eCash

The bitcoin network is not the most intuitive network to get started with when you think of managing your money. You have to learn about running self-sovereign software and handling public and private key pairs, and with this, you’re taking on considerable responsibility for your money.

When most of us are conditioned to use custodial services and trust our local bank or the biggest bank in our country, taking the leap towards bitcoin can seem like a massive jump that many are simply not ready for and won’t be ready for some time.

Overcoming custody issues

If you still wish to have exposure to bitcoin without all the technical and execution risk, the current solution is custodial services and exchanges; these are businesses that hold paper bitcoin promises in your name and require you to KYC and tie your identity to your bitcoin. While there is an obvious privacy risk involved in KYC exchanges, also known as CEXs or VEXs, there is also a not-so-obvious risk, which is the solvency of the business. If the exchange is trying to make money at all costs, it may be taking risks that leave its balance sheet exposed to the losses, and you, as the depositor, will eat that loss.

Despite these risks and a record of many businesses in the space failing and taking their customers down with them, we still millions of people still choose to use these services because there simply isn’t a viable alternative until now.

eCash mints are a way for the average person to access bitcoin without having to deal with either the complexities of the bitcoin base chain or the side chain networks like the Liquid Network or Lightning Network. The eCash protocol allows developers and businesses to create a near custodial-like experience on the front end that is easy for most people to interact with and understand. At the same time, custody management can be split up between 1 custody provider or several that oversee the management and conversion of funds in and out of the mint.

Easier onboarding in a low risk environment

Consider a user who doesn’t understand how to spin up a public and private key-based wallet; they could visit a web page or use an app when someone sends them funds or they wish to fund the wallet. The wallet could accept bitcoin on the different layers and offer the user eCash tokens in their wallet to reflect the same balance since eCash tokens are pegged to satoshis. The eCash tokens are still a bearer assets since they can be exchanged for the bitcoin pegged to the mint, but since you’re not using a blockchain, you are not bogged down by fees and block times. You get quick instant payments, and you can build up a balance, get comfortable with bitcoin, and once you’re ready, you can move down the layers to have a more secure experience.

Competition for custody providers drivers decentralisation

eCash mints not only open up competition for custody with the local community member, but it allows exchanges and wallet providers to offer an easy-to-onboard solution that doesn’t require needless identity doxing and database management. Since the protocol handles the pegging in and out by mining eCash tokens when funds are presented, there is no need for the service to manage all that internal data and keep updating balances and keeping sensitive information like who is buying what and how much money they hold.

eCash mints also allow users to pay anyone in their mint, in another mint or to the wider bitcoin network should the user they wish to pay not be part of an eCash mint.