DigiCash

» see digicash.com as it lived, on the wayback machine

~ the obituary ~

the first time i heard of digicash was in a cryptography textbook in university, years after the company had already filed for chapter 11. it was framed as the historical precedent for anonymous digital cash, the thing chaum had built to prove that blind signatures could let you spend money online without anyone (including the bank) being able to link the spend to the spender. i remember the diagrams. i did not remember that there was a company that had actually shipped this and run live trials with a real US bank.

chaum's 1983 paper introduced blind signatures. the idea was that a bank could sign a digital token without seeing what was being signed, so the user could later spend the token and prove it was valid without revealing which token had been issued to which person. ecash was the productization. digicash, the company, started in 1989 in amsterdam. the first electronic payment crossed the wire in 1994. mark twain bank in missouri ran a live US trial. deutsche bank ran one in europe. the technology was sound. nothing else was.

by november 1998 digicash had run out of money. the trial had signed up about five thousand customers in three years. chaum had reportedly turned down acquisition offers from microsoft and others, and the merchant side of the network never reached the density needed for the consumer side to feel useful. chapter 11 was filed in november. ecash technologies bought the assets. infospace bought ecash technologies in 2002. the patents lived on, the product did not.

i was fourteen in 1998 in turkey on a 33.6k modem and the closest thing to electronic money in my life was the prepaid phone card my parents bought me for the household landline. there was no online merchant in my orbit that would accept anything from anyone, let alone an anonymous cryptographic token from amsterdam. digicash was solving a problem that had not yet shown up in my version of the internet. by the time it had, bitcoin would do roughly the same thing without asking anyone's permission.

~ the case file ~

~ the climb ~

chaum was already a respected cryptographer when he started digicash. the 1983 blind-signature paper had been cited heavily in academic circles, and the company attracted serious early talent: bryce wilcox-o'hearn, niels ferguson, gary howland, several others who would go on to shape the cypherpunk and zcash lineages. the technology demos were beautiful. you could mint coins, spend them, and the bank could verify them without being able to trace them back to you. it was the best crypto-cash story anyone had told.

~ the slide ~

the merchant side never built. mark twain bank's trial was the only US deployment, and the merchant list never grew beyond a few dozen small shops mostly run by enthusiasts. the consumer side wanted to spend ecash but had nowhere to spend it. the bank could not justify the operational cost of a payment rail that had five thousand users. chaum reportedly turned down a microsoft offer that would have bundled ecash into windows 95, and other deals fell through over licensing terms. by 1997 the company was bleeding money and the founders' relationship with the board had broken down. mark twain bank was acquired by mercantile in 1997 and the trial was wound down a year later.

~ the long tail ~

the patents survived. when bitcoin's whitepaper appeared in 2008, the cypherpunk mailing list response was to point at digicash and say: this is the lineage. anonymous digital cash was not a new idea, it was a 25-year-old idea that finally found a substrate that did not need a bank's permission. zcash, which uses zero-knowledge proofs to do something similar to ecash, was started by a former digicash engineer. monero too descends from this lineage if you draw it generously. the company is dead. the idea it tried to ship is now a working asset class.

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