Fairness in Wallets with Observer

We examine the interference of fairness and observers in digital coin systems. Since copying of coins cannot be prevented cryptographically in anonymous off-line coin systems, double-spending detection is one of the major tasks. An observer is a tamper resistant device that prevents double-spending physically. While privacy protection is a desirable property of cash systems, perfect anonymity is not. Perfect anonymity enables criminals to do perfect blackmailing or money laundry, [13]. To prevent a perfect crime it has to be possible to revoke the anonymity of customers in case of need. Anonymity revocation is done by a trusted third party. Cash systems that allow anonymity revocation are called fair. We present a coin system which features both observer and fairness. This shows that both concepts do not interfere and can be implemented simultanously without loss of security.