David Chaum has been combing through bookstores and catalogs in search of histories of money.

Mainly for airplane reading, the books have been generally unsatisfying, Mr. Chaum said. That may be because he has the loftier ambition of writing entirely new chapters.

Mr. Chaum is one of a handful of computer entrepreneurs developing payment systems for electronic commerce, the emerging economy where money takes on an abstract, digital form.

Each new-money competitor has his own arresting technical wrinkle and marketing message, but Mr. Chaum makes several claims that others will find hard to top:

*He is a computer scientist and world-renowned specialist in cryptography, having published numerous articles in academic literature. An article in a more popular medium, "Achieving Electronic Privacy" in the August 1992 Scientific American, helped galvanize the movement to secure transactions over open computer systems like the Internet.

*He formed Digicash Corp., his company promoting electronic payment systems for cyberspace and smart cards, in Amsterdam five years ago, and says it is making money.

*Digicash was the first to demonstrate payments over the Internet - at a conference in Geneva more than a year ago. That was before U.S. rivals Cybercash Inc., First Virtual Holdings Inc., and Open Market Inc. were born.

*Among their products and assets, Mr. Chaum and Digicash boast Ecash, their name for digital cash, currently in a pilot mode on the Internet; smart card technology for electronic purses and wallets, being tested at European Community headquarters in Brussels; and at least 11 basic patents likely to assure a role for the company, not to mention a stream of licensing income, as electronic commerce evolves.

A key piece of the puzzle is missing: one or more banks willing to lend credibility as Ecash-issuing partners. Mr. Chaum hints that he is making progress on this front. He is certainly devoting energy to it.

He makes his pitch with as broad a brush as anyone trying to establish a position on the information highway, combining social and privacy-rights concerns with hard business sense.

Mr. Chaum sees the Internet spawning a "new model" of commerce in which the balance of commercial power shifts toward the individual, who can choose with whom to do business from among millions of potential "counterparties."

The great leveling process is well under way thanks to the personal computer, he said, noting that personal finance programs like Intuit Inc.'s Quicken have already demonstrated mass appeal. Electronic commerce "gives people more power for their PC. By satisfying that growing need you can make a ton of money."

Mr. Chaum believes most corporations today are too short-sighted to seize all the opportunities in Internet/PC commerce. Whoever steps forward with a payment system like Ecash that ensures privacy, efficiency, and accuracy "would make others look daft, perhaps even immoral, not exercising public responsibility."

Banks are uniquely placed "to take the technological possibilities in hand, create a market, and steal the show," Mr. Chaum said in a recent interview. "I tell bankers that if they offered customers something that looked after their interests, they might be able to create the kind of relationship that Apple got with its Macintosh. Some people just love that company, and that's not something you see in banking or credit cards.

"There are 30 million users of the (Internet's) World Wide Web. You can reach them directly, they are technology-savvy, and they are concerned about privacy and security."

Digicash is driving this part of its message home every day in a demonstration project in which 10,000 volunteers have each been given 100 "cyberbucks" to buy various digital trinkets on the Internet.

"We support 10,000 people on Ecash with a 486 machine," Mr. Chaum said, referring to the desktop workstation that proves adequate for electronic commerce. The cost and complexity, he said, are minimal compared with Visa International's plan for a smart card system at the 1996 Olympics - a big expenditure in the interest of convincing banks to back an already proven technology.

"You can get a lot better positioning, and customer loyalty, doing something completely new on the information highway," he said.

This is not to say that Visa and its competitor MasterCard are neglecting on-line commercial potential. They formed alliances - Visa with Microsoft Corp. and MasterCard with Netscape Communications Corp. - to develop encryption-based protection for card transactions on computer networks.

Microsoft's power and influence attracted Visa. Edmund P. Jensen, the card association's president, said recently that the proliferation of companies peddling secure on-line payments "will go the way of other boutiques. Eventually, this will all have to coalesce and come together."

William Melton, founder and chief executive officer of Cybercash in Reston, Va., foresees shakeouts in varying degrees. Secure credit card transactions will be the most competitive part of the market and probably the most concentrated because of the need for scale economies, he said.

Mr. Melton views the cash- and check-replacement market as having higher risk but promising great rewards. A key success factor will be the partners, including banks that providers hook up with.

In a third segment - which Mr. Melton calls micropayments and which is the focus of Digicash's Ecash - he thinks many "boutiques" could survive by serving niches well.

"Bankers like to say they have a monopoly on the payment system, that it is the main advantage of their franchise, and that their principal asset is the customer relationship," Mr. Chaum said. "Digital cash can add value and enhance the relationship, and we are the only ones with digital cash."

Compelling as his logic may be, Mr. Chaum is laboring to bring banks into the fold.

In one recent week the Digicash owner and managing director made two trans-Atlantic round-trip flights to make important meetings, including a couple of speaking engagements. Mr. Chaum tries to accommodate the increasing demands to speak at trade shows and conferences, hoping to build momentum for Ecash.

He has established an outpost in New York - an office in the historic Woolworth Building, where he has put a vice president, Daniel Eldridge, in charge of Ecash business development.

