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RV College of
Engineering Department of Electronics & Telecommunication Engineering
Minor-Project (18TE64)
presentation on,

 “IMPLEMENTATION OF DIGITAL CASH SYSTEM”

Presented By,

Dev Lohana 1RV18TE009

Jigyasa Hirawat 1RV18TE017
Prathamesh Kadam 1RV18TE018

Under the guidance of,

 
Mr. P. Nagaraju
Associate Professor,
Department of Electronics & Telecommunication Engineering,
RV College of Engineering, Bengaluru
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CONTENTS
• Introduction
• Literature review
• Problem definition
• Objectives
• Methodology
• Details
• Implementation (Customer Side)
• Implementation (Merchant Side)
• Expected Outcome
• References
• Schedule
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INTRODUCTION
• Digital forms of money have turned into the most discussed issue in the world economy due to probable
transmission of COVID-19 through coins and bank notes.
• Along with this, paper currency also has its shortcoming which needs to be overcome.
• The Indian government has implemented several promising initiatives, with the aim of making the Indian
economy less cash-based and gradually cashless.
• The fundamental advantage of digital forms of money use is that they make it easier to exchange assets
between two gatherings in an exchange.
• The disadvantage of digital forms of money is that it lacks anonymity and unavailability of offline mode of
transaction.

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INTRODUCTION
• A digital money is an advanced technology that utilizes cryptographic techniques for security.
• However, in typical card-based payments, user divulge their details to merchant for payment that may lead
to fraud, customer profiling and impersonations.
• Mobile payments may lead to spend analysis by linking various purchases and tracing them to the customer.
• The banks and other monetary based organizations may analyze digital currencies as an option for the
monetary exchanges later if these limitations can be overcome.
• Combination of Blinding Protocol, Splitting Protocol and Commitment Protocol at different level of
transaction can ensure both security and privacy for the users

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LITERATURE REVIEW
REFERENCE PAPER CONFERENCE/JOURNAL REMARKS
NO.
[1] D. Madhusudhana Rao, Subba Rao Peram, B. International Journal of Advanced • This paper address few challenges specifically
Premamayudu, “Analysis of Science and Technology, Volume 29, related to security domain of Bitcoin and other
Anonymity and Privacy of Crypto Currencies” Number 3, pp. 10800 - 10813, 2020. digital cash systems.
• Hidden address shuffling, data encryption and
data disintegration techniques were also used in
this paper to protect the privacy of the user.

[2] B. Rajendran, A. K. Pandey and B. S. 2017 IEEE SmartWorld, Ubiquitous • The paper proposed the use of digital tokens and
Bindhumadhava, "Secure and privacy Intelligence & Computing, Advanced detail the token generation, usage and
preserving digital payment" & Trusted Computed, Scalable redemption process.
Computing & Communications, • It also introduced an intermediary entity, DTE -
Cloud & Big Data Computing, Digital Token Exchange to facilitate the
Internet of People and Smart City transaction between Payer and Payee.
Innovation, San Francisco, CA, USA,
2017, pp. 1-5, 2017.

[3] H. Lin, Z. Yan, Y. Chen and L. Zhang, "A Survey IEEE Access, Volume 6, pp. 18345- • This paper has briefly introduced network
on Network Security-Related Data 18365, 2018. security-related data, including its definition and
Collection Technologies" characteristics, and the applications of network
data collection.
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LITERATURE REVIEW
REFERENCE PAPER CONFERENCE/JOURNAL REMARKS
NO.
[4] M. C. Kus Khalilov and A. Levi, "A Survey on IEEE Communications Surveys & • This paper used zero knowledge proofs and ring
Anonymity and Privacy in Bitcoin- Tutorials, Voume 20, Number 3, pp. signatures improving anonymity and privacy of
Like Digital Cash Systems" 2543-2585, 2018. the user.
• Homomorphic commitments are used for hiding
transaction amounts as an alternative to zero
knowledge protocols.

