Keeping money secure

Author: Geoff Walsh

From the humble cash box to complex algorithms – the changing world of financial security

It goes without saying that money must be kept in a safe place. Since their invention coins (and notes) have been stored in the most secure locations, such as a guarded temple, vault or fortress, and later in banks. Impregnable walls and three-foot thick doors guarded by heavily armed militia are still with us after millennia and show no signs of becoming obsolete any time soon. The other side of this is that the weakest link was, is, and probably will always be people – the owners, guards and custodians of said money.

The early years of banking security

Around 3000 years ago money was kept in heavily-guarded temples, but then, as now, money lying idle was considered money wasted. For centuries humans faced the dilemma of either spending/loaning their money or locking it away for months at a time. In most cultures shopkeepers would only employ family members since no one else could be trusted with access to their money.

Using machines to protect cash

This problem was solved by one James Ritty, an ingenious saloon owner from Dayton, Ohio. In 1879 he invented the ‘Incorruptible Cashier’ to prevent employees from helping themselves to his profits. Every transaction would be entered into the machine via a numerical keyboard, and when the ‘total’ key was pushed, a cash draw would open to allow the money to be entered and change to be retrieved. The cash draw was safely locked at all other times, a sale being the only way to activate it. And to defer anyone from making a false ‘sale’ a bell would ring every time the draw opened to alert all and sundry that money exchange was taking place.

Of course if no change was forthcoming the cashier could still pocket the money… until Ritty had the further idea of reducing prices by a penny, thereby making it highly unlikely that the machine could be bypassed. In this way the 99p sale was born, and is still in use in most countries today. (Although this may also have something to do with the side-effects of psychological pricing.)

The Incorruptible Cashier revolutionised retail and was patented in 1883, and shortly afterwards Ritty sold the rights so he could stick to his first love – the saloon. It was renamed the ‘cash register’ in 1884, although this never took off in the UK, where a cash box had always been known as a ‘till’.

Financial security in the modern digital age

Variations on the till theme were used as standard until the 1990s, but with the advent of electronic cash the process has had to be re-evaluated. The walls have been replaced by firewalls: the virtual equivalent of real walls, which keep intruders out. Unless you have the key, you’re not coming in.

The keys to the door have been replaced by complex algorithms, software and hardware. For those interested, transactions are based on prime numbers (numbers which cannot be factorised). Two high prime numbers (higher than a googol i.e. with more than 100 digits) are chosen by a merchant. They are multiplied together and the product is given to the buyer as a ‘public key’, which is then used to encrypt data such as credit card numbers etc. There are a few more calculations involved but essentially to break the encryption all you need is the two original prime numbers. Sounds simple? In 2011 a team of researchers armed with high-powered computers set out to find two such primes, and finally produced the answer in 2013. It really is a very secure system – in two years one could break into Fort Knox with a teaspoon!

Free download

Progressive Security: A New Standard for Digital Banking

Progressive security holds the promise of banking applications that tailor the balance between usability and security dynamically for each user, in the user ’s context, in real time.

13 Jul 2016

Author: Geoff Walsh

From the humble cash box to complex algorithms – the changing world of financial security

It goes without saying that money must be kept in a safe place. Since their invention coins (and notes) have been stored in the most secure locations, such as a guarded temple, vault or fortress, and later in banks. Impregnable walls and three-foot thick doors guarded by heavily armed militia are still with us after millennia and show no signs of becoming obsolete any time soon. The other side of this is that the weakest link was, is, and probably will always be people – the owners, guards and custodians of said money.

The early years of banking security

Around 3000 years ago money was kept in heavily-guarded temples, but then, as now, money lying idle was considered money wasted. For centuries humans faced the dilemma of either spending/loaning their money or locking it away for months at a time. In most cultures shopkeepers would only employ family members since no one else could be trusted with access to their money.

Using machines to protect cash

This problem was solved by one James Ritty, an ingenious saloon owner from Dayton, Ohio. In 1879 he invented the ‘Incorruptible Cashier’ to prevent employees from helping themselves to his profits. Every transaction would be entered into the machine via a numerical keyboard, and when the ‘total’ key was pushed, a cash draw would open to allow the money to be entered and change to be retrieved. The cash draw was safely locked at all other times, a sale being the only way to activate it. And to defer anyone from making a false ‘sale’ a bell would ring every time the draw opened to alert all and sundry that money exchange was taking place.

Of course if no change was forthcoming the cashier could still pocket the money… until Ritty had the further idea of reducing prices by a penny, thereby making it highly unlikely that the machine could be bypassed. In this way the 99p sale was born, and is still in use in most countries today. (Although this may also have something to do with the side-effects of psychological pricing.)

The Incorruptible Cashier revolutionised retail and was patented in 1883, and shortly afterwards Ritty sold the rights so he could stick to his first love – the saloon. It was renamed the ‘cash register’ in 1884, although this never took off in the UK, where a cash box had always been known as a ‘till’.

Financial security in the modern digital age

Variations on the till theme were used as standard until the 1990s, but with the advent of electronic cash the process has had to be re-evaluated. The walls have been replaced by firewalls: the virtual equivalent of real walls, which keep intruders out. Unless you have the key, you’re not coming in.

The keys to the door have been replaced by complex algorithms, software and hardware. For those interested, transactions are based on prime numbers (numbers which cannot be factorised). Two high prime numbers (higher than a googol i.e. with more than 100 digits) are chosen by a merchant. They are multiplied together and the product is given to the buyer as a ‘public key’, which is then used to encrypt data such as credit card numbers etc. There are a few more calculations involved but essentially to break the encryption all you need is the two original prime numbers. Sounds simple? In 2011 a team of researchers armed with high-powered computers set out to find two such primes, and finally produced the answer in 2013. It really is a very secure system – in two years one could break into Fort Knox with a teaspoon!

Free download

Progressive Security: A New Standard for Digital Banking

Progressive security holds the promise of banking applications that tailor the balance between usability and security dynamically for each user, in the user ’s context, in real time.