The Secret Legacy of David Chaum - People

Industry Standard, The, Feb, 2001 by Alicia Neumann

It's hard to get a good look at David Chaum. He's squinting into the sun, and as he speaks he keeps covering his face with his hands, so his gray eyes, salt-and-pepper beard and ponytail reveal themselves only in glimpses.

It seems an appropriate way to view a pioneer cryptographer who some say has done more than anyone else to create technologies that protect privacy on the Web. A former computer science professor, Chaum started thinking about privacy and financial transactions 20 years ago when he became convinced that vendors didn't need to know buyers' birth dates to verify their purchases. He discovered an alternative way to confirm the buys, and set off on a quest to demonstrate that consumers didn't need to sacrifice personal information to ensure the safety of their financial transactions.

Chaum took his passion to the Web about a decade ago, when he invented the world's first digital currency. Based on a technology called "blind signatures," Chaum's electronic cash gave customers a way to transfer funds without revealing their identities. To market the new currency, Chaum founded DigiCash and landed DeutscheBank as a client. But, for Chaum, creating complex technologies was easier than running a new company. DigiCash failed to sign other high-profile clients, and the company ended by filing for Chapter 11.

Though DigiCash has disappeared, Chaum's influence persists. True, the Web has grown into a place where financial transactions can be identified and traced as never before. But in 1999, eCash Technologies bought the rights to Chaum's blind-signature invention, which it employs in a variety of products, including electronic currency that's used by DeutscheBank, in gift certificates to online retailers, and in a pilot system for credit card processing that is used by Metavante. Chaum's dreams of anonymous action also survive in companies like Canada's Zero-Knowledge Systems, which bases parts of its online-privacy software on his innovations.

While others make use of his early inventions, Chaum himself is busy creating fresh technologies, and it's likely that the world of online financial services has not heard the last from him. With 25 patents submitted for approval, he's working on a system that includes a new type of electronic cash. The system will shield buyers from surveillance by banks, retailers and ISPs.

Don't bother pressing him for details, though. As you might expect, mum's the word.