Enabling Offline Digital Payments with Anonsats

The Problem

Can two people carry out a secure digital payment transaction without having a reliable internet connection?

Can it be done?

Yes. And it can be done in a manner that is secure, and without the possibilty of cheating (i.e., with fake tokens, double spends, etc.)

The Solution

The solution is like email for money. You don't have to be online all the time for email, so it should be the same for money. Every once in a while you need to connect online, but that should not limit you in your day-to-day offline activities. The same should hold for money, and that is what anonsats is trying to achieve.

The solution builds on elements and concepts that have existed for decades, along with recent technological advancements that now make the solution feasible.

The solution introduces the concept of a cashu note, built on top of a cashu token, a blinded signature protocol developed in 1982 by David Chaum, the inventor of anonymous electrontic money, appropriately coined Chaumian ecash.

The offline payment scenario is better described as deferred redemption. An exchange takes place betweein two parties (payer and payee), and when there is an opporunty to connect to the internet, the appropriate redemption takes place to settle out the transaction.

Deferred redemption is helpful for situation where either or both the payyer and payee are not connected to the internet, but still wish to still accept digital payments. Examples include:

• a remote vending machine (parking lot), where human operator periodically stops by to 'collect the coins'
• a merchant whi is operating in an area where there is no internet access (a remote tourist location
• individual who wishes to accept payments, but for security reasons wishes to delegate the redemptions to someone else.

These above use cases can be generally referred to as offline digital payments. However, between two parties (payer and payee) there are four inter-related use cases:

1. The payer is online and the payee is online. This use case is already served by the cashu token.
2. The payer is online and the payee is offline.
3. The payer is offline and the payee is online.
4. The payer is offline and the payee is offline.

A cashu note is a cashu token that can be accepted by a payee who can then defer the redemption of the cashu note to a later time.

Cashu Token

First, let's take a look at a cashu token. An implementation already exists and this solution builds on a cashu tokens.

Cashu Notes

A cashu note has the additional properties:

1. A cashu token that is locked to a predetermined P2SH address
2. The public key of a trusted cashu note issuer.
3. The signature of cashu token that is verifiable by the public key.

The payee in accepting a cashu note requires the following:

1. The predetermined P2SH address
2. A list of the public keys of the trusted cashu note issuers.

This actually works