Digital Currencies Part 3: What is Digital Cash?

Digital cash is the beginning of a free market revolution.

Digital cash is a revolutionary new technology that will forever change how we view money and our economy. We are living in a time when our money and our economy are about to become more democratic than ever before. Digital cash, such as bitcoin, proves that we do not need government to issue our money for us. We can do it ourselves and we can do a better job of it.

We at Cognisaya, LLC are creating software that will enable anyone to issue digital cash for a variety of purposes. This blog series introduces the concepts behind digital cash and provides an overview of our digital cash software.

To understand what digital cash is, let’s first talk about what it is not.

Digital Cash is not a Credit Card

Digital cash is not like a credit card. First, no one is extending you credit when you use digital cash. Second, there is no privacy when you use a credit card. The credit card company keeps a record of all of your purchases.

Digital Cash is not a Debit Card

Digital cash is also not like a debit card. A debit card enables you to move money from your account in your bank to someone else’s account in their bank. Again, there is no privacy. Banks have a complete list of everything you buy.

Digital Cash is Cash that’s Digital

Here’s the technical bit. Digital cash has almost all of the properties of physical cash. Specifically, it is fungible, recognizable, limited, private, liquid, costly to obtain, valued, useful for trade, and useful as a store of value.

Now let’s break that down a bit. 

First, digital cash is information that represents monetary value in just the same way that physical cash represents monetary value. Digital cash is encoded with advanced cryptographic algorithms that make it impossible to forge. It is actually easier to make counterfeit paper money than it is to make counterfeit digital cash produced by our system.

Second, the cryptographic encoding used to create digital cash also makes it impossible to spend the same digital cash more than once. This is called double spending. Think about physical cash. You can only spend it once and then its gone. You have no way of spending the same $5 bill twice.

Our system will not let people double spend digital cash. The system must validate all transactions at the time they occur just. It’s similar to the way credit card transactions are validated. 

Third, physical possession of digital cash is ownership. When you use physical cash, it’s considered yours if you have it in your hand. Digital cash has that same feature. If you lose your digital cash, it’s exactly the same as losing physical cash. Our system can’t help you recover it any more than you can knock on the doors of your country’s mint and ask them to replace cash that you lost.

Also, digital cash can be stolen just like physical cash. Our system can’t help you recover it.


It is not completely true that your digital cash it irrecovably gone if it's lost or stolen. There are ways of backing it up and recovering it. But that's an add-on to our system.

In addition, digital cash is completely private, just like physical cash. You don’t know who used your dollar bills before you got them. Likewise, you have no idea who will use them after you part company with them. Digital cash is the same way. It is completely private. It does not keep a transaction history at all. In fact, it’s impossible for the system to do that.

The following figure reviews the main features of digital cash produced by our software.

Understanding Digital Cash

Here’s an analogy that helps illustrate what digital cash is and how it works.

 Once upon a time, people went to music stores and bought black disks made of vinyl. For those of you who are too young to have seen such ancient technology, they were called records. After you bought your records you took them home and listened to them on a record player.

The years went by and technology advanced. These days, we have digitized our music. We still do all the same things we used to with the music-and now we do more. But digitizing music revolutionized the music industry. This is illustrated in Figure 2.

Digital Cash 01Fig02

Figure 2 Digitizing music made the records disappear.

As everyone knows these days, we need music player software to play our music. But music player software is everywhere. We have it on our computers, on dedicated MP3 players, on our phones, and on a wide variety of other devices. So we can have access to our digital music almost anywhere we are. And we don’t need to carry around big black disks to do it. We can store the equivalent of thousands of records on our phones.

Here’s another analogy. We used to generate, push around, and throw away large piles of documents that were printed on paper. These days we don’t. We’ve digitized our documents. We still have the documents, but digitizing them made the paper go away.

Digital Cash 01Fig03

Figure 3 Digitizing documents made the paper go away.

When we digitized documents, the paper went away (thank goodness). We use devices like computers and smartphones to look at our documents. But we can store entire libraries on small devices that fit in our pockets or purses.

Digitizing cash is the same way. It makes the coins and the bills go away. We can still use the cash and it still has pretty much the same features as physical cash. As with digitizing music and documents, digitizing money means that we need a device to use our digital cash. Specifically, we need a wallet program on a computer, phone, or other device in order to store and use our money.


Digital cash is a secure new form of money that gives us far greater economic flexibility than we ever had before. Just as digitizing documents revolutionized offices and digitizing music revolutionized the music industry, digitizing cash will revolutionize the economy and enable us to build customized, decentralized free markets that are more humane and give us greater economic democracy.

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