Summarizing my thoughts on ecash \ stacker news ~bitcoin

5986 sats \ 79 comments \ @sethforprivacy 30 May bitcoin

For some reason this ecash trend seems to be gaining steam instead of going away, so I'll try my best to detail my thoughts on ecash into one post.

1. The incentives are broken

Ecash finds itself between a rock and a hard place. For users to trust the mint, they need to know that the people behind the mint are trustworthy. If the people running the mint reveal their identities (or even just nyms), they're a trivial target for regulators and law enforcement as it's clear a mint is an MSB.

If the people behind a mint don't reveal their identities or nyms, users of that mint are subject to trivial rug pulls with no recourse. Which do you prefer as a user? Mint operator rug pulls or government rug pulls?

If a mint had been targeted like Samourai Wallet was, instead of just a potential privacy loss, all users would have lost all of their Bitcoin.

2. Ecash is not "self-custodial"

For some reason this concept of ecash being "self-custodial" is a thing, merely because the tokens themselves are self-custodied (and require proper backups of seed phrases etc.) While the lines get a bit weird, it's important to separate two things:

The asset people want is Bitcoin, not ecash tokens.
The asset people give up custody on is Bitcoin.

The ecash tokens themselves are completely worthless IOUs without the Bitcoin behind them, so even if I can take custody of my ecash tokens, I have 100% given up custody of my sats to a third-party.

Because of this, talking about ecash as self-custodial is disingenuous -- no one wants empty IOUs, they want Bitcoin. When they use ecash they do not have custody of their Bitcoin.

3. Ecash still requires all of the hurdles of Bitcoin self-custody

The hardest hurdle for many people to adopting Bitcoin is the simple first step -- writing down 12 words and making sure not to lose them. With ecash you still have this single greatest barrier of entry as you must backup a seed phrase or secret in order to restore your ecash tokens.

4. There is no incentive for custodians to implement ecash

While a custodian could switch to ecash out of the goodness of their heart, the incentives are broken for custodians. Not only does ecash harm the UX their users are used to (not having to store a secret seed phrase), it also introduces additional infrastructure complexity. Instead of just running a database, now they have to run additional mint software to provide their users with tokens, and handle support cases where users lose their tokens.

In theory a custodian could just also store the seed phrase for their users, but then have we actually improved on custodians at all? They even have custody of the ecash tokens in that case.

5. Custody is a line that cannot be crossed

The core of what makes Bitcoin unique is that we can actually take custody of it ourselves, gaining immense freedom and self-sovereignty through a bit of personal responsibility. Even though I am a massive proponent of building better privacy tools, sacrificing custody to get better privacy is a non-option for me.

Surely we can do better and build privacy tools on top of Bitcoin (or directly into Bitcoin's consensus layer) that allow us to have both privacy and self-sovereignty via self-custody.

I will not give up custody of my Bitcoin, no matter what, and you shouldn't either. "Better custodians" are just custodians with extra steps, and still strip us of self-sovereignty and thus freedom.

6. Time is a more scarce resource than even Bitcoin

Even though I have been very outspoken on what I view as a pointless venture, I am not here to stop anyone from building what they enjoy in the space. Devs working on ecash are free to do so as of course I have no control over them, though I fear that time spent on improving custodians is time that we will not get back. It's clear that the US gov and many in the EU are seeking to ramp up their attacks on Bitcoin privacy and self-custody, and our time to build tools to route around them is growing shorter and shorter.

P.S. - None of what I write is a direct attack on any ecash dev, and I have immense respect and personal relationships with most of the people working on this stuff. Respect for an individual doesn't have to mean I agree with them on every avenue they pursue.

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1000 sats \ 0 replies \ @conduition 1 Jun

I agree on all of your points, but like others have said, context matters. Nobody should be storing their life savings in ecash notes - just like nobody should be storing their life savings in paper cash notes - but there's nothing wrong with carrying a small wad of cash for spending money, even if the mint that issued that cash could go under at any moment.

What people aren't realizing here is that while ecash is fundamentally a custodial IOU, it is also incredibly flexible compared to lightning. You're not just trading custody for privacy - it's more nuanced. You can build tools with ecash that are incredibly unwieldy or impossible on Lightning. Think about technologies like Ecash-DLCs for example.

