Latest / What Bitcoin Did / The Future of Owning Bitcoin | Jonathan Pollock

Transcript

The Future of Owning Bitcoin | Jonathan Pollock · What Bitcoin Did

• 0:00
  Everybody has something in their life that's more important to them than Bitcoin.
• 0:05
  As soon as that thing is threatened with coercive violence, all of self-custody breaks down.
• 0:09
  If you never make a mistake and you set it up perfectly, you have an amazingly secure system.
• 0:14
  But if you make a mistake, you lose everything.
• 0:16
  Fixing the wrench attack problem needs to be one of the top priorities of how do you do that.
• 0:20
  There's been this idea of conflating self-reliance as a virtue to cover the lack of products that do it for you.
• 0:30
  I need to believe in permissionless money.
• 0:31
  I need to use permissionless money.
• 0:33
  I need to do what I can to make everyone in the world have access to permissionless money.
• 0:37
  And I think if that takes the form of safer and easier solutions, that's a win all the way around.
• 0:46
  Have you seen how many people are getting wrench-tacked right now?
• 0:48
  Yes, yes.
• 0:51
  In France, I think it's something like,
• 0:54
  this could be wrong,
• 0:55
  it's like 50 a week or something insane like that
• 0:57
  that happened this year.
• 0:58
  No, is it that high? I had no idea.
• 0:59
  I could be over-exaggerating there.
• 1:01
  Someone told me a stat recently, it kind of blew my mind,
• 1:03
  but the number of attacks are happening,
• 1:06
  for whatever reason, France seems to be
• 1:07
  the epicenter of this at the moment.
• 1:09
  But I have a friend,
• 1:11
  I won't dox him too much, but he was in London
• 1:14
  recently,
• 1:15
  and he was out with some people,
• 1:17
  He's like a bit of a shit coiner.
• 1:19
  And he was out with some people that are known in the crypto space.
• 1:22
  And went out for drinks, left the bar, and got held at Knife Point.
• 1:27
  Oh, my God.
• 1:28
  Unlocked his phone.
• 1:30
  He had terrible security setup.
• 1:32
  And so they managed to steal a significant amount of money from him.
• 1:35
  That's terrible.
• 1:35
  At Knife Point, along with his watch.
• 1:37
  And do you know one of the crazy parts of that story is that some of it was taken from an exchange.
• 1:43
  Yeah.
• 1:43
  And he spoke to the exchange, obviously, like, filed police reports, all this sort of stuff.
• 1:47
  and then followed that, like follow the transaction. And I believe, don't quote me on this,
• 1:54
  I don't want to get in trouble. I believe that they found that it went to Binance and Binance
• 2:00
  didn't refuse to do anything about it. Really? Which is, but regardless of that stuff,
• 2:05
  which is insane in its own way, like the physical threat on Bitcoin is, feels pretty high right now.
• 2:11
  Yeah. Like, how do you view that? Yes. Okay. So
• 2:14
  So I think the wrench attack problem is like a structural issue with Bitcoin and self-custody
• 2:23
  in the sense that like, you know, even though the numbers are small, I mean, they're very
• 2:28
  troubling.
• 2:29
  You like read these reports and they're like scary and like gruesome sometimes.
• 2:35
  I think the reason it's so important is that it kind of gets at the core of self-custody,
• 2:40
  which is if you have full control of your keys,
• 2:44
  then you can be coerced to do something with them.
• 2:49
  And so as soon as something more important
• 2:52
  than Bitcoin is threatened,
• 2:54
  and everybody has something in their life
• 2:55
  that's more important to them than Bitcoin,
• 2:57
  as soon as that thing is threatened
• 2:58
  with coercive violence,
• 3:00
  all of self-custody breaks down.
• 3:02
  And so that's a really structural problem.
• 3:05
  And so looking at it less from,
• 3:07
  well, how often does it happen and all of this,
• 3:09
  So just like from a systems point of view,
• 3:13
  fixing the wrench attack problem,
• 3:15
  I think is one of,
• 3:16
  needs to be one of the top priorities of how do you do that?
• 3:19
  And the one thing that I really don't like
• 3:22
  about the current wrench attack mitigations
• 3:27
  is they're all based on either deception or coercion.
• 3:31
  Sorry, deception or-
• 3:33
  Like avoidance.
• 3:35
  So you're talking about things like duress pins
• 3:37
  on wallets and stuff like that.
• 3:38
  So like, and I'm with you on that.
• 3:40
  Cause like, they're cool.
• 3:41
  They're really cool products.
• 3:42
  Like I like that they exist, but the question always has to be,
• 3:46
  would you actually use it in that situation?
• 3:47
  Exactly. That's exactly right.
• 3:49
  Yes.
• 3:50
  Using a dress pin or whatever, does that just make the potential attacker more angry?
• 3:55
  Like what's the like physical threat that you, well, the physical,
• 3:59
  like action they take if you kind of trick them into like,
• 4:03
  yeah, basically bricking your hardware wallet.
• 4:05
  So yeah, so this is the thing that I really don't like about duress pins and decoy wallets,
• 4:11
  is that I don't think the, like almost the game theory, the mechanics of it play out that well.
• 4:16
  Because if you, you obviously have a way to get back into your wallet, right?
• 4:20
  Or you burned all your Bitcoin in that moment.
• 4:22
  But if you have a way to get back into your wallet, you haven't really changed much about the situation.
• 4:25
  You've just made it harder.
• 4:27
  So like maybe you've gotten rid of the access in your home, but now you've got some backup somewhere else.
• 4:32
  And so the attacker is still there.
• 4:33
  the attacker is still, you know, you haven't ended the attack. And then, but the other version I think
• 4:38
  is even more scary is if you don't have a decoy wallet, but the attacker thinks you have a decoy
• 4:43
  wallet and like, how does that play out? And so like the whole mechanism of decoy wallets feels
• 4:49
  like it doesn't really solve the problem. And so like putting self-custody users into the situation
• 4:57
  of like, am I going to resist the attacker? I'm going to try to trick the attacker. Like,
• 5:00
  How am I going to navigate the situation?
• 5:03
  And some of these solutions are like,
• 5:04
  put your backup key in a bank lockbox
• 5:07
  because then you have to go there or whatever.
• 5:09
  But all of these really put a lot of the onus
• 5:11
  on the self-custody owner in a violent situation.
• 5:18
  And so I think to really solve the problem,
• 5:21
  what we need to do kind of as an industry
• 5:23
  is take on the assumptions of
• 5:25
  if an attacker has full knowledge of your wallet setup
• 5:29
  and the victim is fully compliant,
• 5:32
  can you still protect the Bitcoin?
• 5:34
  And if we can develop solutions that meet that test,
• 5:38
  I think we'll have something that's like actually
• 5:40
  can mitigate wrench attacks and start to solve the problem.
• 5:44
  Yeah, because like if you go through the,
• 5:47
  someone breaks into your house,
• 5:48
  the different setups you can have with your Bitcoin
• 5:50
  is either like from the very basic,
• 5:54
  you might have Bitcoin on an exchange.
• 5:56
  Well, that can be taken if they've got you at knife point.
