TFTC: A Bitcoin Podcast - #573: A Free World Needs Private Money with Calle
Episode Date: January 17, 2025Marty sits down with Calle to discuss Cashu. Cashu: https://cashu.space/ Calle on Nostr: https://primal.net/calle 0:00 - Intro 0:36 - Programming is art 5:36 - Zooming out on the struggle for freedom ...10:23 - Dealing with the pace of change 14:20 - Unchained & Fold 16:13 - Financial privacy 20:43 - Chaumian ecash history 33:34 - Zaprite & SOTE 35:06 - Ecash on bitcoin 42:55 - Hash pools 48:45 - Interoperable systems 52:11 - We need more privacy and more devs 55:24 - Narrative and communication 1:00:45 - Magic stuff that just works 1:10:19 - Nostr as a gateway to bitcoin 1:17:21 - Wrap up Shoutout to our sponsors: Unchained https://unchained.com/tftc/ Fold https://foldapp.com/marty Zaprite https://zaprite.com/tftc Salt of the Earth https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/
Transcript
Discussion (0)
You've had a dynamic where money's become freer than free.
When you talk about a Fed just gone nuts, all the central banks going nuts.
So it's all acting like safe haven.
I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins.
In the world of fiat currencies, Bitcoin is the victor.
I mean, that's part of the bull case for Bitcoin.
If you're not paying attention, you probably should be.
Probably should be.
Probably should be.
Callie, this is a long time coming.
I was looking forward to this.
Thanks for having me, man.
I was too.
I wanted to do it in person.
I'm happy that we're in person in this beautiful, beautiful place.
Yeah?
The vibes have been high here.
You showed us some skills last night.
We won't dox too much.
but you've got some good gaming skills.
Let's say I won.
You did win.
I've been thinking a lot how to start this conversation.
Obviously, we'll talk about Cashew, eCash, Bitcoin, Noster.
But really, what has impressed me the most ever,
after having gotten to know you probably over the course of,
we probably met over video call this time last year,
and have met in person a couple of times since then.
But it sounds like you're an artist in the cypherpunk world.
You use Cashew, Bitcoin, Nostr as a canvas to really bring your art to the world,
which you think can make the world a better place.
Is this how you view this?
Is this the vibe that you get off and that I get from you every time I meet you?
Yeah, first of all, I'll take that as a compliment.
I think of programming as an art form, yeah, for sure.
So the way I think about it is that an artist needs to do art
because it's their most direct way to translate their thoughts
into physical reality.
So an artist would have an image in their mind,
or a poet will have language in their mind,
and the way they can translate that into the world
is by writing or by painting.
so my mind is a computational mind i think of algorithms and software and when i take a shower
that's the problems that keep reverberating in my mind and i feel the urge to realize those thoughts
into the world and the way to do that is through programming but that's i think that's just a
personal perspective of it obviously programming has way more implications on the world it can
change the world such as any form of art can do it can have an impression on people consuming it
and inspire others to do the same and another thing that i think that programming writing
software being in bitcoin um has in common with art is that it's a skillful it's a skill
and you can get better at it you can master these skills you can study it you can devote your time
and energy into getting better at those things and yeah i think most programmers don't think of it
the way I do, which is unfortunate.
I think it would give them more creative energy,
more purpose in what they're doing.
But I know that many do.
So there is beauty in code
and there is beauty in technology.
We just have to know how to look for it.
And maybe to end on that is
the perception of beauty is something
that needs training.
So let's say you're looking at an abstract piece of art
that looks like complete garbage to many people,
which is just a mess of, a chaotic mess of colors, for example.
A painter who has spent his life on abstract painting
will see something very different from the uninitiated mind.
mind and i think that's also true with code so reading djbs dan bernstein's code for example
is like one of the godfathers of elliptic curve cryptography looking at his code versus
just random code anyone in the business sees a big difference between the code of a true master
versus the code of a person who isn't there yet.
So I think, yeah, there are many similarities
and it makes sense because we're all the same
and I think the creative energy that leads to this output
comes from the same source.
It's some kind of a deeper human desire
to manifest your own work, your own ideas and energy in the world.
And some people choose one way and others choose another.
Yeah, ultimately the art affects the world in a positive way
and has a net positive effect on what happens in reality
and how people actually live their lives, the quality of their lives,
the quality of the reality that they live in.
And I think where it stands today and why we're both here focused on Bitcoin, you're heavily focused on e-cash now, both interested in Noster.
It's because we recognize that the world really needs better tools, more beautiful tools that really enable people and give them a better quality of life and give them a better starting place in this world,
which seems to be at a fork in the road, where you get the dystopian surveillance state, CBDC, social credit score,
which are all built on centralized systems that are tightly controlled either by governments or private corporations like Palantir,
or you get the open source, open protocols that anybody can access, anybody can opt into, opt out of, just as importantly,
where the playing field is level
and everybody has a fair shot.
You know what you're operating in.
And I think, what did Hal Finney say about the Internet?
It could be a tool for good or for bad.
Yeah, he said the computer can be used as a tool
to liberate and protect people and not to control them.
And I think what you're saying is completely right.
And I invite everyone to zoom out on that problem
a lot more than we tend to do we look at these things in from the lens of someone living on a
human scale so we think of the last 10 years and we think of the next 10 years but humans are at
least hundreds of thousands of years old homo sapiens right so we're still just a blip in terms
of the age of our planet and we have way to go and the technological revolution that we're
experiencing right now have been experiencing in the last let's say 100 years
is just the beginning of a new era i think everyone agrees on that so what we set out to do
now will have a way bigger impact than you can imagine today it is you know we have to express
these problems in terms of, let's say, Palantir and X and the NSA
and financial surveillance and so on.
These problems are very understandable in the timescale
of what we experience right now, but we will continue to exist
for thousands of years to come.
And so the question is not only is it an ethical company versus an unethical one, or is it a open source community versus a closed source product?
