This paper explores a payment system that enables transactions without relying on a ledger or intermediary service providers, examining it from a technical perspective. The system facilitates payments through the transmission and receipt of electronic data, analogous to physical cash. In the field of cryptography, this concept has been studied under the name "electronic cash." While several demonstration experiments were conducted in the 1990s, it is presumed that the technology at the time could not ensure sufficient usability. In this paper, we revisit the concept of electronic cash in light of technological advancements and evolving societal needs. Additionally, we conduct practical verification using smartphones to demonstrate that current technological standards can offer electronic cash systems with high usability. From a technical standpoint, we propose methods to further enhance usability and privacy for electronic cash schemes. These include mechanisms for splitting and aggregating electronic cash into arbitrary amounts, as well as schemes that make it difficult to link electronic cash transactions made by the same user. It should be noted that this paper focuses solely on the technical aspects of electronic cash and does not examine the feasibility of its legal, institutional, or practical implementation in society.
Keywords: digital payments; electronic cash; e-money; privacy protection; smartphone payments
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.