As free people of democratic nations, of people who support freedom, we should also support privacy
because without privacy we will not be able to exercise any of our rights in the future.
So the conversation should go into a direction where we normalize privacy and enable it for
everyone because that's a train we clearly missed when we started building out the
internet infrastructure we have today. But I also am very optimistic about this because in
recent years we have seen developments that were unthinkable a couple years ago with end-to-end
encryption and master as decentralized social media. For example, Bitcoin obviously has unstoppable
money that cannot be taken away from you and eCash is also part of that because it allows you to
build systems custodial systems that are private respect your privacy as an individual and also
cannot be censored arbitrarily.
Greetings and salutations my fellow clubs my name is Walker and this is the Bitcoin podcast.
The Bitcoin block height is 832 156 and the value of one Bitcoin is still one Bitcoin.
Today's episode is Bitcoin talk where I talk with my guest about Bitcoin and whatever else comes up.
Today that guest is Kali, an open source Bitcoin and Lightning developer who is currently exploring
Chamean eCash and starred Cashew, an open source eCash protocol for Bitcoin. You've probably seen
a lot of talk about eCash recently on social media but if you're like me you may still have a lot of
questions about what it is, how it works, and what it means going forward. So today's episode will
answer those exact questions and probably answer some questions you didn't even know you should ask.
We also dig into Noster, Scaling, Bitcoin, and even CBDCs using eCash. You can find all Kali's links
in the show notes as well as links to other eCash projects built on top of Cashew. I highly recommend
you check them out. As always you can watch the video version of this episode on Rumble, YouTube,
or X by searching at Walker America or listen on fountain.fm or wherever you get your podcast
by searching for the Bitcoin podcast. If you listen to the Bitcoin podcast on fountain which I
recommend consider giving this show a boost or creating a clip of something you found interesting
and if you're a Bitcoin only company interested in sponsoring another fucking Bitcoin podcast hit
me up on social media or through the website BitcoinPodcast.net. Without further ado let's get
into this Bitcoin talk with Kali. Now we are live. Well again hello and welcome to another
fucking Bitcoin podcast. It's good to see you. Thanks for having me Walker. And so you know we
were just talking a little bit before this. Usually I start off with the question to guests you know
who are you and how did you get here today but for you I want to have the question just be
what are you building today and what is your energy and attention focused on Kali?
So I'm a Bitcoin developer and I started building mostly on lightning which I still do so I was
involved in several lightning projects myself and in recent in the last year I've explored more
and more Chomin eCash which you know I started a project called Cashew which is an open source
eCash protocol built for Bitcoin and that's where I spend most of my time these days building
software for Cashew and talking to other developers who are working on their own projects and working
out a protocol with them so we can all speak the same language and build software that is
interoperable under this umbrella. Beautiful and you know I think maybe for those who are not
familiar or have been too afraid to ask at this point what exactly eCash is. The idea is
obviously been around since I believe the early 80s right David Chomin like 82 wrote the first kind
of paper about it but can you maybe give folks just a little bit of a background and a primer on
how eCash came to be and then kind of where it has evolved to at this point because some of the
early projects were ultimately failures prior to Bitcoin coming on the scene and then that providing
a new vehicle for eCash let's say. So it depends where we want to start because this question is
fairly deep right so but also just we'll just start at the beginning and we can go as deep as you like
so Chomin eCash as the name says was invented by a genius cryptographer called David Chomin
and this was 1982 so this is a precursor to Bitcoin by a long stretch and any kind of
payments on the internet and online payments so David Chomin came up with this idea to build a
anonymous payment system back in 82 that allows users who have a bank account for example to
execute anonymous payments on that bank account because he foresaw already in 82 that most of
our lives will be online at some point and we will be leaving traces for everything that we do and
he anticipated that already in 82 which is amazing to think about because the internet was still very
far away for consumers and so in 82 he came he comes up with this idea called blind signatures and
figures that you can actually make a payment protocol out of this idea and so for anyone who
doesn't know what a blind signature is the typical example that folks like to give in order to imagine
what it's about is a physical one with the carbon paper and we'll do it here again so imagine so
the idea of blind signatures is that someone can give you a signature on a document that they haven't
seen yet but once you present them the document with the signature they can verify the signature
was indeed from them so in a physical world an example might be a contract that you write for
example that contract may say this contract is worth one bitcoin and you put that paper contract
into a carbon paper envelope a carbon paper is where you know you write on top of it and presses
through to to the document below so when you put this original contract the contract says this is
worth one bitcoin into a carbon paper envelope and now send it for example to a bank the bank
might say oh here's a contract and an envelope which i cannot see but i know that you would like
to have a signature on it so please send me one bitcoin first and when you when you've done that
i will sign the contract from the outside and send it back to you so you would send for example one
bitcoin to this bank and the bank then provides a signature on to the envelope and sends you back
the envelope and still close it never opened until now and when you receive it back you can
actually open the envelope and take out the contract and now you have a signature on a contract
that says the bank owes me one bitcoin and the nice thing about this is that this was a blind
signature so the bank never saw the contract which means that when you next go when you take the
contract and go now to the bank and say hey bank i would like to have my one bitcoin back please
and here's the contract with the proof that you approve this then the bank cannot correlate the
signature operation that it did before with the redemption operation that you're doing now and this
is what gives e-cash the perfect privacy basically so obviously this doesn't happen on paper it happens
with cryptography and you're the only person who can open the envelope because it was encrypted by
you and so on and so forth but these are the details the general idea is the same you could
build an e-cash system purely out of paper as well so that is the rough idea of how David Chong
envisioned e-cash to work already in 82 but obviously not with bitcoin because it wasn't around but
on the banking system so replace everything that i said with just dollars and the idea was phenomenal
and very forward thinking and it caused a lot of excitement already in the late 80s and in the
beginning of the 90s and big banks like Deutsche Bank and Credit Suisse and big players like Mastercard
and Microsoft and they were all very very excited about this idea and wanted to build a future in
which we can transact online with e-cash denominated in US dollars to buy stuff online and so on and
so forth however unfortunately this beautiful future that we could have had never came to to
reality because of several operational problems that the company that was building on this technology
called digi-cash made some mistakes here and there you can research it yourself if you're interested
why this business failed but ultimately there was a business failure of this grandiose idea however
in hindsight we can also see that the idea dependent on the cooperation with the financial system so
banks must have been on board in order to really build a system that makes sense right you need a
bank to deposit US dollars to and then get the e-cash and so on so forth so that is also a very big
friction point in the development of the story well then e-cash basically died so this went
nowhere except for some experiments that have been done and no significant or meaningful
adoption of this technology and then we waited all together for around another 20 years and bitcoin
came about so bitcoin and satoshi Nakamoto also directly references xiaomi and e-cash multiple
times and everyone was thinking about xiaomi and e-cash and how to improve that during those times
especially the cypher punks satoshi then found a way to build money that is electronic cash not
quite like e-cash that david xiaomi envisioned but it solved the problem of needing a centralized
server in order to build a monetary system online so again as a just note on that as i explained
before you need the bank running a server for e-cash to work but with bitcoin we don't need anyone
specifically to run a server for us we the system is totally decentralized and bitcoin ultimately
won and now we have a basically a base currency for the internet that everyone is free to use however
they like so that was in 2008 when satoshi invented bitcoin which is around 20 years after e-cash has
died so the history goes that we waited another 15 years or so until bitcoin matured and was here
to stay and also established itself as the base monetary unit for the internet and in recent years
we have seen again new interests pop up in xiaomi and e-cash especially from the bitcoin
from the bitcoin ecosystem so two projects in the bitcoin ecosystem right now are fediment and
cashew which are both xiaomi and e-cash implementations which built on the same idea that are just
described but without the banks so essentially we're building custodial systems in a in a sense
that can issue e-cash to the users without any cooperation of any bank or so you can just build
it by yourself and then offer it as free and open source software and this allows us to build all
kinds of online services that we're already building today but with much more increased privacy and
efficiency and other nice things that you can do with e-cash so to make it very short e-cash
basically allows us today to build something like wallet of satoshi but with almost perfect
privacy so that wallet of satoshi doesn't know that you are a user how much you have in your
wallet and with whom you're transacting i think these are the things that we will be talking
about shortly but essentially and that's the thing to keep in mind e-cash is a way to build
custodial applications with almost perfect privacy and it should have been part of our lives
30 years ago but unfortunately it failed and now we're trying to fix the problem and see
if we can build the system again on top of a free and open source system like bitcoin where you
can innovate without permission that was an incredible primer on that i can i can tell you
may have talked about this before but i i love it that's it's really important background i think
and something that perhaps a lot of a lot of maybe more hardcore bitcoiners really appreciate but that
many i would say many bitcoiners and certainly most of the normie population does not appreciate
is just how messed up our current system for online payments is if you think about just even
using credit cards online like every time you go to a website you want to and you want to check out
you're putting in all of that information i mean and not just not just basically like the private
key to your credit card you know you're putting in all of that detailed credit card information
into an into a form but you're also needing to put your billing address you know all of that has to
match like you are you are doxing yourself and exposing your personal financial information
every time you want to make an online payment that it's really kind of messed up when you think
about it that there isn't another way like you can't really buy something anonymously online
there's until you know bitcoin came along there really wasn't a way to be able to do this and
it's something that i think we've just kind of like accepted as well this is just normal this is
