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647 sats \ 8 replies \ @freetx 23 Jan 2024 \ on: Fedimint and Cashu ecash are gift cards ecash
Very good summary.
Discussing fedi / cashu is difficult because they are nuanced subjects....and it can be difficult to express both openness to the ideas and really seeing usefulness in them, while at the same not believing that they offer anything other then limited stopgap measures which are fraught with moral and security hazards.
The summary is Fedi / Cashu can be very useful in either (a) Small known groups, or (b) Short time duration exposure.
Otherwise, if someone is interested in Layer-2 solutions that have a better security model more aligned with bitcoin principles, things like Liquid / Mercury spring to mind (note: Liquid already exist and proven for 8 years.....unlike other 'whitepaper' style solutions)
I suppose. I think if there is a case that can be made that ecash isn't custody, but rather a product you buy, the use cases expand. For instance, SN could perhaps solve some legal headaches this way. (Although maybe it is just trading one headache for another).
I would add (c) small amounts.
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ecash isn't custody, but rather a product you buy
well....in 1925 when you deposited your gold in the bank you got one of these
was that a "product you were buying" or a claim against the gold you had turned over?
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Probably not a product. But when the USD was still redeemable for gold it wasn't custody either. Custody implies they have your bit with your name next to it. This is my point: whatever is happening at a mint, it isn't right to describe it as custody.
Especially in custody law today, the custodian is supposed to have each persons' assets in separate accounts with their name clearly attached to it.
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Yes, true custody is covered by "bailment law" - which is segregated accounts, non-transfer of ownership.
There was a famous case: Carr V Carr that opened the door to modern fractional reserve banking. In essence it found that banks were responsible for the "general obligation" not the actual item. (Fun fact: This is why your bank statement shows "Credits" - since you are loaning the bank your money....)
Which brings me around to my point: Federations / Cashu are legally much closer to modern frac-reserve banking schemes (regardless of whether debase or not)
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I'm going to do something horrible and take the side of the banks here: it's not like it matters which dollars (or which bitcoin) they give back. In the cliche bailment examples of coat checks and valet parking, it is pretty important that they give you your coat or your car back. Money, not so much.
However, with banks, I'm putting my money there to keep it safe because I don't want to stash a bunch of cash in my closet.
I guess I'm also giving it to them because I can't actually access the digital monetary world directly (can't actually use cash on the internet).
And yeah this sounds exactly like why I might use a fedimint...but the difference is in the bearer instrument-ness of ecash. The mint doesn't have an account for me. I don't have a balance with them. From what I've read, ecash is a certificate that by itself is the claim, no further info required. So, it's not really the same as a bank. I don't have any credit with them.
I still want to try to call ecash a product. If we can make that case, it would ease a lot of the legal weirdness.
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I agree with everything you've written.
However (just like banks), over a long period of time, the likelihood of fractional reserve debasement goes towards 100%...and that is the most crucial "just like banks" similarity.
The "no account / no fyi" while very good, are less significant. With traditional banks, you can already mitigate lots of tracking concerns: (a) Go to ATM, (b) Pay with cash