Cashu is a free and open-source Chaumian ecash protocol built for Bitcoin. Ecash is a digital bearer token that is stored on a user’s device, very similar to physical cash. The Cashu protocol allows you to build applications such as wallets or voucher systems. Cashu is designed to be private, secure and scalable. Transactions are instant and nearly free.
To decrease the cost of Bitcoin transactions, the Lightning protocol was created to lock liquidity between nodes and allow them to exchange bitcoin back and forth using a local state. Cashu adds another layer on top of lightning, implementing the Ecash protocol “Blind Diffie-Hellman Key Exchange”by David Chaum using Bitcoin as the settlement layer.
In Cashu, anyone can create a “mint”. A mint is basically an application that accepts bitcoin, holds that bitcoin in custody and issues tokens to the user that sent the bitcoin. These tokens can then be transferred to other users, that can then redeem the tokens at the mint for bitcoin. This allows users to exchange tokens while they are offline / airgapped, and provides complete privacy as the mints don’t hold information about the transactions thanks to the protocol.