just how things have to be done because we don't have another solution and that's what i think is
so exciting about all of the the e-cash work that's coming out now whether it be fety or
you know cashew is that this is an opportunity to do things right uh to give people the choice
because that's what it all comes down if you want to put in your personal information you don't care
fine but you should have the choice and i think that optionality is so important maybe uh oh yeah
go ahead go ahead yeah just to comment on that because i also think that we've basically found
ourselves in a trap where we accepted the reality as a given and um you know when you look back into
the 90s how it almost succeeded you can see that after its failure and when when e-cash was off the
table then only then paypal and credit cards on the internet really pick up so this was an opportunity
to build systems from the beginning that respect our privacy david charme himself said that in
order to have a functioning democracy you need privacy on a lowest level um in our society is
very well accepted that we need privacy for communication but especially your activity
online when you do small purchases you just you know you purchase maybe an mp3 song or you want to
read an article online and you pay for the paywall or whatever you it is especially the smaller
transactions that uh are not significant in an economic sense leave all sorts of uh scary metadata
about everyone everywhere and we have ended up in a system where this is not only the case but also
wanted because this data is also used to monetize uh on you after the fact that you have paid and
is shared with multiple parties without you really uh understanding or consenting giving consent to that
so uh charme e-cash is an attempt to fix especially smaller payments online and uh to give users back
the privacy where it matters uh which which is mostly online interactions and on a small scale
that we already do every day um every every day and everywhere and i think the other uh the other
important piece there because you know you mentioned both paypal but then credit cards the other very
important piece is that both of those are closed systems that you can be cut off from at a moment's
notice if you buy the wrong thing if you say the wrong thing in a completely different uh silo
and then paypal decides you know what uh sorry this goes against our policies and you're no
longer able to use our service well now now you're screwed you can't use paypal okay your bank cuts
you off you're not allowed to use your credit card it's really uh and i think a lot of americans uh
as an american i'll speak for americans uh a lot of americans do not realize that that is something
that can actually happen to you they they don't realize it because it's never happened to them
but it's something that happens to people all over the world i was talking with kg uh last week who
is building a machankura and one of the reasons he started building that was because his bank
shut down and froze his account because he was trying to buy rights to the bitcoin standard
online and they just froze his account without warning he couldn't get it back that's something
that sounds you know crazy to a lot of americans but uh you know it's just a matter of time before
these things happen to you so it's nice to have options and people don't realize you know if you're
cut off from the financial system you are cut off from everything you know how are you supposed to
exercise your right to free speech if you can't buy a plane ticket to go to a protest how are you
supposed to exercise your right you know again to free speech online if you've been completely you
know shut off from being able to pay for a subscription whatever it might be it's it's a
really important thing both to have that privacy but then to have at least the censorship resistant
capabilities that you know you can continue to exercise all your other rights because money is
really you know being able to transact is the base layer of so many other exercises of rights and i
think that goes over a lot of people's heads they look at them as separate things but they're very
much you know conjoined yes absolutely and this is also i think it's always useful to think back of
physical cash and what what beautiful and simple privacy preserving technology that isn't how well
this is also accepted in our societies and obviously physical cash is being used less and less
everywhere around the world because people prefer the convenience of paying with digital
systems and i understand that because it's more convenient to do it becomes more and more popular
and with e-cash you can achieve a very similar privacy level as with digital with physical
cash by building something very similar to to that in the online space and so i think there is this
nice saying that that says you know if physical cash was invented today it would probably be illegal
and that just gives you this perspective of how fast things can change in terms of what is accepted
in society and whatnot and especially what is deemed okay in society today can change very very
quickly in the future and as as free people of democratic nations of people who support freedom
we should also support privacy because without privacy we will not be able to exercise any of
our rights in the future so the the conversation should go into a direction where we normalize
privacy and enable it for everyone because that's that's a train we clearly missed when we started
building out the internet infrastructure that that we have today but i also am very optimistic
about this because in recent years we have seen developments that were not you know that were
unthinkable a couple years ago with end-to-end encryption and Nostar as decentralized social
media for example bitcoin obviously has unstoppable money that cannot take it away from you and e-cash
is also part of that because it allows you to build systems custodial systems that are private
respect your privacy as an individual and also cannot be censored arbitrarily and we can get
into that later when we describe a little bit more about the privacy features of e-cash how that also
gives you these unexpected features for example such as censorship resistance and perhaps that's
actually a perfect segue into that to talk a little bit about because you use the term like
near perfect privacy for e-cash can you explain kind of what what that means in the context of
e-cash you know the idea of near near perfect yes we can do that so maybe it's useful to first think
about how an ordinary custodial system works today and what what we can call what the systems are
that we can call custodial systems so when i say custodial systems i usually mean a little bit more
than the usual bitcoiner because custodial systems are much more widespread than you would think
so this is not only wallet of satoshi for example which is the biggest custodial lightning wallet
that i like to use as an example and but it extends to things like your kraken account is a
custodial account obviously your bank account is a custodial account but it also goes into
weirder directions for example you could say that your netflix subscription is also a custodial
relationship because you pay upfront and then you expect the service in return stretched over a
window of 30 days for example so if you really want to go into a nuance you can see a custodial
systems almost everywhere and so the way these systems are all built and this is not because
these are evil people because but this is how you can build these systems is using user tables
databases of transactions so essentially a wallet of satoshi server knows that user a walker has
an account and there are 120 satoshis in his account and she received them in the last three
payments from this user from this user and that user so there is a perfect log of all the transactions
for every user in every custodial system and that is because that's just how they work so this is
not to track you this is just to make sure that you can do accounting correctly so any of the
systems that i that i mentioned work like that now e-cache is basically an inverted version of that
with e-cache the server that is the custodian so now let's imagine wallet of satoshi was a cashew
mint so in that case they would not hold a database of users and how much they have and so on
but instead they would give out digital bearer tokens e-cache tokens to every user and the
balance of every user would be determined by how much e-cache they have on their phone so there is
no database in which it says walker has 120 000 satoshis but your balance as the user as a user
is determined by how much e-cache you have stored in your phone for example so the the server doesn't
have a concept of an individual user the server also doesn't know how much each individual user
transacts and with whom they transact the only thing now when you want to send me let's say 500
satoshis from your from a cashew wallet and in that case what the satoshi would be a cashew wallet
then what you would do is you take some piece of their digital data and you send it to me over any
kind of communication medium it could be a telegram message or a QR code or something and I would take
this data and store it on my phone again and so that's how the balance would basically switch
owners from one person to another and the server in the meantime only makes sure that this cannot
be double spent but doesn't know which user interacted with which user and that's what gives
e-cache this quote unquote near perfect privacy and I say near perfect privacy because I like to
be pedantic on this there is no perfect privacy in the universe I guess this can almost be stated
as a mathematical fact but it's also important to to mention the the conditions in which the privacy
could be decremented also in an e-cache system one thing to be aware of is that every time you
talk to a mint there is an IP address for example associated with your request so even if the mint
doesn't know who which user which user you are there is a chance for the mint to figure out which
IP address does which request with the server and therefore they could deduce some kind of properties
of your wallet with that however you can also fix that you can use things like Tor there are also
methods to do the communication to the mint via a network like Nostar where you don't see the IP
addresses of the user so there are ways to also mitigate this risk a bit more but it's still something
that is that everyone should be should be cognizant about I think that that's a good way of explaining
because like you can almost think of privacy like sovereignty where you know there is no
perfect sovereignty right and there's no truly perfect privacy you're kind of a curve asymptotically
approaching that line you can get closer and closer and closer to it but you're never going to be
you know totally at one you're always going to be at you know 0.999 whatever repeating you can never
quite get exactly there but you can do a lot of things to get yourself as close to there as possible
much like Bitcoin will never exactly hit 21 million it'll hit like just below there right
so it's it's about giving yourself the tools to be able to at least move along that curve to get a
little bit closer to get near perfect but I think that that isn't important the the pedantic description
is is is good there because it you know we want to be honest about this like there are always going
to be trade-offs right if you're trying to increase your own personal sovereignty and value open source
technology then head to bitbox.swiss slash walker and use the promo code walker for five percent off
the bitcoin only bitbox o2 hardware wallet it's easy as hell to use whether you're new to bitcoin
or a seasoned psychopath it's bitcoin only and again it's fully open source you can head to
their github and check for yourself there is no need to trust me when you go to bitbox.swiss
slash walker and use the promo code walker not only do you get five percent off but you also
help support another fucking bitcoin podcast this one so thank you and I think one of those
trade-offs that you might see people I'm sure maybe you've gotten some pushback about this too is
eCash is a it is a custodial solution itself right whether that be a
Fetiment and maybe we can a little bit later go into kind of the distinction between cashu versus
Fetiment like one being a more community-based N number of mint mint operators versus you know the one but it is a
number to spend as you don't gotta impossible impchemilar's and also has a situation to be a system as well
know these tables, all of these, they're not trying to track you, but they need to have
that information as a way of doing business versus eCash, where basically you don't need
to know anything about it.
