Thread
• Holding #Bitcoin on exchanges is easy but very dangerous.
• Holding #Bitcoin requires you to be your own bank - which is still too hard for many.
Thanks to @fedimint, there is now a third way.
👇 A thread 🧵
• Holding #Bitcoin requires you to be your own bank - which is still too hard for many.
Thanks to @fedimint, there is now a third way.
👇 A thread 🧵
Holding Bitcoin is too difficult?
Many hard-core bitcoiners will be outraged by what I said.
Remembering 12 magic words is not difficult, right?
Running your own node is not difficult, right?
Many hard-core bitcoiners will be outraged by what I said.
Remembering 12 magic words is not difficult, right?
Running your own node is not difficult, right?
The reality is that it is too difficult, for a big portion of the world.
• 3 billion people do not have access to the Internet.
• 1 billion people do not have access to electricity.
• 770 million people are illiterate.
• 3 billion people do not have access to the Internet.
• 1 billion people do not have access to electricity.
• 770 million people are illiterate.
Ideally, bitcoiners should have custody of their funds and run their own nodes.
But at present, this discomfort leads many to trust third-party custodians such as exchanges - there is no denying it.
But at present, this discomfort leads many to trust third-party custodians such as exchanges - there is no denying it.
What is needed is an intermediate solution that is as convenient as exchanges but much more secure.
@fedimint is the answer to this.
@fedimint is the answer to this.
The only way around the inconveniences of self-custody is to rely on someone - which always requires trust.
Fedimint reintroduces the need for trust in the only way compatible with the value proposition of #Bitcoin
Bottom-up trust.
Fedimint reintroduces the need for trust in the only way compatible with the value proposition of #Bitcoin
Bottom-up trust.
Thanks to the open-source project Fedimint, the most technically-skilled and trusted members of a given community will provide for the others.
In other words, it allows you to be the bank of your mom, your friends, or your community.
In other words, it allows you to be the bank of your mom, your friends, or your community.
The need to trust someone introduces trade-offs that are specific to the particular situation.
However, Community Custody will generally offer a higher level of privacy and control for the users compared to exchanges.
However, Community Custody will generally offer a higher level of privacy and control for the users compared to exchanges.
These community-centered "banks" are known as Fedimint Federations.
No individual will head the Federation. Instead, it will be a group of trusted guardians.
No individual will head the Federation. Instead, it will be a group of trusted guardians.
Having a group of guardians instead of a single individual makes the Federation:
• Harder to corrupt
• Operationally more stable (some guardians can go offline without stalling the federation)
• Less targeted by regulations
• Harder to corrupt
• Operationally more stable (some guardians can go offline without stalling the federation)
• Less targeted by regulations
In addition, guardians will NOT be able to know how much each individual holds or where he spends his money.
This is possible thanks to a very powerful cryptographic protocol called Chaumian eCash.
If you want to know how it works, check out this 👇 thread.
This is possible thanks to a very powerful cryptographic protocol called Chaumian eCash.
If you want to know how it works, check out this 👇 thread.
Leveraging eCash and Blind Signatures, the transactions that take place inside a Federation are:
• Highly Private
• Highly Scalable
• Highly Private
• Highly Scalable
In addition, Fedimint integrates seamlessly with the Lightning network and can improve the scalability of the latter.
Here 👇 is how.
Here 👇 is how.
As things stand now, onboarding each person on Lightning will take decades.
Consider the case where 2,000 channels are opened per block.
Consider the case where 2,000 channels are opened per block.
Even at this rate, to open one channel for every person on the planet (8 billion) would require:
(8b/2000) * 10 minutes ~= 76 years
(8b/2000) * 10 minutes ~= 76 years
To understand how Fedimint can scale the LN, consider the metaphor of a road network.
• Large towns are connected by highways (Lightning).
• Inside each town there are hundreds of smaller roads (Fedimint).
• Large towns are connected by highways (Lightning).
• Inside each town there are hundreds of smaller roads (Fedimint).
Trying to connect every house in town A with town B would be highly inefficient and, as shown before, would take decades of full blocks.
Instead, Fedimint helps the LN scaling “locally”.
Instead, Fedimint helps the LN scaling “locally”.
What connects town streets with highways are the Lightning Gateway Providers.
A Lightning Gateway is a Fedimint User who also runs a Lightning node.
This user is willing to accept the eCash of the Federation (which is Credit, make no mistake!) for sats on the Lightning Network.
A Lightning Gateway is a Fedimint User who also runs a Lightning node.
This user is willing to accept the eCash of the Federation (which is Credit, make no mistake!) for sats on the Lightning Network.
For this service, the Lightning Gateway is paid a fee for each transaction.
In most cases, each Federation would run its own Lightning Gateway, but the architecture of Fedimint allows this service to be outsourced.
In most cases, each Federation would run its own Lightning Gateway, but the architecture of Fedimint allows this service to be outsourced.
Fedimint’s big vision is to power millions of independent community banks all of which are connected by the Lightning Network.
As seen, this would allow the Lightning Network to scale and would facilitate the adoption of #Bitcoin worldwide.
As seen, this would allow the Lightning Network to scale and would facilitate the adoption of #Bitcoin worldwide.
This is only possible by reintroducing trust and thus credit.
But because this is not imposed top-down, but emerges from the bottom-up, it can be a viable solution for many people, especially those at the beginning of their #Bitcoin journey.
But because this is not imposed top-down, but emerges from the bottom-up, it can be a viable solution for many people, especially those at the beginning of their #Bitcoin journey.
Want to learn more?
Check out the official docs here
👉 fedimint.org/docs/category/primer
(from where I have taken most of the images of this thread, ty)
Check out the official docs here
👉 fedimint.org/docs/category/primer
(from where I have taken most of the images of this thread, ty)
That's a wrap!
If you found this thread valuable, consider giving value back💝
1. Follow me @pippellia for content on #Bitcoin and @fedimint
2. RT the tweet below to share this thread with your audience
Thank you 🙏
If you found this thread valuable, consider giving value back💝
1. Follow me @pippellia for content on #Bitcoin and @fedimint
2. RT the tweet below to share this thread with your audience
Thank you 🙏