I think, you know, zooming out, it will just starkly determine the outcome and fate of humanity, whether we will be living in a dystopian cyber dystopia or a utopia that we will have to build using these tools.
it's way scarier than we can imagine
because I don't know what life will look like in a hundred years
but I'm pretty sure it will be very very different from now
and I'm also sure it will be much more technological
and integrated to these technologies
our lives will depend on these things a lot more
just as an example think of prosthesis
body modification
the machines that we put into our bodies
which we will do a hundred percent, which we're already doing with things like just
glasses, for example, are already in modification of your body.
And as we integrate these things more and more into our bodies,
the question is, do we control them or do they control us?
And well, which path we'll take simply only depends on what we built.
and, you know, an individual's decisions of what they want to do, you and me.
So I'm optimistic and scared at the same time.
I am as well.
I'm really optimistic.
I think I'm always optimistic because I truly believe in the human spirit.
But like you said, it is scarier than ever because of the technology,
particularly surveillance technology, social media platforms with algorithms
that know how to manipulate people's psyches,
the ability to quash the human spirit
has never been as easy as it is today.
That's why I love hanging out with Bitcoiners,
people building on Nostr and these open source protocols
because you can really feel the human spirit reacting
to that all-encompassing attempt to squash freedom and liberty
and the ability of the individual to have agency over their life
in this digital world that is evolving.
And that's one thing that I hope these technologies really enable
is to unleash the human spirit in the digital world
and allow it to be free.
I think this is already happening.
As you said, this is happening in real time right now.
I used to be a bit more pessimistic about where we are right now.
As I get older, I tend to accept things a bit more
and look at them from a different perspective,
and I'll make this more specific.
For example, you can complain about fake news,
online manipulation, hatred online.
Just the ugliest parts of humanity are revealed
once we go online and can talk to each other.
And thinking of the 90s, early 2000s,
We had a very strong expectation of that the Internet would allow us to feel closer to each other.
Now, 20 years later, it feels like it's one of the most divisive forces on the planet as well.
And I used to think that this is because we failed.
These days, I'm coming closer to the conclusion that maybe it is actually doing exactly what it's supposed to do.
and the road is a lot bumpier than I expected it to be.
Maybe this is what it looks like when humanity wakes up.
Maybe hatred, fake news, manipulation is just part of the equation.
And we're just trying to grapple with a new type of technology
that no one has showed us before.
It might just take another 50 years until we get used to it.
Yeah, I mean, you mentioned earlier the fact that we've been around
for a couple hundred thousand years as homo sapiens and i think that's the thing that always
is is one thing i always anchor to is particularly i'm a 90s kid born in the early 90s saw a welcome
into my house saw mobile phones get distributed to the market saw the emergence of social media
bitcoin financial crisis and the pace of change in our lives alone uh in my life alone
it has been incredibly fast to the point which has never been experienced in human history this
pace of change and as you were describing maybe we're just going through the process of learning
how to take in all this data filter it and try to discern the signal from the noise and make
decisions that are in our best interest at the end of the day and who knows maybe what are we
12 15 years in longer than that almost 20 years in to the social media age and maybe we're just
developing the brain processing power to actually filter all this data and make correct decisions.
And we've explored the design space and the edge cases of this for two decades now and are finally
at a point where it's like, all right, this seems to be something that we need to course correct.
And we have this natural correction in the form of these open source protocols.
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And so I don't want to say we're getting esoteric, but I think what you're working on,
I said this on the Money Matters podcast on Monday, particularly with CashU.
E-cash generally as a concept is where the signal is in terms of innovation for banking in this digital age, banking on Bitcoin specifically.
And instead of waxing poetic, getting esoteric, I think you do a really good job at highlighting the juxtaposition of the dystopian surveillance financial system that has emerged around us, how it works, and the potential alternative that we could opt into with a financial system built on Bitcoin, eCash, Lightning, Nostr, and all these other open source protocols.
Yeah.
So let's get more specific.
The conversation about financial privacy is something that we're kind of just started having in the last couple of years.
I think this is one of the biggest taboo issues still in the tech space or in just general in society.
We have converged in the last couple of years to a point where most people agree that private communication is important.
We see it as a human right.
We see it as a condition for human expression and freedom.
And I think we need to achieve something similar with financial privacy as well.
Right now, financial privacy is typically associated with crime and just bad people doing bad things.
And this was exactly the same for private communication a couple of years ago.
It was associated with the things that you wouldn't want to be associated with.
And we've got to this place by lots of people working on communication,
communicating these ideas to the right people at the right place in the right time.
And I think we need to go to a similar place for our financial transactions.
I'll just make an example.
If you buy a newspaper with your credit cards,
then there are three, four companies involved in this single transaction.
And they all know which terminal you used at what time with which credit card company and which phone manufacturer you used to make your tab to pay.
And that phone manufacturer knows your account.
So there are so many individual companies in this single operation.
They could all say no.
So they can stop you from transacting.
They could turn off your money at any point.
But I think even the worst part of it is that they can fully track your entire life.
You can try to be as private as you like with anything that you do and say.
You can turn off Google Maps on your phone.
You can use Signal for your communication.
But as soon as you make kind of anything in the world,
which always involves a credit card these days, then you're back at zero.
And we need to come to a place where everyone understands that this is not how it has to be.
I think we are limited by what we can imagine.
We always thought that this is just how any financial service needs to work.
A financial service needs to know who you are and what you're doing and why you're doing it.
But we're trying to show the world that this is not necessary with eCash.
eCash is a completely different way of building financial services, banking services, streaming services, anything that kind of requires a payment.
And it respects the user's privacy.
And we are building it on top of the Bitcoin system because the Bitcoin system invites innovation in contrast to the banking system, the fiat banking system that we have today.
This should be possible also on the fiat banking system.
It should be possible to, you know, you should not have to use your credit cards to make a simple purchase.
