Replying to Avatar Beneath The Ink

At this time I feel more comfortable with a fedimint approach to ecash. Its very likely a lack of education on the mechanisms that make it possible.

Im torn because I know this is inevitabke the future of bitcoin but its almost contradictory to the core tenants of bitcoin.

I mean I know it's based on sound money still but cashu mints in my opinion are a little risky, no?

Thanks for this I feel more needs to be written and discussed on the topic!
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Silberengel 11mo ago

All e-cash is risky. Trading gold-backed notes is also riskier than trading gold, but also more convenient. Convenience has value, so riskier monies have a valid use case.

An IoU based upon hard money is obviously better than an IoU based upon softer money. We already have Bitcoin-based IoUs floating around, in the form of paper ETF trades and mining contracts, so bringing that to the masses was just a matter of time.

What I can say, is that having lots of competing mints producing the IoUs is the best option, so long as one doesn't end up with a monopoly. I can also say that trading the IoUs with relay events is gonna add mad uncertainty to an already difficult situation, but people can never get enough convenience AND THE UX, so here we are.

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SLCW 10mo ago

That's a good way of putting it. When you add layers onto the chain, whether it's Lightning, or Cashu (ecash), you're relying on the liquidity and trustworthiness of the secondary layers above and beyond the trust you have in the chain.

With Cashu tokens, you're relying on the accountability and trust of the mint the token is created (minted) by. So, it's really important to choose mints which are widely trusted, and have a good reputation. There's no specific trust rating system, yet, but there is an ad hoc user rating ability at bitcoinmints.com. But people have to know about it, and specifically take the initiative to visit it to take advantage of it. Hopefully in the future there will be something a bit more formal and integrated.

For Lightning, trust is either a product of you running your own lightning node, and maintaining sufficient liquidity to meet your needs, or having trust in a custodial lightning wallet. I'm always very wary of putting trust in someone else's system, and recommend running your own node to all who are comfortable setting one up and maintaining it. But there are custodial wallets with a good reputation who your sats are likely safe with. For those wallets, I always recommend keeping as few sats as possible in them to minimize your risk should something go wrong.

We're really very early in the layer 2 technology, and associated trust systems, and I do have faith that those systems, and L2 trust in general will continue improving over time. In the meantime, I keep as much of my holdings as possible in cold, on-chain wallets so that if the L2 universe is gobbled up by a black hole, my losses will be comfortably limited.