Scaling Bitcoin Privacy with Calle
\u201cThis was the reason why I think ecash is coming back now: because it needed Bitcoin. Ecash is almost worth nothing if you don\u2019t have a free sovereign monetary layer below it\u2026 and we found the base money of the internet.\u201d
\u2014 Calle
Calle is a Bitcoin and Lightning developer contributing to LNBits and the Cashu ecash system. In this interview, we discuss Cashu\u2019s mission and development, undertake a live demonstration of it in action, the importance of privacy, removing ideology from Bitcoin, and the future of AI and robots.
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\u201cBy providing a high degree of privacy in payments, cash helps to slow the growing information asymmetry between consumers and companies\u2026 between citizens and public authorities\u2026 privacy is crucial for individuals to safeguard their position when dealing with organisations which are more powerful than a single person.\u201d Not the words of an anarcho-capitalist, but a prominent Deutsche Bank economist from 2019.
It is a truism that privacy is the bedrock of democracy. The problem is we\u2019re sleepwalking into a cashless society where digital payments are tracked, recorded and stored. You can learn everything about someone through their transactions. Privacy in other areas means nothing in this environment. The issue has been how to replicate the utility of cash in the digital world.
David Chaum solved this problem in 1982: his dissertation \u201cComputer Systems Established, Maintained and Trusted By Mutually Suspicious Groups\u201d was the original blueprint for blockchains (excluding the proof of work consensus mechanism). His company Digicash launched ecash in 1995, predicated on Chaum\u2019s blind signature innovation. For various reasons, ecash did not take root. Until now.
Amongst a small number of initiatives aiming to revive ecash under the Bitcoin umbrella, is Cashu, which allows for private ecash payments over the Lightning Network. It is essentially digital cash, backed by Bitcoin. It requires no accounts or personal information, and everyone involved in the system is blind to other users' transactions.
There are tradeoffs: it\u2019s a custodial system where sats are deposited in \u2018mints\u2019 to create ecash. The creator Calle, a respected Bitcoin and Lightning Network developer, is working on technical solutions to overcome concerns. Even so, given how well the test version of Cashu is working, Cashu could be the go-to digital cash feature we\u2019re all using very soon, and the feature that enables the next cycle of adoption.
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This episode\u2019s sponsors:
Iris Energy - Bitcoin Mining. Done Sustainably
Gemini - Buy Bitcoin instantly
Ledn - Financial services for Bitcoin hodlers
Bitcasino - The Future of Gaming is here
Ledger - State of the art Bitcoin hardware wallet
Wasabi Wallet - Privacy by default
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