But there is nothing, there is no alternative or no product that you could use today.
with cash we're trying to build this new generation of services on top of bitcoin hopefully to see it
expand to anything and everything but i think we can build a safer financial system for the
individuals where their privacy is guaranteed through cryptography and not only through their
own individual choices whether they have good opsec and so on and so forth yeah i mean and go
back to the beginning of the conversation like an artist creating beautiful software that makes
the world a better place i mean that's that's the way i've used satoshi pushing bitcoin into
the world 16 years ago now and it's funny because e-cash um the sort of idea of these blinded
signature this blinded signature system that enables this digital cast system is old i'm sure
if you've listened to this podcast you understand this but it's probably important for those who
new to bitcoin to understand this uh chami and ecash is an idea that's at this point over 40
years old um so it launched uh in the late 80s correct yeah so the initial paper by david chom
who's the inventor of the ecash systems or blind signatures as you said is from 82 yeah and um
history is super fascinating it is so david chom is this uh cryptographer he's a genius well-regarded
genius across the board still alive today and he's still going strong and in 1982 he invented
something called blind signatures it's basically a way to sign a contract without having to see
the contract and he realized that using this primitive which we call these cryptographic
primitives it's kind of like a building block on which you can build more complex things
and using this primitive that you could build electronic money systems that preserve user
privacy. Now, mind you, this is 82. So David Shum was so visionary that he knew that one day we will
be at a point at a place where we are right now that most of our lives will be online. Everything
will be electronic. And he saw what we just discussed. He saw that payments will be the
perfect way to control and track the population. So he invented an 82, a method to build these
systems in a privacy-preserving way. He's very famous for his quotes where he says that without
privacy, democracy is not possible. And this is very true. If you cannot have a private life,
you are not able to form your own ideas, independent ideas, and push the world to a
place where you want it to see in. So in 82, David Chaum invents Chaumian eCash, what we call
Xiaomi and eCash today. And everyone was extremely excited about this technology.
And if you look back into the history, starting in the 90s, they had this company called DigiCash
and DigiCash was marketing to the biggest financial players in the world. So you had
deals with Deutsche Bank, Credit Suisse, JP Morgan. I think it was Visa or MasterCard,
or one of the two big credit card systems, and even Microsoft.
Like, I'm dropping the biggest names that I could be dropping.
And all of these companies were building e-cash infrastructure in the early 90s,
or at least were interested in offering banking services or financial services
that allow users to use those services with a similar privacy as with physical cash,
but online, electronic cash, e-cash.
and so we're still around almost 20 years before bitcoin even emerged and you know historically
speaking this is the first cryptocurrency meaning it is a currency that uses cryptography to ensure
security and privacy and the whole plan was to build to transition the fiat system
from a from this legacy banking to an e-cash banking system where users would have their
let's say jp morgan bank account you would log into your bank on your computer and then you
download e-cash you can imagine it's similar to going to an atm from your bank for example you
just go to your account and download e-cash and you download it to your computer and think of it
the same way as physical cash. And then as you go to a website, you would then be able to spend this
e-cash, let's say for a merchant online, just to buy a t-shirt, for example, or to read an article
online, or eventually also use it in form of payment cards so you can make purchases,
physical purchases were offline.
So there was a big consensus of that this is the technology
that everyone should follow.
However, it's very interesting to follow this up
and to go into the reasons like why it didn't work.
None of this worked out at the end of the day,
although those huge deals were on the table.
Just one piece of trivia is that Microsoft offered
to David Chaum's company, DigiCash,
that they would include a DigiCash wallet in every Windows 98 installation by default.
This was how serious everyone was taking this.
So you would have a digital wallet in every Windows computer in the 90s.
None of this worked out, though.
There were a couple of pilots and experiments that were successful,
but it seems like David Schaum was unable to make any deals.
She required too much.
She changed the terms of these deals in the last minute and so forth.
So lots of testimonials there, Whitefield.
Eventually, none of this succeeded.
And only in the late 90s, we see credit cards emerging and then PayPal entering the scene
and using really Stone Age technology again to transition us to the digital world.
Basically the same ledger technology that the ancient Egyptians have invented, double
entry ledger where you just add one entry here, subtract one entry there, and you're done.
But with full transparency, everyone is completely trackable. Everyone is completely controllable.
I can just turn off your money if I don't like you and so on. And with that, the internet grew.
This was a precondition for the internet to grow. And I want to say this, this is something that
I've been just recently realizing. These payment technologies that were invented in the late 90s,
beginning of the 2000s were not really innovations they were really like ancient technology in a
digital excel sheet duct taping it onto the internet 100 the reason why they exploded so
much is not because they're so good but because there was real real demand the internet needs
payments it it it became one of the biggest places for markets and economics today this is trivial to
say today but in the early 2000s this was the emerging market for example the story with paypal
is ebay people realized that hey you can trade goods with other people peer-to-peer but there
is no good and easy way to make the payment the other half of the transaction so paypal emerged
because of ebay and ebay got super popular and then therefore paypal got popular so these
technologies as they came they really took their spot because of real demand this is a great
position to be in you have real market demand for new type of solution and the gatekeepers of
those days really were successful in monopolizing and taking over that that part
coming back to e-cash well at that point in history everyone forgot about e-cash this was
largely ignored and put to bed, basically said that the experiment died.
Well, wasn't there another important detail to the eCache, to DigiCache experience,
particularly, and I think Aaron Van Weerdom wrote about this in the Genesis book, is that it became
quasi-permissioned and a lot of the cypherpunks working or wanting to contribute were sort of
boxed out. And so this idea that DigiCache became this centralized third party in the world of eCache
sort of was a detriment to its ability to flourish as well.
Yeah, this is a very good point.
So that's probably like the reason number two why everything failed is it needed to
be bound to the fiat system.
So in order to be able to innovate anything, you needed to cross these huge gatekeeping
organizations.
So you would have to make a deal with a bank in order to be able to develop anything that
is better than the existing thing.
Imagine that today.
Like, even the slightest improvement of financial technology needs cooperation with the old guard.
You need to talk to MasterCard and Visa, and maybe they'll allow you to use their network to make transactions, right?
So that is, I guess, maybe historically speaking, even the more important reason is the banking system, the fiat system is fully permissioned.
The entire stack is permissioned.
The only non-permissioned part is physical cash.
Everything else is permissioned from the central bank up to the PayPal transaction that you do to buy a T-shirt.
So not everyone could just enter the game.
And there were many cypherpunks around in that time.
Like all the cypherpunks in that time, their frame of reference was Charmin eCash.
Everything, like when you look at the academic papers from that time, everyone's tried to just improve Charmin eCash.
And even if you came up with a good idea, which there are many, many out there,
there are like thousands of academic papers improving Charmin eCash,
and none of them have been tried.