[5] Maulid, Hariandi. “The Implementation of Blind International Journal of Applied • This paper proposed online RSA Blind
Signature in Digital Cash” Information Technology, Volume 3, Signatures digital cash scheme and offline
pp. 219-222, 2015. Brands Blind Signatures digital cash scheme.
[6] Liu Feng, Li Xueyong and Gao Guohong, "The International Conference On • This paper proposes an anonymous off-line
design of an e-cash system" Computer Design and Applications, electronic cash system based on the control
Qinhuangdao, China, Volume 2, pp. technology of group signature and blind
119-122, 2010. signature.
• In this paper, the technology of group signature
mechanism is based on the ECC algorithm.

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LITERATURE REVIEW
REFERENCE PAPER CONFERENCE/JOURNAL REMARKS
NO.
[7] Benoît Libert, San Ling, Fabrice Mouhartem, Advances in Cryptology – • This paper provides new tools enabling the
Khoa Nguyen, Huaxiong Wang, “Signature ASIACRYPT 2016, Volume 10032, design of anonymous authentication systems
Schemes with Efficient Protocols and Dynamic pp. 373-403, 2016. whereby new users can join the system at any
Group Signatures from Lattice Assumptions” time.
• It gives a signature scheme with efficient
protocols, which allows users to obtain a
signature on a committed value and
subsequently prove knowledge of a signature on
a committed message.

[8] N. R. Kisore and S. Sagi, "A secure SMS protocol International Conference on Advances • This paper propose a security protocol to secure
for implementing digital cash system" in Computing, Communications and SMS messages and develop a digital cash
Informatics (ICACCI), Kochi, India, system.
pp. 1883-1892, 2015. • Proposed SMS protocol based on ECMQV key
agreement protocol and AES encryption
algorithm

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MOTIVATION

• Limitations of paper based currency

• Lack of anonymity and privacy in existing digital transaction systems.
• Lack of security protocols between payer and payee in methods proposed till now.
• Lack of verification in payee side in a transaction.
• Current digital transaction system has a dependency on internet.

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PROBLEM DEFINITION

“Implementation of digital cash system that offers both online and offline modes of transfer
of money with anonymity, fraud detection and prevention against double spending.”

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OBJECTIVES

The objectives of this project are:

• To implement blinding protocol between user and bank.
• To implement splitting protocol between user and bank.
• To implement commitment protocol between payer and payee.
• Simulation and analysis of digital cash system.

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METHODOLOGY
The high-level overview for the implementation of Digital Cash system:
• Step 1: Customer/Payer sends digital cash request to bank.
• Step 2: Bank provides Customer/Payer with signed requested amount in digital cash.
• Step 3: Customer/Payer pay the digital cash to Merchant/Payee.
• Step 4: Merchant/Payee do the self-verification of the received digital cash.
• Step 5: After successful self-verification, Merchant/Payee deposits the received digital cash to
bank.
• Step 6: Bank verifies the deposited digital cash.
• Step 7: After successful verification by bank, receipt is generated by Merchant/Payee to
Customer/Payer.
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FLOW OF DIGITAL CASH

1. Initiation 6. Verification
BANK

5. D
w ep o
dra sit
With
2.

4. Self Verification
3. Payment

CUSTOMER MERCHANT

7. Receipt

Figure 1: Flow of the cash in Digital Cash System

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TRANSACTION BETWEEN CUSTOMER & BANK

1.Sends k-money orders with identity split into n-secret pairs
 
6. Unblinds for further use

2. Randomly selects k-1 money orders

4. Verification
CUSTOMER 3. Sends blinding factors of k-1 money orders BANK
5. Signs the unverified money order
 
 

Figure 2: Blinding Protocol and Secret Splitting between Customer/Payer and Bank

In figure 2, r is the money order requested by Customer/Payer, e is public key of bank and b is the blinding factor applied by Customer/Payer.

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TRANSACTION BETWEEN CUSTOMER & MERCHANT, MERCHANT &

BANK

Verification against double spending

Commitment for amount
Signed copy received as
payment from customer
Signed Money Order
CUSTOMER MERCHANT BANK MERCHANT

Receipt after verification with the bank Verification status of the payment

Figure 3: Commitment Protocol between Customer/Payer and Merchant/Payee Figure 4: Verification between Merchant/Payee and Bank

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DETAILS

This project will be implemented on Python. Different python libraries which will be used are:
• RSA
• HMAC
• PyCrypto
• BitVector
• Numpy

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RSA
• The RSA algorithm is named after Ron Rivest, Adi Shamir, and Leonard Adleman.
• RSA algorithm is Public Key Cryptography algorithm.
• RSA is based on the fact that it is difficult to factorize a large integer.
• The public key consists of two numbers where one number is multiplication of two large prime
numbers.
• The private key is also derived from the same two prime numbers.
• Encryption strength totally lies on the key size and if we double or triple the key size, the
strength of encryption increases exponentially.

