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55 sats \ 10 replies \ @0330830bf9 6 Nov 2022 \ parent \ on: Getting Started | Fedimint bitcoin
Exactly, because it's just another affinity scamming credit token, a shitcoin that has nothing to do with Bitcoin.
Uncle Jim custody doesn't benefit from a shitcoin gateway, this is a bankers project.
I really want fedi to be a self custody solution, but in the most recent bitcoin magazine podcast about Fedi Obi just confirmed my suspicion. He said that if there is a dispute or someone dies, the guardians who are in charge of the mint can revoke your balance and gain access to your account. He doesn't say it directly but you can read between the lines fairly clearly.
Once again, the rule of confusopoly applies. If you can't understand what is going on behind the scenes, even after looking and asking questions, you're probably looking in places and asking questions they don't want everyone knowing the answer to.
Obi appears to be avoiding direct questions about Fedi; like what are its limitations, how do you transfer between mints and how private is it really? It seems all this talk about human rights and helping people who are oppressed by authoritarians is just another angle at fundraising akin to "feed my starving children".
I prefer that Obi (who I know is occasionally on this platform) be an honest actor and believe he is creating a beneficial technology. However, after my cursory investigation of the, there are so many false promises and conflicts of interest built-in, it amounts to what someone else summarized in a comment here: its no different than a community bank.
A small code change could cause the mint to operate on fractional reserves and nobody would be the wiser.
If you're using a fedimint you truly are putting your funds in the guardian's custody, and the fedi tokens are nothing better than a banknote IOU. If I were a banker, I would be fully in favor of mass adoption of fedi tokens because it would mean I wouldn't need to change my business model of lending on more funds than I have on deposit and collecting interest on other people's money.
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its no different than a community bank.
Imagine running a fractional reserve and the bitcoin price spikes. That community bank would have a huge deficiency (in fiat terms). But this community bank could probably meet withdrawals because with the price rallying, there's probably more people depositing (jumping in) than withdrawing.
But thenwhen there's a bitcoin bear market there's going to be a lot of users cashing out / withdrawing ... it's only then that this community bank's insolvency is discovered (because attempts to withdraw cannot be serviced).
So ya, ... not your keys, not your coins, applies here as well.
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I should give credit where credit is due (no pun intended), fedimint does solve the custody problem for small communities wanting to centralize their custody with a group of 'trusted individuals' and it federates the centralized model into atomic communities.
What I would like to see is the tokens themselves having a similar cryptographic relationship between the owner and the mint as do sats on the lightning network between channel peers such that the mint can be punished for misbehaving and likewise the wallet holder for double spending. This simply is not what Fedi offers, however I believe it could evolve into this level of custody. I would also like to know if there are other E-cash token solutions exploring this possibility.
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how do you transfer between mints
This image isn't showing in the guide. I'll submit a PR so they fix that.
https://fedimint.org/assets/images/fm-Pay-MintToMint.excalidraw-2f210868110262436f6af6a653aa7d36.png
In the guide, it is described here:
Transactions from Fedimint to Other Fedimints
https://fedimint.org/docs/GettingStarted/How-FM-Transactions-Work#transactions-from-fedimint-to-other-fedimints
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I remember seeing this in some other documentation, but I didn't read the Alice and Bob story before. Basically Alice offers Bob some of her Fedimint-1 tokens, and Bob's Fedimint-2 issues Bob some tokens after it resolves the transaction over the lightning network. I didn't realize it was seamless, they initially made it sound like your Fedimint-1 tokens could only be used on your local mint, and you had to jump through hoops to transact with someone on another mint. I'm glad that's not the case, so thanks for pointing this out.
My point still stands about potential fractional reserve and losing your sats if you become ostracized by the people running your mint or there is collusion between the guardians.
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This page in their documentation set describes the tradeoffs and dangers of Fedimint.
https://fedimint.org/docs/TradeOffs/Trust-Trade-Offs
They call out what I've been talking about. I must give many kudos for this level of transparency.
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I wouldn't go so far as calling it a "shitcoin".
But Fedimint sure shows that tools from trustless, low-trust and centralized projects are actually a spectrum instead of a black and white thing. Which is surprising.
I wrote something up about the Bitcoin ecosystem wasting to much time and effort on too many projects a while ago: #63518 This is exactly why should focus on making Lightning rocksolid first.
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By definition there is shitcoin and Bitcoin, since it's not the latter it's the former. This isn't even a shade of gray, it's a completely centralized project that works on trust.
You're somewhat right though on the scope of projects "in the space", this is not organic.
Bitcoin is disruptive to a lot of monied interests, and they will fund clandestine operations and projects to slow it down or steer it with a bottomless pit of money.
Liquid/Fedi are the same effective thing, having nothing to do with Bitcoin, and no one having asked for it. Uncle Jim's Pizza Parlor doesn't need a shitcoin layer to bootstrap communit wallets, yet it was bestowed upon us by all the astroturf accounts on Twitter/Podcasts with seemingly unlimited funding... even though no one has plans to use it. Not organic, Bitcoin is under attack as should be expected.
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By definition there is shitcoin and Bitcoin, since it's not the latter it's the former. This isn't even a shade of gray, it's a completely centralized project that works on trust.
Not trying to defend something I actually don't support but it is backed by Bitcoin and derives its weak security on multisigs...
You cannot seriously look at Liquid, Fedimint, hosted channels and submarine swaps and not tell me that these projects can be sorted in a spectrum of shitcoinery.
If you personally draw the line between any of these projects and paint one half white and one half black, that's fine. I do as well. But do you actually claim your line is right and everyone else is wrong and therefore it's not a spectum? I think that's not a good faith argument then.
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it's a credit token spec, not inherently backed by anything. The affinity scam is in the narrative "it could be backed by Bitcoin". Same with the Liquid "peg".
Hosted Channels / SubSwaps are a different animal, both are services not token specs, and in the case of the swaps are atomically trust-less.
Shitcoin vs. Bitcoin however is binary.
Custody solutions are grayscale to be sure, and for that reason I don't hold any strong opinion on hosted channels. I do lean toward their being a waste of time and unnecessary overhead, but not inherently bad.
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