History of eCash
Believe it or not, the idea of electronic money didn’t originate in the 20th Century. Shockingly it can be traced back to 1880 when American scientist Edward Bellamy purposed that payments be made in his book, “Looking Backwards,” with prepaid cards in settlements. While this system didn’t become a reality, it wasn’t until 1914 that there was an actual attempt to start using credit cards as a form of currency. Again, this didn’t have much of an impact until the introduction of the Diners Card in 1950. Shortly after, Visa and MasterCard began issuing credit cards.
The advancement of technology has helped electronic payments grow significantly. For example, in 1968 the exchanging of electronic data became commonplace for anyone looking to transfer money. In 1974, Robert Moreno patented technology for smart cards, which was followed by the first ATMs in the United States.
Before the decade was over, electronic terminals called, “EFTPOS” (meaning, for non-cash bank payments) were being used in the United States. Five short years later in 1984, email was being used by enterprises everywhere in the financial sector to communicate with customers.
You can’t discuss the history of eCash without acknowledging the release of the first PC by IBM in 1981. The PC made it possible to develop microelectronics, which would quickly allow for microprocessors to be installed in a credit card. However, it wasn’t until 1993 that eCash as we know it first took shape.
Dr. David Chaum, a U.S. citizen and brilliant mathematician, became the head of cryptography at the Dutch national research center CWI. Dr. Chaum was responsible for the invention of secure digital cash, along with the idea of blind signatures for untraceable payments. This resulted in the founding of the first electronic payment system in the world, DigiCash. Unfortunately, DigiCash went bankrupt in 1998 and sold its assets to eCash Technologies. However, DigiCash had already left an impact everywhere in the eCash world. At one American bank, the customers had already embraced the eCash idea, with 90% of its depositors using the system.
At the “Real World Crypto” conference held at Stanford University January 6, 2016, Chaum was back with information on a new plan for encryption, called PrivaTegrity which he is working on with a whole team of experts from other universities. This group of academic partners hopes to allow a system that will fully allow secret and anonymous communication, including eCash capabilities, to be totally secure and be fast enough to work as a smartphone app. It is unknown if the project is fully coded and tested. Particularly compelling was Dr. Chaum’s claim that we may be able to have a “civil society electronically without the possibility of covert mass surveillance.”
Dr. Chaum’s DigiCash wasn’t the only company exploring the electronic cash industry in the early 90s. Mondex, a smart card electronic cash system that implemented the Stored-value card, was conceived by Tim Jones and Graham Higgins of the National Westminster Bank (RBS Group) in 1991. Over the next five years, the company worked on creating an alternative to cash by inventing the Mondex electronic purse. In 1996, MasterCard purchased Mondex International with the plan of using the MXI technology as part of its strategic chip platform.
Around the same time, the first online purchase was completed in 1994 in the United States, along with the debut of the first domestic chip card, known as the “Golden Crown” system, in Russia. With the arrival of a new century, the twelve largest manufacturers of smart cards, software, and credit cards announced that they would be creating the first universal electronic wallet. In 1998, one of the world’s largest online payment systems-PayPal-is launched.
Here are two other pioneers of the eCash movement from the 1990s:
- First Virtual was founded in 1994 and is remembered for being one of the first companies that offered eCash transfers over the Internet.
- In the same year, CyberCash was introduced. The company created a system that allowed users to build a “Wallet” where they could handle currencies, checks, credit cards, and CyberCoin.
The 2000’s saw impressive gains in the use and acceptance of eCash as a result of advances in technology. Some of the most notable occurrences have been:
- Bitcoin, a digital asset and a payment system, was invented in 2009.
- Google’s mobile payment system, Google Wallet, is released in 2011.
- Following in the steps of Google, Apple, Android, and Samsung release mobile payment and digital wallets services in 2014 and 2015.
- The United States makes the switch to EMV cards – which stands for Europay, MasterCard, and Visa – in 2016.