Editor's note: Cashews It is a protocol, not a company.
Founders: Kali
Date of Establishment: October 2022
Headquarters location: far
The amount of Bitcoin held in the vault: nothing
Number of Employees: 20-30 open source developers
website: https://cashu.space/
Public or private? nothing
Of Bitcoin's many notable characteristics, privacy is not one of them.
In fact, the transparency of Bitcoin's blockchain stands in stark contrast to the privacy provided by Chaumian ecash, a 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 electronic money and after a A failed attempt Integrating it into 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 base layer,” Cali 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 better environment to experiment with this technology.”
Calle created this technology via Cashewsa free and open source e-cash protocol that it launched to the world in October 2022. With Cashu, users get the best of both the Bitcoin and Chaumian ecash worlds.
While readers of this post are likely familiar with how Bitcoin works, electronic money may be a new concept.
What is icash?
Ecash is a bearer asset that can be transferred peer-to-peer, just like Bitcoin.
However, the main difference between eCash and Bitcoin is that Bitcoin resides on a ledger, while eCash lives on the holder's device.
“Ecash for us Bitcoin users is a very foreign concept because it turns the concept of a ledger on its head,” Cali explained.
He added: “In the electronic cash system, the status of who owns what is determined by who has cash in their pockets, not “what does this database say about who owns what?”
On a more technical level, ecash tokens are essentially IOUs that are minted using a technology called “Blind signatures“.
With Cashu, regular users can run Mint over the accelerated network using this guide written by Calle.
Kali's motive in creating Kashu
You would think that someone who hides his face behind a bright orange face covering when appearing in the media would be driven by a completely extremist ideology, but that's not the case with Cali.
Instead, he is surprisingly humble, 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 used private financial instruments for hundreds of years without realizing that we are using one of the best technologies in financial privacy – physical cash,” Calley said.
“So, it's not like we're trying to lean into something we've never experienced before. We're just keeping to the things we already enjoy,” he added.
Cali wants to see Chaumian ecash succeed despite the challenges he faced when Dr. Chaum tried to implement it in the traditional financial system through his company. DigiCash In the 1990s.
“Chaumian ecash had a very big mission,” Cali said.
“It should have revolutionized the entire financial world,” he added, “but unfortunately, PayPal and Visa took over.”
“I'm also practical because I chose to build this on Bitcoin first. Bitcoin is the only world where you can start building 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 in everyday transactions.
“Bitcoin should be held by diverse groups of people, so we can get the standards to see the enormous potential this technology has to offer,” he said.
He also believes that by getting more people on board with 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. You don't even have to believe in the separation of money from the state.”
“Ideology spreads much slower than technology. Technology can explode overnight,” he added.
“Just explain to people that we found money from the Internet. This only happens once in the history of the Internet, and we have crossed that line. Let's spread this message.”
When I asked Calley whether he thought the recent crackdown on Samourai Wallet developers might 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. He also pointed out that the traditional financial system is about to employ electronic cash as well.
Ecash is behind Bitcoin
“In Europe, we have very active discussions about what a central bank digital currency would look like here,” Calley explained.
“The European Central Bank is also willing to consider e-cash systems that provide cash-like privacy for transactions worth less than 300 euros. The Bank for International Settlements is piloting an e-cash system at the moment. The Swiss National Bank and the Swiss Parliament itself are considering monetary deployments for their currencies,” he added. National digital.
“We see that there is an opportunity for the fully legal and compliant use of electronic cash.”
According to Calley, any levels of improved privacy that come with the use of electronic money — whether on Bitcoin or within traditional financial structures — is a net positive for everyone who uses the technology.
Who will use Ecash?
Just like Bitcoin, electronic cash is available to everyone. More specifically, it is specifically for those looking to make digital payments.
“The Achilles heel of digital payments is that all payments are tied to identities,” Calley explained. “There is no reason you need to know your customer to read an article on NYTimes.com. These online activities should not be linked to our bank account, especially if you are reading political articles.
Nostr users are already using e-money minted on Cashu in several privacy-based chat apps, according to Calle.
They are also used as a means of payment to prevent denial of service (DoS) attacks in some cases, while other users use them to pay for VPNs anonymously.
However, Kale sounded more enthusiastic when he discussed how unbanked people or those who have been bankrupted due to their political affiliations can use e-money.
“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 expensive that dissidents and political activists basically can't use any digital money,” he said.
For such cases, Kale also described how he could create a system that issues fiat currency-denominated cash backed by bitcoin.
“We can build fiat payment experiences without ever touching the fiat banking system in the most private, fast and efficient way that is very close to physical cash, but still built on Bitcoin,” he added. “This makes me very excited because stablecoins are very popular and have also captured Bitcoin's popularity in most parts of the world.
“There is clear demand for it, and fiat on e-money is the best form of fiat currency I can think of.”
Proceed with caution
While there are a number of benefits to using electronic money, it is also important to be careful when using the technology.
Because electronic money is minted through a custodian, there are counterparty risks associated with its use.
“I would urge anyone to be very careful about the custodian they choose,” Caley cautioned, offering a caveat to his statement, explaining how the team behind Cashu is trying to offset some of the risks associated with trusting the Mint by creating a star rating system based on reputation. for them.
“Our recommendation to anyone using Cashu: Use it in very small amounts. Use it as a wallet in your pocket, so that if you lose it in the bar, it won't hurt you too much,” he added.
He went on to say very clearly: “When the mint drops, your seats are gone.”
There is also some risk of losing your money if you lose the device it's stored on, but Cashu has devised a way to recover lost cash.
“In Cashu itself, there is a mechanism to recover your tokens if you lose them, similar to the Bitcoin UX where you store a seed phrase,” Cali explained.
However, he also noted that users get their money back through the mint, and that, again, if the mint goes down, users will lose their tokens permanently.
Call to action
Kale does not benefit from his work with Kashu. He started the project as an “academic interest” and moved forward because he found great purpose in its development.
He explained, “Working on Bitcoin is a great honor and an opportunity that gives life meaning, because it is a project for humanity.”
“It's nice to be a small part of this process, knowing that every day you're working on something that improves the world and doesn't feed big big tech 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 any relevant skills to drive Bitcoin adoption — to join him in helping increase Bitcoin adoption. .
“I know a lot of people who have 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,” Calley said.
“For those in the big tech industry whose work has lost its meaning, this is an opportunity to work on something meaningful, global and inclusive,” he added.
“Join us as we go to the moon.”