Literally none of them have been tried really on a larger scale,
except for CyberBucks, which is from DigiCash.
It's like play money that they've used for a couple of years,
but nothing that really interacted with a real economical framework or system.
So, all the good ideas just vanished into history and it took another 20 years or so for them to be picked up again.
Now, maybe this is an interesting context also from the history of cryptocurrencies.
The innovation of Satoshi is the emancipation of the constraints of Charmin eCash.
As I said, Charmin eCash only worked with the cooperation of the banks.
So it required access to the banking system.
And everyone understood at that time that the biggest problem is centralization.
So you'd have a single company issuing e-cash and you would have to use that company in order to interact with the larger financial system.
And Satoshi then finally after, now this is almost 40 years after the invention of e-cash, invented Bitcoin.
And Bitcoin closes that part of history.
It is kind of the conclusion of that struggle to invent digital money and then finally set it free.
And Satoshi was able to do that. Now, interestingly or trivially, he needed to
invent a new currency for it. You couldn't build this on the dollar. It's not possible to
decentralize the dollar. So he came up with his own currency, which we call Bitcoin today, which
became a major part of the financial system that we're experiencing today. Now, for people like me,
me, this is great because I'm still very interested in what the cypherpunks have developed in
the early 80s and 90s and charming e-cash and privacy technology. But I can now use
Bitcoin to build these things that I'm dreaming of. And I don't need to go to JP Morgan and
ask them, hey, please, daddy, could I use your infrastructure to make a few transactions
here and there jamie please jamie please please and jamie says no because jamie still doesn't
understand bitcoin um but yeah we don't we don't really need them anymore we we don't really think
of think about them anymore they're thinking about us it's like they're trying to they're
trying to catch up with us now um that's because we have a free system where everyone anyone can
join all the geniuses of the world who do research on this stuff can just directly implement what
they're dreaming of because we have a system that is open for innovation and everyone who wants to
build upon it which is bitcoin that's why bitcoin is so truly truly magical the first innovation of
satoshi is just the beginning of a really really big process a long revolution that will be going
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even took what 12 years after bitcoin launched when was eric syrian the first one to write the
what was it, Minicash, the MVP that he launched,
I believe it was in the summer of 2020 or 2021 even,
that proved that you could do these Chaumian banks,
these e-cash banks on top of Bitcoin.
Yeah, definitely.
And we'll get back to Eric and Fediment
and the leading role that they've played in this process.
um but there's this famous quote by halfini himself in very early days december 30th 2010
i think i know the one you're referencing where he already i mean scaling was always an issue
with bitcoin right like that that was the first comment on satoshi's email was like this doesn't
scale and now here here we're sitting 16 years later and still trying to scale scale this baby
to uh conquer the world but yeah they they saw the same kind of issues uh that we have today
but um the first thought that comes to mind when you have a base layer that can be decentralized
is like how can we rebuild the banking system on top of that and uh yeah this famous quote by by
halfini says that he believes that bitcoin might become the base currency the interbank exchange
currency and allow for new type of banks to pop up that could issue their own virtual currencies
on top and that's basically e-cash he was talking about e-cash without using the word there so it
was that the thought appeared immediately that someone should build an e-cash system on top of
bitcoin and this kept reappearing time and time again you can find old posts on reddit there are
couple posts on the Bitcoin meeting list, people just playing with this idea to build eCash on top
of Bitcoin. But it took quite some time until anyone actually did it. And my full credit goes
there to Eric Sirian, a true innovator, a real cypherpunk, a co-founder of the company called
FedE. And his first, his attempt was, it came from a previous system called SkritCash. SkritCash
was an e-cash system that wasn't bound to an existing currency. It was kind of only e-cash
without any base layer. And more of a proof of concept, I would say it wasn't really built out
in a way that it could be used, but they laid the foundation to build federated e-cash mints,
which is the foundation of what we call FedE-Mint today.
And Eric Sirian is the inventor of the FedE-Mint protocol, the FedE-Mint project.
And that's basically similar to Cashew, an eCash system on top of Bitcoin,
with the prime difference between the two projects is that FedE-Mint is a federated system,
meaning that these eCash mints, they're run by multiple organizations or multiple key holders.
Whereas, uh, for Cashew, uh, we focus on simplicity and efficiency, basically, uh, uh, mint
mints that are operated by single entities, but are extremely, uh, low, extremely lightweight and,
and, and fast to set up and easy to use. Yeah. And I mean, I think that's,
I don't want to say it surprised me, but it's been really exciting to see
fediment cashew in the wild and i think it's pretty clear the protocol that you and the other
contributors the cashew have built has really enabled this explosion of out-of-the-box
experimentation that people have really grabbed onto and run with yeah that's that's that was
kind of always the hidden plan behind all this was never to build an application and just call it a
day. I've built applications before and obviously they can have a big impact. But what we saw
there is, again, a cryptographic primitive, a building block for others to build on.
So from the very early days of the Cashew protocol, we decided it's going to be a protocol.
That practically speaking, that means when you develop a protocol instead of just an
application or just a platform, it means that you spell out the language of the system in
in English terms. So you make specifications that are documents, PDF documents that describe
exactly what's happening and what time and how to communicate between a wallet and the
mint and so on and so forth, what cryptography to use. And we just spelled it out from start
to end. And we're still working on that protocol, extending it with functionality. But the reason
for that was that we wanted others to build on top of that. And we've seen exactly that.
So since we've started the project, which is now Keshu's around maybe two and a half
years old project, we've had dozens of independent implementations by dozens of independent programmers
that all have their own use cases and specific applications that they have in mind. But they
find a repository of specifications, which if implemented, they can become compatible with
the entire ecosystem. So that's one of the benefits of working on protocols, although it's
a much harder road to walk on and it's a slower process because it involves many people deciding
things uh what you end up with is something that enables others to lift them up themselves and
build upon and yeah the the adoption has been staggering uh our main focus the people we talk
to or cater to were always the developers because we're we're still in this early stage where
we focus mostly on those who built
so they can focus on the users
that they want to build for.
And we're seeing exactly that.