• 5:59
  If you have it on a single SIG hardware wallet,
• 6:01
  they can potentially take that
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  as long as you kind of actually sign the transaction.
• 6:06
  If you have multi SIG, you can have it with keys distributed.
• 6:09
  Like you may not physically be able to move Bitcoin,
• 6:12
  but the threat is that they can chop off your finger
• 6:14
  until you do something.
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  And then the one that's very interesting
• 6:20
  is like the anchor watch model
• 6:21
  where they basically say, give them the Bitcoin.
• 6:24
  That's fine.
• 6:25
  We've got you insured.
• 6:26
  What other solutions do you think there can be in that stack?
• 6:29
  Yeah, that's a good question.
• 6:30
  So this kind of gets into the seedless architecture of BitKey
• 6:34
  because I think one of the downsides of seeds,
• 6:38
  and I don't want to bad talk seeds too much because seeds have very good uses,
• 6:42
  but one of their challenges is that they're an instant compromise of the wallet.
• 6:47
  So as soon as you have the seeds, the wallet is-
• 6:49
  I mean, that is the Bitcoin.
• 6:50
  That is the point.
• 6:52
  And so when you have seed artifacts, what you essentially have are the private keys kind of unprotected somewhere.
• 6:59
  And so one way to get the Bitcoin is to just take over the keys.
• 7:04
  When you use a seedless architecture, the way you exit the wallet is not through private key transfer.
• 7:09
  It's through a transaction.
• 7:10
  So you take your two keys and you make a transaction, then you send that transaction to a new wallet.
• 7:15
  What's really nice about using transactions as an escape mechanism, as opposed to seeds as an escape mechanism,
• 7:20
  is transactions can be restricted in a way
• 7:25
  that could give you more protection.
• 7:26
  And so people have talked a lot about this
• 7:28
  in the covenants realm,
• 7:29
  which is like, okay,
• 7:30
  if the blockchain itself had primitives
• 7:33
  that could restrict how Bitcoin was used,
• 7:35
  you could do all sorts of cool stuff.
• 7:36
  We don't have covenants yet.
• 7:38
  Just for anyone who's not like technically on this.
• 7:40
  So covenants, they basically allow you to
• 7:42
  almost like whitelist addresses
• 7:43
  where you can send Bitcoin to.
• 7:45
  Yes, yeah.
• 7:46
  So they're basically an additional layer.
• 7:48
  So it doesn't exist yet.
• 7:49
  There's a bunch of ideas, a bunch of proposals, but the core idea is restricting how the Bitcoin moves, not just who can move it, because that's what keys do.
• 7:57
  Keys already figure out who can move it, but restricting where it can move, when it can move.
• 8:03
  Is that destination whitelisting? Is that time delays?
• 8:06
  And this is where all the different proposals, but just this idea of having an additional layer of restriction on movement.
• 8:12
  And so what you can do today is you can take your Bitcoin and encumber it by multiple signatures.
• 8:21
  One of them that you control, one of them that is controlled by, say, another party.
• 8:24
  And this starts to get into different collaborative custody models.
• 8:28
  But you can put restrictions on, hey, there needs to be a time delay and there needs to be a biometric scan and there needs to be all of these additional restrictions.
• 8:36
  And once you enter that world, I think there are a lot of solutions here.
• 8:39
  And this is actually something that we're working on on BitKey.
• 8:42
  And we're going to, after we announce our new product at Vegas, the next big thing we're working on is the wrench attack problem.
• 8:52
  And so we actually have some designs that we've been working through that we want to take to the community and get some feedback because it's a really hard problem and there's like a lot of different trade-offs.
• 9:01
  But the general shape of it is to restrict the way how Bitcoin moves out of the wallet so that you can add in time delays and biometrics checks and all of these things that could mitigate wrench attacks.
• 9:12
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• 10:07
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• 10:11
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• 10:16
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• 11:51
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• 11:55
  So the new product, can I see it?
• 11:57
  Yes, here.
• 11:58
  Let's have a go.
• 11:59
  So I'm going to come at you with some of the criticisms that the original BitKey got.
• 12:04
  Okay.
• 12:04
  And let's see if they're fixed.
• 12:05
  So the big one was obviously the screen, the lack of a screen.
• 12:10
  I can see that that's fixed.
• 12:12
  There is a screen, yes.
• 12:14
  So what are the new features in this?
• 12:17
  Yeah, so the key thing we wanted to address is we really wanted to address verification writ large.
• 12:23
  It's bigger.
• 12:25
  It is bigger.
• 12:25
  We, you know, bigger screen or a screen and a battery, it's slightly larger.
• 12:30
  I don't have the original one on me, but one of the things we wanted to do with the screen is typically hardware wallets verify transactions.
• 12:40
  And because hardware wallets are typically signing devices, they're not full recovery systems and inheritance and all of that stuff.
• 12:47
  BitKey is a full system.
• 12:48
  And so because it has recovery mechanisms, recovery contacts, inheritance, all of these security settings, the screen is used to verify all of that.
• 12:59
  And so the screen protects not just your transactions, but where your notifications go, what your email is, what your recovery contacts and your inheritance stuff.
• 13:09
  And so we really wanted to look at verification writ large, not just transaction signing.
• 13:15
  So one of the cool things about the BitKey,
• 13:17
  I've always thought,
• 13:18
  is that it's like the hardware wall
• 13:21
  that anyone could use.
• 13:22
  Yes.
• 13:22
  So if my mom and dad wanted to set up self-custody,
• 13:26
  this is where I sent them.
• 13:27
  Does the screen add complexity?
• 13:30
  It certainly adds more steps.
• 13:32
  And that was the point of the screen
• 13:36
  is really to say,
• 13:37
  make sure that anything that the app ever asks me to do,
• 13:41
  I can double check first.
• 13:42
  Yeah, that's awesome.
• 13:43
  And so what'll happen is,
• 13:44
  when the app wants something from the hardware,
• 13:49
  whether it's changing a security setting
• 13:50
  or doing a transaction,
• 13:51
  the screen will show it
• 13:52
  and you have to approve it.
• 13:53
  And so it adds that extra step.
• 13:55
  We did a lot of work
• 13:56
  to make it as easy as possible.
• 13:57
  You'll see the screen is really beautiful.
• 14:00
  It's like easy to read.
• 14:01
  It's touch and swipe.
• 14:02
  And I think your parents will-
• 14:06
  They'll still be able to use it.
• 14:07
  They'll be able to use it.
• 14:09
  And so let's go through
• 14:10
  the sort of criticisms of BitKey,
• 14:12
  sort of the original BitKey.
• 14:14
  Yeah.
• 14:14
  The screen was obviously one of the big ones Another one was that you can export a seed phrase Is that still the same Yes that is And that intentional Yes absolutely So what the thinking there Yeah So the first place where I would start
• 14:26
  is like what a seed phrase is
• 14:27
  because I think this is one of the questions
• 14:29
  we get at the booth a lot is
• 14:30
  how is this self-custody if you don't have a seed phrase?
• 14:33
  And I think that's the right place to start
• 14:35
  because it is a misunderstanding of what a seed phrase is.
