Editing Financial cryptography

'''Financial cryptography''' is the use of [[cryptography]] in applications in which financial loss could result from subversion of the message system. Financial cryptography is distinguished from traditional cryptography in that for most of recorded history, cryptography has been used almost entirely for military and diplomatic purposes.

Financial cryptography includes the mechanisms and algorithms necessary for the protection of financial transfers, in addition to the creation of new forms of money. [[Proof of work]] and various [[auction]] protocols fall under the umbrella of Financial cryptography. [[Hashcash]] is being used to limit spam.

Financial cryptography has been seen to have a very broad scope of application. Ian Grigg sees financial cryptography in seven layers, being the combination of seven distinct disciplines: cryptography, [[software engineering]], rights, [[accounting]], [[governance]], [[Value (economics)|value]], and financial applications. Business failures can often be traced to the absence of one or more of these disciplines, or to poor application of them.  This views Financial cryptography as an appropriately cross-discipline subject. Indeed, inevitably so, given that [[finance]] and [[cryptography]] are each built upon multiple disciplines.<ref>[http://iang.org/papers/fc7.html Financial Cryptography in 7 Layers<!-- Bot generated title -->]</ref>

==History==
{{Unreferenced section|date=September 2018}}
Cryptographers think the field originated from the work of Dr [[David Chaum]] who invented the [[blind signature]].<ref>{{Cite journal |last=Chaum |first=David |date=1983 |editor-last=Chaum |editor-first=David |editor2-last=Rivest |editor2-first=Ronald L. |editor3-last=Sherman |editor3-first=Alan T. |title=Blind Signatures for Untraceable Payments |url=https://link.springer.com/chapter/10.1007/978-1-4757-0602-4_18 |journal=Advances in Cryptology |language=en |location=Boston, MA |publisher=Springer US |pages=199–203 |doi=10.1007/978-1-4757-0602-4_18 |isbn=978-1-4757-0602-4}}</ref> The blind signature is a special form of a [[digital signature|cryptographic signature]] which allowed virtual coins to be signed without the signer seeing the actual coin.<ref>{{Cite web|url=http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurityFall2011/Chaum-blind-signatures.PDF|title=Blind Signatures for Untraceable Payments|last=Chaum|first=David|date=|website=|archive-url=|archive-date=|access-date=}}</ref> It permitted a form of digital [[token money]] that prevented traceability. This form is sometimes known as [[digital currency]]. Similar concepts are now being applied to modern blockchain technologies.{{cn|date=May 2019}}

A system that was widely used during the 1970s-1990s and previously developed cryptographic mechanism is the [[Data Encryption Standard]], which was used primarily for the protection of electronic funds transfers.<ref>{{Cite web|url=https://www.math.uci.edu/~brusso/fea-landau2.pdf|title=Standing the Test of Time: The Data Encryption Standard|website=www.math.uci.edu|access-date=2021-10-13|lang=en}}</ref> However, it was the work of [[David Chaum]] that excited the cryptography community about the potential of encrypted messages as actual [[financial instrument]]s.

As part of a business model, Financial cryptography followed the guide of cryptography and only the simplest ideas were adopted. Account money systems protected by [[Secure Sockets Layer|SSL]] such as [[PayPal]] and [[e-gold]] were relatively successful. In 2001, PayPal processed $3.1 billion in payments, averaging 189,000 transactions daily totaling $9.6 million.<ref>{{Cite web|url=https://www.sec.gov/Archives/edgar/data/1103415/000091205702009834/a2073071z10-k405.htm|title=UNITED STATES SECURITIES AND EXCHANGE COMMISSION - Form 10-K - For the Fiscal Year Ended December 31, 2001|website=www.sec.gov|access-date=2021-10-13|lang=en}}</ref>

But more innovative mechanisms, including blinded token money, struggled to gain traction. David Chaum's [[DigiCash]], opened in 1989, filed for bankruptcy protection in November 1998.<ref>{{Cite magazine|url=https://www.wired.com/1998/11/digicash-outta-cash/|title=DigiCash Outta Cash|magazine=Wired|access-date=2021-10-13|lang=en|last1=Report |first1=Wired News }}</ref> Two competitive rivals also failed to remain viable. First Virtual Holdings abandoned its business in August 1998. [[CyberCash]] ceased its "CyberCoin" in early 1999.<ref>{{Cite web|url=https://www.forbes.com/forbes/1999/1101/6411390a.html|title=Requiem for a Bright Idea|website=www.forbes.com|access-date=2021-10-13|lang=en}}</ref>

==Associations==
Financial cryptography is to some extent organized around the annual meeting of the ''International Financial Cryptography Association'', which is held each year in a different location.<ref>http://www.ifca.ai/ Financial Cryptography</ref>

==See also==
* [[Automated teller machine]]s (ATM)
* [[Bitcoin]]
* [[Blockchain]] 
* [[Cryptoeconomics]]
* [[Digital currency]]
* [[Monero (cryptocurrency)]]
* [[Point-of-sale]] (POS)
* [[Hardware security module]]s (HSM)
* [[Payment system]]
* [[Smart contracts]]
* [[Economics of security]]
* [[Bilateral key exchange]]

==References==
{{reflist}}

==External links==
* [http://www.ifca.ai/ International Financial Cryptography Association]

[[Category:Financial cryptography| ]]
[[Category:Banking technology]]
[[Category:Cryptocurrencies]]