Published on: 2021-06-30T01:05:41+00:00
Banks have historically acted as federations and taken custody of money to manage for their clients, facing social, political, and economic forces. However, banks operating on top of Bitcoin may be subject to different forces due to lack of regulation and increased competition. Federated chaumian banks that interface exclusively with the Bitcoin and Lightning networks could potentially evade regulators and serve a global audience without being tied to a particular country or region. The node management problem can be solved by something similar to CLBOSS software, but it may not fully abstract over high fees, uptime requirements, and unexpected fund unavailability.In the discussion about federated mints, the concept of replacing blinded signatures with blinded credentials is explored. WabiSabi, which uses blinded credentials, faces obstacles in a federated context due to the lack of client-side validation and the use of KVACs. Alternative credential schemes like the ACL scheme, Coconut scheme, and Danake are also discussed. ZkChannels, formerly known as BOLT, is another related project hinting at dropping the requirement for a new opcode. Links to papers discussing these schemes are provided.Federated mint is seen as a replacement for banks and other custodial services, offering superior user experience. Wasabi and WabiSabi avoid the inherent custodial issue of Chaumian mints by operating as temporary entities counterchecked by users. Nodelets allow for multiple users to implement a single node without a central custodian, improving privacy. However, the protocol's complexity and online requirements may make it suboptimal for non-technical users.Chaumian mints have been largely forgotten but offer excellent privacy, usability, security, and scaling compared to naive hosted Lightning wallets. Blind signatures protect against internal privacy leaks, and if the number of users is large, external privacy leaks are prevented. Lightning mint wallets offer superior usability compared to self-managed wallets, as users need not worry about node operation or channel management. Security is greatly improved compared to standard custodial Lightning wallets. Mint operations are lightweight and scaling properties are similar to the Lightning Network itself. The author believes that standardized protocols for communication between wallet interfaces and mint backends will be developed.Overall, federated mints present a promising future for improving the privacy, security, and usability of Lightning wallets. With the power of Bitcoin and the Lightning Network, mints now have access to a decentralized and uncensorable currency.
Updated on: 2023-07-31T23:29:08.834071+00:00