Ecash has become a hot topic in recent years. Ecash is a protocol which can be implemented today, without modifying the Bitcoin protocol.
Cashu is gaining popularity on platforms like Nostr, and inter-mint settlement across the Lightning Network makes Cashu wallets an alternative to things like Wallet of Satoshi as easy to use Lightning wallets. Adoption of Cashu is beginning to happen on platforms such as Nostr. Inter-mint Settlement across the Lightning Network also makes Cashu wallets a viable option to Lightning wallets, like Wallet of Satoshi.
Ecash, in particular Cashu, is likely to be a very popular component of the Bitcoin ecosystem. Cashu’s success at encouraging multiple implementations has been incredible.
Cashu’s developers are working on a plan to build an ecosystem around the protocol that will address the trust issues inherent in ecash as well as the specific requirements of different use cases. We’ll go over the Cashu vision.
Blinded tokens
All ecash protocol’s core is the blind signature system. It is this mechanism which allows a central entity to handle ecash transactions in a way that preserves privacy.
Users must first generate a random number. It is this ecash that you will be using. By generating it yourself, you can be sure that your token will remain in your possession. It’s not enough to generate random values. Anyone can do it. It is the responsibility of the operator to sign and notarize each token.
If they can see the token, they’ll know for whom they’ve signed and will be able to tell who paid when another person comes to them. The user can generate a blinding value to solve this issue before having the token notarized by the mint. This is achieved by multiplying the value of the token by the blinding factor.
This is then given to the mint for signing. The mint has signed only the blinded value of the token, and not the plaintext. You can reverse the process used to blind a token and the underlying cryptography to undo the blinded signature.
It leaves you with an authentic signature of the plaintext token value. The mint won’t know who, when, or why it was created. This is ecash (get it?) in a few words.).
The Small Local Mint
Cashu aims to be an easy-to-implement, simple protocol. It is also easy to integrate. This vision is of an ecosystem consisting of many small, localized mints that are all connected via Lightning Network. Developers envision a much smaller number of local operators and coins with lower value, rather than focusing on the larger ones that would have network effects, allowing token transfers directly between users. This could encourage the accumulation of large amounts of Bitcoin in the hands a small group of trusted counterparties.
Users can rely more on people who they know and trust. Lightning allows this because you do not have to convince anyone to accept tokens that come from your mint. You simply redeem the tokens and give them tokens in their own. own mint.
This strategy tries to rely on Dunbar’s Number, which is the number of people with whom someone can have an emotional relationship.
Mint Discovered Over the Nostr
The new Nostr protocol, which is part of Cashu’s ecosystem in the future, plays a major role. It encourages the use of local mints that are trusted by the people who live nearby. Nostr relies on users’ identities to be tied to the cryptographic key they hold, which ensures that only them and no other person can broadcast messages associated with their identity.
Nostr’s main use case is currently social media. This, combined with the identity scheme based on keys, provides a strong foundation for an old cryptographic concept: webs or trust. Cashu uses this feature to help users discover possible mints.
Anyone using Cashu that supports the Nostr feature will be able, with their key, to locate mints and see which mints other people who they trust and have interacted with, use. It can help them make informed decisions about which Cashu mints they should trust with their money, rather than guessing blindly and hoping to avoid getting burned.
This reputational network of trust becomes stronger over time as more mints come online and more users with Nostr identifies use them. It should automatically weed out mints that are malicious, unknown or untrustworthy and provide users with a list of honest mint operators.
Multiple mints
A market-based, open system that allows users to make choices is built on the foundation of an ecosystem with a wide variety of mints. However, things could be even more advanced. Multiple mints can be used by a single person.
The user can spread their funds across several mints and, using a variation of multipath payment, initiate a Lightning Network payment to one destination, with parts of it coming from different mints. It allows you to spread the risk that comes with having your money stored at a custodian across multiple ones, and still be able to pay people who are using different mints.
It is possible because the mints run customized software. This allows a mint only to pay part of a Lightning invoice. Other mints with funds can pay the remaining invoice. Payment will be successful as long each mint is able to successfully send their payment.
Lightning Nodes can be further customized to provide users with even more customization options. Receive a 10% discount Payment to several mints. The mints can generate the final preimage for the user’s wallet instead of mints. Each mint that receives funds may issue its own own The receiving user can control the release of the preimage on invoices. The user may release preimages to each mint that receives HTLC.
The Nostr protocol, along with its associated webs and trust networks can dramatically improve the security of users.
Program the Money
Cashu’s ability to embed script functionality within an ecash UTXO, in a similar way as a Bitcoin UTXO can be locked with a Bitcoin script program, is one of its most valuable features. Cashu can encode scripts before notarizing the tokens. The mint will then refuse redemption if the scripts aren’t met.
Cashu currently implements a lock-to-public key script that requires a public key signature to redeem a token. It is possible to mint tokens which are only redeemable by a private key holder. After the coin is made with the lock for the public key, no one else can redeem the token.
It can also be used for secure payment when the recipient is not connected to the internet. As soon as the recipient receives the token, they can verify that the mint has signed it. This will ensure they cannot be used by anyone else. Accepting it for payment is safe because they know that it can be redeemed later.
The complexity is introduced by the fact that a recipient must be locked to an account in advance if he or she does not have access to internet at the time they spend. This is because people often do not know how much to spend. If they allocate too much, they can’t get it back.
But script can do many other things. For example, you could create tokens that would require the signature of a particular public key after a set amount time, or from anyone. It’s similar to an HTLC. Cashu also defines a token script that is an actual HTLC.
Scripts to lock Cashu tokens will be expanded as more uses cases become available. This can happen arbitrarily, based on user and mint operator needs. This will become an important aspect of the protocol over time. This could include escrow, multisignature, smart contracts, etc. Cashu Mints are able to enforce script conditions that Bitcoin is capable of, as well as much more.
The Big Picture
It is a fact that people use custodians. This is something they have done for years and it will continue to be the case regardless of whether non-custodial options offer more flexibility. Some people are unable or unwilling to deal with self-custody or the responsibility that comes along with it.
Cashu is a revolutionary improvement in custodial service users’ lives. Users who would otherwise not be able to access privacy, censorship-resistance, or flexibility due to the architecture of traditional custodial service providers will now have these features.
Cashu’s goal isn’t to create a new currency. “scale Bitcoin” Instead of using custodians to provide custodial service, we want to create a private and improved system. It is my opinion that this goal has great potential in the future to benefit these users.
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Source: bitcoinmagazine.com