We all know that a physical coin represents offline payment perfection today, so what does an offline payment look like within a digital world. Digital Payments must have no less functionality than a physical coin today, and hence  be ledger less and operate within a zero digital infrastructure or simply unplugged.

Offline payments within a digital world are referred to as an intractable problem. The reason is simple...Within a digital world, duplication is easy, and undetectable by anyone or anything. Despite numerous attempts by the music, film, and software industries using digital rights management and software keys, digital products such as mp3s, video files, and executable binaries continue to be illegally copied and shared. This ease of copying things results in the “double spend” problem for digital money. 

How does one make a digital currency construct behave like a physical coin, so that only one person can possess it at a time? The short answer is one cannot, why it remains an intractable problem  as long as one is bound by the rules off space and time.

Before continuing, one needs to be sure that one is considering the same issue under the same restrictions, and that means starting with some definitions to ensure that the digital solution has all the important features of metallic coins, but existing solely in a digital world. Central banks have a habit of redefying the physical world in terms which no one can recognise in order to form a solution, they conflate the two worlds via terms like cash-like etc. Beware of these peddled fraudulent conflating of requirements. This page is dedicated to define a immutable set of requirements for an offline payment in a digital world which is identical to the physical con today.

The mandatory requirements:

1. Must be ledger-less, requiring no accounting system to underpin the payment

2. Must require zero network or payment clearing or settlement system

3. Must achieve legal tender functionality, by guaranteeing payment finality

4. Must like a physical coin operate without any infrastructure or centralised function(s) or coordination or logging system.

5. Must support a wide range of payments (from micro, to full currency  supply) without any artificial limits.

6. Must operate on chose in possession  legal basis (same as physical coins), as chose in action requires the pre-existence of a contract.

7. Must prevent counterfeiting and double spend within a digital world

8. Must ensure when value is transferred to a payee the original digital data must be rendered unusable, even if it cannot be deleted (Law 7).

9. Must have close to zero attack surface

10. Has identical AML/CTP requirements as  physical coin today; as it exist as a digital version of a coin.

11. Must be as anonymous and censorship resistant as existing coins within the physical world

12. Must comply with the L:aws of a Digital World

13. Must work for everyone in society, without fear or favour, whenever and wherever individuals and businesses need them 24x7x356 days. 

14. A Coin:

    1. Coins have a recognisable value, the receiver of a coin knows it can spend that same value in the future

    2. Possession of a coin means ownership, the owner has full control of when to spend, how much to spend, and who to pay

    3. Payment in coin is instantaneous, every coin, handed over to a payee changes ownership at that instant 

    4. Coin payments have no fees, anyone paying or being paid with a coin only requires the exact amount involved

    5. .Coin payment in a coin involves only two parties, it is finished there and then and no other party is directly involved in the transaction

15. Any value paid in coin has no memory of its previous owner, hence a payer is truly anonymous 

16. The ability to make a payment is only constrained by the amount of value possessed and not, by any system limitations or centralised policy

17. Knowledge of monetary total value owned is exclusive to the owner. 

The BIS defines an offline payment “as a transfer of value between devices that takes place without requiring connection to any ledger system”, in the absence of internet or telecommunications connectivity. 

The Coin represent the sole[1] technology solution available today to meet the stated requirements for an offline digital payment.

1. In over 40 years since the first digital money, there exist no published paper or to the authors best knowledge any description of any method which can be produced which addresses the above requirements for a offline payment system.

Model

To make it clear: we are looking for a solution that matches the diagram below, in which both the payer and the payee know that the transaction has taken place without a payment network being involved at the point of the transaction.

The acid test is whether the two parties can walk out into the forest with no network coverage, transact, and then return to civilization safe in the knowledge that a fair value transfer happened, with legal finality.