Ecash

Ecash is digital money that behaves like paper cash. Whoever holds a valid token can spend it, and the token carries no record of who used it before. David Chaum introduced the idea in 1982 using blind signatures: a mint signs a token without seeing its contents, so when the token is later redeemed, the mint cannot link the redemption to the original withdrawal.

A bearer token is only as good as the party holding the backing funds. An ecash mint is a custodian. Someone who deposits sats with a mint trusts it not to disappear or inflate the supply. Thanks to the blind signature scheme, the mint cannot censor individual redemptions, but it can still rug-pull everyone at once. Ecash trades the self-custody property of Bitcoin for stronger privacy, low fees, instant settlement between users of the same mint, and the ability to send money by handing over a string.

On Bitcoin, two open protocols put this idea to use. Cashu is a single-operator mint backed by sats on Lightning. Fedimint replaces the single operator with a federation of guardians that jointly hold the backing funds.

References

• Chaum: Blind Signatures for Untraceable Payments (1982)
• Cashu protocol
• Fedimint