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RSA

Figure 6: Message (M) encryption by sender/client using receiver/server’s public key e

Figure 5: Key Generation by receiver/server Figure 7: Message (M) decryption by receiver/server using its own private key d

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HASH BASED MESSAGE AUTHENTICATION CODE

• HMAC is a message authentication code that uses a cryptographic key in conjunction with a
hash function.
• HMAC provides the server and the client each with a private key that is known only to that
specific server and that specific client.
• The client creates a unique HMAC, or hash, per request to the server by hashing the request data
with the private keys and sending it as part of a request.
• HMAC is more secure than Message Authentication Code (MAC) is that the key and the
message are hashed in separate steps.

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HASH BASED MESSAGE AUTHENTICATION CODE

Figure 8: HMAC Construction

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SECRET SPLITTING

• The secret sharing is a method to protect confidentiality and integrity of the secret messages by
distributing the message shares into several packets.
• The secret message could not be revealed unless the recipients collect all packets to reconstruct
the actual message.
• Even though the attacker obtain shares shadow during the share exchange, it would be
impossible for the attacker to understand the correct share.
• Further, packets (with unique identity data) can be XORed with random numbers to obtain more
security.

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BLIND SIGNATURE

• Blind signature is a form of digital signature in which the content of a message is disguised
before it is signed.
• The resulting blind signature can be publicly verified against the original, unblinded message in
the manner of a regular digital signature.
• The blinded message is passed to a signer, who then signs it using a standard signing algorithm.
• The resulting message, along with the blinding factor, can be later verified against the signer's
public key.
• In some blind signature schemes, such as RSA, it is even possible to remove the blinding factor
from the signature before it is verified.
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IMPLEMENTATION (Customer Side)

• Customer side module is divided in two modes.
• Mode 1 is the transaction between customer/payer and bank and Mode 2 is the transaction
between customer/payer and merchant/payee.
• In Mode 1, Blinding and splitting protocols have been implemented along with RSA public key
cryptography.
• In the proposed system, customer will have the public key of bank along with bank’s IP address
and port number.
• Socket programming’s concepts is used for establishing the connection between customer/payer
and bank

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IMPLEMENTATION (Customer Side)

• In Mode 2, commitment protocol is implemented between customer/payer and merchant/payee.
• Before initiating the commitment protocol, the proposed application looks for the digital cash in
customer’s side and separate the use and unused digital cash.
• Using Secure Hash Algorithm 1 (sha1), we can generate checksum value for our message i.e.,
amount to be paid and key which is generated randomly.
• Any deviation from this message and key can be easily identified as its checksum will change.
• To generate the signature for the message HMAC is used.
• Hash-based message authentication codes (or HMACs) are a tool for calculating message
authentication codes using a cryptographic hash function (sha1) coupled with a secret key.

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SPLITTING PROTOCOL

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SPLITTING PROTOCOL

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BLINDING PROTOCOL

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COMMITMENT PROTOCOL

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IMPLEMENTATION (Bank Side)

• There are three types of requests received by bank.
• Request 1 is “MO request”, which means that customer is making a digital cash money request
from bank.
• Request 2 is “b inverse”, which means that customer has send the blinding factor inverse of
money orders as requested by the bank.
• Request 3 is “MO deposit”, which means that merchant has made deposit request to the bank.

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IMPLEMENTATION (Bank Side)

• In Request 1, bank receive digital cash money order requests
packets from customer/payer.
• Depending upon the number of packets received, bank send
random number integer which is in between zero to number of
packets received.
• Customer must send back the inverse blinding factor for all the
packets except the packet which number it has received from
the bank.
• Since bank is expecting inverse blinding factor for all the
packets except one, chances of fraud reduces.
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IMPLEMENTATION (Bank Side)

• In Request 2, bank receive inverse blinding factor for digital cash money order requests packets
from customer/payer.
• Bank uses this inverse blinding factor to process the requests.
• If any fraud is detected bank will deny the request send by the customer.