Furthermore, ecash mints are a great moving target. Anyone who can run a lightning node can also run a mint. And yes, regulators could say "ecash mints are banned" in specific countries... But they can't ban ecash mints worldwide, and neither can they prevent determined users from connecting to mints hosted in open-minded countries (or hosted over TOR). It would be an endless game of whack-a-mole.

I personally think ecash mints will proliferate, and there will be two kinds:

White mints, run by KYC'd public personalities. All customers must be KYC'd and all transactions logged. These are basically just bitcoin-backed banks which happen to be plugged into lightning.
Grey mints, run by nyms like myself, hosted in open-minded countries or over TOR. No KYC, but probably higher fees and higher rug risk.

As always with a free market, everyone is free to vote with their money and use the solutions which work best for them.

3635 sats \ 13 replies \ @Bitcoinisawesome 31 May

If you have ten years of purchasing power locked away in well-tended cold storage, why worry about having a weeks worth of purchasing power in an Ecash that allows you to perhaps participate in a city-wide mint that you are currently visiting? This entire post seems to imply that people, even already-bitcoiners, will be attempting to stash their entire bitcoin-net worth in this stuff which is frankly, absurd.

Additionally, it seems like the attitude here is that development and adoption of Ecash will stop or prohibit "privacy tools on top of bitcoin (or directly into Bitcoin's consensus layer) that allow us to have both privacy and self-sovereignty via self-custody" from being developed. Those tools are nowhere near losing developmental traction. Surely Ecash can exist and grow and allow people to play around with something while you simply refuse to use it yourself. I certainly won't be.

131 sats \ 8 replies \ @DiedOnTitan 31 May

Came here to say essentially the same thing.

With ecash you still have this single greatest barrier of entry as you must backup a seed phrase or secret in order to restore your ecash tokens.

Not if you are using a mint and ecash tokens for pocket change. I am fine with custodial wallets for small quantities of money for easy and quick transactions. Your wallet right here on @sn is custodial, is it not? If @sn rugs you, are you bankrupt? This is a tempest in a teapot.

0 sats \ 7 replies \ @030a29f333 31 May

This was the weakest point IMO. Backing up tokens with a seed phrase isnt required to use ecash as the digital equivalent of pocket change. You can certainly do so (in this way it's actually easier to not lose than cash/coins), but it doesn't have to be a hurdle if used responsibly. As long as the wallet isnt deleted they're fine, and if it happens by accident then maybe they learn the importance of seed phrases in a low stakes environment.

34 sats \ 6 replies \ @sethforprivacy OP 31 May

If this is the way you view it, why not then just use a good self-custodial LN wallet like Phoenix or Zeus?

Users then only have the risk of lost funds on their end without risk of mint rugging (on purpose or on accident).

110 sats \ 2 replies \ @030a29f333 31 May

Seth I like you and you have some good points in your post, but cmon.

Obtaining and managing a LN channel is not for everyone (I'd argue not for most people). Base chain fees won't allow for "pocket money" channels. Getting a channel presumes a decent amount of bitcoin to deploy in the first place.

Phoenix isnt available to everyone on their app store (wink). Zeus is cool but I had an unfortunate experience my first go around with them and regular people aren't gonna deal with force closes.

0 sats \ 1 reply \ @sethforprivacy OP 31 May

So instead of advocating for improving Lightning or building better L2s because of bad experiences, you just give up on self-custody all together for payments?

Talk about throwing out the baby with the bathwater...

0 sats \ 0 replies \ @030a29f333 31 May

Not at all. Trust minimized self-custody will always be the north star. I hope things like Hedgehog can enhance LN. If we get CTV in the next couple years then that opens a lot of interesting doors. Even if not, self-custody LN will continue to improve.

Ecash is just a net improvement for the custodial experience. There is a market for that, whether it is ideal or not, and I'm glad that low hanging fruit is being experimented with.

0 sats \ 2 replies \ @DiedOnTitan 31 May

I agree in principle with this take. I draw a distinction between on-chain HODL accounts with steel plates in cold storage, and hot wallets that can be used with pocket change for coffee around town. The two are not the same nor do they need to be protected exactly the same way, IMHO.

0 sats \ 1 reply \ @sethforprivacy OP 31 May

Of course they don't need to be protected the same way, but we also don't have to sacrifice self-custody.

A much better middle-ground for the novice user is using Phoenix and saving the seed in a good password manager like Bitwarden. Once they get more advanced and have a good HWW they can use BIP 85 child seeds for their hot wallets and get the best of both worlds.

I see zero need to sacrifice self-custody at this point or any point for that matter.