• 14:38
  And so a seed phrase, it's a way to regenerate your key.
• 14:42
  It's not a private key.
• 14:43
  And so Bitcoin existed for years before seed phrases existed.
• 14:46
  Seed phrases were an invention to make managing private keys easier.
• 14:52
  And so with BitKey, you have private keys.
• 14:55
  So it's self-custody.
• 14:56
  You have two of the private keys fully in your control.
• 14:59
  You can always move your Bitcoin.
• 15:00
  You never need Block or BitKey or our servers or our apps or anything.
• 15:05
  And so what we wanted to do is we wanted to look at when we were thinking about self-custody,
• 15:11
  we wanted to design not just like a hardware wallet, which generates keys and then does signing.
• 15:17
  And then what most hardware wallets do is they'll generate a seed phrase and give it to you and say,
• 15:23
  okay, backups, go figure it out. Inheritance, go figure it out. And so now you're left with a seed
• 15:28
  phrase and you have to figure out like, how many copies do I make? Where do I store the copies? Do
• 15:33
  I need a descriptor? You know, and you have like your own treasure map and all that stuff. And so
• 15:36
  what we felt was that once you introduce a seed phrase, what you've done is you've said the hardware
• 15:41
  is now allowed to export its secrets.
• 15:44
  And then you give the user
• 15:46
  the challenge of protecting those secrets.
• 15:49
  And so that's just like a system design decision.
• 15:51
  And that's a really big thing to put on customers.
• 15:54
  And frankly, it's really hard.
• 15:56
  Like doing it well is hard.
• 15:57
  Keeping it up to date is hard.
• 15:58
  Checking that the backups are still there.
• 16:00
  Like all of that is hard.
• 16:01
  And so you've basically given the recovery system
• 16:03
  as a DIY project to customers.
• 16:05
  And so that's essentially what seed phrases do.
• 16:08
  And for some people, that's very empowering
• 16:09
  and they're very good at it.
• 16:11
  And so, great, you seed phrases.
• 16:13
  For most people, it's a product they didn't want.
• 16:15
  And so what we said is, okay,
• 16:16
  what if we started from a different point of view?
• 16:18
  What if we said the hardware never exports its secret?
• 16:21
  Not as a seed phrase, not as a raw key.
• 16:24
  What we know then is that there is exactly one copy
• 16:27
  of your key on one physical piece of hardware
• 16:30
  gated by your fingerprint.
• 16:31
  And now let's build a security
• 16:33
  and recovery system around it.
• 16:35
  And so we say, well, what happens if you lose your hardware?
• 16:37
  And we've got a recovery system to solve that.
• 16:38
  What if you lose your phone,
• 16:39
  a recovery system to solve that?
• 16:41
  What if you lose both?
• 16:41
  We can do that.
• 16:42
  What if you die?
• 16:43
  You can do both.
• 16:43
  And so we went sort of case by case
• 16:47
  to figure out like what it would take
• 16:49
  to build a self-custody system, not just a hardware signer.
• 16:53
  So do you think that users,
• 16:55
  especially the more like technical,
• 16:57
  hardcore Bitcoin users lose anything from using a BitKey?
• 17:02
  Like who is it designed for?
• 17:03
  Like is this a mass market product
• 17:07
  or is this a Bitcoiner product?
• 17:08
  No, it's a Bitcoiner product for sure.
• 17:10
  Yeah, and I mean, the people that build it are Bitcoiners.
• 17:12
  Like, and the idea here is full control
• 17:17
  and to make it very strong.
• 17:20
  And here's, I think, where maybe our approach
• 17:24
  differs a little slightly from others
• 17:28
  and makes it seem like more of a normie product
• 17:30
  when really we are trying to attack the very core
• 17:33
  of self-custody, which is, I think,
• 17:35
  most self-custody products focus on security
• 17:39
  as like the one dimension to optimize.
• 17:42
  And we like to use the word safety instead of security
• 17:44
  and say that safety has a couple of different dimensions.
• 17:47
  And so one is security
• 17:48
  and security is really protection from like adversaries.
• 17:51
  There's also recovery,
• 17:53
  which is protection from loss or natural disaster.
• 17:56
  Then there's privacy,
• 17:56
  which is really the first line of defense against wrench attacks.
• 18:00
  And then there's ease of use,
• 18:02
  which is like protection from mistakes.
• 18:04
  And I think this is one that's really undervalued
• 18:05
  in our products.
• 18:06
  I totally agree.
• 18:07
  Because this is like, everyone always sets up their Bitcoin as if like the state is going
• 18:12
  to come after them and try and steal their Bitcoin.
• 18:14
  When in reality, I think the biggest threat to your Bitcoin is always you.
• 18:17
  100%.
• 18:18
  Yes.
• 18:19
  And like, well, yeah, the security model of Bitcoin, of most Bitcoin self-custody products
• 18:25
  is don't make a mistake and you're fine.
• 18:29
  And you know, that's true.
• 18:29
  If you never make a mistake and you set it up perfectly, you have an amazingly secure
• 18:33
  system.
• 18:34
  But if you make a mistake, you lose everything.
• 18:36
  And so what we did is we said, okay, well, if we look across those four dimensions and we say, well, what makes a good self-custody product?
• 18:41
  It's you can't compromise on any of those four.
• 18:44
  And so, like, how do you build products that raise the bar?
• 18:48
  And one of the challenges we had is when you go the seed phrase route, there's the issue with it is you've put a burden onto the user to figure out the recovery system, the inheritance system.
• 19:00
  and once they have to do that themselves,
• 19:06
  the quality of that solution depends on how perfect they are
• 19:09
  and how well they can not make mistakes and set it up properly.
• 19:13
  And so what we wanted to do was bundle it all together
• 19:15
  into a cohesive system.
• 19:17
  And so if you have the technical know-how
• 19:21
  and the operational discipline to DIY a system
• 19:25
  that's better than BitKey, you should.
• 19:29
  but I think it's an incredibly high bar
• 19:31
  because it's exactly what we do internally.
• 19:34
  How do we raise the bar of the system overall?
• 19:36
  And so it is designed for hardcore Bitcoiners.
• 19:40
  And there's all sorts of advanced things you can do with it,
• 19:45
  like exporting the descriptor and checking it on Sparrow
• 19:47
  if you want to make sure the wallet's set up
• 19:49
  the way you want it to.
• 19:50
  That's cool.
• 19:51
  You can take the private key material.
• 19:55
  You can create backups of your app key
• 19:57
  and make it decryptable by hardware
• 20:00
  and store those on your own in other places.
• 20:02
  And there's all sorts of things you can do
• 20:03
  to kind of extend it.
• 20:06
  But yeah, it's a Bitcoin or product.
• 20:09
  Can I play devil's advocate
• 20:10
  and ask you another question
• 20:10
  that people have always sort of raised about Bitkey?
• 20:13
  Is like, are you reliant on block servers?
• 20:15
  And what does that mean for the user?
• 20:18
  Yes.
• 20:18
  So you are not reliant on block servers.
