Anonymous internet banking
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The use of strong financial cryptography makes truly private, anonymous banking (or more precisely pseudonymous banking) possible for the first time. The Yodelbank is one bank that claims to be fully anonymous.
An example of such an algorithm
Let N=PQ where P,Q are primes. Computing the cube root of a number A modulo some large composite N is hard compared to computing the cube of A modulo N. However if the factorisation of N into two primes is known then both can be done with ease. In the following algorithm all arithmetric is done modulo N.
We have two people Andy and Bertha (for simplicity we assume they have the same bank). Andy wants to transfer £100 to Bertha anonymously.
Only the bank has the ability to calculate cube roots so the bank charges £100 for the service of finding the cube root of a number. The bank pays anyone who can calculate the cube root of an arbitrary number £100.
Bertha asks the bank for many random numbers in anticipation that someone will want to pay her money. The bank remembers which numbers she was given so that it knows when Bertha manages to calculate a cube root of one of them.
When Andy wants to pay Bertha £100 he asks for one of these numbers R from Bertha. He multiplies it by w cubed (W) and pays the bank £100 to cube root it. The bank returns the answer which is wr (where r is the cube root of R) so andy divides it by w and sends Bertha r. Bertha now knows the cube root of R and can tell the bank what it is. The bank pays her £100.
Different composites N can be used for different denominations of currency so this system doesn't take appreciably longer for large transactions.
Note that if neither Andy nor Bertha wishes the bank to know that they performed a transaction with each other then it is hard for the bank to find out. However, in order to ensure this is the case many people need to be making transactions at the same time. Otherwise the bank can figure it out by the timing of the transactions.
External links
- Yodelbank (http://yodelbank.com/)
- End of ordinary money, part 1 (http://www.aci.net/kalliste/money1.htm) part 2 (http://www.aci.net/kalliste/money2.htm)
- David Chaum's Scientific American article on Achieving Electronic Privacy (http://www.chaum.com/articles/Achieving_Electronic_Privacy.htm)
- Untraceable Digital Cash, Information Markets, and BlackNet (http://www.privacyexchange.org/iss/confpro/cfpuntraceable.html) by Timothy C. May
- A large collection of links (http://www.ex.ac.uk/~RDavies/arian/libertarian.html) - Libertarian Views on Money - its Creation and Control
- J. Orlin Grabbe homepage, DMT network (http://www.aci.net/kalliste/) (warning: erotic pictures!)