0 sats \ 0 replies \ @DiedOnTitan 31 May

If it's not on-chain it's not self-custody.

38 sats \ 0 replies \ @kepford 31 May

Here, here.

38 sats \ 0 replies \ @sudonaka 31 May

thank you

3 sats \ 0 replies \ @justin_shocknet 31 May

ECash is literally being pushed as a payment spec in place of Bolt11

It's anti self-custody

A privacy LARP

And bankers/spooks are buying up developer resources to peddle it

It could exist just fine and maybe have some utility if there weren't liars and scammers using it in a psyop for the edollar

Instead they use it to attack Bitcoin

1 sat \ 0 replies \ @sethforprivacy OP 31 May

This entire post seems to imply that people, even already-bitcoiners, will be attempting to stash their entire bitcoin-net worth in this stuff which is frankly, absurd.

That's not implied at all, or at least not intentionally so. Most of the recommendations I see are to use ecash to onboard people to Bitcoin (even though ecash isn't even Bitcoin lol) or to use it for daily spending. That's what I'm speaking against.

Additionally, it seems like the attitude here is that development and adoption of Ecash will stop or prohibit "privacy tools on top of bitcoin (or directly into Bitcoin's consensus layer) that allow us to have both privacy and self-sovereignty via self-custody" from being developed.

Again, no, I said that it takes away some of the limited time we have to make Bitcoin itself more useful and more private. If Bitcoin cannot be self-custodied easily or used privately, you won't even be able to enter a mint if you want to down the line and instead will just be trusting mints entirely with IOUs with no ability to touch the underlying asset.

108 sats \ 0 replies \ @emmanuelrosa 30 May

Here's a toast, to the hopefuly quick and decisive death of this ecash non-sense.

1574 sats \ 2 replies \ @dpc 30 May

Ad 1. Run your own mint for your family, friends and communities. Setting up a federation will eventually be as easy as setting up a WiFi router at home.

Ad 2&5 If you "own" a house, but government can take it away if you stop paying taxes that they arbitrarily set, do you really own it? Or is it really in the custody of your government? So if most people are forced not to have self-sovereignty over the largest asset they own isn't that much bigger problem then some daily spending money?

The same person can have self-custody of their savings, and use a trusted mint for day to day transactions. I have 99 problems, and payments for my groceries not being fully self-custodial isn't one.

Ad 3.Make sure to check the social backup in Fedi app. Very nifty, IMO. There's lot of UX that can be done on top of pre-existing human connections, and we barely scratched the surface.

Ad 4. There's an incentive for the users to use ecash, especially Federated. It improves the UX, robustness, availability, cost, privacy... the list goes on.

Ad 6. If I wasn't working on Fedimint, I'd probably be working on some distributed databases in Rust. Other contributors would likely be doing something else, not necessarily Bitcoin related. Ecash does not take away from other solutions, and too many cooks spoils the broth. There's a lot of people arguing about opcodes on Bitcoin already. :D

0 sats \ 1 reply \ @sethforprivacy OP 31 May

Setting up a federation will eventually be as easy as setting up a WiFi router at home.

How? A useful mint/federation requires a Bitcoin node, a well-capitalized and managed Lightning node, mint software, and a multisig wallet. In what dream world does that become as easy as a plug-and-play router?

If you "own" a house

Huh? How are house mortgages comparable to ecash... Are you trying to argue that because the legacy system is broken it's OK if Bitcoin is broken?

Make sure to check the social backup in Fedi app.

Haven't seen that, will have to check it out!

There's an incentive for the users to use ecash, especially Federated.

Why would WoS users suddenly be OK with dealing with custodying their ecash IOUs when the whole point of WoS to them right now is none of the personal responsibility being necessary?

You only mention users, while the whole point is custodians have to choose to implement this stuff. Why would they?

0 sats \ 0 replies \ @dpc 31 May

How? A useful mint/federation requires a Bitcoin node,

Minimal pruned bitcoind is OK. 12GB of storage currently required.

a well-capitalized and managed Lightning node,

LN Gateway is not trusted and can provided by anyone. I envision that eventually there will be services that provide LN gateway to private Federations for routing fees, after some liquidity is provided. So Federation guardians just register for that service, give it some ecash to have in-Federation liquidity and that's it.

mint software, and a multisig wallet.

Unclear what you mean. The guardians don't need anything else. Users need something like a Fedi or Mutiny app.