• 20:21
  And so the core definition of self-custody
• 20:23
  is the wallet owner can move their money
• 20:27
  unilaterally and no one can move the money without them. And that is true for BitKey.
• 20:32
  And so the way that it works in BitKey is when you set up your wallet, there is a PDF that's
• 20:39
  uploaded to your cloud. And that PDF has one of the keys in it. So BitKey has three keys. It's a
• 20:45
  two of three multi-sig setup. One key is on the hardware, one key is on the phone, one key is on
• 20:50
  server. So the app key, the one on your phone, is encrypted by the hardware key and then uploaded to
• 20:58
  your cloud account as a PDF. And we call it the emergency exit kit. And what that allows you to
• 21:04
  do, you can then download it, make copies, do whatever you want. If your cloud provider, let's
• 21:09
  say Apple or Google, get access to it or somebody hacks your cloud, what they have is an encrypted
• 21:13
  file. They can't use it unless they can decrypt it. And the only way to decrypt it is with your
• 21:17
  hardware and your thumbprint to unlock the phone. And so they basically haven't compromised any
• 21:23
  keys just from gaining access to it. You can always take that PDF, you can take your hardware,
• 21:29
  decrypt the PDF, so now you have two keys, and then with two keys you can move Bitcoin.
• 21:33
  And so you can, it's all open source, so you can write your own software if you don't care,
• 21:38
  if you really want to go tinfoil hat, to create a transaction, sign it with your two keys and
• 21:43
  and broadcast it to the network.
• 21:45
  We provide another piece of software
• 21:50
  that does exactly that,
• 21:51
  hosted on GitHub that anyone can use.
• 21:53
  But you don't have to use it.
• 21:54
  You can write your own.
• 21:55
  And so with no BitKey app,
• 21:57
  no BitKey servers,
• 21:58
  no block company, nothing,
• 21:59
  you can move your Bitcoin.
• 22:01
  Cool.
• 22:01
  Because between the screen and that,
• 22:03
  they're probably the two biggest criticisms
• 22:05
  I've seen thrown at blocks.
• 22:06
  So with adding the screen,
• 22:08
  I guess you've removed that.
• 22:10
  It's very cool.
• 22:11
  Thank you.
• 22:11
  And it's interesting to see how like Bitcoin security, hardware wallets have kind of adapted over the last few years.
• 22:19
  Because one of the most interesting things to me is like when I got into Bitcoin, the path to self-custody was really clear.
• 22:25
  Like for me, like I first bought Bitcoin on Coinbase.
• 22:28
  And then like if you want to actually have real Bitcoin, the path to move that self-custody is very simple.
• 22:34
  It's like literally one transaction to a hardware wallet and you then own your Bitcoin.
• 22:39
  And that has changed so much in the last few years.
• 22:41
  In the sense that I think if you're coming into Bitcoin now,
• 22:44
  like where are you getting your Bitcoin?
• 22:47
  Like there's still a good chance you're using like a river or a swan
• 22:50
  or a coin base or whatever.
• 22:51
  But there's now a greater chance that maybe you're buying it
• 22:54
  through like an ETF in a retirement account
• 22:56
  or maybe you're going straight to a treasury company.
• 22:59
  Like how do you see that kind of institutionalization of Bitcoin
• 23:03
  affecting self-custody?
• 23:04
  Yeah, it's a great question.
• 23:06
  So I think where I would start is that why self-custody is important.
• 23:14
  And I think there's a couple of different layers to that.
• 23:16
  The first is just like, why is it important to Bitcoin in general?
• 23:19
  And I think that like, you know, that's something along the lines of permissionless money is incredibly important and is like a huge unlock for civilization writ large.
• 23:29
  And in order for permissionless money to work, you need to have decentralization.
• 23:32
  In order to have decentralization, you need to have decentralized mining and decentralized ownership.
• 23:37
  And so self-custody is really that pillar of decentralized ownership.
• 23:40
  And so you need self-custody for Bitcoin to work.
• 23:43
  So I think that's kind of point one.
• 23:45
  But that doesn't quite answer the question, which I'll get to, which is like, OK, I'm getting into Bitcoin.
• 23:50
  What should I buy?
• 23:51
  But to kind of like walk it down from sort of first principles.
• 23:54
  I think the other reason self-custody is still super important is that access to ETFs and all of these things is not equal.
• 24:01
  Like, you know, of all the people in the world, very few people have access to these ETFs.
• 24:06
  And so, you know, very few people even have access to bank accounts or a reliable currency.
• 24:10
  And so being able to have Bitcoin, if you have Internet, you can have Bitcoin, you can have a bank account, you can have all of these great things.
• 24:18
  Self-custody is still tremendously important.
• 24:20
  But if you then kind of sort of narrow it down to, all right, I have access to both.
• 24:24
  Which one should I buy?
• 24:26
  When you buy the ETF, you're not buying permissionless money.
• 24:29
  you're buying price exposure.
• 24:32
  And even worse than that,
• 24:32
  you're buying permissioned price exposure.
• 24:34
  And so what you're giving up when you're doing that
• 24:37
  is Bitcoin has a lot of utility beyond just price.
• 24:41
  And that's everything from being able
• 24:43
  to take out a loan against it as collateral,
• 24:45
  to spend it, to purchase things.
• 24:48
  And so you're sort of giving that up in the ETF world.
• 24:51
  But even still, to kind of walk it down even more,
• 24:53
  what if you say like,
• 24:54
  look, I really don't care about the utility of Bitcoin.
• 24:56
  I just care about price exposure.
• 24:58
  should I do ETF or self-custody? I think even then it's not super clear because in the ETF world,
• 25:06
  you have all these additional restrictions on your Bitcoin, which is when can you trade it?
• 25:10
  You know, well, when the market is open, if you don't like an ETF and you want to move to another
• 25:15
  ETF, do you have to sell and take a tax gain and then buy in again? Like you can't just move it from
• 25:22
  exchange to exchange the way you can with Bitcoin. And same problem with even if you want to sell
• 25:27
  your ETF to buy real Bitcoin and move it to a hardware wallet, there's still going to be a tax
• 25:31
  hit at that point. Yeah. And I think maybe one or two ETFs do in-kind redemption, but most don't.
• 25:37
  And that's kind of the point, which is it depends on the provider. And so you're definitely in the
• 25:42
  permissioned world. And so I think you're definitely taking on more restrictions.
• 25:49
  But one of the things about how the question is typically framed, I think embeds in it some
• 25:55
  priors, which I think have been true, but may not be true anymore, which is like self-custody
• 25:59
  is harder and self-custody is less safe.
• 26:02
  And I don't know.
• 26:04
  Than the ETF.
• 26:05
  Yeah.
• 26:06
  And I think that those, maybe if they were true, require another look.
• 26:13
  I think self-custody has come a long way in the past two, three years.
• 26:16
  It's probably harder for people that maybe already have like a brokerage account.
• 26:20
  Yeah.
• 26:20
  They can just buy the ETF on their phone.
• 26:22
  Like self-custody is harder than that.
• 26:25
  Yes.
• 26:25
  But it's like, what's the trade-off?
