We all know that the goal of eCash is to become the best money the world has ever seen. A global currency that aims to be both a great store of value and medium of exchange.
But I wouldn’t say that’s the problem eCash is trying to solve. Nor is it our ability to walk into a store and pay for something with XEC since we can already do that easily enough using cash or credit cards.
So what is the problem eCash is trying to solve? To help answer that, let’s hear from the man who predicted the development of a reliable eCash more than two decades ago, and the man who made it possible:
“The internet is going to be one of the major forces for reducing the role of the government. The one thing that’s missing, but that will soon be developed, is a reliable eCash. A method whereby on the internet, you can transfer funds from A to B, without A knowing B, or B knowing A.”
– Milton Friedman
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
– Satoshi Nakamoto
What you may have noticed is that both quotes highlight a very specific problem: the ability to pay someone over the internet without having to give up your identity. To me, that is the problem eCash is trying to solve.
The invention of the internet has undoubtedly changed humanity forever. It’s enabled us to do everything from finding the least congested route on our daily commute, to being able to instantly listen to just about any piece of music ever created. Using only our smartphones, we can order food, a taxi, watch our favorite movies, or even pay a friend our half of the dinner bill.
Something else the internet has allowed us to do is form connections with people all over the world. People you would have likely never encountered otherwise. Social networks have made it possible to find new communities full of individuals who share your specific interests. They’ve also given us the opportunity to reinvent ourselves and create entirely new personas that are exclusive to the internet.
I believe the last item is an often overlooked, but important point, because it gives us a way to share our thoughts and ideas without fear of being judged or condemned in real life. It allows us to find other like minded individuals or people who are facing the same kinds of issues you have. This anonymity provides us with a feeling of safety and privacy and an additional layer of protection from potentially malicious forces.
But as wonderful as all that is, the one thing that was missing was the ability to transact value over the internet with that same degree of freedom and privacy.
Satoshi Nakamoto changed all that when he launched the Bitcoin network on January 3, 2009. He made it possible for us to send money across borders to anyone in the world without having to go through a bank or other financial institution.
The importance of having a form of money not controlled by a central authority was made crystal clear in the first few months of this year when we witnessed innocent Canadians losing access to their bank accounts simply for giving financial support to a cause they believe in. And now many Russian citizens are suffering the same fate because of a war that was started by their government that they themselves have nothing to do with.
While these two events–Canada’s Freedom Convoy and the Russian invasion of Ukraine–have helped people realize the need for censorship resistant money and the ability to be your own bank, I believe what has gotten lost in the current discourse is the idea of transacting peer-to-peer.
What’s happened instead over the years is that many people discovering crypto for the first time are doing so purely as speculators rather than as users. Instead of self-custodying their crypto, they are relying on centralized exchanges like Binance and Coinbase to hold their coins for them not realizing that this defeats the entire purpose.
I think a big reason for this is due to Bitcoin’s failure to scale. As a result, Bitcoiners have moved away from the idea of digital cash to push the digital gold narrative. But that’s a huge mistake in my opinion. It perverts what Bitcoin was originally intended for. The idea of Bitcoin as digital gold implies its only use case is as a store of value that acts as a hedge against inflation. And while that might make sense for actual, physical gold, I don’t think it does for BTC.
Because I believe what gives something value is its usefulness, and BTC to me is no longer useful as a form of money. The high transaction fees and the need to wait for slow block confirmations makes it both expensive and unreliable to use as peer-to-peer electronic cash.
To be fair, the eCash protocol still has a lot of work to do before I can honestly say it has everything I’ve been hoping for since first learning about Bitcoin. But I can at least take heart in the fact that the people leading this project are focused on solving the right problems and gives me great confidence for its future.
Let me conclude with this. In case you’re still unable to see the value or usefulness of being able to permissionlessly send digital cash to anyone in the world, look no further than the eCash giveaway I recently held to celebrate surpassing 15,000 followers on Twitter:
By leveraging the XEC network, I was able to distribute less than ten cents of value to nearly 500 different people from all over the world, each of whom I’ve never met, who don’t know what my name is, or what I look like. This is something I wouldn’t have been able to do before Bitcoin was invented, and it’s something I can’t do with BTC today because of its high fees.
By using eCash, I’m able to pay for people’s attention in a much more efficient way. I’m convinced that as long as we are able to continue demonstrating how eCash can solve people’s problems, it will continue to grow in value.
Just as the internet has given me the chance to find people willing to hear what I have to say, eCash has given me the chance to pay those people for their time and attention no matter what jurisdiction they live in, while preserving my privacy, and without having to ask for anyone’s permission.