Electronic Cash, Before Bitcoin

Dec 2013 - History of Virtual Currency

The many attempts to create a digital currency

Electronic Cash, Before Bitcoin

Digicash, Liberty Reserve, Bit Gold, Hashcash, RPoW, and more


from Buniskey’s Cryptoassets:

“One of Bitcoin’s most famous ancestors was pioneered by a company called DigiCash, led by David Chaum, who remains one of the most famous cryptographers in crypto­ asset history. In 1993, prior to Marc Andressen founding Netscape, Chaum invented the digital payment system called ecash. This allowed secure and anonymous payments across the Internet, no matter the amount. 3 Clearly, Chaum’s timing could not have been better given the tech boom that followed through the mid- to late-1990s, and his company, DigiCash, had several opportunities for growth, any of which might have made it a household name. However, while Chaum was widely regarded as a technical genius, as a businessperson he left much to be desired. Bill Gates approached Chaum about integrating ecash into Windows 95, which would have immediately given it global distribution, but Chaum refused what was rumored to be a $100 million offer. Similarly, Netscape made initial inquiries about a relation- ship, but management was quickly turned off by Chaum’s attitude. In 1996, Visa wanted to invest $40 million into the company but were dissuaded when Chaum demanded $75 million (if these reports are correct, it’s clear that the potential price for Chaum’s creation was dropping). 4 If all had gone well, DigiCash’s ecash would have been integrated into all our web browsers at the ground floor, serving as the global Internet payment mechanism and potentially removing the need for credit cards in online payments. Sadly, mismanagement ultimately ran DigiCash into the ground, and in 1998 it declared bankruptcy. While DigiCash failed to become a household name, some players will resurface in our story, such as Nick Szabo, the father of “smart contracts,” and Zooko Wilcox, the founder of Zcash, both of whom worked at DigiCash for a time. 5:

FirstVirtual and CyberCash

  • Early History of Digital Cash and Cryptocurrency
    • In 1994, FirstVirtual offered online payments, like paypal, via e-mail.
    • 1994 - CyberCash - utilizing SET architecture to provide micro-payments

      Secure electronic transaction (SET) was an early protocol for electronic credit card payments. As the name implied, SET was used to facilitate the secure transmission of consumer credit card information via electronic avenues, such as the Internet. SET blocked out the details of credit card information, thus preventing merchants, hackers and electronic thieves from accessing this information. -investopedia

  • CyberCash Credit Card Protocol Version 0.8


  • NetCheque, NetCash, and the Characteristics of Internet Payment Services ‘95

    Secure methods of payment are needed before we will see widespread commercial use of the Internet. Recently proposed and implemented payment methods follow one of three models: electronic currency, credit-debit, and secure credit card transactions. Such payment services have different strengths and weaknesses with respect to the requirements of security, reliability, scalability, anonymity, acceptability, customer base, reliability, convertibility, efficiency, ease of integration with applications, and ease of use. NetCheque and NetCash are payment systems under development at the Information Sciences Institute of the University of Southern California. NetCheque and NetCash are described and their strengths with respect to these requirements are discussed.


Project CAFÉ


In April 2007, the US government ordered e-gold administration to lock approximately 58 e-gold accounts, including ones owned by The Bullion Exchange, AnyGoldNow, IceGold, GitGold, The Denver Gold Exchange, GoldPouch Express, 1MDC (a Digital Gold Currency, based on e-gold), and forced OmniPay’s owner, G&SR, to liquidate the seized assets.-Bitcoiners: Remember what happened to eGold



Beenz and Flooz

An early clickworking site that rewarded users with its own digital currency.





Reusable Proof of Work

  • Subject: RPOW - Reusable Proofs of Work -03 [ϟ]

    This system receives hashcash as a Proof of Work (POW) token, and in exchange creates RSA-signed tokens which I call Reusable Proof of Work (RPOW) tokens. RPOWs can then be transferred from person to person and exchanged for new RPOWs at each step. Each RPOW or POW token can only be used once but since it gives birth to a new one, it is as though the same token can be handed from person to person.