And we're seeing now applications of Cashew
that were never intended in the first place
because we couldn't think of all the different ways
that you could.
And, you know, you can,
getting back to the beginning
with our allegories to art and creativity,
instead of painting a simple picture,
we decided that we want to create the canvas and the brush
so others can paint their own.
And this is what really drives adoption
and now makes Cashew the easiest way
to onboard people into Bitcoin
And we see a lot of adoption on Noster, which is, again, a social media protocol or platform of a whole host of different applications that also need money.
Similar to how the story with eBay went, right?
So you have now lots of different things on the Internet and they all kind of need integration with money because we humans, we need money to transact.
And now people can look at Cashew and see if it fits their use case and choose one of the libraries and boom, you have an eCache system inside your application that respects users' privacy and allows your users, gives them much more control than a traditional custodial system would.
What's one of the most surprising implementations, applications of eCache that you weren't expecting?
I think the most bullish that I'm on currently, and it's something that I'm overwhelmed with every month.
Every month I see new applications and new developers that just pop up out of nowhere and say,
hey, I've built this, and it's just immensely grateful for this.
But right now the most bullish thing that I can think of is something that a fellow called VNPRC is working on,
and he's working on a project called hash pools and he's using e-cash to improve the payouts to
bitcoin mining pools to their to the miners so i can just briefly explain the problem
bitcoin mining pools are basically all custodial in nature even if they don't feel like it
sometimes because the pool pays out immediately often most of the time it does not pay out
immediately, but you have just a balance that keeps increasing until you withdraw. And the
first ideas that were floating around when we started thinking about whether we can also improve
Bitcoin mining tools using e-cash were just simply focusing on the fact that you could pay out the
miner with e-cash and then the miner could decide at any point to withdraw the e-cash back to the
Lightning wallet, for example. So the intermittent time where you are in a custodial relationship
with the mining pool could be improved by using e-cash instead of just a stupid Excel ledger
table. What does this improve for the miner? First of all, you can use the mining pool
without creating an account. And this is great for miner privacy. It is actually very, very
important to improve mining privacy because mining is the Achilles heel of Bitcoin.
It is one of the most fragile parts of the Bitcoin system in terms of regulation or takeover
by governments.
So eCash mining pools that pay out their users, the miner in eCash would allow them to use
their service without having to register an account, without having to give them your
on-chain address or your lightning address. You could just simply turn on your miner and
connect to the pool and start mining. And as soon as the mining pool either finds a block
or depending on the payout scheme after a certain time has expired, you would then just get e-cash
directly from the mining pool. And that e-cash is like an IOU. It says like this mining pool
owes you that in this much satoshis and the nice thing about it is the mining pool is not able to
track you as an individual miner it wouldn't be able to know that you're the same miner who
mined yesterday it wouldn't be able to know how much you've mined in the last year it wouldn't
even necessarily have to know you know what are your withdrawal addresses on on-chain addresses
and be able to connect individual payouts to each other and then being able to see you know what
you're doing with the bitcoin that you've earned so um i'm very very bullish this is just a basic
way of doing it vnprc is working on a way better system in which uh the the reward is not only
paid out uh when a block is mined but also before a block is mined so that the payout can be more
regular and the nice thing about this is if you issue the the potential future reward as a bear
instrument like e-cash that allows the users to trade this instrument before even the block is
found so in his proposal his project is built on stratum v2 it is it's very fascinating as he is
building it for bidax the the home miner his whole vision is to enable pleb miners to regain more
control and to, you know, decrease the, let's say, the discrepancy between what a large miner
can do and what a pleb miner can do at home. And if you are able to put the e-hash, he calls it
e-hash, it's a beautiful name, into a pair instrument, then you are allowing the miners
to trade this and use it similar to a future instrument
for a potential block reward that might come in the future.
And this can allow miners to hedge against the risk
way more safely and develop a hash price market to emerge.
It's kind of like over the top of my head
because I'm not a financial instruments guy,
but I think it serves also as a good example
of what people do
that we have never thought about.
And what I'm most happy
about this specific project
is that, and I've said this now
in this part before,
we, those who are building
the Cashew system,
we benefit from the existence
of Bitcoin.
Like we're kind of leeching
on the existence
or the success of Bitcoin.
The only reason why
we can build Cashew today
is because Bitcoin
has these properties.
And this is the first project
where I truly have the feeling that e-cash can become a benefit for Bitcoin itself.
So kind of giving back to the mother of all protocols
and improving mining, I think, is a very worthwhile thing to do.
Yeah, I mean, it goes back to Hal's post, too.
I think a lot of what you just described leads me to appreciate
the interoperability of these open systems even more.
Obviously, you have Bitcoin, the base layer.
Obviously, you have these Chaumian mints.
And then you mentioned Lightning, like withdrawing the Lightning.
We haven't even brought up applications within Nostr.
But you have this sort of fractal progression of applications and use cases that are emerging due to the sort of interoperability of all these different open networks.
And you can, again, what you just described is the emergence of this new way of doing banking and financial products and the hash rate problem.
The centralization of mining pools specifically is a big one.
And privacy is one of the Achilles heels for miners.
And being able to shift the asymmetric advantage that these large mining pools have is a massive benefit to Bitcoin.
which is funny because it's enabled by this interoperability so you're seeing the symbiotic
relationship between all these protocols emerge and for the longest time going back to the scaling
debate within bitcoin everybody's like squinting at the problem and saying oh you're not gonna be
able to scale on chain you're not gonna be able to scale with lightning we're gonna need all these
other shit coins to scale payments and all that we're gonna need dedicated blockchains for all
these different use cases. But I think a lot of that comes from a high time preference that has
emerged in our high velocity trash economy over the last 30 to 50 years. And if you really take
a step back and let these ideas germinate and these tools get built, you can really see how
being patient and letting everything mature to the point where this interoperability
is as easy, not only as it is today, but I believe it will get much easier moving forward.
And you can see how this canvas is beginning to get filled in with a beautiful piece of
art that can ultimately replace the incumbent banking system.
Oh, yeah.
We're going to scale this without shit coins.
That's for sure.
And this type of technology building on top of Bitcoin also attracts the right kind of
people.
So all these projects that I've talked about and Cashew itself is something that doesn't allow you to do a pump and dump.
