Scaling Bitcoin Privacy with Calle - WBD647

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.