Digicash (also known as E-cash) is an electronic payment system developed by Dr. David Chaum, who is widely regarded as an inventor of digital cash. The system was based on digital tokens called digital coins. DigiCash operated as follows:

Step 1: A customer establishes an account with the bank or other organization that could mint and receive digital coins. The customer’s account was backed by real money in some form, for instance it could be linked to the customer’s checking account.

Step 2: The customer also needs to download and install a software called electronic wallet

Step 3: To obtain DigiCash, the customer uses the electronic wallet to create digital coins. The coins are sent tot eh bank to sign. When the coins are signed, the equivalent amount of money is withdrawn fro the customer’s account.

In the proposed protocol the customer also had an option of “blinding” the coins. Thos blind a coin, the customer multiplies it by a random number r before sending it to the bank to sign. The bank sings the data. After the data and its digital signature are sent to the customer, the customer computers the digital signatures of the original (non-multiplied) coin by dividing the bank’s signature by r. This way the bank doesn’t known he coin, but the customer, who knows r, can trace his/her payments. Blind signatures have not been implemented.

Step 4: When the customer wants to make a purchase, he/she sends signed digital coins to the merchant. The merchant verifies the bank’s signature and deposits the coins to the bank, where they are credited to the merchant’s account.

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