Blind Signatures

A blind signature is a cryptographic technique in which a signer validates a message without seeing its contents, like signing a document through a sealed carbon paper envelope. Invented by cryptographer David Chaum and published in 1982, it became the foundation of digital cash systems in which a bank could certify tokens without being able to trace who later spent them.

Why it matters

Blind signatures made private digital money conceivable decades before Bitcoin. Chaum's company DigiCash deployed them in the ecash system in the 1990s, proving that electronic payments did not have to create a surveillance record. DigiCash filed for bankruptcy in 1998, in part because it depended on banks adopting it, and that failure taught the cypherpunk movement a lasting lesson: digital cash issued by a central party inherits that party's fragility. Bitcoin answered the centralization problem differently, with a public ledger, and gave up the strong payment privacy that blind signatures provided.

The technique is now returning on top of bitcoin. Chaumian ecash systems such as Fedimint and Cashu use blind signatures so that a mint holding bitcoin cannot link tokens to the users spending them.

How it works

The user mathematically blinds a message with a random factor, the signer signs the blinded value, and the user then strips the blinding factor, leaving a valid signature on the original message. The signer can later verify its own signature is genuine while being unable to connect it to the signing session that produced it.