• 26:26
  Is it worth the work?
• 26:28
  Is it worth it?
• 26:29
  And I think one of the things that people undervalue is, what are the risks of the ETF?
• 26:34
  And these are like, while they are kind of long tail, tinfoil-y hat risks, they have all happened before.
• 26:41
  So the idea of like, maybe the government decides you can't own Bitcoin anymore, so you get forced converted back into USD at a semi-unfair price.
• 26:50
  I mean, like that happened with gold.
• 26:52
  or maybe the exchange is negligent and can't fulfill it.
• 27:00
  You don't take it like a Lehman Brothers
• 27:01
  or maybe it's full on fraud,
• 27:04
  like more of an Enron or like an FTX.
• 27:06
  And like there's a small percent that happens,
• 27:10
  but if you hold Bitcoin over a decade
• 27:11
  and you stack up kind of all of these catastrophic events,
• 27:14
  like you're not taking on no risk.
• 27:15
  It's not zero.
• 27:16
  And so I think what it comes down to
• 27:18
  at the end of the day is,
• 27:19
  would you rather your risk take the form of political, governmental, business risk,
• 27:27
  so like the people who make the rules,
• 27:29
  or would you rather your risks take on the private key risks,
• 27:33
  which is like, can I manage it safely?
• 27:36
  Is it safe from natural disaster?
• 27:38
  And so you're either taking on self-custody risks
• 27:41
  or politician, business, government risk.
• 27:44
  And I think that when weighing those two,
• 27:47
  it's not clear to me that there's, you know, like the ETFs are the obvious answer.
• 27:51
  No, I know which side of that I fall on. Like I want to take the risk on myself. Like I want to
• 27:55
  be in control of my destiny. Yes. And I think what's been great about self-custody over the
• 27:59
  last, you know, forever, but like, I think a lot in the last few years is that risk has been
• 28:03
  getting smaller and smaller as the tools have been getting better and better. Like the risk
• 28:07
  of self-sabotage I think has decreased dramatically in the last two years as you start to get these
• 28:12
  collaborative custody solutions, these seedless solutions, things that make it harder to make a
• 28:17
  mistake and make it easier for you to have recovery, to have inheritance, to have safe
• 28:22
  keys without having to deal with all of the details of setting it up.
• 28:27
  And do you think there's any argument to say that with the move away from the sort of
• 28:33
  more hardcore Bitcoin solutions making things easy like the seedless idea does that take a step away from the core values of Bitcoin in any way Okay I don think so
• 28:46
  And I might not be reflective of the most OG, hardcore Bitcoiners,
• 28:52
  but I've been a product manager for a long time, 20 years.
• 28:56
  And really, for me, it all comes down to what problem are you solving for who?
• 29:01
  And I think that one of the places where I think there's been a big gap in the products in the Bitcoin industry is there's been this idea of conflating self-reliance and as a virtue to cover the lack of products that do it for you.
• 29:23
  which is to say like, hey, take your seed phrase,
• 29:26
  protect it yourself, you know, put it in metal plates,
• 29:28
  buried in the ground, distribute it.
• 29:30
  Like self-reliance is a virtue in and of itself.
• 29:33
  You are now practicing like this higher form of,
• 29:36
  you know, Renaissance man.
• 29:38
  And I kind of look at that and say like,
• 29:40
  that's not what people want to do.
• 29:41
  They want permissionless money
• 29:43
  they can own easily and safely.
• 29:44
  And that's like, and this using the ideal
• 29:49
  to cover the gap in good products
• 29:52
  has always never has really sat right with me.
• 29:55
  And so I don't see the ethos personally,
• 29:59
  I guess it's more of a personal statement
• 30:01
  than a statement about the industry,
• 30:02
  but I don't see the ethos as
• 30:03
  I need to DIY it myself to be a real Bitcoiner.
• 30:11
  I need to believe in permissionless money.
• 30:13
  I need to use permissionless money.
• 30:14
  I need to do what I can to make everyone in the world
• 30:16
  have access to permissionless money.
• 30:18
  And I think if that takes the form of safer
• 30:21
  and easier solutions, that's a win all the way around.
• 30:24
  Yeah.
• 30:25
  So if you think, like with the BitKey,
• 30:27
  obviously in terms of seed phrases, they're gone.
• 30:32
  It's collaborative.
• 30:33
  There's two or three where you have a key,
• 30:35
  one here, one on my phone.
• 30:37
  It has inheritance.
• 30:39
  What's missing?
• 30:40
  Like what's the piece that you want to build next?
• 30:42
  Like what do you think the hardware market needs?
• 30:44
  Yes.
• 30:47
  Because we were talking before about wrench attacks.
• 30:49
  Like how do you look at that?
• 30:50
  Do you have something in mind?
• 30:51
  We do, yes.
• 30:52
  Yeah, so let me just kind of take the trajectory there
• 30:54
  because this is exactly how we developed BitQ,
• 30:56
  which is we sort of looked at the self-custody markets.
• 30:57
  Okay, what are the biggest problems to solve?
• 31:00
  And so the first one was people's recovery systems
• 31:03
  are really uneven in their effectiveness
• 31:06
  and their thoroughness
• 31:08
  and how well they resist different types of scenarios.
• 31:10
  Let's build a wallet with a recovery system built in,
• 31:13
  and that led us down the seedless route.
• 31:15
  And then when we got there, we said,
• 31:17
  okay, well, inheritance is the next biggest one.
• 31:19
  That's one of the hardest things to do
• 31:20
  because right now inheritance is like treasure maps
• 31:22
  or KYC solutions,
• 31:24
  even if they're self-custody, they're KYC.
• 31:25
  So then we said, okay, let's tackle inheritance.
• 31:27
  And then we looked at our solution and said,
• 31:32
  well, because this is collaborative custody,
• 31:34
  we have one of the keys.
• 31:36
  And one of the things we don't like about having the keys
• 31:39
  is we had visibility into the wallet
• 31:41
  because when you have the keys,
• 31:42
  you can see all the transactions.
• 31:44
  And so we were very uncomfortable
• 31:46
  with having that sort of visibility
• 31:48
  because we don't want that data.
• 31:49
  So then we invented Chaincode Delegation, which is a BitProposal.
• 31:53
  This was Jesse Posner and...
• 31:54
  And Jervis.
• 31:55
  Yeah, that's right.
• 31:56
  Yeah, so the two of them...
• 31:57
  That's really cool.
• 31:58
  And that's something that's just good for Bitcoin as a whole.
• 32:00
  That's awesome.
• 32:01
  It is so cool.
• 32:02
  I love both of them so much and they're like...
• 32:04
  Yeah, I'm a big Jesse stan.
• 32:06
  Yeah, yeah, for sure.
• 32:08
  Yeah, no, they did such a great job with that.
• 32:09
  So basically what they did is they invented a way for multi-sig,
• 32:12
  which typically every key has both signing ability and visibility of the wallet.