Like I just downloaded the the enut swallow it today, and confused yourself and the actual
developer of it on Twitter in a classic blunder on my part.
But I loved going in there and seeing that there's no data collected.
There is there is nothing that needs to be collected there.
But can we talk a little bit specifically about the fact that the eCash tokens are actually
locally being stored on your device?
They're not somewhere else.
There's not somebody that can rug you from like what's on your phone, but a mint itself
can be rugged to a certain extent.
Can you talk about that kind of because I think that's where people get a little bit
confused.
Yes.
So let's make that very, very clear from the beginning.
The eCash solutions that we're building on Bitcoin today are custodial.
So no one should be confused about that.
And if you're not interested in custodial solutions, you should definitely stay away
from these technologies because it is something where you give up your Bitcoin to the custody
of a service provider.
And that service provider then promises you a certain service.
And that in that case, it would be honoring your redemption when you want to get your
Bitcoin back, for example.
So just that upfront, and I understand that many people are not interested in custodial
solutions and that is totally fine.
Bitcoin gives us finally the option to not care about custodial solutions.
Bitcoin is the only option that basically allows us to do that.
And when you think of the fiat system, however, there is essentially no other way to be non-custodial
than to have the cash on the your mattress.
There is no non-custodial digital way to transact with fiat.
Now why am I saying this is I'm a, let's say, incremental improver.
I think it is worth improving systems that we already use, even if they are not perfect.
And you could also argue that Bitcoin itself is not perfect.
For example, it doesn't scale to 8 billion people without any significant changes that
we would have to make.
And also custodial systems are not perfect.
Indeed, they're pretty bad in terms of your privacy.
And also they have the custodial risk that you can be rocked at any moment.
And eCash does not improve on that.
So eCash does not improve the rugged ability of a custodian.
So the custodian, let's say the operator of Wallet of Satoshi, and I'm not implying that
they would ever do that.
I also like Wallet of Satoshi a lot, but it's just an example that many people know.
The operator of Wallet of Satoshi could close down shop at any moment, or could be forced
to close down shop.
And all the Bitcoin that is on their note would be unavailable to their users.
So and eCash solutions do not improve on this problem.
So what eCash does improve is to take custodial systems that already exist and add the almost
perfect privacy on top of that.
So in that sense, it is an incremental improvement of something that already exists.
And I think that's worth pursuing, especially if you look at the real world activity of
Bitcoiners, especially in the small transaction size realm where we are talking about Zaps
and Tips and small payments online.
Most people use Lightning for that, and most people actually use custodial Lightning for
that and not their own note.
So of course, we have to educate everyone to be non-custodial as much as they can, but
we won't reach any point in a reasonable short future where we will be able to transact
with 200 Satoshis in a non-custodial way with Bitcoin.
And it's not even truly the case with Lightning.
Some Lightning pros out there will know that for a transaction size below the dust limit,
for example, not even a Lightning payment is truly enforceable until it's actually finished.
So we have this problem, and this is a real problem.
Now with E-Cash, as I said, you can improve custodial systems, and maybe it would make
sense to again go one step back and think, like, talk about this distinction between
custodial Bitcoin but non-custodial E-Cash and how that comes together and the way that
we, it comes together in the way that we built your systems today.
So a cash-serve server, which could be run by anyone, so you can imagine this is maybe
a company that runs a wallet, or this could also be an online shop where you can charge
a balance or something like that.
That company or a service provider takes your Bitcoin and gives you E-Cash in return.
And as I said before, E-Cash is a bearer instrument token, so it is a token that the Mint generates
for you, and that is worth, let's say, 200 Satoshis.
So you gave the Mint 200 Satoshis on the Lightning network, and what you get back is a piece
of digital data that is worth 200 Satoshis.
And that's a bearer token, and that is, you know, when you remember my very first example
in this recording today, I mentioned this contract that the Mint blindsides.
This contract is E-Cash, so in digital form this is a piece of E-Cash.
Now it gives you back this E-Cash, and then you store it on your device, and then, and
I mean that literally, it is stored on the drive of your device and has no trace on the
server because the server doesn't actually know what it's looked like because it closed
its eyes that did this blindsigning that I explained before.
So you have E-Cash in your wallet, and there is Bitcoin on the server's wallet.
So the Bitcoin is custodial, but the E-Cash itself cannot be taken away from you because
no one knows, has ever seen the E-Cash except you.
And that's the nice thing about E-Cash in general because now, if the server would like
to send, for example, you walker because you did so many bad jokes on Nostra, and you should
be punished for that, for example, then the server in a classical sense could say, I don't
like walker, I'm going to turn off his money, and your account would be frozen.
But with E-Cash you cannot do that because first of all, the user, the server doesn't
know about you, there is no account or anything, you just hold E-Cash, and the server cannot
take away your E-Cash because it doesn't know what it looks like, it has never seen it before,
it cannot even sensor your E-Cash.
So there is only one thing that the mint operator can do, is either rack everyone, so take the
Bitcoin and run, and then the server is basically down, and this is the same risk that, for example,
I explained, like what if Satoshi could close down and it's over, or no one, so or rack
no one, there is no way to specifically sensor one specific user that I don't like, and that's
the beauty of E-Cash, and something also I think is a bit unintuitive because as Bitcoiners
we always know censorship resistance, and we equate it with custody basically, or having,
you know, being sovereign, and that is very strongly coupled in the case of Bitcoin, but
what E-Cash taught me is also in a custodial system, like with E-Cash, you can still be
censorship resistant, and that's maybe surprising for some because usually you wouldn't expect
that something where you have to trust the custodian is not able to sensor any specific
user, and that is the case with E-Cash.
I think that's a really, you're right, it's a bit counterintuitive, but it's an important
point, you know, yes, it's either rug all or rug none, it's like there is greater privacy
and greater censorship resistance when there's strength in numbers, it's like the zebra,
you know, the zebra by itself sticks out, right, but a zebra in a herd is just a bunch
of stripes, you can't tell who is what, they're all the same, right, and so you can't single
out a particular zebra, you need to decimate the entire herd, right, but in with E-Cash
there is still the rugability at the server side from the mint operator to take all of
that Bitcoin, in which case then that's not going to be a trusted mint operator anymore,
nobody's going to use, if you know, if you rug everybody, nobody's going to use anything
you create in the future, and you can't just rug one person, you can't single out walker
for his terrible jokes and say, I'm taking just that guy's Bitcoin, so I think that
that's a really important distinction there, and one that is easily lost because we tend
to, as you said, we tend to think, okay, you're either, you know, totally unruggable, or you
are rug-able, but in this case, yeah, you're rug-able, but only if every other person is
also rugged, so it doesn't remove that risk, it just removes your ability to be individually
censored because you are, have that near perfect privacy, and you can't be distinguished from
that other herd of Bitcoin-zapping zebras, which is kind of a nice visual that maybe
I'll have to have AI generate.
