Thread

🛡️
I don't know who needs to hear this, but eCash is not any worse than any other form of custodial Bitcoin. It may not be any better either. That's debatable. But it's certainly not any worse. Everything that is less than ideal about eCash is equally true about other forms of custodial Lightning.

Replies (12)

Fedi has a better association between minted ecash to BTC reserves than CashU through cryptography, however its advantage is also a disadvantage. Fedi requires coordination of multiple people to keep its onchain payouts functional, and there is not an explicit subsystem to incentivise participation of the guardians. It's lightning-reserves are generally not 100% of its total minted ecash (by design), and up until recently, it could be at most 50% due to its non-native support of lightning. Cashu only requires one "Uncle Jim" to run a mint, and it's power is in diversification and reputation. A structured incentive exists to keep a good mint running because the single owner recieves all of the TX fee profits. Unlike Fedi, cashu natively retains 100% of its liquidity on the lightning network. The ability of wallets to allow multiple mints custody cash-on-hand creates a competitive market that naturally lowers fees and incentivises the owner to guard their reputation.
🛡️
↩ replying to Martti Malmi
Indeed. This has always been the case for abstracting away from the underlying asset; it improves payment speed, reliability, optionality, etc. The nice thing about eCash is that it makes these improvements over custodial Lightning while maintaining the same trust model. The thing that drives me nuts is when people characterize the trust model of Cashu as fundamentally worse than the trust model of custodial Lightning. They're both IOUs that are only as good as the custodian is honest. Perhaps the main issue is that there is such a low barrier to entry to run a mint that users may be more likely to come across some random mint that rugs them, whereas custodial Lightning is typically taken on by businesses trying to build a brand and reputation, so the rug-risk is naturally lower. However, the trust-model itself is exactly the same. Even that can be mitigated with eCash by spreading your risk among multiple mints, so that if one rugs you, it's a minimal loss.