Strong Loss Tolerance of Electronic Coin Systems

Untraceable electronic cash means prepaid digital payment systems, usually with offline payments, that protect user privacy. Such systems have recently been given considerable attention by both theory and development projects. However, in most current schemes, loss of a user device containing electronic cash implies a loss of money, just as with real cash. In comparison with credit schemes, this is considered a serious shortcoming. This article shows how untraceable electronic cash can be made loss tolerant, i.e., how the monetary value of the lost data can be recovered. Security against fraud and preservation of privacy are ensured; strong loss tolerance means that not even denial of recovery is possible. In particular, systems based on electronic coins are treated. We present general design principles and options and their instantiation in one concrete payment system. The measures are practical.