So actually, and this is a good segue into a question that was posted on Noster that
somebody wanted me to ask you, is eCash cryptographically verifiable in an offline state?
So it's being, you know, is the, like, can you verify, yes, this is in fact a, you know,
my eCash token, it is here, it is related to this mint, even if you are offline and
don't have connection to the mint at that time.
Okay, so we're starting to get into the interesting bits of the crazy things that you can do with
eCash because right now we've spent quite some time in explaining how the custodial
risk situation is and the privacy, but eCash offers also some cryptographic magic that
you can use to build really cool systems.
So to answer the question, eCash tokens themselves, they have a signature of the mint.
So as I explained in the very beginning, there is a contract that you have written, the mint
has never seen, and there is a signature of the mint on that contract.
So anyone can verify that signature, that means that if I show you, you're offline
and if I show you a piece of eCash token, you can, because you have remembered the public
key of the mint before, you can verify the signature and say, yes, this was actually
signed by the mint.
However, so we haven't talked about this, but maybe it would make sense to do it right
now.
What an ordinary eCash transaction usually looks like.
So imagine I have some eCash in my wallet, it's stored in my wallet and Walker, I want
to send you 200 Satoshis.
Now as I explained before, maybe the smart attentive listener already noticed that I
was sending you a bear token via QR code, for example, what basically hinders me from
double spending the same token to another user.
Let's say you want to sell me an apple, I give you the token and while you're giving
me the apple, I buy a banana with the same token and now I have a banana and an apple,
but I paid both of them with the same piece of money and that would be obviously bad.
So for a normal eCash transaction to finish, we still have to make one more step, which
is I take the token and I send it to you.
And now before you give me the apple, you take the token and you send it back to the
mint and say to the mint, hey mint, here's 200 Satoshi token that you have never seen,
but please give me another one in return and burn this one.
So the mint basically upon receiving, you will send it to the mint and receive a new
token immediately.
And with that, I'm not able to spend the same token that I gave you to another person.
So that's how the mint makes sure that eCash cannot be double spent.
So that is cool.
That is usually how every normal eCash transaction would work.
But now what happens if you're offline?
I say you now as a receiver, you're offline and you cannot talk to the mint immediately.
So one thing that I could do is I could give you eCash with a signature and send it to
you.
And while you're offline, you will, you're able to verify the signature of the mint and
at least know that this is a valid token.
It was validly signed by the mint.
So this token was created at some point.
However, the transaction is still not complete because you don't know whether I've spent
this token, even though you verified the signature, whether I spent this token to anyone else.
And so how could you fix that?
And to enable truly offline payments where the receiver can remain fully offline, but
the payment cannot be double spent, you have to do some a few tricks before.
And the trick we use here is called Pay2Pupkey.
And Pay2Pupkey is a transaction type that we also know from Bitcoin.
And essentially what Pay2Pupkey means is that you as a receiver, now you would give me your
public key and it's usually in Bitcoin is in form of a Bitcoin address.
A Bitcoin address is a public key, so to speak, in most basic case.
And now what I can do is I can spend Bitcoin to a public key.
And that means in the blockchain there will be an entry that says from Kali to Walker's
public key sent to Anasatoshis.
And now the transaction, now for you in order to be able to spend this Bitcoin again, you
would have to make a signature that proves that you have the private key to the public
key that you have given me before.
So that's how it works in Bitcoin.
You give me your public key and I send money to your public key and you can only spend
it once you give a signature from your public key that only you can do.
That's how we secure most normal Bitcoin transactions.
So with eCash we can do something quite similar to that and it was indeed also inspired by
basically how Bitcoin works.
And what we do essentially is the same situation as before, you are offline and I am online
and I want to pay you.
Let's say you have a little small like a pharmacy shop and you want to sell apples
but your internet connection is bad.
You can still receive eCash that cannot be double spent by giving me your public key
in form of a QR code for example.
And what I can do now with the eCash on my phone for example, I can send it once to the
Mint and redeem it for new eCash but this new eCash is a little bit more special.
This new eCash that I redeem for my own eCash is now locked to a public key similar like
a Bitcoin transaction is locked to a public key.
So I just communicate with the Mint once and redeem like send the Mint 200 Satoshis
from my phone and I received 200 Satoshis again from the Mint but this time I cannot
spend these 200 Satoshis anymore only you can spend these 200 Satoshis because it's
locked to your public key.
And that means now while you can be offline I can send you this eCash token and you can
just look at it, essentially just look at it, verify the signature of the Mint and say
okay this is okay and then verify that it was indeed locked to your public key and say
this is okay and then the transaction is complete and this is quite magical because this token
now once you have seen it only you just have to perceive the token once you can be sure
that it cannot be double spent by anyone else and the transaction is complete.
So this is cool because you don't have internet, there is a final transaction, we just did
a half offline transaction and that's very cool but this idea you can just go crazy with
this idea and this is what we're doing obviously.
For example what you can do with this is also ultra fast payments and like I need to say
ultra ultra or some even more extreme form of that word because I think this is the most
the fastest possible payment that I can think of is now imagine you're an offline service
provider sorry you're not offline you're a service provider and you want to sell me
individual video frames of a YouTube video right so you want to get paid 25 times a second
let's say you want that.
Now what I could do as a user of your service I could take eCache and pre-lock all of the
eCache to your public key and keep it on my drive and then send for each frame that I
request from you I can send you eCache during a direct channel between us and you can just
look at the eCache you don't even have to do a round trip with the Mint which would take
some time you can literally just look at it and store it in your database and the transaction
is complete and with that I can send thousands of payments to you that all will succeed with
100% certainty and that all will take maybe I don't know 15 milliseconds or depending
on the internet connection between us to to reach you and so this is something that we're
exploring and with this payment types you can probably scale this to the thousands of
payments per second type of situations for extreme streaming kind of situations where
you want to do value for value on a I don't know second or millisecond basis or couple
hundred millisecond basis and so on.