• 32:18
  of the wallet to say, even if the key can sign for the wallet, it cannot see all the transactions
• 32:24
  of the wallet. Fancy cryptography, and it's applicable to any multisig wallet, we implemented
• 32:31
  it in ours. And so the key that block holds cannot look at the transactions. And that's on by default
• 32:36
  now, right? Yeah, it's just how the wallet works. Yeah. It's not an option. It's just, we don't want
• 32:40
  the data. Like we don't want it in our systems. And so it's just the way how the wallet works.
• 32:44
  and so privacy was the next big one.
• 32:48
  Then the next big one after that was verification
• 32:51
  and so we say, hey, we have all this infrastructure now
• 32:53
  to do like recovery and inheritance and all of this stuff.
• 32:56
  How do you make sure that you can verify
• 32:59
  everything that's doing all of that stuff
• 33:01
  is telling the truth
• 33:02
  and so we put a screen on the hardware
• 33:04
  not only to just do transaction signing
• 33:06
  which every hardware screen has done forever
• 33:07
  but to validate all of the steps
• 33:10
  of all of the other components.
• 33:11
  Was it partially to shut the Bitcoiners up as well?
• 33:13
  Well, not to shut them up, to get them as customers.
• 33:16
  I mean, we want to build a product that Bitcoiners love.
• 33:20
  The thing that keeps me up at night
• 33:22
  is the idea of a critical error with my Bitcoin cold storage.
• 33:24
  And this is where AnchorWatch comes in.
• 33:27
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• 33:28
  with your own A-plus rated Lloyds of London insurance policy.
• 33:32
  And all Bitcoin is held in their time-locked multi-sig vaults.
• 33:35
  So you have the peace of mind knowing your Bitcoin is insured
• 33:37
  while not giving up custody.
• 33:39
  So whether you're worried about inheritance planning,
• 33:41
  wrench attacks, natural disasters,
• 33:43
  or just your own silly mistakes, you're protected by Anchor Watch.
• 33:47
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• 33:50
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• 33:55
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• 34:00
  visit anchorwatch.com today.
• 34:02
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• 34:04
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• 34:07
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• 34:07
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• 34:10
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• 34:13
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• 34:17
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• 34:21
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• 34:34
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• 34:50
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• 34:54
  If you already self-custody Bitcoin, you know the deal with hardware wallets.
• 34:58
  Complex setups, clumsy interfaces, and a seed phrase that can be lost, stolen, or forgotten.
• 35:03
  Well, BitKey fixes that.
• 35:05
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• 35:08
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• 35:12
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• 35:16
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• 35:20
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• 35:23
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• 35:28
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• 35:33
  Okay, so that takes us to sort of where we are right now.
• 35:35
  So now we think the next big thing to solve is this wrench attack solution.
• 35:39
  So we do have a solution in mind and it's almost there. And so we'll be publishing this in probably
• 35:47
  a couple of weeks to sort of solicit feedback from the community and get people to poke holes
• 35:51
  in it and do all that. But this is the basic idea, which is you put your Bitcoin into a vault.
• 35:57
  And the vault has essentially two doors and both are important, but we'll talk about the first one
• 36:02
  first, which is the normal door is just, it requires a signature from both you and BitKey and
• 36:09
  and block.
• 36:10
  And what block will do is block will withhold the signature
• 36:13
  until certain conditions are met.
• 36:15
  And so this becomes like a two of two.
• 36:16
  It's a two of two.
• 36:17
  The first door is a two of two.
• 36:19
  And the block will say, okay, in order for me to sign,
• 36:23
  you need to first pass a biometric scan.
• 36:26
  Second, wait a certain amount of time
• 36:28
  that's configurable by you.
• 36:29
  So this could be days, weeks, months.
• 36:31
  And then third, pass another biometric scan
• 36:34
  on the other side of it.
• 36:35
  And so what this is meant to protect against
• 36:37
  any sort of smash and grab wrench attack.
• 36:41
  Because you need to pass that biometrics check
• 36:43
  at the end of the period,
• 36:45
  it forces the attacker to force compliance
• 36:48
  throughout the entire length of that period,
• 36:50
  and that could be days, weeks, months.
• 36:52
  And one of the things that we used to frame this
• 36:54
  was we looked through James Lopp's GitHub
• 36:56
  where he lists out all the wrench attacks,
• 36:58
  and there's hundreds of them there,
• 37:00
  and looking at if you make the attack
• 37:05
  last longer than one week,
• 37:06
  you're already down to 1% of the attacks on that page.
• 37:10
  If you make it last longer than a month,
• 37:12
  there's not a single attack on that page
• 37:13
  that lasted longer than a month.
• 37:14
  Very few people are going to kidnap you for a month.
• 37:16
  To get your thing.
• 37:17
  So that's the first door.
• 37:19
  So that I think mitigates
• 37:21
  the sort of first problem of rent or tax.
• 37:25
  The new problem you introduce with that
• 37:28
  is that it's not self-custody anymore.
• 37:30
  It's joint custody.
• 37:32
  And so now what you need to do
• 37:34
  is put self custody back into the solution.
• 37:37
  So this is where the second door comes in.
• 37:39
  So the second door is controlled entirely by your own keys,
• 37:43
  but it's time locked to when the vault ends.
• 37:45
  So when you put it into the vault,
• 37:46
  you say, hey, I want this vault to last for two years.
• 37:49
  Over the course of those two years,
• 37:50
  you can use the first door as much as you want.
• 37:52
  That's the normal door, add, you know, to withdraw Bitcoin,
• 37:55
  you just go through whatever settings
• 37:57
  that you've configured and the vault just works.
• 38:01
  If for some reason you wake up one day
• 38:02
  and you're like, I don't trust block anymore.
• 38:04
  I don't want to work with them.
• 38:04
  I don't want them co-signing my transactions
• 38:06
  or block goes out of business
• 38:07
  or the BitKey app gets pulled from the app store.
• 38:09
  Anything that you can imagine,
• 38:11
  that second spend path with your own keys
• 38:14
  can now get the money back out of the vault.
• 38:17
  And so now you've fixed the self-custody.
• 38:20
  But how, wait, I don't know if I understand that.
• 38:22
  So like how would the second door of the vault
• 38:24
  like know that block's gone out of business?
• 38:27
  So it wouldn't know that block's gone out of business.
• 38:29
  The door just becomes usable at a certain time.
• 38:32
  Okay, okay, okay.
• 38:33
  So you still have to wait the two years.
• 38:35
  You still have to wait.
• 38:36
  Yeah, yeah.
• 38:36
  So you have self-custody inevitably.
• 38:41
  And you can unilaterally decide you're not signing anything until the second door opens,
• 38:46
  then use the second door yourself.
• 38:48
  And so it's just like if you were to like a really kind of crude example is you take
• 38:51
  a Bitcoin, you time lock it for a year, it's still your Bitcoin.
• 38:55
  Is this using Miniscript?
• 38:57
  There's a couple of ways to implement it.
• 38:58
  I think we're, depending on the shape of the solution, we're not sure exactly how we're
• 39:03
  to do it, but yes, we're using, I mean, you can also do it with just some time locks,
• 39:07
  just basic time locks on the second spend path. Okay, so then there's one more piece
• 39:12
  of the solution. So, and this is the thing with self custody is like, it's all trade-offs.
