Fedimint

Fedimint sits between holding your own keys and handing them to a company. The bitcoin is held by a federation that tolerates a fixed share of bad guardians, four surviving one failure and seven surviving two, and the notes it issues use blind signatures published by David Chaum in 1982. It is still somebody else's custody, and that is the whole tradeoff.

How it works

A Fedimint federation is a small set of servers, each run by a different person, that agree with each other before anything moves.

The guardian count follows a Byzantine fault tolerance formula of three faults plus one, so a federation of four keeps working with one guardian malicious or offline, seven tolerates two, and ten tolerates three. Coordination between them uses AlephBFT, an asynchronous consensus protocol, and each guardian runs its own bitcoin node beside the Fedimint software. The bitcoin itself lives in a multisig none of them can spend alone.

Deposits arrive on chain or over Lightning, and what you receive back is ecash. The mint signs your note without seeing it, using Chaum's blinding trick, then you unblind it and hold a piece of bearer data worth a specific number of satoshis. Spending is handing that data to somebody, who asks the mint to reissue it so it cannot be spent twice. Because the reissue is blinded too, the guardians learn that a note was used and nothing about who used it or who received it. Inside a federation, payments are private from the very people holding the money.

Lightning is bolted on through gateways. A gateway is a separate participant, not a guardian, that swaps ecash for Lightning payments in both directions so members can pay invoices in the wider world. Gateways are untrusted in the same sense the mint is not: they can fail a payment, not take your balance.

Two honest caveats. Notes are files on your device, so device loss is a real risk, although modern clients can rebuild a balance from a seed by replaying the federation's records, which only works while the guardians are running. And if enough guardians collude or are compelled at once, the bitcoin is theirs, not yours.

Where you see it

Fedimint turns up where a bank account is hard to get and a single trusted custodian is worse than a group of neighbors.

The typical deployment is a community that already trusts each other in other ways: a savings club, a co-operative, a congregation, with guardians chosen from among people who cannot easily disappear. It also gets used as a shared family or small-business wallet, where one member keeps the Lightning gateway running. The Fedi app packages the whole thing for people who will never read a configuration file.

For a reader buying bitcoin with the aim of keeping it, the recommendation is blunt: this is not self-custody, and it should not hold your savings. Withdraw from an exchange to a wallet whose seed phrase only you know, and use hardware if the amount justifies it. Fedimint's real audience is people whose alternative is not a hardware wallet but a custodial app run by strangers, or no bitcoin at all.

Fedimint vs Cashu

Fedimint and Cashu both issue Chaumian ecash, and they differ in who holds the keys. Cashu is a single mint with a single operator: easy to run, easy to try, and a single point at which everything can be stolen. Fedimint spreads the keys across guardians so no individual can walk away with the reserve, paying for that with setup complexity and coordination. Cashu notes also travel between many independent wallets, while Fedimint notes belong to the specific federation you joined and mean nothing outside it.