What is a blind signature?

A signature usually shows that the signer saw what they signed. A blind signature is made without seeing it. The cryptographer David Chaum explained it with envelopes lined with carbon paper: “Writing a signature on the outside of such an envelope leaves a carbon copy of the signature on a slip of paper within the envelope.”

His 1983 paper, “Blind Signatures for Untraceable Payments”, used the trick for money. A bank signs a customer’s digital coin without seeing it. Anyone can check the bank’s signature, so the coin is accepted, but when it comes back the bank can’t tell which customer it was given to, so the payment can’t be traced. Chaum’s company, DigiCash, built its eCash on the idea and patented it.

Bitcoin took another path. eCash needed a central company to issue and check every coin, and Satoshi Nakamoto called that “the Achilles heel of Chaumian systems; when the central company shut down, so did the currency.” Bitcoin has no central signer and every payment is public; for privacy, Satoshi wrote, a new key pair is used for every payment.

Blind signatures have returned in some newer projects built around Bitcoin, such as Cashu, in which a “mint” issues tokens for bitcoin paid to it over Lightning. As with eCash, the mint must be trusted. In Cashu’s own words, “Ecash is a claim on its mint, not a deposit.”