Ecash makes Bitcoin (and Fiat) private with Calle’s Cashu

Editor’s Note: Cashew is a protocol, not a company.

Founders: Calle

Date of establishment: October 2022

Location of the head office: At a distance

Amount of Bitcoin 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 features, privacy is not one of them.

Even more so, the transparency of Bitcoin blockchain is in stark contrast to the privacy it offers Chaumian ecasha form of digital money created by legendary cryptographer Dr. David Chaum in 1982, offers.

What do these two technologies have to do with each other?

Well, 40 years after the invention of ecash and after a failed attempt To integrate it into the traditional financial infrastructure in the 1990s, a developer who goes by the pseudonym “Calle” 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 on which anyone can build financial innovation without having to consult the big banks. It’s just a much better environment to experiment with this technology.”

Calle innovates with this technology via Cashewa free and open-source ecash protocol that he released in October 2022. With Cashu, users get the best of both the Bitcoin and Chaumian ecash worlds.

And although the readers of this publication are probably already familiar with it how Bitcoin worksecash can be a new concept.

What is Ecash?

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 resides on a ledger, while ecash resides on the holder’s device.

“Ecash is a very foreign concept to us Bitcoiners because it turns the concept of a ledger on its head,” Calle explains.

“In a cash system, the status of who owns what is determined by who has cash on hand, not ‘What does this database say about who has what?’” he added.

On a more technical level, ecash tokens are essentially IOUs beaten using a technology called “blind signatures.”

Cashu allows regular users to operate a coin via the Lightning Network guidewritten by Calle.

Calle’s motivation in 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 a fairly radical ideology, but this is not the case with Calle.

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

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

“So it’s not really like we’re trying to bow to something we haven’t experienced yet. We are only keeping the things we already enjoy,” he added.

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

“Chaumian Ecash had a very big mission,” says Calle.

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

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

Ecash on 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 supported by diverse groups of people so that we can show the standards the enormous potential this technology offers,” he said.

He also believes that if we want to introduce more people to Bitcoin, we need to be more restrained in our approach and let the technology itself do the talking.

“You don’t have to be against the state to love Bitcoin. You don’t even have to believe in separating money and state,” he said.

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

“Just explain to people that we found the money from the Internet. This only happens once in the history of the internet, and we’ve crossed that line. Let’s spread that message.”

When I asked Calle if he was thinking about the recent one crackdown on Samourai Wallet developers could put a privacy-focused protocol built on Bitcoin like Cashu in the crosshairs of regulators, he didn’t respond directly, but he didn’t seem particularly concerned either, as he pointed out that the traditional financial system is about to be leveraged from eCash too.

Ecash beyond Bitcoin

“In Europe we are having very active discussions about what CBDC will look like here,” Calle explains.

“The ECB is also willing to look at ecash systems that offer cash-like privacy for transactions under 300 euros. The Bank of International Settlements is currently testing an ecash system. The National Bank of Switzerland and the Swiss Parliament itself are considering the use of ECASH for their national digital currency,” he added.

“We see that there is a period of completely legal and compliant use of ECASH.”

According to Calle, any level of improved privacy that comes with using ecash – whether on Bitcoin or within traditional financial structures – is a net positive for everyone using the technology.

Who will use Ecash?

Just like Bitcoin, ecash is for everyone. More specifically, it is aimed at those who want to make private digital payments.

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

According to Calle, Nostr users already use ecash from Cashu in various privacy-based chat applications.

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

However, Calle seemed most enthusiastic when discussing how people without bank accounts or those left unbanked due to their political leanings can use ECASH.

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

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

“We can build fiat payment experiences without touching the fiat banking system in the most personal, fast and efficient way that is very close to physical money, but it is all still built on Bitcoin. That makes me very excited because stablecoins are extremely popular and have also taken over the popularity of bitcoin in most parts of the world,” he added.

“There is just a clear demand for it and fiat on ECASH is the best form of fiat I can think of.”

Proceed with caution

While there are a number of benefits to using ECASH, it is also important to be cautious when using the technology.

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

“I would urge everyone to be very careful about the custodian they choose,” warned Calle, who caveated his statement and explained how the team behind Cashu has addressed some of the risks associated with trusting a currency tries to compensate by creating a currency. star rating system based on reputation for them.

“We advise everyone who uses Cashu: use it for very small quantities. Use it like a wallet in your pocket so if you lose it at the bar it won’t hurt you too much,” he added.

He further said very clearly: “If a coin goes down, your sats are gone.”

There is also a risk of losing your money if you lose the device it is stored on, but Cashu has come up with a way to recover lost cash.

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

However, he also pointed out that users will get their money back through the coin and that, again, if the coin goes bankrupt, users will lose their tokens permanently.

Call to action

Calle does not benefit from his work with Cashu. He started the project out of an ‘academic interest’ and has continued because he sees a great purpose in its development.

“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 wonderful to be a small part of this process, knowing that day in and day out you are working on something that improves the world and doesn’t feed the big mega tech companies while they suck the life out of your body.”

So not only does he encourage you to use Cashu if you’re looking for more privacy in your daily Bitcoin transactions, but he also invites developers – or anyone with any skills relevant to driving Bitcoin adoption – to join him in helping to promote Bitcoin adoption. .

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

“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.

“Come with us when we go to the moon.”

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