Cashu: Chaumian E-Money & Mints Over Lightning – Bitfinex weblog

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 fee system named after creator David Chaum, a legendary cryptographer, whose pre-Bitcoin, early digital money system “Digicash” supplied huge enhancements in person safety and privateness by utilizing 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 personal, 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 will 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 concern 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 unique “Digicash” Chaumian e-cash system which was launched within the 1990s, however which didn’t achieve traction and mainstream adoption. 

To be extra exact, Cashu relies 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 Exchange 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 referred to as Fedimint, which employs related applied sciences to realize lots 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 person 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 repute, price, comfort, or different components and incentives.

What Benefits Does Chaumian E-Money Present for Bitcoin?

Cashu units the stage for a number of necessary and key advantages which customary on-chain Bitcoin or Lightning Community transactions don’t possess. Cashu’s e-cash makes some tradeoffs to realize personal, safe, scalable, low cost transactions. The principle commerce off is that customers should deposit Satoshis with the mint with the intention 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 person deposits their Bitcoin with the mint and creates e-cash tokens, the mint itself has no approach of figuring out the variety of customers, who they’re, their account balances, or their transaction histories. Cashu customers may also 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 growth, so enhancements are continually being applied, 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 enjoyable new tasks which tackles Bitcoin’s privateness and scalability points, from a unique approach. 

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

Cashu additionally gives comparable pace and value 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 gives a number of benefits from a usability perspective. There’s no must handle channels and inbound/outbound liquidity, or take care of 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 companies, to make e-cash, mint, and Lightning Community integrations extra seamless. Cashu gives numerous benefits that might result in widespread adoption in commerce functions and use instances.

Cashu’s improved usability significantly 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 out there in the present day. 

It might be a significantly better and easier strategy to supply a Lightning-like Bitcoin person expertise to non-technical customers who simply need to use Bitcoin to purchase and promote stuff on-line, with out the complications of operating 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 significantly enhancing the Bitcoin round economic system by easing the educational curve at present skilled by Bitcoin customers making an attempt to undertake layer two applied sciences like Lightning Community. 

Whether or not Bitcoin wallets, companies, and companies start to assist 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 carry Digicash to the general public within the 1990s?