eCash Wallets

When you decide to use bitcoin, you have two choices, a toss-up between complexity and custodial risk. You can either run everything yourself or trust a third party to manage it for you, which is a single point of failure, subject to legal, execution, financial and security risks.

To run everything yourself is costly and complex, and many around the world simply don’t have access to the resources to go fully non-custodial. Instead of dealing with on-chain wallets, fees and channel management with Lightning, eCash mints remove that hassle from users and allow a federation to manage it on their behalf as a sort of bitcoin-backed community back.

Running an eCash mint can be done for friends and acquaintances, but platform operators, communities and banks can also offer this service for their own customers, members and friends. It provides a healthy middle ground for those who have to choose between costly non-custodial and risky and possibly even costlier custodial services.

eCash privacy

A Mint does not know its users, their balances or the transactions made. Thus, there is anonymity towards the operator of the Mint. But also outside of Mint results in a higher anonymity for the user. All Lightning payments from users of a Mint are perceived externally as the total activity of that Mint.

eCash wallets provide a smooth, simple experience and allow users to interact with eCash and Lightning users/wallets.

eCash usability

If your only option is a custodial wallet, you’re relying on permission access to your funds and could be exposing yourself to risks like hacks, fractional reserve operations or even fraud. Unlike a custodial wallet, you need not rely on a single entity but on the federation to honour the protocol and ensure that complexity is handled by them, while users simply interact with one another to send and receive payments.

eCash security

The security of an eCash Mint and, therefore, an eCash wallet is by no means as secure as a self-hosted wallet; this is still the better option when it comes to security. When you use an eCash wallet, you might save on transaction fees and dealing with complexity, but you are introducing trust into the equation.

The federation members responsible for the security and conversion of the bitcoin balance can make off with it. Members would need to collude to steal all the funds, and if mint members’ identities are public, there is social pressure and legal pressure to keep them in check. Members may be individuals with a good reputation, with whom users have some trust or personal connection or businesses who would not risk stealing from customers as it harms the brand and profitability going forward.

Similarly, association members can be located in different countries and have different ideals, making the Mint more robust to regulatory intervention. While eCash mints are a trust-based model compared to a standard custodian wallet, the security is much higher.

Setting up an eCash wallet

eCash wallets require very little in terms of setup; all you need to do is create a wallet and backup your wallet file, allowing you to restore your wallet should you lose it. Alternatively, you can tie it to a private and public key pair like Nostr should you wish to have an easier way to recall your wallet.

Once your wallet is set up, you can immediately receive bitcoin via the Lightning network or eCash tokens. Ecash is a bearer asset, meaning losing access to this wallet will mean you will lose the funds. The wallet stores ecash tokens in its database.

If you lose the wallet or delete your data without backing up, you will lose your tokens. So ensure that you always back up your wallet and learn how to restore it before you start using funds.

Once your wallet is set up, you will need to add a mint or several mints so you can interact with users on the network.

An eCash mint is a backend and custody provider that communicates with your wallet and manages funds and conversions. An eCash mint’s primary function is to accept bitcoin deposits from its users and exchanges them into bitcoin into sats-denominated eCash tokens. When you deposit 100 satoshis into an eCash mint, you are meant to receive 100 eCash tokens that represent that balance. This bitcoin, meanwhile, is stored in a multi-sig address shared by several custodians to help reduce custodial risk.

You can then send and receive eCash tokens with different users via various mints and later burn those tokens to receive the number of satoshis you have and withdraw them to the Lightning Network.

The operator of an eCash mint needs to learn the owners of the eCash wallet, i.e. its users. An eCash mint does not see the number of users, their identity, account balances or transaction histories. This gives users complete freedom to choose the Mint with the best reputation or to use a local Mint with which to personally interact with members of the depository.

Anyone can run such a Mint for their friends or as a group. Likewise, wallets like the Wallet of Satoshi or the Cash app could run a mint. Even non-financial services, like Twitter, could run an eCash mint. Users would be able to subscribe to private mints or public mints as long as they have the URL to interact with the mint.

Should you wish to test out an eCash wallet, below you can find public mints available.

Note: You are using these mints at your own risk; if you lose your wallet or mint URL, you could lose your funds. Ensure you do not fund wallets to a size you can tolerate losing and make backups of your wallets.