The general process is hopefully well described in e.g. instruction: https://github.com/fedimint/nixos-deployment

Eventually it should become even simpler.

You only mention users, while the whole point is custodians have to choose to implement this stuff. Why would they?

Guardians are the users themselves. That's how I think about it. You don't use random federations, or even reputable public federations, at least with any non-trivial amounts. You use a federation that you ideally run in part by yourself with other people you know and trust personally , along with your extended family, friends and close knitted community.

68 sats \ 0 replies \ @nerd2ninja 30 May

Though I might remember you most from our interactions while disagreeing with each other, on this we agree.

Just avoiding what happened to gold (the IOU became money itself) is a big enough goal.

93 sats \ 1 reply \ @TonyGiorgio 30 May

Ecash is self custodial: #395461

79 sats \ 0 replies \ @sethforprivacy OP 31 May

lol

910 sats \ 26 replies \ @Scoresby 30 May

You might use bitcoin to buy monero. When you do this no one says the monero community is custodying your bitcoin in any way. You are trading btc for xmr.

Now, why is it not the case that you can use bitcoin to buy ecash tokens from a particular mint? Why do you call this transaction custody?

Perhaps because the mint plays the role of creating tokens and in the popular implementations (cashu and fedimint) only creates tokens when it receives btc.

Let's say you use btc to buy ecash tokens from another user. In thid case who is custodying the bitcoin? Especially if you pay them btc to an independent wallet they control.

In all these cases you trade one coin for a different coin with different properties. It's up to you to decide whether the trade is worth it for you.

118 sats \ 8 replies \ @DarthCoin 30 May

In both cases you trade one coin for a different coin with different properties

Wrong. ecash is not a "coin". Is a cryptographic IOU. A FUCKING GIFT CARD.

20 sats \ 7 replies \ @Scoresby 30 May

As are all the other shitcoins, no? Certainly the stable coins like tether aren't much more than "cryptographic IOUs". The real question here is: are ecash tokens shitcoins?

27 sats \ 6 replies \ @DarthCoin 30 May

IMHO: yes, kind of, are not even shitcoins, are IOUs.

130 sats \ 4 replies \ @Scoresby 30 May

To me, the ecash conversation would become much more fruitful if we get past the idea that they are custodying anything. Can they be useful to bitcoiners or are they a distraction? Bitcoiners would have a much easier time sorting this out if they did not think the mint was somehow agreeing to custody their btc for them. Why would you ever give up btc if you didn't expect to get something in return? What is a mint giving you when you give them btc and is it worth the cost?

208 sats \ 3 replies \ @DarthCoin 30 May

I consider ecash as quick solution to onboard the "poor man" that cannot afford a full UTXO to open a LN channel for himself.

Kind of a more fancy way to use WoS. In the end is the same custodial shit.

The important thing is to educate these poor "entry" users that should not keep using ecash forever and redeem their "trapped" sats from ecash into real LN channels or onchain UTXOs.

One thing is very clear: ecash tokens are NOT sats! Are just IOUs.

41 sats \ 2 replies \ @Scoresby 30 May

That makes sense to me.

Do users understand this easier when they are told ecash is custodial bitcoin or when they are told it is a different coin, not bitcoin?

37 sats \ 0 replies \ @DarthCoin 30 May

Hard to say. Depends on each wallet app and our guides :) I see a lot pushing this ecash without educating well the users BEFORE use. And that is wrong.

I am using ecash, for testing purpose only and learn more about it, so I will not speak just for the sake of speaking. But I do not consider it as the "ultimate" solution for scaling Bitcoin or more privacy. Privacy do not stand in multiple mumbo jumbo mental gymnastics and added protocols. First of all you have to know WHO you really are so you will know what is private and what is public.

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38 sats \ 0 replies \ @fiatbad 31 May

"Do users understand"..... ???

I wish we would stop talking about eCash in public at all. It's gotta be confusing the shit out of regular users.

I see ecash as a technical layer in a larger protocol. In any Mint-based App, the user should simply see how many Sats they have. They do not need to know that it's really eCash.

I have not used Fedimint yet, but I've done a lot of reading on it. I'm praying as hard as I can to Odin himself that when I open the Fedi app for the first time I DO NOT SEE ANY MENTION OF ECASH! I hope the devs are not that stupid. It's part of the protocol, but it should be abstracted away from users just like the layers of the internet, and even fiat banks, are abstracted away from the users. Just show me my Sat balance and let me send it cheaply, privately, and fast, for fuck's sake.