That is a pretty wild concept to think about and and the your explanation of the kind of
offline very verifiability makes a lot more sense to me now because that's something I
was kind of wondering about as well I was glad to see this question get asked it means I'm
I'm not alone in my curiosity there so that's basically for to just very simply recap
if you have these eCache tokens and you want to send it to me and I'm offline
as long as you know one person you have a connection to the Mint you can lock them
to my public key and then when you receive those back I cannot go and send those to
you know to Pablo or to to Will there or excuse me you cannot they're just locked to Walker
that is now Walker's eCache and when I come back online reconnect with the Mint I will then have
those eCache bearer tokens in my own custody correct exactly that's exactly how it works yeah
that's really I mean really cool and the the ability for so this is when you talk about
micro payments kind of at scale and at ultra ultra ultra speed we're talking actually faster than
lightning has the capability of communicating to right it's actually like on another level
from lightning or do you put it at comparable to lightning oh yeah it's it's strictly faster than
lightning so lightning is already pretty fast if it works well right you can get a lightning
payment in under a second but I'm talking below a few dozen milliseconds here so a lightning payment
can also be very fast in special cases for example when you have a direct channel and you don't do
any lightning routing you can also get to very impressive speeds with lightning but most payments
won't be over a direct channel for some high-speed applications that might actually be useful to
set up a certain situation where you have a direct connection between two participants of a transaction
but in the normal case this won't be the case this won't be so you would usually do a couple of
hops until you reach the destination and then information again needs to travel backwards
for the transaction to be complete here in this case I can I could send it to you via a laser
signal and then we could do a transaction with the speed of light basically as long as you can
read the data then verify the signature and store it in your database and that's all you need to do
and I mean in for fast modern computers these operations don't take more than one millisecond
together so most of the time is spent on the way to you through the internet but with a
technique like with something like a QR code scanner for example then that's pretty much instant yes
that is really quite cool to think about that you know lightning already being insanely lightning
fast but to take that to another level where you are you're talking about really as near real time
as you could just about possibly get with this while still also dealing with a bear instrument
which is pretty powerful and I think that that's maybe one thing at least for me and I think for
some others probably when first hearing about e-cache is something that maybe trips people up a
little bit because they hear about e-cache and these e-cache tokens and perhaps it's because of
all of the crypto world jargon that's thrown around about tokens and everything else people get a
little bit confused and think well hold on am I not dealing with bitcoin here and I think what
you've kind of explained in these couple of these previous notes that you've made is that
the the bitcoin these are represent or these are bear assets that allow you to redeem bitcoin
from the server the server the mint operator mint issuer has the bitcoin these are bear tokens in
your custody that allow you give you the claim basically to say I want this bitcoin right now
I want the you know 69 420 satoshis however many it is but I have the digital bear instrument that
allows me to do that and something you touched on earlier is something I've actually been been
thinking about a lot recently which is in the fiat world the only way to custody to actually have
self custody of your of your fiat tokens your dollars in my case is to have them in cash you
know literally physical cash that is the only way there is no way to have custody actual self custody
of digital fiat instruments it's it's impossible it's only I mean even if I mean in the case of a
cbdc you would still you certainly don't have custody then if it's on your your fed federal reserve
wallet they can rug individual users with startling precision and accuracy it is you know and if
you're using a bank we all know the money in your bank is not really yours they're they're holding a
an io for you but that can also be taken from you you know so I think that that's a really
important thing that is often lost yeah cash is cash is wonderful I found myself starting to use
physical cash more the deeper I started going down the bitcoin rabbit hole because I was like well
man you know cash is actually pretty wonderful I can just hand this to somebody and it's theirs
and nobody else needs to be watching this transaction that's a beautiful thing e-cash is
now giving you the ability to have that digital cash like bearer transaction with the same amount of
privacy you know because cash okay you and I give each other a you know I give you a ten dollar bill
somebody could still be watching and sees that I handed you a ten dollar bill sure it's not perfect
privacy there either but it's near perfect especially compared to using a debit card using a credit
card using whatever else so that's a pretty pretty incredible thing I think maybe I'd like to talk a
little bit about the overlap between e-cash and noster and how you've uh no it was you that created
n pub.cash right uh no that is also not you man I am I just assume anything to do with with nuts
and uh is just related to you so this is again no I need to make some apologies I work a lot on
cashew and I started it and but most of the work that people see today especially the visual stuff
in apps and all the beautiful things that people have been building is from the community so there
many different developers who are building on their own project on the cashew protocol and
and I can recommend for example the enauts a enauts.cash wallet or for android users also the
minibits.cash wallet these are two very excellent phone wallets that you can try today to play around
with charming e-cash and cashew and n-pop.cash was made by another hacker not me and that is a
website that allows you to receive e-cash tokens using an ossa public key and should we talk about
what we do on nosa with e-cash? I would love to yeah and and I'd like to apologize also to the
to the developers out there I'll make sure to get the uh I'll link all of this in the show notes
so I can give proper attribution but for anyone listening I apologize. No worries I'm pretty
sure they will forgive you so um uh nosa yeah so uh as I said before for e-cash to be transmitted
from one person to a person you need some sort of a communication channel and um the easiest way
of doing it today and you know remember an e-cash token is a bare instrument and what it actually
looks like for a user is it looks like a random piece of string it's a piece of data like a
scrambled random piece of string that always starts with cashew and you can copy this piece of string
and you can put it into an email and send it to your grandma for example and your grandma will see
this piece of uh data in the email and then just take it and put it in her e-cash wallet so that's
how the transaction could work um you can also do it with uh QR codes or whatever you want basically
to send around data between phone and phone and user and user and so on so now obviously uh as
bitcoiners we're very focused on on noster as a social network that uh that an unruggable social
network that cannot be turned off and so on noster uh and it turned out pretty quickly when we started
working on cashew which was coincidentally very close to uh when noster got uh was picking up
um we noticed very early that noster is an ideal place to send around e-cash uh from and to users
um because it has several very nice uh features that we can make use of in cashew so um first of
all in noster everyone has an identity uh you have an n-pop everyone knows that that's you it's
not just an impersonator i can look up your follower account and see this is indeed you and it's
legit and so on so there's kind of a identity and a web of trust already just by being a social
network with people interacting with each other and that is already a huge huge thing i think
it's still undervalued this property of noster and uh i have to remind you like the the last successful
attempt at doing something like that was pgp and it's very very old like you would have key servers
and people would have to attest that they know you and so on like was very uh very chaotic and not
really useful at least from from point of view of today and with noster you just get that for free
by just following someone shitposting with them interacting and then you get some credibility
that this is indeed the person and so we have that and at the same time we also have a network to
send around uh notes and other things transmitted over relays right so um while most users know
noster from uh this it's social media application site uh many app developers also really love
noster because they can use these identities uh on a network that also provides you the rails to
send the data to these identities and in the case for a cashew what we do is essentially um i think
all cashew wallets today have some sort of a noser capability and what you can do in them is
you just when you have your wallet open which says a thousand set horses in your ballots for example
you can click on a on a contacts tab and then you will see all your friends that you follow a
noster and with a click of a button you can just send money to them even if they don't have a cashew
wallet you can just take a piece of e-cash from your wallet and send it over an encrypted direct
message to them so what they will see if they don't have a cash wallet they will just see
a random string appear and if they have a noster client that shows them the e-cash in a nicely
visual rendered form like an amatrist and and snored and i think i believe it's coming to primal and
it's already also in uh nostrital i think so then it will show up as a nicely rendered e-cash
token uh payment made to you so you will see that kali just sent you a dm and in that dm there was
some money for you and if you have a not if you have a cashew wallet that supports receiving
a noster it might even see that automatically and immediately you will see it in your wallet
balance just go up so i can pay you directly using a noster relay between us basically and only you
can read the message because it's a direct message that is encrypted so this is what we have been
focusing on so far and this is what the apps have built and now in the last couple of days we have
uh you know uh more fascinating and interesting stuff coming up so one thing that you mentioned
already is npop.cash and this is a this is a service that basically gives every noster user
a lightning address whether they know it or not so uh with npop.cash you can basically it generates
an infinite amount of the different uh lightning addresses so you can think uh your npop so it
might be the scrambled number your npop at npop.cash is a lightning address that works and if anyone
sends bitcoin to that lightning address uh the the lightning payment to that address will be converted
into e-cash nuts and they will be stored or waiting for you to pick up on noster but they will be
stored until you come back online and then you can go to npop.cash log in with your uh noster
uh signing extension so there are no user signups or accounts or any shenanigans like that uh you
just sign up with your signing extension and then you see the e-cash waiting there for you that was
