Paper 2016/107

Fully Anonymous Transferable Ecash

Hitesh Tewari and Arthur Hughes

Abstract

Numerous electronic cash schemes have been proposed over the years ranging from Ecash, Mondex to Millicent. However none of these schemes have been adopted by the financial institutions as an alternative to traditional paper based currency. The Ecash scheme was the closest to a system that mimicked fiat currency with the property that it provided anonymity for users when buying coins from the Bank and spending them at a merchant premises (from the Bank's perspective). However Ecash lacked one crucial element present in current fiat based systems i.e., the ability to continuously spend or transfer coins within the system. In this paper we propose an extension to the Ecash scheme which allows for the anonymous transfer of coins between users without the involvement of a trusted third party. We make use of a powerful technique which allows for distributed decision making within the network - namely the Bitcoin blockchain protocol. Combined with the proof-of-work technique and the classical discrete logarithm problem we are able to continuously reuse coins within our system, and also prevent double-spending of coins without revealing the identities of the users.