical currency.


Electronic money is a money balance recorded electronically on a stored-value card or other device. Another form of electronic money is network money, allowing the transfer of value on computer networks, particularly the Internet. Electronic money is also a claim on a private bank or other financial institution such as bank deposits.


Electronic money is a term that is still fairly vague and undefined. It refers to transactions carried out electronically with a net result of funds transferred from one party to another. Electronic money may be either debit or credit. Digital cash per se is basically another currency, and digital cash transactions can be visualized as a foreign exchange market. This is because we need to convert an amount of money to digital cash before we can spend it, and the conversion process is analogous to purchasing foreign currency.


In the world of banking, electronic money is considered as an alternative to cash. It is monetary value that is stored electronically on receipt of funds, and which is used for making payment transactions. E-Money can be held on cards, devices, or on a server. Examples include pre-paid cards, electronic purses, such as M-PESA in Kenya, or web-based services, such as PayPal.As such, e-money can serve an umbrella term for a number of more specific electronic value products and services.


As such, e-money can serve an umbrella term for a number of more specific electronic value products and services.
Electronic Money Regulations defines electronic money as a monetary value as represented by a claim on the issuer which is:

• stored electronically, including magnetically;
• issued on receipt of funds;
• used for the purposes of making payment transactions
• accepted as a means of payment by persons other than the issuer; and is not otherwise excluded by the Electronic Money Regulations.

Electronic money is an electronic payment product. The value is held electronically or magnetically on the payment instrument itself (either locally or remotely) and payments using the value are made electronically. So, for example, monetary value stored on a:

• prepaid payment card;
• personal computer; or
• a plastic card that uses magnetic stripe technology;
may all fall within the definition if the value is intended to be used for the purposes of making payment transactions.(6)


E-money products can be hardware-based or software-based, depending on the technology used to store the monetary value.

Hardware-based products

In the case of hardware-based products, the purchasing power resides in a personal physical device, such as a chip card, with hardware-based security features. Monetary values are typically transferred by means of device readers that do not need real-time network connectivity to a remote server.

Software-based products

Software-based products employ specialized software that functions on common personal devices such as personal computers or tablets. To enable the transfer of monetary values, the personal device typically needs to establish an online connection with a remote server that controls the use of the purchasing power.


Other Terms

Other terms that are often used in association with, or interchangeably with, e-money, mobile financial services include:
Electronic Wallet (eWallet)

  • Refers to the cash value that is stored on a card, phone, or other electronic device. Pre-paid cards are one form of electronic wallet. Electronic wallets can represent a fixed value. In this case, once the value has been spent, the card can no longer be used. Or wallets can be reloaded – to be used again and again. The term wallet is used because the card or phone is considered a substitute for the cash normally carried in a person’s wallet.

Electronic Vouchers

  • Refer to definition for electronic wallet.

Mobile Money

  • Refer to definition for mobile financial services.

Mobile Wallet (mWallet)

  • An electronic wallet that is stored on a phone. GSMA provides the following more specific definition: “mWallet is a data repository that houses consumer data sufficient to facilitate a financial transaction from a mobile handset, and the applicable intelligence to translate an instruction from a consumer through a mobile handset/bearer/application into a message that a financial institution can use to debit or credit bank accounts or payment instruments.”

Stored Value

  • Refer to definition for electronic wallet.
  • -blogs.worldbank.org/psd/e-money-mobile-money-mobile-banking-what-s-the-difference