This is a transcribed excerpt from the “Bitcoin Magazine Podcast”, hosted by P and Q. In this episode, they are joined by Obi Nwosu to talk about the difference between Fedimint and Fedi and how Chaumian Mints can be used to onboard millions of people on bitcoin.

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Q: How did Fedi’s idea come about — what inspired you and the team to say, “Hey, that’s the problem. How are we going to solve it? And then that’s how we’re going to solve it.

Obi Nwosu: There is Fedimint and then there is Fedi. So Fedimint is this open-source protocol, much like Bitcoin is a protocol for store or value. Lightning is a protocol for transferring this low cost bitcoin at high speed, and also increased privacy as a side effect. Well, Fedimint is a protocol for storing that value, keeping it with incredible privacy in a way where you use your community to effectively support you. They work really well together. In fact, they are both Layer 2. When your money is at rest, you store it in Fedimint, and when your money is in motion, you use Lightning. But the money is in bitcoin under both.

This is the Fedimint protocol.

It actually had its roots – well actually if you go back 39 years ago we have Chaumian ecash, then about 13 years ago with the invention of bitcoin, then four or five years ago with the popularization by Blockstream of the federation technology used for Liquid. When these things were combined, a number of incredible cypherpunks and cryptographers discovered that we could combine these things together and take Chaumian ecash – invented by David Lee Chaum in 1983, which was considered catnip for cryptographers, one of the best forms of privacy technology out there – combine that with the best form of money, bitcoin, which for the first time multiple people could hold, and federations allowed you to somehow federate releases this Chaumian Mint with bitcoin as the backing currency as opposed to US dollars which was David Chaum’s original attempt.

Work started three or four years ago and there were a number of parallel projects, but my now co-founder Eric Sirion was working on one called Fedimint. About two years ago Blockstream saw it, got really excited, started sponsoring it, and about a year ago I saw it when I was – and I didn’t mention this I ran the UK’s oldest bitcoin exchange. At one point I had 70% market share in the UK, knocked the whole hammer off the New York Stock Exchange. And we were the first regulated stock exchange in Gibraltar, all that sort of thing. But that’s the past now. But in selling this company, I was looking for a way to get people away from the exchanges because I was increasingly concerned that there would be liquidity breeding liquidity, and there will be increasing centralization around the exchanges.

I could see this kind of Orwellian future where there are half a dozen exchanges, each with a billion users with full visibility, just as bad as having CBDCs (central bank digital currencies) by country because that’s where we’ll end up if we keep going. So we needed an alternative to stock market custody.

Now the obvious alternative is first-party custody, which is do-it-yourself custody, but if you just look at the numbers and if you look at people’s attitudes, we let’s realize that with the best will in the world, you’re going to have 5% of the people, maybe 10% [doing] self-guard, but that still leaves 90-95% trapped in those exchanges.

So I was looking for a solution to get people out of the exchanges. I was at Hackers Congress last year. I ran into Eric. We had a conversation. I suggested some of my ideas. He politely told me why they wouldn’t work, then I asked him what he was working on. He told me about Fedimint and he saw it as this amazing privacy technology, which it is, but with my exchange operator hat I realized it was actually a solution for get people out of exchanges – if it was properly designed. This is where I started getting involved, I started cheerleading and I talked about it in Bitcoin Miami. This led Alex Gladstein to ask me to go to the Oslo Freedom Forum to talk more about it.

I then met some of the bravest men and women I have ever had the opportunity to meet, who are human rights defenders and activists from around the world. You may have met, as if you come to Ghana, I hope you were there, you will see Farida Nabourema from Togo, for example, Fadi Elsalameen from Palestine, Roya Mahboob from Afghanistan, who created the first team of all-female robotics in Afghanistan when women weren’t allowed to study and so on, and the list goes on. They all realized that the problems and challenges they faced in the world, whether in Latin America, Africa or post-Soviet parts of the world, although they seemed very different, and the authoritarian regimes they were fighting seemed very diverse, they all had a common thread: these groups were using weaponized money and through high/hyper levels of inflation and many other mechanisms. They realized that if they wanted to repel these forces, they had to be able to control their own money. So they weren’t bitcoiners, but they came to bitcoin because they needed to solve problems, but they had problems with scaling.

They wanted to roll them out to millions of people at scale in many of these areas. And what I understood was that only Fedimint could do that. It was in May. It went from, Fedimint is an amazing open source protocol that we were supporting and letting grow organically, but I came back on June 1, spoke – and now the co-founders have grown to myself, Eric and Justin Moon, another incredible soul. I explained what I had seen and observed and who I had spoken to, and we all agreed that we needed to speed this up. This is how Fedi was born. Fedi’s goal is to take Fedimint as its core protocol and accelerate the adoption of bitcoin by billions of users over the next few years because we can’t wait. We have technology that enables the rapid deployment of bitcoin with incredible levels of privacy, high levels of security, and direct integration with Lightning. So why are we waiting? There is no reason. And that’s where Fedi’s journey began.