BizAims

Digital money man

In the world of digital cash, David Chaum is the marked penny that keeps reappearing. His ideas circulate as freely as cash itself. He is indisputably the pioneer of the field, the one who shifted it from the ether of science fiction to the solid footing of mathematical truth. But the man himself is the center of controversy. All of those involved in the daring attempt to shred dollar bills into arcane mathematical formulae know of Chaum, and almost all admire his work. But when they talk of their dealings with him, they immediately go off the record. It turns out that at one point they considered licensing Chaum's patents or at least recruiting Chaum's participation in their projects. These processes seemed to end in fruitless standoffs, sometimes acrimonious ones. Then, inevitably, more negotiations. Chaum cannot be ignored even by those who disparage him off the record.

Why are all these people so worked up about David Chaum? 

I get a hint the day after my ride with Chaum through Amsterdam. We have made plans to meet at a coffeehouse off the Keizersgracht.

Our plan is to spend the entire day talking about digital money and his work. But before the tape recorder goes on, Chaum takes pains to make one thing clear to me: he is not, as some people derisively call him, some sort of privacy nut. He is by no means a paranoiac, but merely someone who has made some remarkable discoveries that people should know about before they make irrevocable choices about the traceability of their finances.

Fine, I say, and begin the interview. Tape recorder on. "How old are you?" I ask. "I don't tell that to people," he says.

At heart, David Chaum is driven by ideals. Indisputably the brains behind making digital cash work, he holds the key patents in the field, particularly in the area of anonymous, untraceable cash. He is therefore in a position to become a very rich and powerful person. Yet he avoids the path of least resistance and largest revenues - cashing in by licensing his schemes - because he is passionate about the potential of anonymous cash and wants the news of its viability spread far and wide.

He says that if, after knowing that the possibility of private, digital-monetary transactions exists, people opt to spend their money with the same traceability as credit cards, he will accept the decision. But he doesn't think that will happen. His guess is that once people are aware of the issues, they will agree that traceable routes are the evil of all money.

From a very early age, David Chaum had an interest in the hardware of privacy. "What's important to realize is that there is a strong driving force for me," he says. "My interest in computer security and encryption came from my fascination with security technologies in general - things like locks and burglar alarms and safes," he says. (As a graduate student, he devised two new designs for locks and came close to selling both to major manufacturers.) And, of course, he was very much fascinated with computers. In high school and college, he did typical hacker sorts of things: password cracking, dumpster diving, and such. But he was also picking up some serious background in mathematics. And late in his college career, he came to cryptography, a discovery that in retrospect seems inevitable.

Chaum's first major papers, published in 1979 when he was a graduate student at the University of California at Berkeley, are indicative of his strong focus in his work: devising cryptographic means of assuring privacy. His ideas build upon the concept of public-key cryptography, the technique devised by Whitfield Diffie and Martin Hellman in the mid-'70s that established cryptography as a mass technology. Specifically what excited Chaum was the use of digital signatures - a way of establishing the authenticity of a message sender. "I got interested in those particular techniques because I wanted to make [anonymous] voting protocols," he says. "Then I realized that you could use them more generally as sort of untraceable communication protocols." The trail led to anonymous, untraceable digital cash.