HomeNewsCryptocurrencyThe Predecessors of Bitcoin: Blind Signatures and DigiCash

The Predecessors of Bitcoin: Blind Signatures and DigiCash

Cryptocurrencies as the world know them today are not the first successful iteration of digital cash. Several projects and ideas came and went well before Satoshi Nakamoto put the Bitcoin whitepaper together. The world’s leading cryptocurrency has borrowed some ideas from these earlier projects, including the concept of “blinded cash”. 

Introducing David Chaum

People familiar with the world of cryptography will recognize the name of David Chaum. He is a well-respected pioneer in cryptography, with a strong focus on privacy-preserving technologies. During his career, he has come up with many interesting projects and developments, most of which are still used today. 

Some of his notable research projects span vault systems, digital cash, and digital cryptographic signatures. The vault systems David Chaum contributed to are the foundation of blockchain technology envisioned by Satoshi Nakamoto in 2008. In his dissertation, Chaum explains how a consensus state can be achieved between different operators on the network. Additionally, Chaum also highlighted the use of time-stamping chained data and even the implementation of such a protocol in the real world. 

Blind Signatures

Following the dissertation on vault systems, Chaum began working on how such a system can be implemented in the real world. His focus shifted to digital cash, which can be considered to be a cruder form of cryptocurrencies today. The first step to unlocking such a digital currency requires the use of a “blind signature”. This signature would effectively give consumers access to a digital currency from a bank. However, the bank -or anyone else – would not know how users store or spend that funds later on. 

The term “blind signature” refers to how the information in a message is masked, or blinded. It is still possible to verify the blind signature against the unblinded message by using it as a traditional digital signature. In the Bitcoin industry, the research on blind signatures resulted in how one’s private key can be matched with the information tied to an address in the public space. Albeit it does not allow for that much transactional privacy where Bitcoin is concerned, it was a major development in the 1980s.

The use cases for blind signatures are much broader than just financial transactions however. Back in the day, it was the predecessor of granting sender privacy for voting protocols. By utilizing this method, the authority conducting and counting the votes would not see the content of any ballot being signed. They are also unable to link blinded ballots it signs off on to the un-blinded ballots it received prior. 

Blinded Cash and DigiCash

By taking the blind signature to the financial sector, David Chaum created an ecosystem for a token currency. This currency can be transferred between network participants in a safe and private manner. All information transmitted between the two parties of a transaction is encrypted through the blind signatures. 

Eventually, this venture lead to the creation of DigiCash, which was the first commercialized implementation of David Chaum’s blind signatures. DigiCash existed between 1990 and 1998, with the first electronic payment being broadcasted in 1994. Following the demise of the company, the underpinning technology started making its way into the hands of other developers, who put their own spin on these concepts accordingly. 

JP Buntinx
JP Buntinx
JP Buntinx is passionate about cryptocurrencies, fintech, blockchain, and finance. He currently resides in Belgium.
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