Nicolas Christin, Alessandro Acquisti, Bryan Parno, and Adrian Perrig
Despite cryptographic breakthroughs in the area of digital cash and the rapid advance of information technology, physical cash remains the dominant currency: it is easy to use and its exchanges are largely independent of computing devices. However, physical cash is vulnerable to rising threats such as high quality, government-mandated forgeries. Can a hybrid of physical and digital cash protect more effectively against these threats? We discuss the rise of high-quality counterfeits and review technological solutions to thwart such threats. Specifically, we study mechanisms to combine physical cash with digital cash to remove their respective shortcomings and obtain their combined advantages. The mechanisms range from cryptographic signatures embedded in 2-D barcodes to online verification systems assisted by physical one-way functions. Notably, we compare these different proposals by looking at them through the prism of economics, and examining their cost and benefit trade-offs.
In I/S: A Journal of Law and Policy for the Information Society