generated while you were offline with a click of a button you can either pay directly to your
lightning wallet or you can redeem the e-cash directly on a different cashier wallet so this
is one project i'm very excited about because we're building it in a general way so that it can be
used also by other cashier wallets as a backend for lightning addresses so instead of every cashier
wallet having to implement some way to do lightning addresses for them we imagine that npop.cash
will will have a nice api that can be used by anyone also be run by anyone themselves so it
doesn't have to be on on that domain and you can get a lightning address support for every
e-cash wallet basically that way that is it's really cool and i just uh yesterday or the day
before i started playing around with with npop.cash and for anyone listening you can just go to
npop.cash on your browser and you can try this out you can claim a username uh for a few sats or
you can just use your as uh as callie said your existing npop and then it'll just be at npop.cash
it's really easy to use and i just you know signed in it was using albie so just you know
use that browser extension to securely sign and then i'm good to go it was super easy um
i'm curious because there's a little bit of a difference between that and enuts now enuts when
i was setting that up which is now live on the on the app store i think the play store too i'm
not sure but i know the app store for sure uh because i've just downloaded today you can search
enuts uh on there i did not have to do any sort of did not have to sign it with my private key
i just had to put in my public key and then it said that it was deriving a special private key
for me based on that public key so there was no no need to do any sort of secure sign in there
no data collected of course can you explain the difference there so that's not uh is that basically
specific to the enuts wallet then on my device it's deriving a new private key for me based on my
public key because i populated my whole address book i sent i sent 69 uh sats to you in the form of
uh some some e-cash uh because it was super easy i just searched for calle boom all my
nos to contacts are imported i sent it done but can you explain the difference there between
uh kind of n pub dot cash versus enuts and maybe if there's uh you mentioned opening up an api for
n pub dot cash that obviously gives a lot more interoperability uh benefits but are there some
other benefits to the deriving a new private key from the public key like enuts does uh so this is
something that the developers of both enuts and minibits are currently exploring is what are the
ux implications for both of these methods because um so um it would be best if the developers themselves
would comment on this but uh from what i have witnessed there there was in the beginning
uh also a concern about privacy and data safety to ask users to enter their uh
insects or their nos to private keys into yet another application um that means that if you
don't want to do that that means that the app that you're using cannot read your direct messages
so what i just explained with someone sending you uh e-cash to your uh nos to account uh the wallet
wouldn't be able to see that in order to circumvent that both applications minibits and enuts do it
slightly differently but essentially they derive you a new set of keys so it's a new private key
that is only associated with that wallet and all the direct messages to that private key and public
key pair that are going there will end up in your inbox that the wallet can then pick up so it adds
uh definitely some privacy not everyone uh on the on the nos the network can see who paid whom
because on nos to you can see all the activity uh metadata and so um it definitely improves the
privacy however it also causes some uh a little bit of confusion for the user itself because the
user now needs to know uh okay i have my social key now i have my wallet key and then there is
another key and so this has to be communicated either very mindfully to the user or some other
technique should be considered i guess so they might want to consider also entering your
insect eventually i don't know or using something like an insect bunker what publu is working on so
have a remote signing uh software running somewhere else that can sign without you having to enter your
your um private keys into the wallet itself but at the end of today both work with nos their
identity so as well as npub.cache or inots and mini bits and the idea is mostly the same i want to
be able to know your npub or a npub that reaches you and i'm just throwing e-cache to that npub
and whoever has the private keys for that npub can read the e-cache and then redeem the e-cache
okay okay so there like with anything there are some trade-offs the uh
version that enuts is using could be argued that perhaps it's a little bit more private
because it's not actually uh associating like it's creating a a new identity derived from your
existing uh social npub that you're using so it's you know it's again a question of optionality a
question of choice what does the user want to do if they want to use you know npub.cache great that
will be signed with their private key via a signing extension if they want to use enuts they just need
the public key and you'll get a new private key derived from that and some some trade-offs to both
but okay i appreciate that clarification because i was kind of uh wondering a little bit about that
there um i'm curious can you talk a little bit about just uh where you know what are what else
are you excited about in terms of building on noster or the implementations that may be possible
that are that are now made possible on noster because of e-cache do you think this is you know
you mentioned that a lot of these noster clients are implementing uh implementing cashew already so
they'll be able to have that back in back end and interface with all of these other services that
are being built around e-cache but you know what else as you look toward the future uh what are you
kind of excited about there that you see wow this is something big with these two things together
noster and and e-cache we can now do things that we could have only you know hope for at an earlier
stage um so i think what what comes to my mind here is especially improving zaps on noster right
now we have uh everyone knows zaps and loves zaps and it's also one of the reasons that noster is so
extremely fun to use is that you can get lightning zaps a lightning tip a small very small lightning
payment to a post that you make and if it's a good post then you get even more and that that really
drives the social uh layer of noster and um that is great i think but one of the um one of the
downsides of this is first of all uh obviously it drives people to use custodial systems um we
have seen from statistics that i think around 90 percent of all the lightning addresses on
noster are custodial and i would argue using a charming e-cache custodian would be strictly
better for your privacy there so there is definitely something that we can improve in what we do today
just by using for example more using cashier wallets and building cashier wallets um but another thing
that i think we will be able to do very soon this is something that we're working on kind of right
now is to also do zaps that are not lightning but zaps that are e-cache so we want to be able to uh
tip a post or a person very similarly in the ux like it is right now but the payment will not
be a lightning payment but it will be an e-cache payment and that e-cache token and it's perfect
again for noster because the token the data itself is the payment so you don't have to query a lightning
server and then the lightning server has to respond back to the noster network and give some sort of
a certificate and this is how zaps work today it's kind of a complicated thing but it it must be
it must be done like that um because the noster network itself doesn't have any way to verify
that the payment was made actually so the the lightning service provider that recedes the zaps
actually gives back a receipt for everyone to to see and then render that you know 200 satoshis
was was tipped to this post so we want to improve that with e-cache namely by combining all of the
things that we have already talked about today so it will be possible to you know you will write a
post on noster and if i like this post in my noster client i'll just press a zap button and instead of
doing a lightning payment it will take some e-cache for my balance and just and lock it to your public
to your n-pub so we can lock the e-cache to your n-pub very the same thing as i explained before
with paid public key and we can also give this proof of the signature so that i can post this
and this e-cache token just check that it's a valid signature from the mint and they can just
look at the e-cache and see that the signature is indeed valid and they can also check that this
e-cache token was locked to the intended recipient so for example i'm zapping you
everyone can check this is actually your n-pub so they can see that there was indeed there must
have been a payment from one user to another user for this specific post and that's all you all you
need basically in order to be able to render the the zap counter in your noster client and everyone
will see that 200 satoshis have been zapped to that post and this is really cool because it opens up
many new possibilities of things that you can do for example the clients themselves could first of
all the noster clients themselves could first of all just decide that they will only render zaps
from e-cache mints that they know that they are legit so it's not they could decide that only a
set of mints will be rendered and the other ones are just random mints that they don't like or
don't know or don't trust so they wouldn't render them that's possible another thing that is also
possible is that you can even use this with different currencies so e-cache itself as i said is a
separate technology from bitcoin but we are building it on bitcoin and for bitcoin but so i know that
fiat jeff would like to separate noster more from bitcoin because there is this this need for more
users from a diverse group more diverse group than just bit corners i mean you could argue about that
whether that's a good idea or not but if you would want to do that you could even do i don't know fiat
zaps if you like or some other currency or just do zaps maybe that are not backed by anything it's
just a play money a zap money that was issued by the noster relay or something like that so it gives
you more flexibility for the payment actual payment currency that you want to support and it
allows you to do crazy scripting on top of the e-cache so you could do i don't know a multi-sig
e-cache zap or do a e-cache zap with a timeout that you can redeem back if the user didn't redeem it
in a in let's say in a two week period and things like that so all of these things are are then
just possible with e-cache because you can because you can use all the different features of e-cache
and just use it on top of a social network that's that's really cool i mean do you think that we see
uh like individual noster clients just becoming uh mince themselves so they say look you can you know
we'll we'll basically issue tokens uh as you know we'll be the we'll be the server here we're already
providing you with the service like basically you see you start seeing more integration between
the the e-cache wallet and the noster client just kind of blending into one almost is that
something or do you think they'll stay more uh more separate and just kind of tie into each other as
we're sort of seeing now i think for now it will probably stay more separate because uh these are
two very different uh obligations or responsibilities running a mint and running or running a noster
relay or writing a client for noster however i can see how these things merge in the future
