June 17, 2024
1 Solar System Way, Planet Earth, USA
Crypto

Ecash makes Bitcoin (and CBDCs) private with Calle's Cashu

Editor's note: cachu It is a protocol, not a company.

Founders: street

Foundation date: October 2022

Headquarters Location: Remote

Amount of Bitcoin held in Treasury: N/A

Number of employees: 20-30 open source developers

Website: https://cashu.space/

Public or Private? N/A

Of Bitcoin's many notable properties, privacy is not one of them.

In fact, the transparency of Bitcoin block chain contrasts sharply with the privacy that cash chaumiana form of digital cash created by legendary cryptographer Dr. David Chaum in 1982.

So what do these two technologies have to do with each other?

Well, 40 years after the invention of cash and after a Failed attempt To integrate it into traditional financial infrastructure in the 1990s, a developer calling himself “Street” found a place for the technology within the Bitcoin ecosystem.

“Ecash was waiting for Bitcoin as a fundamental layer,” Calle told Bitcoin magazine. “Bitcoin represents a permissionless system where anyone can generate financial innovation without having to consult big banks. “It’s just a much better environment to experiment with this technology.”

Calle has been innovating with this technology through cachua free and open source e-cash protocol that launched to the world in October 2022. With Cashu, users get the best of the world of Bitcoin and Chaumian e-cash.

And while readers of this post are probably already familiar with how bitcoin worksCash may be a new concept.

What is electronic money?

Ecash is a bearer asset that can be transferred peer-to-peer, just like bitcoin.

However, a key difference between ecash and bitcoin is that bitcoin exists on a ledger, while ecash lives on its holder's device.

“Ecash is a very strange concept for us Bitcoiners because it turns the concept of a ledger on its head,” Calle explained.

“In an electronic cash system, the status of who owns what is determined by who has cash in their pockets, not by 'What does this database say about who has what?'” he added.

On a more technical level, ecash tokens are essentially promissory notes that are coined using a technology called “blind signatures.”

With Cashu, ordinary users can operate a mint over the Lightning Network using this guidewritten by Calle.

Calle's motivation when creating Cashu

You would think that someone who hides their face behind a bright orange mask when appearing in the media would be motivated by a fairly radical ideology, but this is not the case with Calle.

Instead, it is surprisingly realistic, practical and very logical. Their goal in building Cashu is simply to preserve the kind of privacy we've had in financial transactions for centuries.

“We have used private financial instruments for hundreds of years without realizing that we are using one of the best technologies in financial privacy: physical cash,” Calle said.

“So it's not really like we're trying to lean into something we haven't experienced. “We are simply preserving the things we already enjoy,” she added.

Calle wants Chaumian ecash to succeed despite the challenges he faced when Dr. Chaum tried to implement it in the traditional financial system through his company. DigiCash in the 90's.

“Chaumian ecash had a very big mission,” Calle said.

“It should have revolutionized the entire financial world. But unfortunately, PayPal and Visa took over,” he added.

“I'm also being pragmatic in choosing to build this on Bitcoin because first. “Bitcoin is the only world where you can start building something like this open source.”

Cash in Bitcoin

Part of Calle's goal in building Cashu on Bitcoin is to get more people using bitcoin for everyday transactions.

“Bitcoin needs to be carried by diverse groups of people, so we can get regulators to see the huge potential this technology offers,” he said.

He also believes that by bringing more people into Bitcoin, we should be more measured in our approach and let the technology speak for itself.

“You don't have to be against the State to love Bitcoin. You don't even have to believe in the separation of money from the State,” he stated.

“Ideology spreads much more slowly than technology. Technology can explode overnight,” she added.

“Just explain to people that we found the money on the Internet. This happens only once in the history of the Internet and we have crossed that line. Let's spread that message.”

When I asked Calle if he thought the recent Crackdown on Samourai Wallet Developers could put a privacy-focused Bitcoin-based protocol like Cashu in regulators' crosshairs, he didn't respond directly, but he didn't seem particularly concerned either, noting that the traditional financial system is about to employ Cash as well.