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27 sats \ 0 replies \ @MarsIronPI 30 May

What's the difference between a coin and an IOU?

18 sats \ 15 replies \ @sethforprivacy OP 31 May

You are trading btc for xmr.

The difference here is that Monero is it's own, stand-alone currency with powerful privacy features. It's not an IOU for anything, it has all of it's own properties. BTC <-> XMR is a currency exchange, while depositing Bitcoin at a mint to get ecash is being given an IOU that is worthless if the underlying Bitcoin disappears.

Who will take ecash from a mint that has no Bitcoin to back it? As opposed to Monero, where it has it's own direct value and has thousands of merchants and users directly accepting it.

Ecash is not a "coin" it's an IOU. Those are wildly different things and are not comparable.

17 sats \ 11 replies \ @TonyGiorgio 31 May

The difference here is that Monero is it's own, stand-alone currency with powerful privacy features

Literally no difference. You're nit picking because you have XMR bags. It's so funny watching you walk around in circles around this. You're literally giving up custody of Bitcoin to hold a shitty asset that's heading to zero.

51 sats \ 1 reply \ @Scoresby 31 May

To be fair, a cashu ecash mint does suffer from a single point of failure, in a way that monero does not. I don't know enough about monero to say whether a fedimint with something like 7 guardians is closer to the cashu side of things or the monero side. But I think it's a valid point that mints are generally susceptible to servers going offline while that's not really a concern with something like monero.

17 sats \ 0 replies \ @TonyGiorgio 31 May

whether a fedimint with something like 7 guardians is closer to the cashu side of things or the monero side

That's an argument for spectrums of decentralized. You can say a network is more decentralized or less decentralized than another network.

At the end of the day, they're the same thing. A DLT network.

21 sats \ 4 replies \ @sethforprivacy OP 31 May

No you just don't like my responses because they don't fit your narrative. As seen in your strawman reply instead of a real response.

0 sats \ 3 replies \ @TonyGiorgio 31 May

Yeah bro post more fake screenshots of fake quotes from politicians to try to defend your XMR bags and bash privacy tech.

0 sats \ 2 replies \ @sethforprivacy OP 31 May

wut lol

Dude, take a step back and calm down. We don't have to both love the same custodial tools to be reasonable and actually have conversations.

0 sats \ 1 reply \ @TonyGiorgio 31 May

#557067

10 sats \ 0 replies \ @sethforprivacy OP 31 May

I've responded at length to that, many times. It's an asinine take that is dangerous and disingenuous and will lead to people hating Bitcoin because they think Bitcoin lost their money when it was really a malicious mint or a gov rug pull.

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0 sats \ 3 replies \ @btc_remnant 2 Jun

Literally no difference? You can take custody of your Monero, and the network is decentralized, but ecash tokens are without value once the mint is taken over.

0 sats \ 2 replies \ @TonyGiorgio 2 Jun

You take custody of the ecash notes too. How much value is xmr when a 51% attack happens and the network is useless?

0 sats \ 1 reply \ @btc_remnant 3 Jun

ecash notes don't have any value without the trusted party!!

119 sats \ 0 replies \ @TonyGiorgio 3 Jun

You realize with fedimint, it is a decentralized network?

0 sats \ 2 replies \ @Scoresby 31 May

When btc and xmr were just getting started, there were not thousands of merchants and users.

The major difference that I can see between your definition of coin and an IOU seems to be usefulness. Btc doesn't have intrinsic value, it has value because people think it's properties are useful. Same with xmr. No reason ecash cannot be the same.

The weakest part if me saying ecash are altcoins is this: if the mint turns off its servers, poof no more ecash. I don't think this means it is not a coin, though. Stable coins all seem to have this property. Do you think tether is an IOU?

Are all stablecoins custodial?

Even if they are, I think that talking about ecash with an altcoin model is more honest than telling people it's custodial bitcoin.

Who will take ecash from a mint that has no Bitcoin to back it?

It would be interesting to think about what an ecash token that overtly fractionally reserved would trade at. Or, for that matter, an ecash token that was interoperable with lightning but used something else in it's treasury. Shares of community owned land? Shares of a company?

I'm in agreement with you that ecash is not bitcoin. But this does not mean it's a useless idea.

28 sats \ 1 reply \ @sethforprivacy OP 31 May

Do you think tether is an IOU?

