Fairness in wallets with observer

We examine the interference of fairness and observers in digital coin systems. Since copying of coins cannot be prevented cryptographically in anonymous off-line coin systems, double-spending detection is one of the major tasks. An observer is a tamper resistant device that prevents double-spending physically. While privacy protection is a desirable property of cash systems, perfect anonymity is not. Perfect anonymity enables criminals to do perfect blackmailing or money laundry according to B. von Solms and D. Naccache (1992). To prevent a perfect crime it has to be possible to revoke the anonymity of customers in case of need. Anonymity revocation is done by a trusted third party. Cash systems that allow anonymity revocation are called fair. We present a coin system which features both observer and fairness. This shows that both concepts do not interfere and can be implemented simultaneously without loss of security.