SECURITY IN PAYMENT SYSTEMS PRIOR TO BITCOIN

In this section, we elaborate on prominent research and industrial payment systems (and their security properties) that started prior to Bitcoin. In particular, in Section 2.3.1, we elaborate on the security vulnerabilities featured in these payment systems. By extracting appropriate lessons from these vulnerabilities, we overview research results in the field of digital payment systems and show how these systems resist or deal with the aforementioned threats in Sections 2.3.2 and 2.3.3. In our overview, we focus on the systems that are of historical importance or became popular throughout their deployment.

Common Payment System Characteristics

Bitcoin is a payment system that satisfies the following properties:

  • • Liveliness of payments
  • • No need for payment mediator
  • • Decentralization of trust in payment processing
  • • Support for micropayments
  • • No need for (expensive) specialized hardware

We elaborate in this section on each of these properties separately by extracting lessons from the security vulnerabilities witnessed by previously deployed payment systems.

 
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