KoinlyticsCashu and Fedimint are two open-source implementations of e-cash primitives on Bitcoin. Both derive from David Chaum's 1980s digital cash designs. Both give Bitcoin users transactional privacy that Lightning cannot provide, at the cost of trusting a federation or mint operator.
The Chaumian model
- User deposits sats with a mint / federation.
- Mint issues blinded tokens (cannot link back to the depositor).
- User transfers tokens off-chain (via any messaging channel).
- Recipient redeems tokens for sats from the mint.
The mint knows total deposits and redemptions but cannot link individual transactions to users. This is why the design is called "e-cash" — the properties feel like physical cash.
Cashu (2022)
Single-mint model. Anyone can spin up a Cashu mint. Users choose which mint(s) to trust. Simpler tech, easier to run, individual custodial risk.
Fedimint (2022)
Federated model. A group of guardians (often 4-10) collectively runs the mint using multisig + BFT consensus. Requires majority guardian collusion to steal. More resilient than single-mint.
Why this matters
- Lightning is not private. Payments across public channels reveal payer, payee, or both to routing nodes.
- Federations enable privacy without on-chain footprint.
- Small communities (villages, cooperatives) can run their own money without custodial exchange dependence.
Real deployments
Fedimint deployments in El Salvador, Africa, and among Bitcoin communities globally. Cashu mints run by hobbyists and privacy-focused wallets (Nutstash, Minibits).
Trade-off you accept
Your sats live inside a federation or single mint. If the federation fails or the mint runs, you lose. This is real custodial risk. The design assumes the federation is a lesser evil than either total self-custody Lightning routing exposure or a fully centralized exchange.