Yeah, it's literally an IOU for dollars.

Even if they are, I think that talking about ecash with an altcoin model is more honest than telling people it's custodial bitcoin.

As I said, I think it's disingenuous to pretend that ecash is not custodial, as the asset people care about is Bitcoin, not the IOU on top of it. No one would accept ecash that wasn't fully redeemable for Bitcoin as then it's literally a worthless credential. That is far different than altcoins which have their own incentive structures and are far more resilient than ecash.

I'm in agreement with you that ecash is not bitcoin. But this does not mean it's a useless idea.

I don't necessarily think it's a useless idea, but that it's useless to pursue for Bitcoin payments because of the broken incentives etc. that I mentioned. All previous ecash attempts have failed because they undermine the state and are trivial to shut down, and the latest take on ecash is no different (except that it's backed by an asset that is under intense scrutiny from the US gov). The reason I push so hard against it is because it's inevitable that this either ends in users rugged and trust broken, killing ecash as an idea, or gov rugs and trust broken, killing ecash as an idea.

To me it's a concept that is technically fascinating and I want to love, but one that clearly has no future in the world we live in today. Once we overthrow our oppressors and have more just laws it's another story, and community banking via ecash would probably be a good tool in that potential future.

142 sats \ 0 replies \ @Scoresby 31 May

There is a distinction to be made between the resilience of a system that is just starting out and one that has been around for a while. Be it tether, monero or bitcoin, all were trivial to shut down in their infancy. They are much less so now. It's an interesting thought how trivial it would be for a gov to shut down tether. Certainly worlds easier than btc and xmr, but also probably not trivial.

I'm still quite confused why anyone would trade sats for ecash if what they wanted in the end was the same sats. Why make such a trade in the first place?

For me, I expect to get something for such a trade, and I expect to pay a price. Perhaps the ability to do certain kinds of transactions I can't currently do with btc.

Some folks say ecash's only benefit is privacy. I see more than that: LN still has difficulty delivering on a internet of micropayments. Ecash solves some of these problems (offline receive, need to run a LN node). For example, websites like SN might be able to navigate the trade offs between usability and regulation if they use ecash instead of custody.

We both agree that in the beautiful future all these things might work or at least we will be able to reason about them more clearly. In the unpleasant regulatory mess we currently inhabit, especially in the US, I still wonder if ecash as an altcoin has more usefulness than ecash as custodial bitcoin.

0 sats \ 0 replies \ @TonyGiorgio 31 May

Bingo.

28 sats \ 0 replies \ @Nuttall 30 May

My experience with eCash via the Mutiny wallet was not positive. I also received 2000 sats and then via cashu as it happened the URL was changed and the tokens ended up getting lost!

To me I like listening to the people developing but I'm 4 years into lightning and I'm barely a functioning operator but I somewhat understand what I'm doing.

I appreciate what was written here and the comments. It's easy to get distracted and is better to stay focused on the mission.

Bitcoin full node, custody and being a lightning steward is a good task. Fediment and eCash are good progressive projects but I don't like it for myself.

410 sats \ 0 replies \ @justin_shocknet 30 May

ECASH IS A SERVER CREDENTIAL NOT A CURRENCY

Anyone claiming otherwise is lying or willfully ignorant at this stage

ecash trend seems to be gaining steam instead of going away

There's no trend, it's astroturf from a well-funded enemy, the water is carried by sockpuppets and useful idiots with their hands out.

There is no incentive for custodians to implement ecash

Unfortunately that's not true, its a shield to lie behind about privacy and obfuscating custodians (Federations are part of the scam)

30 sats \ 0 replies \ @cristaiji 30 May

Thanks for your take. I've played around with Fedi bravo but of course it's early days and i'm not sure about it. I have only had small amounts in the federation so far and don't yet trust it for larger amounts.

11 sats \ 0 replies \ @Coinsreporter 31 May

The ecash tokens themselves are completely worthless IOUs without the Bitcoin behind them, so even if I can take custody of my ecash tokens, I have 100% given up custody of my sats to a third-party.

100% correct.

35 sats \ 4 replies \ @HardRich 30 May

I don’t have a dog in this fight but it seems like you’re saying eCash would replace on-chain coins. One is for pocket money one is for savings.

Sadly, the US is staring to suck and the MSB argument is legit. That being said, there are other countries.

17 sats \ 0 replies \ @fiatbad 31 May

Good point.

