Fedimint & the Future of Bitcoin Custody with Obi Nwosu - WBD551

Obi Nwosu is a co-founder of Fedimint and a board member for Jack
Dorsey’s and Jay-Z’s ₿trust. In this interview, we discuss how
Fedimint builds upon various innovations to create community
Bitcoin banks, with the aim of fully realising Bitcoin’s
potential to bank the unbanked.


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In 2018, Bitcoin Magazine asked Andreas Antonopoulos to reflect
on 10 years of Bitcoin. He remarked that not everybody needs
Bitcoin; “the real impact of this technology is on the other 6
billion: the unbanked, the underbanked, the politically
oppressed.” Whilst Bitcoin has the utility to help those living
outside of the financial system, in its current form it still
lacks the functionality and scalability to adopt the majority of
people who, as Andreas stated, really need it.


Bitcoin has multiple constraints, but a principal issue is
expecting the unbanked to be able to self-custody. The answer to
this problem lay in work undertaken by one of the original
cypherpunks. In 1989 David Chaum created Digicash. Despite the
venture eventually failing, decades later it helped pave the way
for Bitcoin, and, now it is the basis for Fedimint.


Chaum’s innovation was to create blind mints: digital banks where
communities can deposit and utilise digital dollars, and where
the custodians have no access to any of the user data. But it was
a chance meeting between Obi Nwosu and Eric Sirion at a hackers
congress in Prague last year that dusted off Chaum’s work and
give it new life, with the aim of opening up Bitcoin to the
masses. As a result, Fedimint was born in 2021. It attracted the
sponsorship of Blockstream.


Fedimint operates outside of the Bitcoin blockchain, and the idea
is that the custody will be managed by trusted members of a
community. Custodial risk is reduced through the ability to have
such mints federated, where the operation operates as a
multi-sig. Obi believes that after the provision of decentralised
censorship-resistant money and payments, Fedimint is the third
pillar of Bitcoin. It offers the real opportunity to scale
Bitcoin into a global currency.