Editor’s word: Cashu is a protocol, not an organization.
Founders: Calle
Date Based: October 2022
Location of Headquarters: Distant
Quantity of Bitcoin Held in Treasury: N/A
Variety of Staff: 20-30 open-source builders
Web site: https://cashu.house/
Public or Non-public? N/A
Of Bitcoin’s many notable properties, privateness isn’t one among them.
In actual fact, the transparency of the Bitcoin blockchain contrasts starkly with the privateness that Chaumian ecash, a type of digital money created by legendary cryptographer Dr. David Chaum in 1982, presents.
So, what do these two applied sciences should do with each other?
Properly, 40 years after the invention of ecash and after a failed try to combine it into the standard monetary infrastructure within the Nineties, a developer who goes by the pseudonym “Calle” discovered a spot for the expertise inside the Bitcoin ecosystem.
“Ecash was ready for Bitcoin as a foundational layer,” Calle instructed Bitcoin Journal. “Bitcoin represents a permissionless system on which anybody can construct monetary innovation with out having to seek the advice of the large banks. It’s only a approach higher setting to experiment with this expertise.”
Calle has been innovating with this expertise by way of Cashu, a free and open-source ecash protocol he launched into the world in October 2022. With Cashu, customers get the most effective of each the Bitcoin and Chaumian ecash worlds.
And whereas readers of this publication are probably already conversant in how Bitcoin works, ecash could also be a brand new idea.
What Is Ecash?
Ecash is a bearer asset that may be transferred peer-to-peer, very similar to bitcoin.
Nonetheless, a key distinction between ecash and bitcoin is that bitcoin exists on a ledger, whereas ecash lives on its holder’s machine.
“Ecash is for us Bitcoiners a really alien idea as a result of it flips the idea of a ledger on its head,” defined Calle.
“In an ecash system, the state of who owns what is decided by who has ecash of their pockets, not ‘What does this database say about who has what?’” he added.
On a extra technical degree, ecash tokens are basically IOUs which can be minted utilizing a expertise known as “blind signatures.”
With Cashu, bizarre customers can function a mint by way of the Lightning Community utilizing this information, written by Calle.
Calle’s Motivation In Creating Cashu
You may suppose that somebody who hides their face behind a shiny orange face wrap when making media appearances can be motivated by fairly radical ideology, however this isn’t the case with Calle.
As an alternative, he’s surprisingly down-to-earth, sensible and extremely logical. His purpose in constructing Cashu is solely to protect the kind of privateness we’ve had in monetary transactions for hundreds of years.
“We used financially-private devices for a whole bunch of years with out realizing that we use top-of-the-line applied sciences in monetary privateness — bodily money,” mentioned Calle.
“So, it is not likely like we’re attempting to bend in the direction of one thing that we haven’t skilled. We’re simply preserving the issues that we already take pleasure in,” he added.
Calle desires to see Chaumian ecash succeed regardless of the challenges it confronted when Dr. Chaum tried to implement it into the standard monetary system by way of his firm DigiCash within the ‘90s.
“Chaumian ecash had a really large mission,” mentioned Calle.
“It ought to have revolutionized the whole monetary world. However, sadly, PayPal and Visa took over,” he added.
“I am additionally being pragmatic in that I am selecting to construct this on Bitcoin as a result of first. Bitcoin is the one world the place you can begin constructing one thing like this open supply.”
Ecash On Bitcoin
A part of Calle’s goal in constructing Cashu on Bitcoin is to get extra individuals utilizing bitcoin for on a regular basis transactions.
“Bitcoin must be carried by various teams of individuals, so we are able to get the normies to see the big potential that this expertise provides,” he mentioned.
He additionally believes that in onboarding extra individuals to Bitcoin, we must be extra measured in our method and let the expertise itself do the speaking.
“You don’t should be towards the state to like Bitcoin. You don’t even should imagine in separating cash from state,” he mentioned.
“Ideology spreads far more slowly than expertise. Expertise can explode in a single day,” he added.
“Simply clarify to those that we now have discovered the cash of the web. This occurs as soon as solely within the historical past of the web, and we now have crossed that line. Let’s unfold that message.”
After I requested Calle if he thought the latest crackdown on the Samourai Pockets builders may put a privacy-focused protocol constructed on Bitcoin like Cashu within the crosshairs of regulators, he didn’t reply instantly, however he additionally didn’t appear significantly nervous, as he identified that the standard monetary system is on the verge of using ecash, as effectively.
