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49 sats \ 11 replies \ @freetx 13 May \ on: Thinking through Cashu bitcoin
The big risk of eCash is the mint can debase everyone silently (ie. every time someone buys in for 100 sats, they mint 105 sats and send 5 sats to themselves).
Its very difficult to detect this.
Here is a chart I made that roughly ranks the risk profile of the various BTC offerings.
| Least Risk | Greatest Risk | |||||
|---|---|---|---|---|---|---|
| BTC | LN | Ark/Mercury | Liquid | Fedimints | eCash | Bitcoin Bank/CEX |
I'd argue eCash beats the Bitcoin Bank/CEX in some ways.
If some anon eCash person rugs you, wtf you gonna do?
At least there is the Proof of Violence algorithm the legal system can impose on Bitcoin Banks if they piss enough people off. I don't know if we've seen a big eCash rug yet but if we did I bet you the person doing it would have the sense to stay anon.
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Yes, the "anonymous mint" aspect of eCash is both its strength and weakness.
This is also whats behind the series of reasoning that I think bolsters Liquid:
- Individual mints can rug you
- Therefore Fedimints are better, since you can distribute power and judge reputations
- Liquid is already an existing Federation of known pro-Bitcoin companies that has been operating for 6 years without any claims of censorship / rugging.
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If some anon eCash person rugs you, wtf you gonna do?
Precisely why Cashu is for small amounts
Fedimints issue ecash as well. You're using ecash in this chart when you mean Cashu.
Did not know this, thanks for the info. My first thoughts: (1) there's a tradeoff for everything (TINSTAAFL) and (2) I'm okay with services that add value making a profit. It's best if things are up front and clear though (as you suggest they're not right now).
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(2) I'm okay with services that add value making a profit.
At the current time, proponents of eCash are somehow thinking very altruistically and they sort think people are going to run mints for free for friends / family. I'm doubtful if it works out like that.
Regardless, the simple way to protect yourself from debasement is to "dip in / dip out" of eCash....that is don't hold it for more than a few days....it should just be a "transactional currency" and not something you hold. This way any secret debasement will not affect you during that short period.
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Yes. Cashu the “Monero killer”.
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Wow, we have created fractional banking but cryptographically! They will be real angry!