We are proud to announce our sponsorship of Minimint, a project in development that brings the technology of blinded federated mints (Chaumian banks) to Bitcoin.
Federated mints are a natural complement to existing scaling solutions like the Lightning Network and the Liquid sidechain. Families or communities may prefer federated mints for a more local and streamlined Bitcoin banking experience, where running your own node or using a fully centralized custodial service is neither available nor wanted.
In addition to providing a community-focused custody solution within the Bitcoin ecosystem, federated mints preserve the privacy of members’ identities, wallet balances, and transaction histories automatically through the use of blind signatures.
Federated Mints 101
A federated mint comprises independent members who create a multisig wallet and participate in a blind, distributed custodianship. Funds can not be moved or otherwise controlled except by the rules laid out in that particular federation.
When a member makes a deposit, the mint blindly issues a redeemable receipt or note that is then exchanged for bitcoin. These blinded notes can then be traded between mint users. The mint can not tell to whom a note was issued or when it was spent, allowing for a fully untraceable exchange of payment, similar to how cash works.
For a more in-depth review of the technicals behind federated mints and how they work, please see our Engineering Blog entry.
Mints on Lightning
Users are currently limited in their choices when using Lightning: either self-host or rely on a centralized hosting service. For many, running their own Lightning node and wallet is either too much of a technical challenge or altogether unavailable due to their living situation. With the integration of Lightning into federated mints, users have access to a trust-minimized and privacy-conscious wallet solution right from the start.
By adopting BOLT protocols, Lightning-enabled mints would remain interoperable with the broader network, creating a standardized model that is not only secure, blinded, and fungible but, overall, better suited for mass adoption.
As we move closer to hyperbitcoinization and more communities like Bitcoin Beach begin to adopt Lightning for everyday purchases, custody models like federated mints will be essential to the success of onboarding and scaling. By localizing and having certain anonymization measures built-in, mints can preserve privacy, enable censorship resistance, and build a flexible payment system with no single point of failure.
The Minimint project is currently under development and can be found on the Fedimint repository, where individuals working on similar concepts can collaboratively build blinded federated mints on Bitcoin and the Lightning Network.
For more discussion of federated mints and to stay up to date on any breakthrough concepts, you can join the Fedimint Telegram and follow @Eric Sirion, the lead developer, on Twitter.