What Bitcoin Did

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Scaling Bitcoin Privacy with Calle

Peter McCormack

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Scaling Bitcoin Privacy with Calle - WBD647 Peter McCormack

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Calle is a Bitcoin and Lightning developer contributing to LNBits and the Cashu ecash system. In this interview, we discuss Cashu’s 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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“By providing a high degree of privacy in payments, cash helps to slow the growing information asymmetry between consumers and companies… between citizens and public authorities… privacy is crucial for individuals to safeguard their position when dealing with organisations which are more powerful than a single person.” 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’re 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 “Computer Systems Established, Maintained and Trusted By Mutually Suspicious Groups” was the original blueprint for blockchains (excluding the proof of work consensus mechanism). His company Digicash launched ecash in 1995, predicated on Chaum’s 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’s a custodial system where sats are deposited in ‘mints’ 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’re all using very soon, and the feature that enables the next cycle of adoption.

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00:01:38: Introductions
00:04:48: David Chaum and Digicash
00:11:54: Custodial wallets, and eCash via Cashu
00:16:46: Live eCash demo, and blind signatures explained
00:33:05: Differences between Cashu and Fedimint
00:36:46: Criticism of Cashu, and Cashu mints
00:43:14: Building a CBDC on Cash
00:45:36: Bitcoin privacy
00:51:23: Separating ideology from Bitcoin
00:54:49: The power and danger of AI
01:08:34: AGI and robots
01:26:54: Final comments

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If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:

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