17 Mar Cashu: Chaumian E-Money & Mints Over Lightning

Cashu is a challenge for Lightning Community enabled Chaumian e-cash for Bitcoin. Chaumian e-cash is digital money cost system named after creator David Chaum, a legendary cryptographer, whose pre-Bitcoin, early digital money system “Digicash” provided huge enhancements in consumer safety and privateness through the use of cryptography.

Chaumian E-Money Over Lightning with Cashu

Cashu is an thrilling new Layer two Bitcoin challenge for Chaumian e-cash and mints which allow quick, scalable, completely non-public, low cost, Bitcoin-backed e-cash transactions. Cashu creates a mint, which points e-cash tokens on Lightning Community which accepts Bitcoin and makes use of blinded signatures to mint e-cash tokens, which could be spent, obtained, transacted with, and ultimately redeemed for Bitcoin.

With Cashu, there aren’t any accounts or private data required, the mint can’t see your stability, tokens, or who you’re transacting with, and you may maintain on to your individual tokens, (though your Bitcoin is within the mint’s custody). Cashu permits anybody to start out a mint, and act as a “financial institution” which might difficulty e-cash. Customers have the liberty to decide on the mint they need to use, and redeem their e-cash tokens for Bitcoin at any given time. 

Cashu was created by Calle, a pseudonymous Bitcoin and Lightning Community developer who takes his inspiration for Cashu from David Chaum’s authentic “Digicash” Chaumian e-cash system which was launched within the Nineteen Nineties, however which didn’t acquire traction and mainstream adoption. 

To be extra exact, Cashu is predicated on a variant of Chaumian blinding, designed by David Wagner, a pupil of Chaum, in addition to a minicash-based token logic which makes use of a Blind Diffie-Hellman Key Alternate scheme. Wagner was a pupil of Chaum’s who made an alternate implementation of e-cash to realize related safety and privateness ensures via encryption whereas avoiding sure patents held by Chaum for Digicash.

Cashu, is much like one other Chaumian e-cash challenge for Bitcoin generally known as Fedimint, which employs related applied sciences to realize most of the identical objectives of improved privateness and scalability, with the important thing distinction being that Fedimint employs federated Chaumian mints, whereas Cashu doesn’t. 

Cashu’s mannequin permits anybody to create a mint, and any consumer to decide on the mint they need to use, however the mints are impartial of one another and don’t federate as in Fedimint. Cashu customers can simply use a number of mints, relying on the mint’s status, price, comfort, or different elements and incentives.

What Benefits Does Chaumian E-Money Present for Bitcoin?

Cashu units the stage for a number of necessary and key advantages which normal on-chain Bitcoin or Lightning Community transactions don’t possess. Cashu’s e-cash makes some tradeoffs to realize non-public, safe, scalable, low cost transactions. The principle commerce off is that customers should deposit Satoshis with the mint as a way to mint e-cash, so it’s a custodial pockets design, though a custodial design with far much less belief assumptions than are usually required for custodial wallets.

As soon as a consumer deposits their Bitcoin with the mint and creates e-cash tokens, the mint itself has no manner of figuring out the variety of customers, who they’re, their account balances, or their transaction histories. Cashu customers can even pay to and obtain from common Lightning Community wallets with on-chain capabilities coming quickly. Moreover, Cashu e-cash transactions are low cost, extremely scalable and with out limitations. 

Cashu is a brand new challenge, which continues to be in an early stage of improvement, so enhancements are continuously being carried out, and customers ought to bear this in thoughts in the event that they plan to make use of it with actual cash. That being stated, it is without doubt one of the most fun new tasks which tackles Bitcoin’s privateness and scalability points, from a special approach. 

Cashu’s e-cash presents some variations to custodial Lightning wallets from each a privateness and safety perspective. At present, custodial Lightning Wallets, whereas on the spot and low cost, may censor a consumer’s transactions if motivated or compelled, in addition to monitor transaction information and spending habits. With e-cash, this isn’t attainable as mints don’t know something about quantities or senders and recipients. 

Cashu additionally presents comparable pace and price advantages much like Lightning transactions, so funds are on the spot, and unfairly low cost, however with extra privateness.  When contrasted in opposition to non custodial Lightning wallets, Cashu’s e-cash nonetheless presents a number of benefits from a usability perspective. There’s no must handle channels and inbound/outbound liquidity, or cope with channels being unilaterally closed by liquidity companions. 

Calle, Cashu’s creator additionally envisions a future the place Cashu is a protocol which might simply be added to a variety of Bitcoin wallets and providers, to make e-cash, mint, and Lightning Community integrations extra seamless. Cashu presents numerous benefits that might result in widespread adoption in commerce purposes and use instances.

Cashu’s improved usability vastly simplifies the layer two expertise for Bitcoin most customers are accustomed to via Lightning Community, and enhances the extent of privateness and safety skilled by custodial Lightning pockets customers within the overwhelming majority of custodial Lightning wallets accessible in the present day. 

It might be a significantly better and less complicated method to provide a Lightning-like Bitcoin consumer expertise to non-technical customers who simply need to use Bitcoin to purchase and promote stuff on-line, with out the complications of working a Bitcoin and Lightning Community node, and managing channels and liquidity on their very own. 

Cashu and different e-cash implementations like Fedimint have large potential for vastly bettering the Bitcoin round economic system by easing the training curve at present skilled by Bitcoin customers attempting to undertake layer two applied sciences like Lightning Community. 

Whether or not Bitcoin wallets, companies, and providers start to help Cashu or different e-cash schemes for Bitcoin stays to be seen. Will e-cash revolutionise Bitcoin this time round, or will its momentum sputter and fizzle out because it did nearly 30 years in the past when David Chaum endeavoured to convey Digicash to the general public within the Nineteen Nineties?