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BOX  L.1
Characteristics of Digital Cash Tokens

• Monetary value. Electronic tokens must have a monetary value; they must represent either cash (currency), a bank-authorized credit, or a bank-certified electronic check.

• Exchangeability. Electronic tokens must be exchangeable as payment for other electronic tokens, paper cash, goods or services, lines of credit, deposits in banking accounts, bank notes or obligations, electronic benefits transfers, and the like.

• Storability and retrievability. Electronic tokens must be able to be stored and retrieved. Remote storage and retrieval (e.g., from a telephone or personal communications device) would allow users to exchange electronic tokens (e.g., withdraw from and deposit into banking accounts) from home or office or while traveling. The tokens could be stored in any appropriate electronic device that might serve as an electronic ''wallet."

• Tamper-resistance. Electronic tokens should be tamper-proof and be difficult to copy or forge. This characteristic prevents or detects duplication and double spending. Counterfeiting poses a particular problem, since a counterfeiter may, in network applications, be anywhere in the world and consequently be difficult to catch without appropriate international agreements. Detection is essential to determine whether preventive measures are working.

SOURCE: Adapted from Cross Industry Working Team, Electronic Cash, Tokens, and Payments in the National Information Infrastructure, Corporation for National Research Initiatives, Reston, Va., 1994.

money is printed nor the string of bits that represents digital cash has intrinsic value; value is conferred on a piece of paper or a particular string of bits if, and only if, an institution is willing to accept responsibility for them. The basic characteristics of digital cash are described in Box L.1.

Public interest in digital cash is driven largely by pressures for electronic commerce. For example, cash is usually the medium of choice in conducting low-value transactions; present mechanisms for conducting transactions at a distance make economic sense only when the value is relatively high (the average credit card transaction is several tens of dollars). In addition, these mechanisms generally require a preexisting arrangement between vendors and credit card companies: completely spontaneous transactions between parties without such arrangements are not possible with credit cards as they are with cash. Instant settlement when conducting financial transactions at a distance and reducing the cost of managing physical cash are still other advantages.

Both cryptography and information technology, including computer

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