For the past decade, Jack Dorsey has been looking for ways to remove intermediaries from communication and finance. He claims that Twitter was better conceived as a protocol than an app. Since then, he has helped develop Nostol, open source, unauthorized, censor-resistant social networks.
Now, he and his team of collaborators have developed Bitchat, a Bluetooth messaging app that quietly appeared on the Apple App Store earlier this month. The software knits mobile phones that are within close range of each other into low energy meshes, allowing text to hop from device to device without touching a cell tower, router, or remote server. It works like an offline version of the signal, and while it's just newsworthy, when Bitchat pairs that mesh, a real breakthrough appears ecashthe recently revived concept that Wolud can send Bitcoin from phone to phone in the same way.
Ecash vs. Bitcoin
Bluetooth was not designed for payments, but when combined with Bitchat and Ecash, you can create offline digital bearer devices. The Bitcoin developer known as Calle, the most famous of Ecash's open source implementation, Cashu, recently filmed two phones in front and back lighting Satoshis on a Bitchat mesh. An internet connection was not required for this transaction to take place. After that, the Ecash token is converted to on-chain bitcoin and it will ultimately be resolved.
Ecash is a date from David Chaum's 1982 paper Blind SignatureThe primitive of encryption that allows banks to guarantee banks without learning who to use it. This was a solution to maintain cash privacy while solving the problem of double spending on digital money (you can spend the same money multiple times). Chaum began the idea commercially in the 1990s, but failed to achieve traction.
Bitcoin solved the double spending problem with a global ledger that was independently verified by all nodes on the network. To achieve this, however, Satoshi's solution traded off the speed and privacy offered in physical cash. Shaumia's Ekash, grafted into Bitcoin, reverses that trade-off. ecash mint It handles double speed detection, but users regain the local finality of the instant, along with the option of returning the token to money whenever connectivity comes back.
Many people who have first heard about Chaumian Ecash may assume that it must be Altcoin as the tokens are circulating outside the public Bitcoin ledger. In fact, every token is the bearer's claim against the actual Bitcoin held within the mint that offers one-to-one redemption. Since Mint cannot make more claims than the Bitcoin it controls, the Ecash token inherits a fixed supply of 201 million Bitcoin. Everything about digital money is a trade-off. By providing speed, Ecash introduces counterparty risk to the mint layer. In other words, Ecash trades off the independently-bearing underlying coins to gain the ability to instantly move the tokens of digital bearers. Bitchat shows that this can even be done without a device, even touching the internet.
Clearing and reconciliation
To further explain how ecash differs from Bitcoin, we can draw out the distinction between Clear and settlement In traditional finance. Liquidation is a provisional accounting step that records what owes while the settlement is an irreversible transfer of subsequent reserves. Clearinghouse Interbank Payment System, or one payment network, called a chip, clears dollar wiring during business days. Another payment network, FedWire, resolves net positions in the Federal Reserve. Ownership may change during liquidation, but finality arrives in settlement alone.
Bitchat's Bluetooth mesh acts as a chip. When two phones trade Ecash tokens offline, the sender will abandon the claim and the recipient can immediately re-expend it. The local ledger has been cleared. True payments only occur when the current holder reconnects and redeems memos with mint, burns the token and pushes the corresponding bitcoin into the base layer of the network (Bitcoin time chain). Until that redemption, the payment will be resolved, but not resolved. When mint writes to the time chain, it enjoys the same global, irreversible finality as chain transfers.
Last Mile Rights
The Bitchat-Plus-Ecash model broadens the surface area of Bitcoin without tampering with financial policies, indicating that payment speed is important and hard money can be used in the context of whether an internet connection is available or not. Meanwhile, the Ecash token used for payments is a bearer instrument that remains fixed on a non-corrupted base.
To get there, Mint implementations require strict reputation management and booking features, allowing users to understand whether Mint introduces counterparty risk. The end-user app itself must present ECASH payments in a familiar interface and turn ECASH payments and Bitcoin redemptions into regular taps and swipes. If the user experience of this technology can be developed to the extent that it is readily usable by non-experts, then what Nostr is aiming for speech can be done for payment.