There is no token associated with it.
There is no shitcoin that could make me rich or throw me off rails, basically.
I do this because I want to build on Bitcoin.
I want to improve Bitcoin.
And my incentives are very clear.
And those who join me or join us, their incentives are completely aligned with the incentives of anyone participating and improving Bitcoin.
and i mean this is just for me all this stuff is just background noise and it comes and it goes and
i just i don't even pay that much attention uh anymore because the moment you start understanding
one thing it blows up and is replaced by the next thing as i said i i like to think of our future in
a way way larger time scale and i think we're in one of the most important times that we ever had
that we will ever have again.
It is the transition from the non-digital world
into a digital world.
We have only one shot.
We need to do this right.
In terms of priorities,
in urgency about particular priorities,
what do you think people should be focusing on,
developers out there
and maybe listening to this specifically?
Well, I think we all need to,
I mean, it's clear that I'm a privacy advocate
and we all need to take privacy a lot more seriously.
This does not mean that you need to hide your face like a crazy person like I am
or do everything as a nim and so on.
But just have a conscious understanding of who you are asking for permission
when you live your life.
And this is something that we all need to be a lot more aware of
and especially the developers need to be a lot more aware of.
And secondly, I think maybe that what comes to mind is that we need more developers.
We need a lot more developers.
Many people focus on the Bitcoin price, for example.
I know that the Bitcoin price is going to go up.
It's not that interesting for me.
It just goes up and it doesn't go down.
It just fluctuates upwards.
And it will do that because it's programmed to do that.
What's not programmed is whether Bitcoin will be built and kept alive by people, by people.
Those are individual decisions.
And so we need to increase, largely increase the number of developers that we have.
We have a constant lack of innovation, a constant lack of developers.
And for that, we need to work on our culture.
We need to work on our messaging and engage a lot more with the world.
we cannot
build this in isolation
by closing off. We can build
our little projects and our little citadels
without having to
engage with anyone. But then we will
fail.
We are currently racing
first against
a technological dystopia
that will come if we don't
do anything against it. And
secondly, we're also racing against CBDCs.
The central
bankers aren't sleeping.
And they are being paid to do their work.
Good thing is that they are very slow.
They are way slower than a startup could be or a high-tech company could be.
It's still very bureaucratic, but they keep on churning on.
And the CBDC is going to come.
So we need to be able to provide a safe alternative for people who don't want any of that.
and we will see a world where there is no physical cash anymore and everyone
will be forced to use digital money and the question is what type I hope that
everyone will be able to use a free and open source system like Bitcoin that is
made from the people for the people that allows us to choose how much privacy we
want to have how much control we want to have over our money that allows us to to
store our wealth without permission and to make payments without being tracked.
Yeah. And this is something we've been talking about on the side off and on over the last week,
which is something that obviously running a media company, I focus on a lot as narrative.
And I think if going back to meeting people where they are and communicating and framing
things properly, that's one thing I think I'm going to be focusing on more in the coming years
of the framing of this privacy. Obviously, Matt and I talked a lot about it on the Rabbit Hole
Recap. We've had plenty of privacy advocates here on TFTC throughout the years. But I think,
again, going back to the point that you made, which is we are at this pivotal,
crucial moment, I think the main focus needs to be on financial privacy over the next few years,
particularly um and i think we've seen particularly with esg dei that if you do speak up and frame
things correctly and and put good points out there people that'll resonate with people it'll connect
and ultimately the bad ideas will get pushed out and the better ideas will will will emerge and
win out in the long run but framing narrative and good messaging is important and when it comes to
financial privacy, obviously, since 1970, funnily enough, with the Bank Secrecy Act here,
or not here, but in the United States, that has really devolved into this surveillance
financial dystopia that we've been discussing. I believe a lot of the core of the problems with
financial privacy stem from this one act that I think we should attempt to abolish. But before
we even get to the point of being able to abolish it, it's really framing the narrative of why
financial privacy is good um and why the the tried and true tropes that the regulators and
people will fear monger over financial privacy put out there terrorism money laundering
drugs whatever it may be you're letting you're letting the bad actors win because everything
we've been discussing here like that's what frustrates me the most about this discussion
about financial privacy and the inability of regulators to let innovation in a banking and
financial application sense flourish is it all anchors back to oh no you can't do that because
we can't surveil you it's you're literally letting the terrorists win when you say that 100 this is
exactly what what we are in right now they are controlling the narrative it's not us and it might
feel for some that we are because you're thinking of a smaller world that that there is but the
the world is really really large and most people don't care about what we say right now and so this
is it's not only about being right it's also about winning an argument and those are two different
things as uh you know as most people will know but it requires rhetorics and knowing what's going on
outside the world that you move in and acquiring their own their language and meeting people where
they are. And just to repeat, we've gone through the same thing with private messaging. When people
were talking about privacy and messaging, it was associated with child sexual abuse material,
terrorist financing, and all sorts of criminal activity. And that was the first association
that a normie on the street would have when you say encrypted chat. Today, encrypted chat means
I can be free and I can send a love letter to my loved one without being intercepted.
This is a commonly regarded part of freedom that we have today.
We have still the entire road to walk in terms of financial privacy,
and we need to walk it, I think it would be good to walk it in the same way,
By finding people who can transport this message appropriately to the appropriate people and show that it's not only the bad guys who want financial privacy, it's mostly 99.9% the good guys who also require financial privacy.
I think people like Alex Gladstein are doing an amazing job by communicating the idea of Bitcoin, the ideals of Bitcoin and the opportunities that it gives us to a world that is first like outside of this techno bubble.
But there is like on a political realm, on a societal realm, there's so much to do.
and i hope we won't get there by making huge mistakes it can also you know some people wish
that something explodes and then people get hurt and that's how they find the good thing
i hope that that's not going to be the way although this might be what we end up with
but i hope that not a massive data leak that docks half of the planet will be it but rather
that we can, um, that we can provide positive and constructive, uh, arguments why, uh, this
is important for everyone. Yeah. Again, like the frustration of letting the baddies win.
