The virtual equivalent of cash. Digital cash is implemented using encryption techniques; in particular,
digital signatures,
blind signatures, and
cut and choose protocols play significant roles.
Relatively simple Digital Cash systems can offer anonymous money transfers on the net, without the need to contact any central authority for each transaction, and where the identity of any double spenders (people that use cash twice) is automatically disclosed to the bank. More advanced schemes also allow dividing up a coin locally (without contacting the bank).
Most digital cash (ie, anonymous) schemes are covered by David Chaum's patents on blind signatures. The alternative is to make it impossible for anybody but the bank to verify the validity of a coin, or to use Stefan Brands' certificate technologies (which also are patented, and are supposedly tricky to implement correctly.)
The advantage of digital cash compared to bookkeeping systems (like credit cards) is that the transaction cost is much lower - no need to check anything. This means that digital cash can be used e.g. by routers buying bandwidth by the minute.
Digital Cash is likely to have significant effect on society - it make possible completely anonymous transactions, thus making it very hard to tax anything but real property. Some people believe it will bring about the end of all government.