because e-cache allows you to also monetize uh all sorts of things on your own like digital
monetization of your content or service on the internet so i myself i imagine e-cache means to
not only be run for custody for for bitcoin wallets the way that we're using them today but they can
also be run uh in the back end of a digital service provider so i mentioned already the video
streaming service for example that might want to run mint just for the video streaming service so
and now we're not talking about an interoperable money like satoshis but we're talking about
access right to a service that is paid by satoshi so you can do these closed systems of e-cache
where you just want to provide your users perfect privacy and enjoy all the other cool things that
you can do with e-cache and there might be this video service but it could also be a noster relay
provider and i believe a noster relay provider could could try to fund its operations like that
very easily so you could offer you could just run an e-cache mint next to your noster relay
and users of the noster relay would have to top up a balance and you would maybe get like a certain
percentage of that as as some kind of a fee and the rest could be useful as apps for example so
i can imagine how services generally trying to monetize will use e-cache because it just
is way easier to integrate than a normal uh table-based custodial system where you need
user data and so on and so forth with an e-cache mint you just run the mint it just checks for
double spending and that's it so it's much easier to implement in one side at the same time you also
get like perfect privacy for your users which is a great thing to offer obviously okay okay well i'm
excited to see kind of how this continues to evolve because just you know playing around with it
already it's uh it's it's just fun and by the way uh how did you decide to just uh to call cashew
cashew and to call uh e-cache nuts and like was it just a fuck it let me let me name it this or
was there uh is there something like technical behind it that gave you the idea to call it that
well actually it's a good question so it's definitely a fuck it will go with this type
of situation definitely the energy is very you know joke heavy and we like to have fun i mean
we're spending most of our time working on this stuff so we we demand to have fun while doing so
and this is our attempt by just making everything a bit more joyful by making jokes and our theme
is nut based because i think it started with the word cashew because you have cash in the word cashew
and i just love cashews this literally true i'm doing a little obseq fail here but i'll tell you
i eat my 200 grams of cashews every day because i just love them so much so maybe not every day
but i'm exaggerating here so i love nuts and well nuts are atomic there are small little pieces you
can send them around so it's nice to imagine and somehow this meme got much larger than than the
project itself by now so everyone is just going with it and we'll we'll see how far we can drive
this nut i love it and i love cashews too for what it's worth they're they're a great nut okay
because i was always curious about that i was like is there something deeper but and i like that you
know the cash the cashew it's a great nut these nuts roll with it i like the idea you should have
fun when you're building building really badass open source tech i think that's a that's a good
goal to have there um another question for you because i think people there's obviously a lot
of talk about fediment right now and a lot of talk about cashew these are two different protocols
can you explain a little bit the difference between kind of the federated model of fediment
uh the uh non federated model of cashew and then where the crossover is because they're
both still dealing with e-cash but with kind of different purposes for their uh like what their end
use case is right yes exactly so um fediment is an amazing piece of uh engineering so it's a federated
e-cash system which means that now uh almost everything that i said applies uh to to fediment as
well so it's an e-cash system the charming e-cash system works very much the same with a bit of
different cryptography so it's not interoperable with with cashew in the sense that you cannot
take a cashew token and pay it in a fediment federation or vice versa but the underlying
principles are very much the same so you pay your bitcoin to a service the service gives you some
e-cash and then you transact with the e-cash inside the system until uh you want to make a bitcoin
payment again so that's also how fediment works but the crucial difference between um cashew and
fediment is that you have a federated mint and that means that a single mint in in the case of
fediment is not run by one party but by n parties so let's say you have a quorum you can also have
a quorum so you have a quorum of three out of five for example that will mean in the case of
fediment that there are five different servers and they all have to agree or at least three of
them have to agree in order to make one e-cash payment and that is great because first of all
it's a big engineering challenge to do that and they've successfully done so and secondly it improves
the rock risk for the entire mint substantially so that means obviously if you just trust one party
uh then you have to put all your trust in that party and in the case for fediment you have you
can spread your trust across multiple participants and they would then have to collude in order to
take everyone's bitcoin and runaway so that really improves the custodial risk of fediment
and i think that also fits a lot on their kind of mission uh that they are following and as far as
i understand fediment is all about community custody so they want to give people the ability
to transact with bitcoin if they cannot run their own lightning node or if they cannot use
on-chain payments themselves because of fees and complexity and so on and so forth so in that case
fediment allows you to you know find a trusted group of people and then deposit your bitcoin
there and use their e-cash service in return and and that's great for cashew cashew also allows you
to build a similar system so you can imagine a wallet provider for example running a cashew mint
but it's always going to be at least for the time being it's going to be a single trusted party
that that you give your bitcoin to and then you use their e-cash system now the the reason why
we don't consider a federated model right now though is that we really want to focus on the
efficiency so the goal of cashew is to build a system that can cover a very wide range of
applications so we focus a lot on the protocol design and spelling it really out for other
developers to implement and we want multiple implementations to be there for different use
cases and when i say a wide range of applications i mean very small scale applications like a
single website with a few hundred users that wants to run an e-cash mint for one specific purpose
for example or an e-cash mint maybe even running on a small integrated board of you know low value
hardware because you have a vending machine somewhere for example that wants to use e-cash
so it should be applicable for these very small scale scenarios but at the same time we're working
also on making this system scale to thousands and tens of thousands of concurrent users so
we want to build cashew such that you can do tens of thousands of transactions per second
which is the scale you need for very big applications if you can imagine i don't know maybe it's
going to be the bitcoin banks of the future maybe it's going to be the social media providers of
the future that have some kind of an e-cash mint running and they need extreme levels of throughput
and this is something that you cannot really achieve if you have a federated consensus system
that also needs to where you have five servers to always keep up with everyone else and so that
just introduces delays and complexity but again Feddy Mint is amazing software i urge everyone to
check it out and i think for cashew we will we will see wallet providers doing that but we will
also see more exotic and diverse use cases of e-cash that i can probably not think of
already now i appreciate the clarification so we you could essentially in a very simplified way
think of it as cashew single sig versus Feddy Mint multi-sig in terms just at a way of thinking
about it you know you've got you know whatever x of n versus just one of one in terms of the the
model for the mint itself but the actual e-cash the issuing of the bearer tokens that is basically
you know besides some cryptographic differences essentially the same concept there fair summary
yes there's a good summary okay so i have a i want to be conscious of your time here and i have
two other small things i want to get into well they're actually i lied they're they're not small
but they're big questions but i'll go to the the first one that i think is perhaps more
more generally interesting to people which is you know you talk about scaling you mentioned
earlier and i think this is pretty well known is that bitcoin self-custody in its current state
is not going to scale to eight billion people right this is has been known by people who are
familiar with it for some time it appears that others folks perhaps on on twitter are just now
figuring this out but i'm curious because when i the more i learn about e-cash the more i look at
it as a scaling solution a way to scale on top of bitcoin at another layer of bitcoin to utilize
bitcoin still has that base layer money still has that reserve that's being kept in the mint
but give people a privacy preserving a better privacy near a perfect privacy way to interact
with bitcoin also very very quickly i view that as a way to scale bitcoin to many many more people
but then there's the question of scaling bitcoin at the base layer and changes to be made so i'm
just curious as somebody who has worked on bitcoin on lightning now on e-cash you have a really good
holistic perspective of this entire space starting from the base layer through the other layers
how do you approach that problem just from like a logical perspective how do you think about
scaling bitcoin versus scaling bitcoin in layers if if that question makes sense
yeah so in this in that question i'm also a little bit pedantic and i think here in this case
is even more important to be pedantic because the question of scaling bitcoin is really something
that you can attack from many different angles when some people say scaling bitcoin sometimes
they only mean scaling bitcoin economically in a sense that more people participate in bitcoin
somehow so for in some sense you could say that coinbase is scales bitcoin because tens of hundreds
of i don't know maybe millions of users use coinbase and use bitcoin in some way even though they
these users won't be touching the base chain don't hold their own keys and in a very strict sense
are not using bitcoin but they're using a database that coinbase provides so there's this way of
looking at it but the other more challenging and more important way of looking at bitcoin scaling
is the technical scaling of bitcoin and what do we mean by that and usually what we mean by that is
scaling the number of people who can use bitcoin in a sovereign way and a sovereign way means
that you hold your keys and you hold your keys and your money cannot be taken away from you
even if you don't cooperate or if you or if you're part of a layer that also means that you
should be able to exit that layer at any moment once you don't want to use this layer anymore
so let's take lightning as an example and why this is a true scaling technology for bitcoin
is in lightning you put your bitcoin into a multi-sig with someone so you hold keys you're not the
only holder of that multi-sig keys it's also your channel partner but and then you can use bitcoin