They have been making the right contacts. Mr. Chaum has held conversations with the major bank card associations - Digicash did some work for MasterCard in a recent test of smart card technology - and has even developed cordial relations with competitors like Lee Stein, chief executive officer of First Virtual, and Tim Jones, head of National Westminster Bank's Mondex smart card effort.

Mr. Chaum also has participated in the Smart Card Forum and Financial Services Technology Consortium, groups of bankers and others jointly exploring leading-edge technologies.

Daniel Schutzer, vice president of Citicorp and president of the technology consortium, of which he was the chief organizer, said he is a fan of Mr. Chaum's and called him "a heavyweight in the cryptography community." But his dealings with Mr. Chaum have been "purely informational," Mr. Schutzer said. "I know he is trying desperately to bring a bank on board."

Mr. Chaum acknowledges that the people he'd like to do Ecash business with are not exactly beating a path to his door. One factor may be the business conservatism he is trying to fight; another may be the way Mr. Chaum is perceived - or misperceived.

He doesn't fit the mold of a banker or most of the technology vendors who sell to the banking community. He earned a PhD in computer science from the University of California at Berkeley in 1982. After teaching there and at New York University, Mr. Chaum settled at the Center for Mathematics and Computer Science in Amsterdam in 1984, and has lived in that cosmopolitan Dutch city ever since.

A cofounder of the International Association for Cryptologic Research, Mr. Chaum did influential work in cryptographic and digital signature techniques. He put them into practice through Digicash, which has grown since 1990 to 25 employees.

The company's first claim to fame was the CAFE project, the electronic- purse smart card system being showcased at the European Community buildings in Brussels. Digicash is one of several corporate participants in what may be the first glimpse of a futuristic pan-European payment system, and the Center for Mathematics and Computer Science is the project coordinator.

The recent flurry of Internet activity by the likes of Cybercash and First Virtual brought more attention to Digicash and its Ecash. Mr. Chaum claims to do better than all others in terms of privacy safeguards, coming closest to replicating cash - in all its swiftness, anonymity, and finality - for relatively low-value exchanges over the Internet.

Ecash is not designed to handle transactions that people would prefer to put on credit cards, though it can make cash a viable alternative. Ecash, in fact, appears as coins on the computer screen. Banks would serve as Ecash issuers, certifying that coins used to pay for, say, a downloaded picture or piece of software have not been illicitly duplicated.

Digicash has the means to combine the software incarnation of Ecash, used for Internet payments, with smart cards, allowing money to be taken off the network and stored in the card's chip for off-line or point of sale purchases.

Mr. Chaum calls this hybrid approach "the best of both worlds." The system it most closely resembles is Mondex, which was explicitly designed according to the cash model - to the point of being able to make payments from one card's chip to another's.

"Mondex is revolutionary and has privacy - but not privacy like we have," Mr. Chaum said.

Tim Jones of Mondex, which is preparing for its first big market test in England this summer, bridles at such criticism. He said his organization, with partners including British Telecom and Hitachi Ltd., has spent years building security, privacy, and anonymity into their chip cards, electronic wallets, and communications networks.

While he said he admires Digicash's technology, Mr. Jones does not see it as capable of contending with Mondex as a potential global replacement for physical cash.

"The (Mondex) system conceivably could be used to find out about your transactions and build a dossier," Mr. Chaum said. "As a participant, you are not in control, you are not empowered to protect your own interests."

Privacy, empowerment, protection, and education are key words for Mr. Chaum. Their political charge may be at the root of his business challenge.

At a recent conference on digital cash and electronic money at the Columbia University Graduate School of Business, Eric Clemons, a University of Pennsylvania professor, put Mr. Chaum's views down as "Walden Pond meets the Internet."

Lee Stein of First Virtual, more charitable toward his rival, characterized him as "passionate about privacy."

"At heart, David Chaum is driven by ideals," Steven Levy, a Newsweek columnist and fellow at Columbia's Freedom Forum Media Studies Center, wrote in a pathbreaking article about electronic money in the December 1994 Wired magazine.

Mr. Chaum played a starring role in that article, but a trivial detail reported by Mr. Levy sticks out. When the interviewer turned on his tape recorder and asked, "How old are you?," Mr. Chaum responded, "I don't tell that to people."

"I admire the stance he is taking," Mr. Levy said in a speech several months later. "There is real concern about what happens when you start loading information onto these chips . . . People will get suspicious. The privacy issue could snap back and hurt the industry."

Mr. Chaum doesn't deny he stands on privacy principles - "When I check into a hotel or buy something at Radio Shack, there are some things I won't give out" - but he resents the way he has been portrayed.

"It is inaccurate to call me a crusader for privacy," he said. "That's an easy pigeonhole to throw me in."

He pleads instead to being "a visionary" in keeping with the demands of information technology, yet "a businessman" who is turning a profit year after year.

"Privacy is just a part of the more general notion of people controlling their side of a transaction, protecting their financial interests against mistakes, against (dissemination of) unnecessarily detailed information about them and what they are doing," he said.

"My mission is to create a market for this sort of thing, and the best way to create it is on the demand side - by letting people know what is available to them, so they can control their lives and not be a passive participant in someone else's game."

If only bankers would be bold enough to be the empowerers, Mr. Chaum said, "they'd be heroes."

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