page, a business model that's evolving on the Internet. Electric-money systems must be able to handle high volume at a marginal cost per transaction. Millicent, a division of Digital Equipment, may achieve this goal. Millicent uses a variation on the digital-check model with decentralized validation at the vendor's server. Millicent relies on third-party organizations that take care of account management, billing, and other administrative duties. Millicent transactions use scrip, digital money that is valid only for Millicent. Scrip consists of a digital signature, a serial number, and a stated value (typically a cent or less). To authenticate transactions, Millicent uses a variation of the zero-knowledge-proof system. Consumers receive a secret code when they obtain a scrip. This proves ownership of the currency when it's being spent. The vendor that issues the scrip value uses a master-customer secret to verify the consumer's secret. The system hasn't yet been launched commercially, but Digital says internal tests of transactions across TCP/IP networks

The fourth technical component in the evolution of electric money is flexibility. Everything may work fine if transactions use nice round dollar amounts, but that changes when a company sells information for a few cents or even fractions of cents per

The third component of the electronic-currency infrastructure is anonymity--the ability to buy and sell as we please without threatening our fundamental freedom of privacy. 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 d

Some topics in this essay:
Virtual Internet-based, MIT¡¦s Kerberos, Millicent Scrip, Initially Internet, Data Interchange, Digital Equipment, Commercial R&D, Internet Electric-money, electric money, secure hash, spending habits, consumers merchants, security authentication anonymity, blinding factor, hash algorithms, electronic money, security authentication, authentication anonymity, zero-knowledge-proof system, authentication anonymity divisibility,