Contract-Backed Digital Cash
S{\o}ren Debois, Fritz Henglein, Morten C. Nielsen, Christian Olesen,, Gert Sylvest

TL;DR
This paper defines digital cash as a secure, private, and decentralized form of digital money that is contract-backed, enabling automated, guaranteed transactions and complex contracts without intermediaries, illustrated through various case studies.
Contribution
It separates money characteristics from blockchain technology, and explores the design space and potential of contract-backed digital money through case studies and theoretical discussion.
Findings
Contract-backed digital cash enables automated, guaranteed transactions.
Smart contracts can eliminate counterparty and settlement risks.
Case studies demonstrate practical applications like tokenization and digital currencies.
Abstract
We characterize digital cash as the digital equivalent of physical cash: secure, fungible, decentralized, directly controlled, privacy-preserving; but enhanced with qualitatively new functionality. It is extremely efficiently transferable and, most importantly, transactional or, more generally, contract-backed. This facilitates fully automated, guaranteed transactional execution of atomic resource exchanges and more complex contracts, without a multitude of intermediaries and expensive or slow semi-manual processes. A didactic objective is separating money characteristics from technology aspects such as specific blockchain and distributed ledger systems to help disentangle discussions of digital money design from implementation techniques. We finally discuss the power and role of programmable (contract-backed) digital money in case studies: tokenization of invoice debt using smart…
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Taxonomy
TopicsFinTech, Crowdfunding, Digital Finance · Blockchain Technology Applications and Security · Private Equity and Venture Capital