And I don't, I don't think it's, I think the regulators and a lot of people, um, in the
financial realm understand that this technology is probably good, but they like their boat and
like having control but i think it's important to get the narrative outside of that bubble and into
the minds of of the layman the common man if you will financial privacy is good and not only that
like the technology the stack the banking stack that is emerging on bitcoins we have bitcoin
lightning e-cash arc is pretty interesting to me noster creating this messaging layer um that can
set past messages between all these different layers that are interoperable with each other
like the high-tech sci-fi applications that can be built are mind-blowing when you sit there to
think about the thought of uh being pigeonholed and boxed into the traditional financial system
and only being able to innovate there is completely demoralizing and i think that's
one part of the message and financial privacy is just a part of that sci-fi future i mean
interoperability and the applications that you can build are the power and the the privacy i would
argue is not just an added benefit but it's just a feature of the system that that is emerging and i
think that's one thing from a messaging perspective that we need to do as bitcoiners is that we can
build the sci-fi financial system of the future like these are the tools that are going to get
us to that place. It's not getting a license with JP Morgan and setting up a broker dealer
or a wire house to be able to do this. It's this interoperable open source, these interoperable
open source protocols that anybody can build on. That's where the innovation is going to
come from.
Yes. And it's not only privacy that we are improving. We're also improving functionality.
We're making things possible that were impossible before, such as true microtransactions, for example.
So an e-cash system allows you to make real microtransactions.
What I mean by that is sub-cent payments that take a couple milliseconds to settle, for example.
Another thing is that I think this is also interesting for the audience to realize is that because e-cash is a bearer instrument,
which means that kind of think again like physical cash that you take out of the atm
you can use it without internet so the fact that you can go into a bar and make tap to pay with
your bitcoin wallet without having to be online is is mind-blowing this is like this is where we
need to be this is what we need to achieve in order to um to replace mastercard and visa
But the same property of being able to make offline payments is also what gives you fantastic privacy properties.
So it's a whole package of innovations and privacy is just a small part of it.
And I think this is also a narrative that we should focus on is that you don't have to believe in privacy in order to use these systems.
They just give you also more ability and more control.
And privacy can also be seen as a side effect of these things.
Similar to, for example, using Lightning.
So in Lightning, you're able to make Bitcoin transactions that settle almost instantly.
And the fact that it's onion-routed is something that is technically necessary for a system where everyone can pay everyone, basically.
So it needs to hop through multiple lightning nodes until it reaches the end.
But the same method also gives you great privacy as the payer.
So maybe something also to keep in mind as a developer is that we can put our own ideals into the software that we built.
And we can package things in such a way that they give a comprehensive collection of these ideas that users can use in a whole package.
I think we're going to win.
But it is going to take people taking agency over their own lives and getting off their ass and actually building this stuff.
And that's the one thing that's been incredibly encouraging to see emerge from the Cashew protocol and the culture around it is this idea of you can build immediately, come test it out.
and seeing the applications that are being built whether it's ehash to fix the mining pools uh
things like the what boardwalk is doing with their with their application the stability pools and um
just on nostre while it's implementing mpub.cash and giving people who join the nostre protocol
a wallet out of the out of the gate so they can receive bitcoin i think like that use case
is incredible you download a a noster client iris.2 or something like that and boom you're
able to receive money you essentially have a bank account immediately from downloading a piece of
software it is quite crazy yeah i'm like this is this pumps me up so much uh the the true innovation
there is is pablo's nip 60 this is something that most noster clients are looking into right now
Just as a small, short summary of what this allows you to do is right now in Noster, Noster works in a way that you have a key pair.
So you have a private key and a public key.
It's an NSEC and an NPAP.
And that NSEC, that allows you to kind of log in everywhere.
So the first magical experience that everyone has with Noster is they generate an NSEC, then you use one client.
And then someday they learn that there are more clients out there and maybe they want to use a different client because they don't like the first one.
anymore so they take their insect and put it into the second client that they've just downloaded
and boom everything just appears like your whole profile all the people you're following all the
posts that you that you're reading and your comments and so on like everything just reappears
and this is like the true power of nostra which gives the user control to switch as easy as
possible nothing can lock you in and that's amazing and uh this was this was quite hard to
achieve with a Bitcoin wallet itself. So your wallet would typically be bound to the client
that you are using. And as soon as you want to move the client, then you would have to take care
of that wallet somehow, either empty it or do something with it. Always like a friction for
users. And now with NIP60, NIP60 basically allows you to have an eCash wallet inside your NOSTA
client that stores the eCash on the NOSTA relay. So that means you can have the same experience as
the posts that you can take your nsec and move to another client and see everything reappear
and the same can be true also for your money it means that you can take your money with you
basically take your nsec go to the next client everything loads up and there are your sets and
you can immediately start zapping again yeah it might scare people your ecash hits on the
relay but you need your nsec to unlock the ecash oh yeah everything is completely encrypted and by
the way everything we say sounds super complicated but all the time we keep the normie user in mind
Like, my prototypical user in mind is the old lady on a Brazilian beach selling mangoes for Bitcoin.
Like, I want to cater to her.
I want her to have the best privacy possible, the best functionality possible, without having to understand anything that's going on.
So the goal is always peep.
That's like tap to pay, you're done.
Yeah.
And thinking of the Brazilian grandmother selling mangoes on a beach, you just go to her and say, hey, download this application and broadcast to the world that you're out here selling mangoes to draw attention to your business.
And then, oh, in the same application, you can receive payments as well.
Yeah, and it goes even further than that.
So with these integrated Bitcoin wallets inside Nostor, we can build real circular economies.
And I don't mean just people zapping each other in a circle, but literal trades that
happens inside.
So one example of that is, let's say you make a post on Highlighter, you write an article
because you're a journalist and people really like that and they can zap you and you receive
those sets and you put them directly, you see them appear in your Highlighter clients.
Now you can take the same insect and you can go to Shopster, for example, Shopster is a
Decentralized Marketplace built on NOSR uses all the same primitives.
And you can take your NSEC and put it into Shopster and see your money reappear.
And you can use that money to buy a phone that can be sent to you in physical space.
So this is actually happening.
People are earning money on NOSR and spending the same money on NOSR without leaving the protocol and without having to install any additional software.
It's quite magical.
