Episode notes
In this episode of Bitcoin, Explained, hosts Aaron van Wirdum and Sjors Provoost are once again joined by resident sidechain and Layer Two expert Ruben Somsen, this time to discuss Federated Ecash, a project that has since October 2021 been sponsored by Bitcoin infrastructure company Blockstream.
In the episode, Aaron, Sjors and Ruben discuss the history and design of Ecash, a pioneering digital cash project developed by cryptographer David Chaum and his startup Digicash in the early 1990s. The trio explains how the Ecash system allowed customers of regular banks to make private transactions over the internet.
This latest iteration of Ecash, Federated Ecash, takes the original concept, but applies it to be utilized by custodial (or shared custodial) Bitcoin and Lightning wallets. In short, a Federated Ecash service would accept bitcoin deposits, and exchange them for bitcoin-denominated Ecash tokens. These tokens can be send to other users, and ultimately redeemed for the deposited bitcoin. These bitcoin would, in the mean time, be locked up in a multisig address shared between a set of custodians.
Concluding the episode, Aaron, Sjors and Ruben go over a short list of ideal properties for a digital cash system, and asses how Bitcoin, Ecash, and the combination of the two embed these properties.
Chapters
00:00:00 Federated ecash with Ruben Somsen
00:03:33 David Chaum, DigiCash and digital cash
00:07:09 Blind signatures and private payments
00:12:44 Bitcoin-backed federations and shared custody
00:16:06 Improving custodial wallets with ecash
00:18:24 Connecting federations through Lightning
00:26:02 Trust, reserves and hidden inflation
00:28:49 Denominations, timing and network privacy
00:34:02 The ideal properties of digital cash