OP had a really good point about MSB. But the U.S. is not the whole world.... and Federated Mints with thousands of users, dozens of well-known key holders, and a single large well managed LN node, sounds like absolute heaven. It's the promised land, and we shouldn't poo-poo it simply because the U.S. is a big bully.

1 sat \ 2 replies \ @sethforprivacy OP 31 May

US MSB arguments will quickly apply to almost all jurisdictions, as they already do. FinCEN and FATF reach is far beyond US borders.

you’re saying eCash would replace on-chain coins

Most are positing that this is how people should be spending their Bitcoin. I see no need for custodial solutions at this point, especially when there are major UX improvements to be had with simple soft-forks like covenants via CTV or LNHANCE.

0 sats \ 1 reply \ @HardRich 31 May

Do you think covenants will be coming any time soon? They sound like a good idea but most folks seem gun shy about any changes. I'm guessing we need some distance from the NFT mess and then maybe folks will be open to another soft fork? But, how long will that be? Seems like a few years in my estimation. In the mean time, if some folks are building out some scaling concepts it seems like a fine thing to do.

I'm not sure I agree that the MSB topic will be as big of a deal as you think. I do think the US will want to go after them. Will they be able to in the end or will it go to the supreme court? And even if so, is there no way nym mints wouldn't be able to exist? Most of the bitcoin folks I follow are nyms or might as well be. Besides, I'm not going to stress about losing $1k across a few mints.

And, will MSB apply to a small group using a fedimint? Perhaps, but that sure would be bad optics if the US went after a small family, community, organization for hosting a mint for themselves simply to avoid transaction fees, for example.

Or maybe I'm too optimistic.

10 sats \ 0 replies \ @sethforprivacy OP 31 May

Do you think covenants will be coming any time soon?

Yes, massive and growing traction in the Bitcoin developer community around covenants + extending Bitcoin script via the Great Script Restoration or similar. Hard to give timelines but we're getting closer steadily to rough consensus.

Will they be able to in the end or will it go to the supreme court?

If Tornado Cash and Samourai cases are lost then mints are 100% a simple prosecution as they're already far "worse," legally.

And even if so, is there no way nym mints wouldn't be able to exist?

They can definitely exist, but will incentivize rug pulls, and the few good ones will be scared off after one mint op gets prosecuted. It's very, very, very hard to maintain OPSEC as a nym when a nation state wants to track you down.

And, will MSB apply to a small group using a fedimint?

Supposedly there is some grey area if its a fedimint with enough signers but not sure the specifics of that. Agreed that it would be a much harder legal sell if it's actually community custody, but no fedimints are that ATM AFAIK. If they remain very small and very niche they might just not be worth pursuing for the US gov but hard to say.

100 sats \ 2 replies \ @RedRadish688 30 May

As others mentioned, I think ecash should be treated like a custodial wallet and as such can serve some specific purposes, e.g. loading up small amounts for a quick use or onboarding beginners.

I also see it serving as custodial mixing service if it is accountless.

The good point is, that since the ui wallets are already there, open source, custodians have a lower entry barrier of just setting up a mint and don't need to implement their own ui. This could lead to a more decentralized set of many smaller custodians.

That being said, I agree that this is not the end solution and that for higher amounts and long term storage only self custody can work.

40 sats \ 1 reply \ @sethforprivacy OP 31 May

Why are custodial solutions necessary at all?

Why isn't Zeus or Phoenix sufficient?

10 sats \ 0 replies \ @RedRadish688 31 May

Fees can be a big reason for smaller amounts.

Simplicity, e.g. when you need to load up sats for a day trip without understanding the intricacies of each self custody wallet.

Usually access to a wider range of feautures, e.g. when some services only send payments to an lnaddress, I can quickly fire up a custodial wallet to receive it.

Also ease of onboarding in general. Lightning has a very steep learning curve, so I find good to have something I can start using right away and expand my skillset over time.

0 sats \ 5 replies \ @allmightyrandom 31 May

Is self custody for your small money really so important for you? Keep your live savings in Bitcoin, use lightning to spend some sat, cashu is only adittional and mainly designed to improve custodial lightning solutions. I dont get it why you always shooting against cashu. It makes no sense. You are intellignet, so my question is who pays you? Do you have a better idea to improve custodial lightning solutions? Why are you not working on the protocol to improve it?

1 sat \ 4 replies \ @sethforprivacy OP 31 May

No one pays me to write these things.