• 39:18
  And so what happens, okay, first door, you kind of solve the attack problem,
• 39:22
  but you break self custody. Second door, you fix self custody, but you've actually reintroduced a
• 39:27
  new attack, which is, I'll just take your keys and hold onto them for two years, and then get
• 39:33
  your Bitcoin. So we have to fix. So that's the last thing to fix. And so our idea here
• 39:37
  is that we would restrict where that Bitcoin can be sent to. So this is back in kind of a
• 39:43
  covenants pattern. And so, okay, this Bitcoin can only be sent to a predetermined address.
• 39:49
  And so that way, even if the attacker steals your keys, they can only send that Bitcoin
• 39:54
  to a predetermined address that you may still control.
• 39:57
  Assuming they didn't steal that as well.
• 39:59
  So here's, yes, no, this is your, yeah, this is exactly right. So 100%. And so the way that would
• 40:05
  be enforced, because Bitcoin doesn't have covenants yet, is you can do it on the hardware's
• 40:11
  firmware. And so you can say, hey, the firmware will only sign transactions of a certain shape.
• 40:16
  And that shape is going to be the shape we decided when we set up the vault. And so you can configure
• 40:22
  what that shape is, and then it's locked forever.
• 40:27
  And this is another reason why the seedless architecture gets you there, because if the
• 40:31
  key is inside the hardware, then the hardware can determine how the key is used.
• 40:36
  If the key is exported out of the hardware, which is what seed phrases are, then no system
• 40:41
  can make any decisions about how the key is used.
• 40:43
  So anyway, so the last piece of this, which you've already started poking holes in, and
• 40:48
  this is the piece we need help with, is what should that final destination be?
• 40:52
  Yeah. Because if it's just another wallet, then they could steal that too.
• 40:57
  Can I tell you my really non-Bitcoin perspective on this?
• 41:01
  Like people are going to hate me for saying this,
• 41:03
  but I wonder if the best place is like a Bitcoin exchange address.
• 41:08
  That's where we ended up to. That's where we ended up to.
• 41:11
  And I love that you got there. We didn't get there maybe quite as fast.
• 41:16
  But yes, I think so.
• 41:19
  And it's weird to say being such a self-custody maxi,
• 41:23
  but one of the things that institution
• 41:25
  and custodial Bitcoin does really well
• 41:27
  is it's not susceptible to physical violence
• 41:30
  the way private keys are.
• 41:32
  Institutions cannot be physically coerced
• 41:34
  the way private keys can be physically coerced.
• 41:36
  And so even though I would pick self-custody
• 41:38
  over custodial Bitcoin 100% of the time,
• 41:42
  actually not 100%.
• 41:43
  If there is a violent attacker trying to steal my Bitcoin,
• 41:47
  where do I want my Bitcoin at that moment?
• 41:49
  in a KYC-based exchange.
• 41:51
  And so one of the nice things about a solution like this
• 41:55
  is it says, okay, you can basically put it there
• 41:59
  in that moment that you need it there,
• 42:02
  and then it's identity-based.
• 42:04
  And it's like, don't let perfect be the enemy of good
• 42:06
  in this situation.
• 42:07
  Like, I agree that I don't hold Bitcoin on any exchanges,
• 42:11
  but in that situation,
• 42:11
  I can't think of a better place for it to go.
• 42:13
  But I guess the best solution
• 42:15
  would probably be allowing users to decide.
• 42:18
  It would be put an address in.
• 42:19
  That's how we would implement it.
• 42:20
  You put an address.
• 42:21
  You want it to be, you know, the other things we thought about is, could it be another bit
• 42:23
  key?
• 42:24
  And like, how do those start chaining together?
• 42:26
  Could it be someone else's bit key?
• 42:27
  The problem is then you get into this situation where you have to like educate users on how
• 42:30
  to keep the second bit key and all this stuff.
• 42:33
  And like, I'm sure you don't want the headache of that because then if something goes wrong,
• 42:37
  they're going to be like, this is what you told me to do.
• 42:39
  Yep.
• 42:40
  And so the other one is like, could it be inheritance?
• 42:42
  Like should we plug out the inheritance solution into that escape route?
• 42:46
  And so this is really where we're looking
• 42:47
  to solicit feedback, which is like,
• 42:49
  because we only want to build things that people want to use.
• 42:51
  And so if people look at this and they're like,
• 42:53
  you know what I do want it in an exchange In this one moment in this one case I want it in an exchange great If everyone like no that the worst idea ever I don want to do that I mean truthfully like apart from the fact that obviously it going to a KYC exchange like if that did happen you could just withdraw
• 43:07
  it again. Like it's, yeah, exactly. And that's the other thinking too, is almost everybody,
• 43:12
  everybody, unless you're a miner, has an exchange that registered to, that's where they got their
• 43:15
  Bitcoin from. And so like you already have an account set up, you already have a relationship
• 43:20
  there. And most likely your Bitcoin came from there in the first place. Do you want to be able
• 43:24
  to teleport it. That's not actually how it works, but do you want it to be able to go there in a
• 43:29
  wrench attack? Yeah. The thing that that doesn't fix, and I actually think is potentially impossible
• 43:37
  to fix, is the attacker that comes into your home who wants your Bitcoin can't get it. And it never
• 43:44
  stops the physical side of that attack. And this is where, because they still might chop your finger
• 43:49
  off. But I do think this is where things like Anchor Watch are really interesting, where you can
• 43:53
  just send them the Bitcoin. Just have it go away. And then you've got the insurance claim.
• 43:58
  Would you ever look into doing insurance type stuff within BitKey?
• 44:02
  Oh, I don't know. I thought you were going to ask me what my thoughts on it. And I was going to say,
• 44:05
  yeah, I think the insurance angle is very powerful. Would we put it on our roadmap?
• 44:12
  I don't know, to be honest. So the BitKey product in and of itself, very narrowly,
• 44:19
  it's a non-KYC product.
• 44:21
  So I don't know if you can do insurance without KYC.
• 44:24
  I seriously doubt it, but I don't know.
• 44:25
  If maybe someone figures that out, sure.
• 44:28
  Would it be a better Block product?
• 44:31
  So Block does a lot for Bitcoin.
• 44:33
  They've got Cash App for buying Bitcoin,
• 44:35
  Square for spending it,
• 44:37
  BitKey for storing it,
• 44:38
  and Proto for powering it.
• 44:41
  Spiral for developing it.
• 44:42
  Spiral for developing it.
• 44:43
  Would one of those other brands,
• 44:45
  could we do some ecosystem play
• 44:47
  where you can get insurance through
• 44:49
  like cash or something. Maybe it's not on the roadmap, but like I think looking at the synergies
• 44:55
  between the different Bitcoin solutions is really where like we turn Bitcoin into like true
• 45:00
  permissionless money, where it has all the features of traditional finance in its own ecosystem.
• 45:06
  So yeah, it's a great idea. And I do agree with this piece of even when you take on the assumption of
• 45:15
  the attacker has full knowledge and the victim is fully compliant.
• 45:19
  Will they be pissed if they can't get Bitcoin? You can't really design away that piece.