Ecash Past Bitcoin
“In Europe, we now have very energetic discussions about what CBDC will appear like right here,” defined Calle.
“The ECB is keen to additionally look into ecash programs that present cash-like privateness for transactions beneath 300 euros. The Financial institution of Worldwide Settlements is piloting an ecash system proper now. The Nationwide Financial institution of Switzerland and the Swiss Parliament itself are contemplating ecash deployments for his or her nationwide digital currencies,” he added.
“We see that there’s a window of completely authorized and compliant use of ecash.”
In line with Calle, any ranges of enhanced privateness that include utilizing ecash — whether or not on Bitcoin or inside conventional monetary constructions — is a internet optimistic for whoever makes use of the expertise.
Who Will Use Ecash?
Very like Bitcoin, ecash is for everybody. Extra particularly, it’s for many who wish to make digital funds privately.
“The Achilles heel of digital funds is that every one funds are tied to identities,” defined Calle. “There isn’t a motive why it is advisable to have KYC to learn an article on NYTimes.com. These on-line actions shouldn’t hook up with our checking account, particularly when you’re studying political articles.”
Nostr customers are already utilizing ecash minted on Cashu in a number of privacy-based chat functions, in accordance with Calle.
It’s additionally getting used as a cost to stop denial of service (DoS) assaults in some circumstances, whereas different customers are utilizing it to pay for VPNs with out disclosing their identification.
Calle appeared most enthused, although, when he mentioned how the unbanked or those that have been debanked due to their political affiliations can use ecash.
“I believe quite a bit about how this may change into native banking infrastructure in elements of the world the place there are not any banking programs and or banking programs are so prohibitive that dissidents and political activists principally can not use any digital cash,” he mentioned.
For such circumstances, Calle additionally described how he can create a system that points fiat-denominated ecash backed by bitcoin.
“We are able to construct fiat cost experiences with out touching the fiat banking system in any respect in probably the most non-public and quick and environment friendly approach that may be very near bodily money, however it’s all nonetheless constructed on Bitcoin. That makes me very excited as a result of stablecoins are extraordinarily widespread and so they have additionally taken over the recognition of bitcoin in most elements of the world,” he added.
“There may be only a clear demand for it and fiat on ecash is the most effective type of fiat that I can consider.”
Proceed With Warning
Whereas there are an a variety of benefits to utilizing ecash, it’s additionally essential to watch out when utilizing the expertise.
Provided that ecash is minted by means of a custodian, there’s counterparty danger related to utilizing it.
“I might urge anybody to be very cautious concerning the custodian that they select,” warned Calle, who offered a caveat to his assertion, explaining how the workforce behind Cashu is attempting to offset a number of the danger related to trusting a mint by making a star ranking system primarily based on fame for them.
“We suggest to anybody utilizing Cashu: Use it for very small quantities. Use it like a pockets in your pocket in order that when you lose it on the bar, it will not damage you an excessive amount of,” he added.
He went on to state very clearly that “when a mint goes down, your sats are gone.”
There may be additionally some danger in shedding your funds when you lose the machine on which they’re saved, however Cashu has created a method to restore misplaced ecash.
“In Cashu itself, there’s a mechanism to revive your tokens when you lose them, much like Bitcoin UX the place you retailer a seed phrase,” Calle defined.
Nonetheless, he additionally identified that customers restore their funds by means of the mint and that, once more, if the mint goes down, customers lose their tokens completely.
Name To Motion
Calle doesn’t revenue from his work with Cashu. He began the venture as an “educational curiosity” and has pushed ahead as a result of he finds nice function in growing it.
“Engaged on Bitcoin is a giant honor and alternative that provides life which means, as a result of it is a venture for humanity,” he defined.
“It is lovely to be a bit of a part of this course of, figuring out that you simply work on one thing day-to-day that improves the world and would not feed large mega tech firms whereas they’re sucking the life out of your physique.”
So, not solely does he encourage you to make use of Cashu when you’re in search of larger privateness in your on a regular basis bitcoin transactions, however he invitations builders — or anybody with any abilities pertinent to driving Bitcoin adoption — to hitch him in serving to to additional Bitcoin adoption.
“I do know so many individuals with this want to work on one thing that makes the world a greater place, and Bitcoin is an open system that invitations anybody with any talent degree to take part,” mentioned Calle.
“For these within the large tech business whose work has misplaced which means, this is a chance to work on one thing significant, world and inclusive,” he added.
“Be part of us as we go to the moon.”