Ecash makes Bitcoin (and fiat) private through Calle’s Cashu.

Editor’s note: cashew It’s a protocol, not a company.

Founder: calais

Establishment date: October 2022

Headquarters location: remote

Amount of Bitcoin held in Treasury: Not applicable

Number of Employees: 20-30 open source developers

Website: https://cashu.space/

Public or private? Not applicable

Among Bitcoin’s many notable properties, privacy is not one of them.

In fact, the transparency of the Bitcoin blockchain contrasts sharply with the privacy provided by Chaumian ecash, a form of digital cash created in 1982 by legendary cryptographer Dr. David Chaum.

So how do these two technologies relate to each other?

Well, in the 1990s, 40 years after the invention of ecash, and after failed attempts to integrate it into traditional financial infrastructure, a developer using the pseudonym “Calle” found a place for this technology within the Bitcoin ecosystem. .

“Ecash has been waiting for Bitcoin as its base layer,” Calle told Bitcoin Magazine. “Bitcoin represents a permissionless system where anyone can achieve financial innovation without consulting the big banks. It’s just a much better environment to experiment with this technology.”

Calle has been innovating this technology with Cashu, a free and open source ecash protocol that it launched to the world in October 2022. Cashu allows users to enjoy the best of both Bitcoin and Chaumian ecash worlds.

Readers of this publication are likely already familiar with how Bitcoin works, but ecash may be a new concept for you.

What is Ecash?

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

However, the main difference between ecash and Bitcoin is that Bitcoin exists on a ledger whereas ecash resides on the holder’s device.

“Ecash is a very new concept to us Bitcoin users,” Calle said. Because Ecash turns the concept of a ledger on its head,” Calle explained.

“In an ecash system, who owns what is determined by who has ecash in their pocket, not by ‘what does this database tell us about who has what?’” he added.

On a more technical level, ecash tokens are essentially IOUs issued using a technique called “blind signing.”

Cashu allows regular users to run Mint over the Lightning Network using this guide written by Calle.

Calle’s motivation for creating Cashu

You might think that someone who hides their face behind a bright orange face covering when appearing in the media would be motivated by some pretty radical ideology, but that’s not the case with Calle.

Instead, he is incredibly down-to-earth, practical and very logical. His goal in building Cashu is simply to preserve the type of privacy we’ve enjoyed in financial transactions for centuries.

“We have been using financial non-disclosure measures 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 like we’re trying to bend to something we haven’t experienced. “We’re just preserving what we already enjoy,” he added.

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

“Chaumian ecash has taken on a very big task,” Calle said.

“It should have revolutionized the entire financial world. But unfortunately PayPal and Visa have taken their place,” he added.

“I’m also pragmatic in that I’ve chosen to build this on Bitcoin first. Bitcoin is the only world where you can build something like this open source.”

Bitcoin’s Ecash

One of Calle’s goals in building Cashu on Bitcoin is to get more people using Bitcoin for everyday transactions.

“Bitcoin should be held by a diverse group of people. Only then can we get a standard that will allow us to see the enormous potential this technology offers,” he said.

He also believes that if we want to onboard more people to Bitcoin, we need to measure our approach more carefully 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 separating money from the state,” he said.

“Ideologies spread much more slowly than technology. “Technology can explode overnight,” he added.

“Explain to people that we found money on the Internet. This has only happened once in the history of the Internet, and we’ve already crossed that line. Let’s spread that message.”

When we asked Calle if he thought the recent crackdown on Samourai Wallet developers could put Bitcoin-based privacy-focused protocols like Cashu in the crosshairs of regulators, he didn’t respond directly, but he didn’t seem particularly worried either. It wasn’t. He pointed out that the traditional financial system is also on the verge of using ecash.

Ecash beyond Bitcoin

“There is a very active discussion in Europe about what a CBDC might look like,” Calle explained.

“The ECB is also willing to investigate the ecash system, which provides cash-like privacy protections for transactions under €300. The Bank of International Settlements is currently piloting a demonetization system. “The Swiss National Bank and the Swiss Parliament itself are considering deploying ecash for their own digital currency,” he added.

“We have confirmed that there is a window in which eCash can be used in a perfectly legal and compliant manner.”

According to Calle, the increased level of privacy that comes with the use of ecash, whether with Bitcoin or within traditional financial structures, has positive outcomes for those who use the technology.

Who will use Ecash?

Like Bitcoin, ecash is for everyone. More specifically, it is for people who want to make digital payments in private.

“The Achilles heel of digital payments is that every payment is tied to your identity,” Calle explained. “There is no reason you need KYC to read articles on NYTimes.com. This online activity should not be linked to our bank accounts. “This is especially true if you read political articles.”

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

Additionally, in some cases it is being used as a payment method to prevent denial of service (DoS) attacks, while others are using it to pay for VPNs without revealing their identity.

But Calle seemed most enthusiastic when discussing how ecash could be used by people who are unbanked or have lost their bank accounts due to their political affiliation.

“I think a lot about how this can be a local banking infrastructure in places where there is no banking system or the banking system is so strict that dissidents and political activists can’t use digital currencies by default,” he said.

In these cases, Calle also explained how to create a system to issue fiat-denominated electronic money backed by Bitcoin.

“We can build a fiat payment experience in the most private, fast and efficient way, very close to physical cash, without ever touching the fiat banking system, but still all based on Bitcoin. “We are very excited because stablecoins are very popular and have taken over Bitcoin’s popularity in most parts of the world,” he added.

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

proceed with caution

There are many benefits to using ecash, but it is also important to be careful when using the technology.

Since ecash is issued through a custodian, there is counterparty risk involved in using it.

Calle urges you to be very careful about the caretaker you choose. He was careful to point out his statement by explaining how the Cashu team is trying to offset some of the risks associated with mint trusts. Star rating system based on reputation.

“I recommend it to everyone who uses Cashu. Use very little. “Use it like a wallet in your pocket so you don’t get seriously hurt if you lose it at a bar,” he added.

He went on to say very clearly, “When the mint runs out, your mint is gone.”

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

“Cashu itself has a mechanism to restore tokens, similar to Bitcoin UX, where it stores the seed phrase if the token is lost,” Calle explained.

However, he also pointed out that users restore their funds through Mint, and if Mint falls, users lose their tokens permanently.

call for action

Calle does not profit from his work with Cashu. He started this project out of ‘academic interest’ and pursued it because he believed there was a great purpose in developing it.

“Working on Bitcoin is a great honor and 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 are doing something every day that improves the world and that Big Tech isn’t feeding you while they suck the life out of your body.”

Therefore, he not only recommends using Cashu if you want better privacy in your everyday Bitcoin transactions, but also invites developers or anyone with the necessary skills to promote Bitcoin adoption to join Bitcoin. We invite you to join us in helping with adoption. .

“I know there are so many people with a passion for making the world a better place,” Calle said. “Bitcoin is an open system where anyone can participate, regardless of their skill level.”

He added, “For those in big tech who have lost the meaning of their work, this is an opportunity to do meaningful, global and inclusive work.”

“Join us when we go to the moon.”