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In this episode of “Bitcoin, Explained,” hosts Aaron van Wirdum and Sjors Provoost are as soon as once more joined by resident sidechain and Layer 2 skilled Ruben Somsen, this time to debate Federated Ecash, a challenge that has been sponsored by Bitcoin infrastructure firm Blockstream since October 2021.
In the episode, van Wirdum, Provoost and Somsen mentioned the historical past and design of Ecash, a pioneering digital money challenge developed by cryptographer David Chaum and his startup Digicash within the early Nineteen Nineties. The trio explains how the Ecash system allowed prospects of standard banks to make non-public transactions over the web.
This newest iteration of Ecash, Federated Ecash, takes the unique idea, however applies it to be utilized by custodial (or shared custodial) Bitcoin and Lightning wallets. In quick, a Federated Ecash service would settle for bitcoin deposits, and alternate them for bitcoin-denominated Ecash tokens. These tokens might be ship to different customers, and finally redeemed for the deposited bitcoin. These bitcoin would, within the meantime, be locked up in a multisig tackle shared between a set of custodians.
Concluding the episode, van Wirdum, Provoost and Somsen went over a brief record of very best properties for a digital money system, and asses how Bitcoin, Ecash and the mixture of the 2 embed these properties.