Cashu is an implementation of E-Cash, or Chaumian E-Cash, named after David Chaum, because, in the 80's he invented it and made it into a company in the 90s. Of course his company used US $ as the base, instead of Bitcoin, but it's a way of issuing 'tokens' or 'note' which are long strings of numbers, issued by a mint, In exchange for, in this case, bitcoin. The string of numbers exists not in a blockchain on the web, but ON your phone when you possess a cashu note. The mint doesn't know who you are, but they are sure that they issued it, and how much the note is worth. So, if someone gives you a note, the first thing you do is make sure it hasn't been used before by checking with the mint, if not, you give it to them, and get a new one. This way, you don't have a note anyone knows you have. You can pass it to someone else or you can give it to the mint, who will give you sats. The mint knows nothing about you. You got your sats, but the mint doesn't know who you got it from.
Discussion
A very good explanation. Cheers!
Still don't know why I should use it, tho.
I could see maybe there being stronger privacy guarantees. Was just reading up a bit and apparently transactions are completely free when done within a mint, so that's cool.
Oh, so it's a privacy tool, nice!
Found this nice video from BTC Sessions that talks some about the privacy benefits as well: https://www.youtube.com/watch?v=riTRD0BdMDI
There is actually a very widespread misconceptions about privacy benefits Lightning. If you use custodial, you have no privacy (from your wallet). If you use noncustodial, the receiver has bad privacy. For the sender, you may have good privacy, but there may be an active surveiller if they are doing active routing surveillance.
It's definitely a good thing to have around. No need to keep money in e-cash form though, but it's there if you want to, let's say donate to something really sensitive, get some e-cash, send it to them, (through signal or Nostr DM,) they cash it. I guess that's the thing, you text message or nostr post or email someone a cashu note. There's no chainanalytics or off-chainanalytics (Lightning surveillance) that can be done on it.
Got it, thanks. But there is trust involved at some point?
Correct, itβs custodial. The mint holds the funds until they the redeemed.
They are*
I actually wonder though how harmful trust becomes when the custodian has almost no information. We're no longer trusting them to not spy or censor because they can't do those things anymore anyways.
This is a helpful breakdown.
Where can I find more info about why the receiver in a self-custodial lightning transaction lacks privacy?
Custodial lacks privacy for both sender and receiver, as the wallet sees everything. self-custodial mostly lacks privacy for the receiver.(you have to know where to send it)(But there's always a chance that the node routing your payment could be a secret spy node working for chainanalytics and figre out the sender too.)
This is a really good resource.