  • Use me Baby one more Time
  • https://github.com/NakamotoInstitute/RPOW
  • https://slashdot.org/story/04/08/18/1345258/rpow—reusable-proofs-of-work
  • » More Information on Hal Finney »

Bit Gold

Liberty Reserve

  • Digital Currency Liberty Reserve Busted for Money Laundering

    About 1 million users worldwide, including 200,000 in the U.S.; 55 million transactions; and $6 billion in ill-gotten gains.

    Those are the numbers defining the case of Liberty Reserve, a digital currency and online payment service incorporated in Costa Rica in 2006. On Tuesday, an indictment was unsealed showing that seven men have been charged with running the unlicensed Liberty Reserve as a “bank of choice for the criminal underworld.” According to The Wall Street Journal, “The system allegedly was designed to give criminals a way to move money earned from credit-card fraud, online Ponzi schemes, child pornography and other crimes without being detected by law enforcement.” Five of the seven men are in custody, having been arrested on Friday in Spain, Costa Rica and Brooklyn, N.Y. Extradition will be sought for the suspects who are overseas; the other two remain at large.

    For the first time, officials invoked the post-9/11 Patriot Act to shut down a virtual currency when they cut off Liberty Reserve from the U.S. financial system. The drastic measure comes at a time when digital alternatives to traditional currencies such as Bitcoin are drawing wider interest from the public.

  • Liberty Reserve digital cash chief jailed for 20 years

    The founder of the digital currency service Liberty Reserve has been sentenced to 20 years in prison. Arthur Budovsky had pleaded guilty to conspiring to commit money laundering. The online facility, shut down in 2013, had operated out of Costa Rica. Prosecutors in New York said many of its clients had been cybercriminals who had sought to move funds anonymously. Two other men involved in the business were sentenced to shorter jail terms. Two more people will be sentenced on 13 May. The authorities are still trying to locate a further two suspects.

  • Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250 Million through His Digital Currency Business

    The founder of Liberty Reserve, a virtual currency once used by cybercriminals around the world to launder the proceeds of their illegal activity, pleaded guilty today to running a massive money laundering enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York.

    Arthur Budovsky, 42, pleaded guilty to one count of conspiring to commit money laundering before U.S. District Judge Denise L. Cote of the Southern District of New York. He is scheduled to be sentenced on May 6, 2016.

  • Hackers switch to new digital currency after Liberty Reserve

    NEW YORK (Reuters) - Three months after a team of international law enforcement officials raided the digital currency firm Liberty Reserve, cyber experts say criminals are increasingly turning to another online currency called Perfect Money.

    Idan Aharoni, the head of cyber intelligence at EMC Corp’s RSA security division, said that some online scam artists and thieves are using Perfect Money’s digital currency to launder money and conceal profits in much the same way they allegedly did with Liberty Reserve’s currency.


  • Karma: Secure Economic Framework for Peer-to-Peer Resource Sharing

    Peer-to-peer systems are typically designed around the assumption that all peers will willingly contribute resources to a global pool. They thus suffer from freeloaders, that is, participants who consume many more resources than they contribute. In this paper, we propose a general economic framework for avoiding freeloaders in peer-to-peer systems. Our system works by keeping track of the resource consumption and resource contribution of each participant. The overall standing of eachparticipant in the system is represented by a single scalar value, called their karma. A set of nodes, called a bankset, keeps track of each node’s karma, increasing it as resources are contributed, and decreasing it as they are consumed. Our framework is resistant to malicious attemptsby the resource provider, consumer, and a fraction of the members of the bank set. We illustrate the application of this framework to a peer-to-peer filesharing application

  • A Brief History with Professor Emin Gün Sirer - Dec 3, 2017



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