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David Chaum: Godfather of Digital Currency

blind signatures
The use of blind signatures in the banking system
David Chaum
Source: Crypto Network NZ

The popular story is that Satoshi Nakamoto, the anonymous founder of Bitcoin, came up with the concept of cryptocurrency all on his own. But the concept of digital currency had been floating around for decades. Many of the achievements in cryptography today bear the signature of one man who is considered by many to be the godfather of electronic money. His name is David Chaum.

Before his keynote speech at Ethereal 2018, Joe Lubin, a legend himself, acknowledged Chaum as the father of online anonymity for his contributions to the field.

Who is David Chaum?

A cryptographer, mathematician, and computer scientist by profession, David Lee Chaum was born in 1955. He went on to pursue a Ph.D. degree in computer science and business administration from the University of California, Berkeley and received his doctorate in 1982. He also taught at the New York Graduate School of Business and the University of California.

Chaum was simultaneously involved in several breakthrough projects. In 1982, he established the International Association for Cryptologic Research (IACR). In the late 1980’s he launched a cryptography research group at the National Research Institute for Mathematics and Computer Science (CWI) in Amsterdam. At CWI, as David was the head of cryptography department, he became a keen observer of cryptography and explored electronic payment options and systems.

Well known for his contribution to digital cash (DigiCash) and several other cryptographic protocols, Chaum had anticipated, and, in a way, triggered the growth of virtual money much before anyone else. He came up with several cryptographic protocols and privacy technologies, and contributed to the development of anonymous communications research.

Awards & Recognition

It goes without saying that anyone who has worked tirelessly will get back something for what he gave to the society. Chaum is no different. He’s been recognized with the following achievements:

  • Information Technology European Award, 1995
  • IACR Fellow, 2004
  • Received the RSA Conference Award for excellence in the field of mathematics, 2010

When the National Security Agency (NSA) planned to cancel all public research in cryptography at Berkeley, it led to chaos as the NSA, before, had threatened sessions and conferences based on the topic of other large organizations. But Chaum did not lose hope and went to the Berkeley Free Press to have a conference on cryptography. More than 80 scientists appeared at the conference to show broad support for Chaum and his work.

David Chaum at Deconomy
David Chaum at a Conference to discuss ‘Deconomy-Distributed Economy’

Chaum’s Significant Contributions

Blind Signatures

In 1982, Chaum wrote a paper on blind signatures explaining the private key technology and introduced a new form of digital signature called blind signature scheme. This feature allows a user to get a message signed by another party without exposing the message content to the other party. Blind signature schemes are implemented in privacy-related protocols in which the message author and the signer are different parties.

Blind signature allows a voter to enclose a ballot in an envelope lined with carbon paper. On the outside of the envelope the voter’s credentials are pre-printed. An official authority will then verify and sign the envelope via carbon paper and transfer his signature to the ballot. The envelope is then returned back to the voter. Further, he transfers the signed ballot to a new normal envelope. So, in this case, the signer simply signs without viewing the contents.

Use Case: Blind signature has enormous applications in the banking industry. It can help in setting up a payment gateway system where the anonymity of the participants can be protected but the users have the facility to prove the transaction, if required.

blind signatures
The use of blind signatures in the banking system

Digital Cash

Digital cash uses an idea similar to that of blind signature. It was launched by Chaum in 1989 as an electronic money corporation. It seeks to resemble fiat money in terms of transferability and anonymity, but it is very different from fiat money.

The journey to digital cash began in the year 1982 when Chaum first published “Blind Signatures for Untraceable Payments.” Then, in 1994, he started the world’s first digital cash payment. By 1995, a DigiCash trial started to expand worldwide and he developed chip technology for “smart cards.”

Like fiat currency, DigiCash could be used for transactions. It can be deposited to and withdrawn as well as transferred to or received from a deposit account. In 1994, the company executed the first electronic cash transaction over the internet.

Though the company was able to partner with banks interested in its technology, it was way ahead of its time. It was unable to grow its user base and filed for bankruptcy in 1998.

Anonymous Communication

In one of his papers, Chaum proposed the idea of anonymous communication by the name of mix networks to prevent anonymity abuse. In later years, he developed a solution to the dining cryptographers problem with his communication system DC-Net.

How Anonymous Communication Works
Anonymous Communication Network allows sharing of encrypted messages over a server. Upon receiving the messages, messages are reshuffled in such a way that no one apart from the group of servers will know anything about the identity of the sender. Messages are passed from server to server protecting the anonymity of the sender before the messages are decrypted and conveyed to the receiver.

Trustworthy Voting Systems

Chaum also came up with the idea of securing voting systems by end-to-end verification. Chaum analyzied the drawbacks of existing voting systems with respect to protecting anonymity and assuring the correct tallying of all valid votes. He then developed a system, Scantegrity, which can be used in concert with traditional paper ballots while also providing anonymous online confirmation to voters that their votes have been correctly counted.

Major Cryptology Conferences

In 1982, Chaum founded the the International Association of Cryptologic Research (“IACR”) to support the flagship annual Crypto Conference, a. at the University of California Santa Barbara (UCSB) The IACR created the first published research articles and further sponsored three other flagship conferences–Crypto, AsiaCRYPT, and EuroCRYPT.


It is difficult to weight the impact of David Chaum on the cryptocurrency industry. He has been a pioneer of multiple technologies that sit together to create much of the crypto universe. In his latest appearance during Blockchain Week in San Francisco, he shared that he believes that crytpography has a long way to go and would not only change how the economy works but bring real democracy into our governance systems. In January 2018, he started Elixxir where he currently serves as CEO and founder.

About the author

Allen Taylor

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