very very fast and it scales greatly and the number of bitcoin transactions can go 1000x or
something like that so and crucially you can also exit lightning whenever you want so even if your
peer goes offline you can always force close the channel and then if you did something wrong your
peer will be able to punish you in the in the way that currently lightning currently works
but it's very important that you can you can choose to exit the relationship at any moment
and you pay your on-chain fees and the bitcoin is again in your hardware wallet so and that I think
that is a necessity for anything to be considered a scaling solution for bitcoin and I say this
you know from a people tell me that tell me that e-cash scares bitcoin or cash use scales bitcoin
and I tell them no it does not so as bitcoiners we cannot and I see this over and over in in
discussions and I just want to be very frank and direct upfront with it e-cash does not scale bitcoin
e-cash is just something that was waiting for bitcoin to exist so we built e-cash is separated
from bitcoin it allows many more users to participate in bitcoin economically but it does not change
the fundamental issues of bitcoin which are scaling related so as bitcoins we cannot be lazy
and just hope that some form of custodial system or delegated system or anything you know federated
custodial system or something will save our assets and and kind of fix the fee or block size or
or transaction speed or UTX or ownership problem however you want to express it so don't get lazy
and don't see e-cash as a solution to the to the scaling problem because it is not and so
so that ramped aside I think there are still ways that we can scale bitcoin and this goes into
direction of covenants for example is a topic that is being discussed very very actively now and it
allows solutions true scaling solutions like the lightning network also offers in a in a sense
that now we're thinking about a lot about UTX or co-ownership so instead of just being able to hold
your own UTX OS maybe one UTX or could be owned by multiple people and they could be in a kind of
an arrangement together where still everyone who wants to exit that arrangement can do so at their
own will so these are there are still these these conditions for a true scaling solution where you
are sovereign and you hold keys and you can exit whenever you want these are the goals of scaling
solutions for example using an opcode update like opctd and all the different proposals that we've seen
like ARC or payment timeout trees and so on so forth so there are multiple things on the table
but again I want to say eCash is not one of them eCash allows us to build the best custodial systems
that exist today anywhere and and it also allows us to improve other payment technologies or monies
so to speak so you could even you know fix fiat banking with eCash but obviously that is not a
way to scale bitcoin so just making that example I'm making an example to make it very clear that
it's a separate thing and it does not improve or fix the base layer of bitcoin which is some
that which is what we should focus on when we talk about scaling I really appreciate that clarification
because it is very easy to and I'm sure that I myself am guilty of this at times of saying that
this you know as I just said you know oh is eCash a scaling solution for bitcoin I appreciate the
clarification that no it is not it is separate it provides a valuable service that bitcoin happens
to be the perfect monetary medium to use with that service which we did not have before until bitcoin
was was discovered but it is not a strict scaling solution for bitcoin itself so I appreciate that
clarification and the last thing I wanted to ask you which is perfectly segues from the last thing
you said which is fiat banking rails and eCash I know that I think the Bank of International
Settlements put out a report I want to say was maybe in in November maybe it was before that
but it was about a project Turbulin or something similar to that where they're basically trying to
demonstrate eCash or cash like anonymity for CBDCs using eCash I know this is probably a very big
topic and we don't have much time but can you just give me your kind of overall thoughts on this
and do you think that we actually is this just an exercise in futility for central bankers because
realistically I don't think they want eCash they don't want their CBDCs to to have cash like privacy
preserving features I mean unless they are much more altruistic than I currently believe I'm curious
of your take on this yes so this is also something I asked myself is what are the intentions of these
campaigns but to summarize for people who might not have seen this is at least for the ECB European
Central Bank proposal of how to build a CBDC this is the case is that there are multiple different
applications for how to build a CBDC and most of them are from big banks and big big financial
institutions but one of those proposals is a system called GLUTALA and this is another
significant eCash project out there and I would say with Fedim and Keshu and GLUTALA are probably the
three most well-known eCash projects and GLUTALA is an eCash project built for Fiat and it has its
own problems it's not ideal and I'm not the biggest fan of it although I mean because of some of the
of its properties but anyway it is still and this is something you know this is a strong statement
but among privacy aware people it is generally accepted that a CBDC built on eCash would be the
best CBDC that we can currently think of and this this sounds like kind of an oxymoron but you have
to integrate this into your brain something that can be bad can also be better than something even
worse and so this is this is how I see GLUTALA and also the project that you have mentioned from the
Bank of International settlement I think it is based on GLUTALA I'm not quite sure but I think it
goes into the same direction now the question is why are they doing this why don't they just do a
full on PayPal account based CBDC and the server at the central bank and trust me you will get it so
this you we will have the full controllable transparent CBDC that can be completely controlled
but I think there is at least in in the case of the ECB some you know significant public pressure
of the public of stakeholders of privacy advocates of politicians in the EU itself
to push for privacy preserving alternatives because even in our Bitcoin solo in our Bitcoin bubble
we sometimes think that the entire world is against us and they don't value the things that we value
and that's not really the case so if you look into the activity going on around the CBDC there
are also many critical people about CBDCs who are not Bitcoiners obviously Bitcoiners know
not most about CBDCs probably from any of these groups because we're challenging this paradigm
directly but also in the realm of the more established people who comment on this in this
in this banking world there's also voices that say we need some level of privacy and this is not
you know you won't get privacy for everything that you do I don't believe in that at all
but you might get privacy for a smaller amount transactions this is something that you know
you can find also quotes by central bankers who hypothesize with the idea of maybe allowing a
small balance of 300 euros or something that you can use privately they don't say explicitly which
technology would qualify for that but for me it's pretty obvious and clear that they are considering
or the only solution that really would make sense is an e-cash solution for those cases so I would
not be completely surprised if we get a full on totalitarian CBDC plus an e-cash solution on the
side of that and the e-cash solution somehow allows us or the users of that CBDC to do private
transactions on a small scale and that is already better than nothing but I'm pretty sure that you
won't get privacy in general for CBDCs because that's not the point. Yeah it's maybe they end up using
the small scale private transactions you know only up to 300 euro or something like that as their
justification for look we gave you the privacy here but you know if you want to do anything larger
than that then we're gonna you know be a bunch of totalitarian surveilling you know dictators on
top of you and there's nothing you can do about that it maybe it's the it's the kind of foot in the
door technique to appease the privacy advocates and then they can still roll out their full scale
dystopian you know central bank digital currency I don't know that huh that almost that almost is
more worrisome that they use the foot in the door like that in some ways I don't know well we'll see
that could be it's a that's I think a general question that is hard to answer I have problem
answering it myself is you know whether providing half privacy solutions is better than providing
no privacy solutions at all this is a topic you know in and of itself same could be asked for
systems that are not perfect like Tor or signal that give you the impression of privacy and you
really get privacy it's much much better privacy than not using them but are you are you safe if
you are targeted as an individual that's another question so I cannot answer that question perfectly
but it feels to me that everything that improves privacy even incrementally is something that we
should pursue and in that sense I would even support a cbdc that uses e-cash because I know
that there are much much more worse designs that could be implemented as well but again my prediction
would be that we definitely get the the bad one and maybe we get the good one in a small scale
as well if we're very lucky but if not it doesn't matter because we're still building it on bitcoin
and for to build it on bitcoin you don't need the permission of these people and we'll just have to
fix it fix it ourselves and I believe we have the better coders we have the better hackers
we have the better theoreticians and we also have the better money so I'm not worried too much about
the future amen to that that's a perfect note to end on um I first of all really appreciate
you sharing your scarce time because bitcoin is scarce like your time but bitcoin podcasts are
abundant so thank you very much for coming on this one thank you for answering my questions
I think this is going to be really useful for a lot of people I'll include your your
uh noster and twitter links and whatnot but in terms of uh you know different e-cash projects
npub.cash uh enuts cashew is it cashew.me to get to the wall or cashew.space to find the project's
main website and you find also the documentation space there for developers if if you'll allow me
I'll do a special shout out to developers listening to this we're in dire need we're an unfunded open
free and open source project we live of contributors like you and if you're looking for
any bitcoin project and you know you want to get your hands dirty and finally work on something in
this space feel free and be invited warmly to join us in our mission at cashew.space you'll find
information you can just reach me using any any channel that that you like and I'll hold your
hands and show you the ecosystem and show where you can help because we definitely need help so
if you're hearing this please consider it all right that a great message to end on well thank
you so much for your time I really again appreciate it and this was fascinating I'll just ask you to
stay for a moment after I cut the recording just to let it upload fully but thank you again Cali
this was fantastic I learned a lot and I could probably ask you questions for a few more hours
but we'll have to save that for next time so thank you so much thanks for having me walker I appreciate
things and that's a wrap on this bitcoin talk episode of the bitcoin podcast if you are a bitcoin
only company interested in sponsoring another fucking bitcoin podcast head to bitcoinpodcast.net
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