This isn't an attack on Cashu, but a summary of my issues with ecash generally (that includes fedimints etc.).

Do you have a better idea to improve custodial lightning solutions?

Yes, don't use them :)

Why are you not working on the protocol to improve it?

Covenants would make Lightning for more user-friendly and enable better L2s, so that would be an ideal starting place.

69 sats \ 3 replies \ @allmightyrandom 31 May

Not using custodial solutions is not a solution! Sometimes it makes sense. Why you only see the negative aspect of custodial solutions? Iam willing to loose some sats i use for my daily spendings if i get more privacy and functionality. With ecash you can literally print your own money (iou) and give it offline to somebody else. You can do it even physically by handing over a banknote. You can even be in the desert without internet access or electronic device.

Covenants is another solution that does not exist yet. It also is a L2 solution. Cashu does exist today and i would say it is a L3 solution and an improvement of custodial services that are being used since many years.

0 sats \ 2 replies \ @sethforprivacy OP 31 May

Can't you also do that with LNURL-w?

0 sats \ 1 reply \ @allmightyrandom 31 May

No, this is not the same. LNURL is a HTTP request. Sure you can print a lnurl-w voucher on paper. But you still have the problem that the custodial sees everything and can even delete this specific request. With ecash this is not possible. You can not destroy a specific token. Iam not a lnurl professional, only using it sometimes so i can not explain the difference very well but i think others here can explain the difference.

If nobody answers open a neutral topic: The difference between Lnurl-w and ecash.

0 sats \ 0 replies \ @allmightyrandom 31 May

Here the differences chatBTC gave me:

Purpose: LNURL-w: Facilitates easy withdrawals from Lightning Network wallets. Ecash Token: Provides anonymous digital cash-like transactions.

Privacy: LNURL-w: Focuses on ease of use rather than privacy. Transactions are not inherently anonymous. Ecash Token: Prioritizes privacy and anonymity through cryptographic mechanisms like blind signatures.

Transaction Process: LNURL-w: Involves scanning a QR code to automate the withdrawal process from a Lightning wallet. Ecash Token: Requires interaction with a mint to issue, transfer, and redeem tokens while maintaining user anonymity.

Trust Model: LNURL-w: Relies on the existing trust model of the Lightning Network and its nodes. Ecash Token: Trusts the mint to issue and redeem tokens correctly while ensuring privacy and preventing fraud.

Usage: LNURL-w: Mostly used within the context of the Lightning Network for quick and seamless withdrawals. Ecash Token: Can be used for various anonymous digital payments beyond just the Lightning Network.

These distinctions highlight how each system serves different needs within the realm of digital currencies and payments.

0 sats \ 0 replies \ @kingzing131 31 May

Gold pegged still lasted for an extremely long time and would have had if it wasn't for "fixing the economy"

At the end money needs to be more usable. Monetary properties arent the only criteria to judge a good money.

More self custody doesn't necessarily mean less privacy and vice versa, it just so happens Bitcoin is hitting a brick here.

I for one very much prefer Bitcoin has more development that doesn't change its core. Bitcoin is in its infancy, it needs to run through more experiments

0 sats \ 4 replies \ @om 31 May

I will not give up custody of my Bitcoin, no matter what, and you shouldn't either.

You know that for this post you got zapped around 5 ksats (so far) custodied by SN, right?

1 sat \ 3 replies \ @sethforprivacy OP 31 May

Yes, sadly I don't have a choice on the matter here :)

0 sats \ 2 replies \ @om 31 May

Well if 5 ksats here isn't the end of the world, then maybe paying with ecash for inexpensive online services such as AI isn't a big problem either? You can embed ecash in HTTP headers, nothing else can do that.

0 sats \ 1 reply \ @sethforprivacy OP 31 May

I don't have a choice here, not sure how I can make that clearer.

I would much prefer to be able to not give up custody of a single sat.

0 sats \ 0 replies \ @om 31 May

OK. I don't really get the point of crusading for a single sat but at least I see what you mean now.

0 sats \ 0 replies \ @Athena 31 May

If Ecash were so so succesful, the need for Bitcoin is over! But it's not so we can understand we need bitcoin not the Ecash

0 sats \ 4 replies \ @itsrealfake 31 May

Yield is the incentive

1 sat \ 1 reply \ @sethforprivacy OP 31 May

Yield is also what makes a mint clearly illegal in practically every jurisdiction. Again, broken incentives.