The only thing that you need to keep is your NSEC.
And with that, you can move anywhere and take everything with you.
Yeah.
And I mean, I think you've been if I feel comfortable saying this because you've been
sending notes about it and we've talked about you, you're becoming more convinced that Nostra
is going to be an incredible bootstrapping mechanism for Bitcoin itself.
Yeah, absolutely.
I was I mean, I'm a big fan of tips and zaps and all this, like my my half of my life I've
spent building systems where people can do that.
And I think the Internet is supposed to be monetizing through peer to peer interactions.
And that's a whole nother discussion with the advertising model that we've gone gone
with instead of the peer to peer payments model that people in the early days have envisioned.
But again, that's another discussion.
However, what I'm seeing right now, I'm getting more and more convinced is that maybe the
best way to onboard someone a completely naive person who doesn't know about bitcoin yet maybe
it's easier to onboard them to noser actually than to bitcoin because you get bitcoin for free when
you're a noser you get everything in a package and it's in a context so the context really makes
people understand what's happening there when you start get your first sets because like one of your
bitcoin or friends gave you a wallet of satoshi and give you 10 000 sets there and you just
felt this instant transfer most people are like great but what do i do with the bitcoin now like
10 000 sets is not enough to really take security super serious and maybe not enough to get into the
entire bitcoin rabbit hole and understand what's what it's about and start stacking yourself or
something like that but what do i do with these 10 000 sets and with noster that question just
doesn't arise. You just, you enter Noster, you start making posts and people start zapping you
and then you acquire a few hundred, a few thousand zaps, sets as zaps. And the first thing that you
can do immediately is to just zap it on to someone else. So you become a recipient and the sender of
value inside Noster. And no one asks like, what do I do with the Bitcoin on Noster? It's just like,
if you don't know what to do with it, just zap it on. And you can just also keep it in your NSEC.
soon you'll just keep the nsec and the money will be there with you when you log in like in a week
again when you think of nostra for the second time or something but um having a way to receive
and send in a context i think that's truly powerful uh i think basically all the all the
questions they answer themselves if you can embed the user in an ecosystem right away yeah i was
talking with um a bitcoiner at the event that we were at last week and he was explaining to me that
in the town that he lives in they have a lot of merchants that accept bitcoin and he's literally
been living off of zaps like he'll get he'll make post get zapped acquire balance and then
in meat space go to the the butcher and buy some steaks and just use the zaps straight from his
wallet and pay the butcher i'm sure those steaks were fucking delicious but it is emerging and it
does seem great and it is i think the ultimate goal of sitting down with you in person thank you
for doing this by the way um my pleasure is to introduce the world to artists like yourself
working on this and more importantly the fact that there's a lot of as the price of bitcoin
goes up what happens with this show is people looking to learn about bitcoin come to learn
about Bitcoin, but many get distracted with the siren calls of shit coins, DeFi, Web 3.0,
whatever it may be, whatever the meme of the week is. And I love bringing, I love having you on the
show because I think, again, I said it on Money Matters and I'll reiterate it now. I think what
you're working on is the signal, the true infrastructure that will lead us to a new
banking system built on Bitcoin. It's going to take time. It's going to take effort. It's not
going to happen overnight. It's going to take a lot of patience by the individuals who expect
these things to just hit the market. It's not going to happen that way. But if you squint and
you actually begin experimenting with the tools, you can see where this is going. And I think
it is imperative that anybody, particularly anybody new out there, or maybe even people
have been in Bitcoin for a while and have cast away Nostr or eCash, whatever it may be, to begin
using the tools and seeing it because once you use it like that's the crazy thing over the last
two weeks uh i didn't bring a lot of cash down here i made the mistake of not hitting the atm
uh and getting cash and a lot of places are cash only and i've had a bum um bum some tabs off of
friends but immediately i'm able to open primal find them in my contacts and just zap them and
And that use case alone, like replacing Venmo with this web of trust on Nostr with an embedded Bitcoin wallet is incredibly useful for me.
It is the most important thing to try these things out for yourself because you won't be you don't you don't experience the magic of this by just listening to two dudes talking about it.
You must experience the self.
And although we're early, all of what we've talked about already exists.
like this is not just we're not drawing uh ideas here uh you can try this yourself you can go to
cashew.me c-a-s-h-u dot m-e that's a web wallet for cashew it's just one of like a dozen different
cashew wallets it doesn't lock you in you can just it's one of the things that you can try
and find a mint and start using it as a as a lightning wallet for example you can it's it's
One of the best custodial Lightning Wallets that you can have and make payments and receive payments.
If you're more well-versed and you're running a service, you're running, let's say, a video streaming platform or you're selling something online,
you have any kind of software that gives users a balance, then you can run a cash or mint as well.
So you can research how to do it.
It's super simple to set up.
All you need is a Lightning Note and that's basically it.
And you can issue e-cash to your users, and the users can use it in your platform, for example.
And so all this stuff is already there, and more and more people are using it.
The most important thing is that you try it out.
Only if you convert that zap into a stake, you know that shit is real.
That was my first experience.
The first time I bought, I think it was beer.
something with bitcoin except for just stacking it i understood that this stuff is actual money
it is money it's just money it's that it's very simple to understand
khali it was a pleasure sir i know uh i know it must be painstaking for you to wear the mask
through an hour-long interview i was born this way
any final messages for the freaks
other than that
yeah go to cashew.space
if you're interested
that's casu.space
you can find all the information there
if you want
if you're a developer
and this inspired you
look into cashew
we're always looking for contributors
if you have any ideas
how you could use these systems
to improve your own technical stack
try it out you can reach out to me directly i'll always show you around and help you to get into
this and if you're a developer listening to this and you're not particularly interested in cashew
then please consider becoming a bitcoin developer we need all the help that we can get we can only
build the system in an open source and a collaborative manner and i can assure you that
working on a huge project like this will give you life fulfillment and motivation to keep going
you don't have to work for a company that you don't like which is unfortunately most of the
people that i know who work in tech do so please consider it and help us to reach you know to
prevent a massive dystopia from emerging and on the contrary to build the utopia that we want to
see no one else is going to do that for us so join us join us peace and love freaks
