Nostr Web Client

Feels a bit dumdum to ask but... can someone explain cashu to me? What I think I understand is... it's another L2 solution similar to lightning but is more anonymous than lightning? Does it similarly work on a network of nodes/relays?

Can someone shed some light on how the whole minting process works? (When I try to claim an... invoice?... it says to add a trusted mint... since when were bitcoiners ok with "trusting"?!)

Also, what parts of the cashu workflow are anonymous and what parts are exposed to third parties?

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Discussion

pleb_world 2y ago

#[2] had two great podcast appearances explaining it last week. One on #[3]‘s show and one on Peter McCormack’s.. check ‘em out!

Nice and Kind Vic 2y ago

I may be wrong on some of these, but as I understand it thus far...

- Cashu operators are custodial.

- But there's no formal account registration process. Similar to some LNBits

- The amounts are blinded so the operator doesn't know who/how much

- Some mints integrate to other mints and lightning for swaps

- The above can be leveraged to anonymously send/redeem value through the network in a privacy preserving way

Allamex 2y ago

So if cash is successful at making this work, then coinjoins are kind of a thing of the past.

I know there are some small differences and benefits to both, but it seems cashu’s trade offs are significantly better. It doesn’t cost much, it’s much more private and it’s almost instant.

Is my argument mostly correct?

Nice and Kind Vic 2y ago

Collaborative coinjoins are still appropriate for layer 1 transactions

Allamex 2y ago

But why pay 5% fee, wait for transaction times, etc when you could just cashu funds to a different wallet you control and no one is any wiser?

Nice and Kind Vic 2y ago

Because collaborative coinjoins don't have counterparty risk which you are taking on whenever you use cashu? Decisions and risk tradeoffs based on size.

Allamex 2y ago

Coinjoins are still very inconvenient and most people don’t know how to do them successfully without fucking up their privacy. All it takes is 1 mistake. Even pros mess it up.

Nice and Kind Vic 2y ago

Also.. 5% fee seems awfully high. For whirlpool this would only be that high if you were mixing only 1 output worth. It's more effectivr to enter a mix with more, producing more outputs to reduce the effective fee and then stay remixing for free.

mark tyler 2y ago

Can you explain a bit more? It sounds promising but I don’t know what you mean quite yet.

Nice and Kind Vic 2y ago

Whirlpool has a few different pool sizes.

.5 BTC, .05 BTC, .01 BTC and .001 BTC

Let's say you have .2345 BTC

With this amount you can't use the .5 BTC pool, but could enter any of the others.

If entering the .05 BTC pool, the fee would be .0025, and you end up with 4 outputs being mixed and change. Effective fee of 1.25% per output (.0025 / .20)

If entering the .01 BTC pool, the fee would be .0005 BTC, and you'd get 23 outputs. The effective fee per output is then about .2173% per output (.0005 / .23)

There are maximums on the amount you can enter a pool with for Tx0. I think the .001 BTC pool is limited to at most 25 UTXOs (and the others up to 75?) so if that's true then with .2345 BTC, you'd only be able to enter that .001 BTC pool with .025 BTC with a pool entry fee of .00005. This makes for an average of .2% (.00005 / .025) per output

mark tyler 2y ago

Ahh yes, makes perfect sense now. Thank you and zapped!

Toshi 2y ago

Coinjoins are for on-chain privacy. Cashu is a token that gets exchanged off-chain

Allamex 2y ago

Right, but I don’t care if it’s on chain or not. The idea is if no one knows who has it after it’s sent thru cashu then why coinjoin?

Toshi 2y ago

Do you mean something like: on-chain -> lightning -> cashu -> different lightning wallet -> different on-chain wallet?

Allamex 2y ago

Yes indeed. Much cheaper and easier to do then a coinjoin.

Toshi 2y ago

I guess the difference is that on-chain you still just had one transaction. Nobody knows if it’s you who received it or somebody else, but neither does anyone know that when I just do a normal transaction. But there is only one possible history. With a coinjoin the link to the history of the UTXO is broken, because a hand full of people does a transaction together, with the same amount, and therefore it’s hard (at some point impossible) to say, what the history of your UTXO is.

As long as you stay off-chain Cashu seems good, but on-chain it doesn’t really change anything imo

Allamex 2y ago

Well it would if I sent you money on cashu and you redeemed it. It makes it to where the bitcoin never moved anywhere on chain and the bitcoin has completely changed hands undetected. It makes on chain surveillance almost useless because any bitcoin on chain could have changed hands and no one could know.

PBJ 2y ago

It’s a bearer instrument. The files are the value. You can pass the file around without identifying who holds it. Offering near perfect privacy.

Different mints can settle funds over the lightning network.

PBJ 2y ago

Only use in small amounts. The privacy benefits make it very attractive.

The ecash idea was around long before bitcoin. It was being actively discussed in the 1980s.