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I have heard of Fedimints. Never understood them 100%, can some explain it to me like i am five?

As far as the user is concerned it's like wallet of satoshi but where the keys to the actual bitcoin are held in a multisig so most of the key holders would need to collude to steal the coins.

The fedimints would have lightning channels between one another and custodial services so they were all interoperable. Users themselves would technically have e- cash rather than actual bitcoin, but that's irrelevant as far as user experience is concerned.

Better privacy and less chance of rug pulls are the benefits over custodial. It'll also be cheaper and easier than the self custody options, allowing bitcoin to scale.

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Discussion

035d1314... 2y ago

There would be checks and balances, audits regarding e-cash to Bitcoin? Or where does e-cash become involved with Bitcoin? Are they IOUs?

Sorry, your answer is good, but now I have more questions.

Shire 2y ago

There are ideas for automated bank runs to keep them honest. It really hinges on the key holders being chosen well, though - people of standing in their local communities so they can be held accountable if there is a problem.

When you compare it to a regular custodial arrangement the fedimints seem clearly superior. Say you'd need 7 of 10 corrupt key holders who are ready to collude don't care about the consequences.

Also, any failures (fraud) would be highly localised with this model and obviously the actual supply of bitcoin would remain unaffected.

035d1314... 2y ago

Thanks so much.

Shire 2y ago

And

Yes, anything that isn't self custody is an IOU. 🙂