## 06-34 Digital Cash

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When we think about the money is it's really a promise from a trusted bank.
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If the promise it says if someone brings this money to the bank,
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the bank will exchange it for something of real value.
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Today, we think of the paper itself as having real value.
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But in the early days, what the paper meant was you could go to the bank
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and exchange it for something that everyone would recognize as real value,
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say a bar of gold--almost as valuable as a gold star.
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If that's what money means, well then we should be able to do the same thing with cryptography.
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Let's see how that would work.
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Alice would go to Indivisible Prime Bank, which everyone knows is very trustworthy,
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and she would give to the bank a \$100 in some other currency,
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let's assume the bank to take US dollars.
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The bank will read the message that says, "The bank owes the bearer of this note \$100."
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The bank will send Alice a signed version of that message.
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The message, along with its signature, which is signed by the bank using the bank's private key,
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signing a hash of that message.
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This signature proves that it is a valid IOU from this bank,
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and now Alice has something representing currency.
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Now Alice could spend the currency. She could buy some tacos from Bob's Taco Emporium.
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Give him the currency. Pretty expensive tacos.
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And Bob could take the note--this signed message from the bank--
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and give it to the bank and ask the bank to deposit into his account.
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Now the question is how well would the scheme that I've described work?
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Let's assume that everyone in the universe trusts Indivisible Primes
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and knows that bank's public key.
Title:
06-34 Digital Cash
Description:

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Team:
Udacity
Project:
CS387 - Applied Cryptography
Duration:
01:38
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