Tech startup Fedi has raised $17 million in an effort to make Bitcoin easier for newbies to use and grasp through the use of private and scalable “federations.”
“Fedi, as a company, aims to empower communities everywhere by accelerating the adoption of technologies like Bitcoin and Lightning—and rolling out Fedimint federations to communities and companies worldwide is how we intend to do it,” Fedi CEO and co-founder Obi Nwosu told Decrypt.
Fedimint federations are a cryptographic Bitcoin tool that allows users to set up communities—which could be made up of friends, neighbors, businesses, or any other loosely coupled group of people—for custodying Bitcoin and Lightning together.
Stepping back for a minute, Bitcoin stands out from traditional digital money because it allows users to have control of their assets, rather than trust them in the hands of a third party. It’s kind of like digital cash. But, most users end up storing their money on exchanges or custodial wallets anyway because self-custody takes time to learn.
Fedi wants to use federations to provide a way of using Bitcoin that’s easy, and gives users more security than traditional Bitcoin wallets. It works because rather than just one custodian being in charge, the Fedimint protocol allows power to be distributed amongst a number of custodians, making it harder for any single entity to run off with the funds.
“The main advantages of the Fedimint protocol are that it provides an incredibly powerful yet simple way to use Bitcoin without requiring a single point of trust or control, it allows Bitcoin to scale to billions of users, and it enables builders to extend the functionality of the Bitcoin ecosystem more powerfully and easily than current smart contract, DeFi, and Web3 solutions on alternative blockchains,” Nwosu said.
Additionally, Fedi claims to provide more privacy than the most popular Bitcoin wallets. Under the hood, the Fedimint protocol obscures who’s a part of a federation and how much Bitcoin each user has, so that the custodians can’t see any of these details.
Fedi also has plans to go beyond Bitcoin with a “federated operating system” that would allow “a Fedi user to take control of their money and data by utilizing one or more trusted federations of their choosing,” Nwosu said.
“One of Fedi’s in-built features will be a wallet, but chat, web browsing, and application execution will also be significant capabilities,” he added. The team plans to release an Alpha version of its product geared towards developers by the end of the month.