WEPIN Store

31 Dec 1997 - Anonymous Currency Copyright


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                            Public Notice

                         Common Law Copyright

                           31 December 1997



               West El Paso Information Network (WEPIN)

                           6112 N. Mesa #218

                          El Paso   { 79912 }

                                Texas



                         wepinsto@colossus.net



The following cryptographic protocol allows fully anonymous electronic 

currency with protection against double-spending. The protocol may be 

used by anyone in any product without payment or notice.



Anonymous Currency (Coins)



In the following protocol, an issuer is an entity that sets up 

accounts, manages reserves, and issues electronic currency. A user is 

an account holder that withdraws, spends, receives, exchanges, or 

deposits electronic currency.



The key to the growth of electronic commerce is the availability of 

fully anonymous currency, called coins in this protocol. The coins are 

anonymous in the sense that, except for the initial withdrawal of coins 

from an account and the final deposit of coins to an account, no one 

will be able to determine the past history of the coins, i.e., cannot 

determine who spent the coins, in what transactions the coins 

participated, or who accepted the coins. While the coins must be fully 

anonymous, there must also be a mechanism to prevent, or at least 

significantly reduce, the possibility that the coins can be copied and 

respent.



The general protocol used is as follows.



When a user wants to withdraw some coins from his account, his software 

will generate a random and time-stamped 110-digit serial number for 

each coin. The serial numbers will be stored locally and an MD5 hash of 

each serial number will be generated and added to the coin request. The 

coin request, but NOT the serial number, will be sent to the issuer.



The issuer will time-stamp the coin request with an expiration date six 

months from the date of the coin request. The issuer will encrypt the 

MD5 hash of the serial number and will then clearsign the coin request, 

which now contains the encrypted MD5 hash of the serial number, turning 

it into a proto-coin. The clearsigned proto-coins will be returned to 

the user.



The user software will then add the serial numbers to the appropriate 

proto-coin turning them into coins. (Care must be exercised to ensure 

that each serial number is attached to the correct coin. Otherwise, the 

serial number will not validate.) The coins are now ready to spend.



The user spends the coins by sending them to a recipient, another user, 

who has agreed to accept them. The recipient sends the coins, unsigned 

but encrypted in the issuer's public key, to the issuer for validation. 

(There are two options here allowing more or less anonymity. See 

below.) The recipient can elect to accept the coins without validation 

but then the recipient accepts the risk that the coins have already 

been spent. The issuer will perform three checks to validate the coins.



	a. The issuer will verify that the proto-coin portion of the coin 

was clearsigned by the issuer and that nothing in the signed portion 

has changed since it was signed.



	b. The issuer will verify that an MD5 hash of the plain-text 

serial number matches the encrypted MD5 hash, once it has been 

decrypted, contained in the signed portion of the coin.



	c. The issuer will search for the serial number in the issuer's 

spent-coin database. If the serial number is there, then the coin has 

already been spent. If the serial number is not there, then the issuer 

adds it to the database and validates the coin. (This database is 

potentially quite large and must be very efficient. This is the main 

reason behind the six-month expiration date.)



On validation, the issuer will deposit the value of the coins into the 

recipients account or, at the option of the recipient, generate new 

proto-coins, possibly in different denominations, and return them to 

the recipient. The recipient now has new coins in his preferred 

denominations that can be spent. There are two levels of anonymity for 

the recipient.



	a. If the recipient elects to have the coins deposited into his 

account, there is minimal anonymity for the recipient since the issuer 

will have to have the user account id in order to deposit the coins 

although the issuer will not be able to determine in what transactions 

the coins were involved nor who spent the coins.



	b. If the recipient elects to have the coins exchanged for new 

coins, there is a fair bit of anonymity for the recipient since the 

only information the issuer will have is the IP address of the 

recipient which can change each time the recipient logs on to his ISP. 

For the truly paranoid, the recipient can use different ISPs for each 

transaction. In my opinion, this level of anonymity should be 

sufficient for most business transactions.





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Donald Dale Henson, sui juris

All authority is assumed authority. Assume some today!

Visit WEPIN Store at http://colossus.net/wepinsto/wshome.html





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Copyright at Common Law, West El Paso Information Network, 1997