Editor's note: Cashu is a protocol, not a company.
Founders: Street
Creation date : October 2022
Location of head office: Remote
Amount of Bitcoin held in cash: N / A
Number of employees: 20 to 30 open source developers
Website: https://cashu.space/
Public or private? N / A
Among the many notable properties of Bitcoin, privacy is not one of them.
Indeed, the transparency of Bitcoin blockchain contrasts sharply with the intimacy which Chaumian treasurya form of digital money 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 mainstream financial infrastructure in the 1990s, a developer known under the pseudonym “Calle” found a place for the technology within the Bitcoin ecosystem.
“Ecash was waiting for Bitcoin as a foundational layer,” Calle told Bitcoin Magazine. “Bitcoin represents a permissionless system on which anyone can build financial innovation without having to consult big banks. It's just a much better environment to experiment with this technology.
Calle innovated with this technology via Cashua free and open source electronic payment protocol that it launched globally in October 2022. With Cashu, users benefit from the best of both Bitcoin and Chaumian electronic payment worlds.
And even though readers of this publication probably already know how bitcoin workscash may be a new concept.
What is Ecash?
Ecash is a bearer asset that can be transferred peer-to-peer, much like Bitcoin.
However, a key difference between cash and bitcoin is that bitcoin exists on a ledger, whereas cash resides on its holder's device.
“Ecash is a very foreign concept for us Bitcoiners because it turns the concept of a ledger on its head,” Calle explained.
“In an electronic payment system, who has what is determined by who has cash in their pockets, not 'What does this database say about who has what?' ” “, he added.
On a more technical level, e-cash tokens are essentially IOUs that are struck using a technology called “blind signatures.”
With Cashu, ordinary users can mine a currency via the Lightning network using this guidewritten by Calle.
Calle's motivation in creating Cashu
You'd think that someone who hides their face behind a bright orange mask during media appearances would be motivated by a pretty radical ideology, but that's not the case for Calle.
Instead, he's surprisingly down-to-earth, practical, and very logical. His goal in creating 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 for financial privacy: cash,” Calle said.
“So it’s not really like we’re trying to lean into something that we haven’t experienced. We’re just preserving the things we already enjoy,” he added.
Calle wants to see Chaumian ecash succeed despite the challenges it faced when Dr. Chaum attempted to implement it into the traditional financial system through his company. DigiCash In the 90s.
“Chaumian ecash had a very big mission,” Calle said.
“It should have revolutionized the entire financial world. But unfortunately, PayPal and Visa have taken over,” he added.
“I am also pragmatic in that I choose to build this on Bitcoin in the first place. Bitcoin is the only world where you can start creating something like this open source.
Cash on Bitcoin
Part of Calle's goal in creating Cashu on Bitcoin is to get more people using Bitcoin for everyday transactions.
“Bitcoin needs to be carried by diverse groups of people, so that we can bring standards to see the enormous potential that this technology offers,” he said.
He also believes that as we onboard more people to Bitcoin, we should be more measured in our approach and let the technology itself do the talking.
“You don’t have to be against the state to love Bitcoin. It is not even necessary to believe in the separation of 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 crossed that line. Let’s get this message across.
When I asked Calle if he thought the recent 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 also didn't seem particularly concerned, as he pointed out that the traditional financial system is about to use cash as well.
Ecash beyond Bitcoin
“In Europe, we are having very active discussions about what the CBDC will look like here,” Calle explained.
“The ECB is willing to also examine cash payment systems that offer cash-like privacy for transactions below 300 euros. The Bank for International Settlements is currently testing a cash payment system. The National Bank of Switzerland and the Swiss Parliament itself are considering deploying cash for their national digital currencies,” he added.
“We see that there is a window of perfectly legal and compliant use of cash.”
According to Calle, any improved level of privacy associated with the use of electronic money – whether on Bitcoin or within traditional financial structures – is a net positive for anyone using the technology.
Who will use Ecash?
Just like Bitcoin, cash is accessible to everyone. Specifically, it is aimed at those looking to make digital payments privately.
“The Achilles heel of digital payments is that all payments are tied to identity,” Calle explained. “There is no reason why you need KYC to read an article on NYTimes.com. These online activities should not be linked to our bank account, especially if you read political articles.
Nostr users already use cash issued on Cashu in several privacy-based chat apps, according to Calle.
It is also used as a payment method to prevent denial of service (DoS) attacks in some cases, while other users use it to pay for VPNs without disclosing their identity.
Calle, however, seemed very enthusiastic when he explained how the unbanked or those who have been unbanked due to their political affiliations can use cash.
“I'm thinking a lot about how this can become a local banking infrastructure in parts of the world where there is no banking system and/or the banking systems are so prohibitive that dissidents and political activists practically cannot use digital money,” he said.
For such cases, Calle also described how he 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 money, but it's still all built on Bitcoin. This makes me very excited because stablecoins are extremely popular and they have also taken over the popularity of bitcoin in most parts of the world,” he added.
“There is clear demand and fiat to cash is the best form of fiat I can think of.”
Proceed with caution
Although there are many benefits to using e-money, it is also important to be careful when using this technology.
Since cash is issued through a custodian, its use carries counterparty risk.
“I urge anyone to be very careful about which custodian they choose,” warned Calle, who caveated his statement, explaining how the team behind Cashu is trying to offset some of the risk associated with trusting a currency by creating a star rating system based on their reputation.
“We recommend to anyone using Cashu: use it for very small quantities. Use it like a wallet in your pocket so that if you lose it at the bar, it doesn't hurt too much,” he added.
He then stated very clearly that “when a mint drops, your sats disappear.”
There is also a risk of losing your funds if you lose the device they are stored on, but Cashu has created a way to restore lost money.
“In Cashu itself, 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 pointed out that users restore their funds through the Mint and that, again, if the Mint goes down, users permanently lose their tokens.
Call to action
Calle does not profit from his work with Cashu. He started the project as an “academic interest” and continued it because he finds great interest 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 part of this process, knowing that you’re working every day on something that makes the world a better place and not feeding 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 greater privacy in your daily Bitcoin transactions, but he invites developers – or anyone with skills relevant to driving Bitcoin adoption – to join him in help advance the adoption of Bitcoin. .
“I know so many people who want to work on something that makes the world a better place, and Bitcoin is an open system that invites anyone, regardless of 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.”