Can “Bitchat” Build A Free Internet With Bitcoin?

Ex-Twitter CEO Jack Dorsey. Photo by Drew Angerer/Getty Images.Getty ImagesJack Dorsey has spent the last decade searching for ways to strip intermediaries out of communication and finance. He has maintained that Twitter would have been better conceived as a protocol than an app; since then he has supported the development of Nostr, an open-source, permissionless, and censorship-resistant social network.

Now he and a team of collaborators have developed Bitchat, a Bluetooth‑only messaging app that quietly appeared in the Apple App Store earlier this month. The software knits phones that are within close-range of each other into a low‑energy mesh so that text can hop from device to device without ever touching a cell tower, router, or remote server. It works like an offline version of Signal, and that alone would be newsworthy, but the real breakthrough emerges when Bitchat pairs its mesh with ecash, a recently resurrected concept that wolud allow bitcoin to be transmitted from phone to phone in the same way.

Ecash vs. Bitcoin

Ecash dates from David Chaum’s 1982 paper on blind signatures, a cryptographic primitive that lets a bank vouch for a coin without learning who spends it. It was a solution to maintaining the privacy of cash while solving the double-spending problem of digital money (being able to spend the same money multiple times). Chaum launched the idea commercially in the 1990s, but it failed to achieve traction.

Bitcoin solved the double‑spending problem with a global ledger that is independently verified by all nodes on the network. However, to achieve this, Satoshi’s solution traded off the speed and privacy offered by physical cash. Chaumian ecash grafted onto bitcoin reverses that trade‑off. An ecash mint handles double‑spend detection, while users regain instant, local finality along with the option to collapse the token back into money whenever connectivity returns.

MORE FOR YOUMany who hear about Chaumian ecash for the first time might assume it must be an altcoin because the tokens circulate outside the public bitcoin ledger. In fact, every token is a bearer claim on real bitcoin held inside a mint that offers one-for-one redemption. The mint cannot create more claims than the bitcoin it controls, so the ecash tokens inherit bitcoin’s fixed 21-million supply. Everything in digital money is a tradeoff; by providing speed, ecash introduces counterparty risk at the layer of the mint. In other words, ecash trades off self-custody of the underlying coins in order to gain the ability to move a digital bearer token instantly. Bitchat shows that this can be done without devices even touching the internet.

Clearing vs. Settlement

To further illustrate how ecash differs from bitcoin, we can draw upon the distinction between clearing and settlement in conventional finance. Clearing is the provisional accounting step that records who owes what, while settlement is the later, irreversible transfer of reserves. One payment network called the Clearing House Interbank Payments Systems, or CHIPS, clears dollar wires during the business day. Another payment network, Fedwire, settles the net positions at the Federal Reserve. Ownership can change during clearing, but finality arrives only with settlement.

Bitchat’s Bluetooth mesh plays the role of CHIPS. When two phones trade an ecash token offline, the sender relinquishes the claim and the receiver can immediately spend it again; the local ledger has cleared. True settlement happens only when the current holder reconnects and redeems the note with the mint, which then burns the token and pushes the corresponding bitcoin onto the base layer of the network (bitcoin’s time chain). Until that redemption, the payment is cleared but not settled; once the mint writes to the time chain, it enjoys the same global, irreversible finality as any on-chain transfer.

Last-Mile Sovereignty

The Bitchat-plus-ecash model widens bitcoin’s surface area without tampering with its monetary policy, showing that hard money can be used in contexts where payment speed is important and internet connectivity may or may not be available. All the while, the ecash tokens used for payment are bearer instruments that remain anchored to an incorruptible base.

To get there, mint implementations need rigorous reputation management features and proof-of-reserve functionality so that users can understand how much counterparty risk is introduced by the mint. The end-user app itself must present ecash payments in a familiar interface, turning ecash payments and bitcoin redemptions into ordinary taps and swipes. If the user experience of this technology can be developed to the degree that it can be readily used by non-experts, it could do for payments what Nostr aims to do for speech: extend the reach of permissionless systems all the way to the physical edges of daily life.