Cash beyond Bitcoin

“In Europe, we have very active discussions about what the CBDC will look like here,” Calle explained.

“The ECB is also willing to study electronic cash systems that provide cash-like privacy for transactions below €300. The Bank for International Settlements is currently piloting an electronic cash system. “The Swiss National Bank and the Swiss Parliament itself are considering implementing e-cash for their national digital currencies,” he added.

“We see that there is a window for perfectly legal and compliant use of electronic money.”

According to Calle, any improved level of privacy that comes with the use of ecash, whether in Bitcoin or within traditional financial structures, is clearly positive for those who use the technology.

Who will use Ecash?

Like Bitcoin, cash is for everyone. More specifically, it is for those looking to make digital payments privately.

“The Achilles heel of digital payments is that all payments are tied to identities,” Calle explained. “There is no reason you need to have KYC to read an article on NYTimes.com. These online activities should not be connected to our bank account, especially if you are reading political articles.”

According to Calle, Nostr users are already using Cashu-minted ecash in several privacy-based chat applications.

It is also used as a payment to prevent denial of service (DoS) attacks in some cases, while other users use it to pay for VPN without revealing their identity.

Calle seemed more enthusiastic, however, when he talked about how the unbanked or those who have been unbanked due to their political affiliations can use cash.

“I think a lot about how this can become local banking infrastructure in parts of the world where there are no banking systems or the banking systems are so prohibitive that dissidents and political activists basically can't use digital money,” he said.

For such cases, Calle also described how you can create a system that issues fiat-denominated cash backed by bitcoin.

“We can create fiat payment experiences without touching the fiat banking system at all in the most private, fastest and most efficient way that is very close to physical cash, but everything is still based on Bitcoin. That makes me very excited because stablecoins are extremely popular and have also surpassed the popularity of bitcoin in most of the world,” he added.

“There is a clear demand for it and cash fiat money is the best form of fiat money I can think of.”

Proceed with caution

While using ecash offers a number of benefits, it is also important to be careful when using the technology.

Since cash is issued through a custodian, there is counterparty risk associated with its use.

“I urge anyone to be very cautious about the custodian they choose,” warned Calle, who issued a caveat to his statement, explaining how the team behind Cashu is trying to offset some of the risk associated with trusting a mint by creating a star rating system based on their reputation.

“We recommend anyone using Cashu: Use it in very small quantities. Use it like a wallet in your pocket so if you lose it at the bar it won't hurt too much,” she added.

He went on to say very clearly that “when a coin falls, your sats disappear.”

There is also some risk of losing your funds if you lose the device they are stored on, but Cashu has created a way to restore lost e-money.

“In Cashu, there is a mechanism to restore your tokens if you lose them, similar to Bitcoin UX, where you store a seed phrase,” Calle explained.

However, he also noted that users restore their funds through Mint and that again, if the Mint goes down, users lose their tokens permanently.

Call to action

Calle does not profit from his work with Cashu. She started the project as an “academic interest” and has continued because she finds great purpose in developing it.

“Working on Bitcoin is a great honor and an opportunity that gives meaning to life, because it is a project for humanity,” he explained.

“It's beautiful to be a small part of this process, knowing that you work on something every day that improves the world and doesn't feed big tech mega-companies while they suck the life out of your body.”

Therefore, he not only encourages you to use Cashu if you are looking for greater privacy in your daily Bitcoin transactions, but also invites developers (or anyone with relevant skills to drive Bitcoin adoption) to join him in helping promote Bitcoin adoption. .

“I know a lot of people with this desire to work on something that makes the world a better place, and Bitcoin is an open system that invites anyone with any skill level to participate,” Calle said.

“For those in the big tech industry whose work has lost meaning, this is an opportunity to work on something meaningful, global and inclusive,” he added.

“Join us as we go to the moon.”

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