If unchecked, all our transactions, as well as analyses of our spending habits, could eventually reside on the corporate databases of individual companies or in central clearinghouses, like those that now track our credit histories. Serial numbers offer the greatest opportunity for broadcasting our spending habits to the outside world. Today's paper money floats so freely throughout the economy that serial numbers reveal nothing about our spending habits. But a company that mints an electric dollar could keep a database of serial numbers that records who spent the currency and what the dollars purchased. It is then important to build a degree of anonymity into electric money.
Blind signatures are one answer.
Devised by a company named DigiCash, it lets consumers scramble serial numbers. When a consumer makes an E-cash withdrawal, the PC calculates the number of digital coins needed and generates random serial numbers for the coins. The PC specifies a blinding factor, a random number that it uses to multiply the coin serial numbers. A bank encodes the blinded numbers using its own secret key and debits the consumer's account. The bank then sends the authenticated coins back to the consumer, who removes the blinding factor.