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Cryptography is used in most digital money schemes in many different ways.
Here are a few examples:
- Authenticate the user to the bank.
- Money can be generated by banks, represented by a long number.
- Nobody except the bank can alter the number representing the
value, without the ``bill'' losing its value.
- Send data safely over a public phone line or the Internet. An
eavesdropper can not use, read or understand that data.
- Digital signatures.
This section introduces the basic concepts and underlying principles
of cryptography. Sections 4.1 up to section 4.3
are taken from [Bla96].
Unfortunately, a profound mathematical knowledge is
required to understand section 4.2 up to
section 4.3. In case you would like to skip this part, the
important concepts introduced are:
- RSA is a public key cryptographic algorithm. This means that
everybody on the planet can encrypt a message to Alice with Alice's
public key, but only Alice will be capable of decrypting the
message, by using its secret key. It is important to note that there
are 2 different keys that form a pair, one is public and is used to
encrypt a message and the private key is kept secret, so only the
receiver can decrypt the message. Every person has a unique keypair.
- DES is a private key algorithm. If Bob and Alice want to
exchange encrypted information, they both need to possess one private
key, which is kept secretly between them. This key is needed for both
encryption and decryption of the message.
- Digital Signatures can be used to uniquely sign an electronic
document. Similar to the RSA public key algorithm, but this time using
the private key, Alice will compute a number representing the
signature of the document, which depends on the document content as
well as Alice's private key. Everybody can now verify, by using
Alice's public key, that really Alice wrote the document and that the
document was not altered by anybody after the computation of the
signature.
Next: Encryption Systems
Up: Digital Money A divine
Previous: ConfidenceA Key Element
Adrian Perrig
Fri May 31 09:07:38 MET DST 1996