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IMPLEMENTATION (T.B.D.)
• Banks’s public and private key is needed to be generated.
• Simulation of implemented customer and bank side needs to be done.
• Implementation of merchant side module needs to be done.
• Simulation of merchant side module needs to be done.
• Integration of all three modules needs to be done.

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EXPECTED OUTCOME
• Digital cash transaction environment is established between customer and bank, customer and
merchant, and merchant and bank.
• Anonymity and privacy in transaction is available for customer and merchant.
• Digital cash generated cannot be double spend by customer or merchant.
• Digital cash storage will not required any specific digital wallet and can be stored easily.

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REFERENCES
D. Madhusudhana Rao, Subba Rao Peram, B. Premamayudu, “Analysis of Anonymity and Privacy of Crypto
[1] Currencies”, International Journal of Advanced Science and Technology, Volume 29, Number 3, pp. 10800 -
10813, 2020.

B. Rajendran, A. K. Pandey and B. S. Bindhumadhava, "Secure and privacy preserving digital payment," 2017
[2] IEEE SmartWorld, Ubiquitous Intelligence & Computing, Advanced & Trusted Computed, Scalable Computing
& Communications, Cloud & Big Data Computing, Internet of People and Smart City Innovation, San
Francisco, CA, USA, 2017, pp. 1-5, 2017.

H. Lin, Z. Yan, Y. Chen and L. Zhang, "A Survey on Network Security-Related Data Collection Technologies,"
[3] IEEE Access, Volume 6, pp. 18345-18365, 2018.

M. C. Kus Khalilov and A. Levi, "A Survey on Anonymity and Privacy in Bitcoin- Like Digital Cash Systems,"
[4] IEEE Communications Surveys & Tutorials, Voume 20, Number 3, pp. 2543-2585, 2018.

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REFERENCES
D. Madhusudhana Rao, Subba Rao Peram, B. Premamayudu, “Analysis of Anonymity and Privacy of Crypto
[5] Currencies”, International Journal of Advanced Science and Technology, Volume 29, Number 3, pp. 10800 -
10813, 2020.

B. Rajendran, A. K. Pandey and B. S. Bindhumadhava, "Secure and privacy preserving digital payment," 2017
[6] IEEE SmartWorld, Ubiquitous Intelligence & Computing, Advanced & Trusted Computed, Scalable Computing
& Communications, Cloud & Big Data Computing, Internet of People and Smart City Innovation, San
Francisco, CA, USA, 2017, pp. 1-5, 2017.

H. Lin, Z. Yan, Y. Chen and L. Zhang, "A Survey on Network Security-Related Data Collection Technologies,"
[7] IEEE Access, Volume 6, pp. 18345-18365, 2018.

M. C. Kus Khalilov and A. Levi, "A Survey on Anonymity and Privacy in Bitcoin- Like Digital Cash Systems,"
[8] IEEE Communications Surveys & Tutorials, Voume 20, Number 3, pp. 2543-2585, 2018.

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SCHEDULE
Schedule From To
Discussion and finalization of topic 01-04-2021 08-04-2021
Literature review and synopsis preparation 10-04-2021 19-04-2021
Understanding the basic concepts involved in Digital Cash 20-04-2021 28-04-2021
Understanding and learning the working of Python and its libraries 29-04-2021 6-05-2021
Understanding and implementing Blinding Protocol and Splitting Protocol 7-05-2021 15-05-2021
Understanding and implementing Commitment Protocol 16-05-2021 23-05-2021
Understanding and implementing the bank’s side functionalities 24-05-2021 09-06-2021
Understanding and implementing the customer/payer’s side functionalities 10-06-2021 18-06-2021

Understanding and implementing the merchant/payee’s side functionalities 19-06-2021 27-06-2021

Simulation of complete Digital Cash System 28-07-2021 09-07-2021
Analysis, verification of expected result and correction (if any) from the simulation 10-07-2021 16-07-2021
Preparation of the report 16-07-2021 24-07-2021

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