• 45:26
  Yeah, I think there are interesting insurance angles here.
• 45:29
  Yeah. You've obviously thought about this a load and you said you've been a product manager for 20
• 45:34
  years. Can we take a step back? Why are you in Bitcoin? What happened? How did you get here?
• 45:38
  Oh, so my career up until about 2020 was all in big tech, internet firms, and AI.
• 45:52
  And then right around 2020, I kind of caught the, I want to say Bitcoin bug, but honestly,
• 45:58
  it was the blockchain bug.
• 46:00
  And I really believed in this idea of decentralization and permissionless.
• 46:06
  And then I kind of sort of came to realize that Bitcoin was really the only truly decentralized permissionless protocol.
• 46:15
  And it had real product market fit with permissionless money.
• 46:18
  And that's what I wanted to work on.
• 46:20
  And that I found my way to block.
• 46:21
  And like, you know, like Jack Dorsey's Bitcoin ethos was like really refreshing after sort of the DeFi, DGEN tour.
• 46:29
  and so I joined the Bitcoin team about a year before we launched the first version of hardware
• 46:36
  and have been there ever since. Nice and so you obviously spent a load of time looking into the
• 46:41
  hardware wallet side is there anything else you look into in Bitcoin deeply? I mean no not as
• 46:47
  deeply as self-custody hardware wallets I mean that's like my full-time job and I and I love it
• 46:51
  but just being like you know a nerd and like liking the Bitcoin space. So you're not getting
• 46:58
  into the quantum debate?
• 47:00
  I mean, I've listened to so many people on it
• 47:03
  that like know a lot more than I do.
• 47:07
  My take is probably naive, but it's,
• 47:12
  I think, I don't think we can freeze coins.
• 47:15
  I think that's just, that's just theft.
• 47:18
  It's just another version of theft.
• 47:20
  And so, okay, and this is, this is my current thoughts,
• 47:27
  but like, I don't know.
• 47:28
  I changed my mind sometimes on this, but are stolen coins that big a deal?
• 47:33
  And so like the one, so let's say whatever, the million coins get broken by quantum computers.
• 47:41
  So there's a ton of, there's a huge supply shock, the price crashes, all the real believers
• 47:46
  pick up a ton of super cheap sats.
• 47:49
  Is it an existential threat to the Bitcoin network?
• 47:52
  And I've seen people argue yes, that like, okay, if that happens, then miners do this.
• 47:57
  And then once the miners do this, then this thing happens.
• 47:59
  And now Bitcoin's gone.
• 48:02
  I don't know that I buy that.
• 48:04
  What to me feels like of if we confiscate people's coins, that's an existential threat
• 48:10
  to Bitcoin.
• 48:11
  If the supply instantly increases by 5 million, like not increase to 26 million, but obviously
• 48:16
  all these coins just flood the market.
• 48:18
  Is that existential to Bitcoin?
• 48:20
  I don't think so.
• 48:21
  And so I think it would suck.
• 48:23
  But anyway, I feel like my take is that the quantum resistant algorithms exist.
• 48:32
  Bitcoin will upgrade the protocol in time.
• 48:37
  Most people will upgrade their coins in time.
• 48:40
  And then would I rather be in a world where Bitcoin broke the promise of property rights
• 48:47
  or in a world where the price crashed tremendously?
• 48:51
  I take the price crash.
• 48:53
  So there's nothing else to say because I agree with everything you just said.
• 48:56
  I passed the test.
• 48:58
  Do you think there's anything that we've missed on the hardware wallet conversation that you pay a lot of attention to?
• 49:05
  Yeah.
• 49:06
  So the one thing I think a lot about is this idea of like, what is a hardware wallet?
• 49:11
  Which seems like kind of a trivial question.
• 49:14
  But if you think about hardware, it is an air-gapped piece of technology that does signing.
• 49:20
  And it necessarily, you don't want it on the internet because it keeps your keys super safe.
• 49:23
  If you think about a wallet, it has to be connected to the internet because its job is to
• 49:29
  scan the blockchain, tell you your balance, construct transactions and broadcast them to the
• 49:34
  network. So the idea of like a hardware wallet is a little bit ambiguous and it doesn't mean like
• 49:39
  a wallet that has a hardware signer. There's no Bitcoin in there. Right. And so like, is this a
• 49:44
  hardware wallet? Like this by itself, well, Bickey's a little special, but like if you take a hardware
• 49:47
  wallet, usually they're like a better name would be a hardware signer. A signing device. Right. It's
• 49:52
  a signing device. And the reason I think that's important is because wallets should have not only
• 49:59
  like transaction capabilities, but recovery capabilities. Like where do you put these ideas
• 50:03
  like recovery and inheritance and all of the things you might want from your like bit key
• 50:09
  self-custody system. And we don't really like have a good phrase to talk about self-custody as a
• 50:14
  system. And, you know, that's how we think about BitKey. It's how we build BitKey. And so, you know,
• 50:21
  are we a hardware wallet? Well, we have a hardware signer. Are we a collaborative custody solution?
• 50:25
  Well, we have a collaborative key. And so like, what category are we in? And I think of it
• 50:33
  personally of like self-custody as an overall solution. Self-custody solution, self-custody
• 50:38
  system. And so this idea of like hardware wallets, I think, unless like you're ready to go really deep
• 50:45
  with someone about it, can give people like a misconception about like what, like the different
• 50:49
  components that are being put together. Especially when you get into like multi-sig, it's like if you
• 50:55
  have multiple keys and some of them are hot keys and some of them are cold keys, like how do you
• 50:59
  refer to that? And so I just, I just think of like thinking of self-custody as an overall system and
• 51:03
  how it handles security, recoverability, privacy,
• 51:08
  and ease of use is like the framework to bring to it.
• 51:11
  And then looking at the system as a whole.
• 51:13
  It's just, it's not as marketable
• 51:15
  to call it a signing device as a wallet.
• 51:19
  So one of the shade that gets thrown at things
• 51:22
  like Trezor and Ledger and these hardware wallets,
• 51:25
  signing devices that have multiple coins on,
• 51:28
  is that complexity is the enemy of security
• 51:30
  in a lot of ways.
• 51:31
  And so comparing you to, I'm sure, one of your bigger competitors being like Colcard,
• 51:37
  this is far more complex in its design, in the sense that it's collaborative custody,
• 51:43
  it has inheritance, it has potentially wrench attack protection in the future.
• 51:47
  Does that add any issues with security?
• 51:52
  Whereas if you buy a Colcard, it has your keys.
• 51:55
  That's kind of it.
• 51:56
  It is just a plain signing device.
• 51:58
  Yeah, yeah.
• 51:59
  No, it's a good question.
• 52:00
  And I think the way I would answer it is if you compare just the hardware signer to the hardware signer, then there's no extra complexity.
• 52:09
  When you start comparing a hardware signer to a full self-custody solution, then there's all of this extra complexity on the recovery system inheritance like you mentioned.
• 52:18
  But what I would sort of urge you to do in that comparison is to say, well, what's your recovery solution?
• 52:23
  And so you need to compare, if you're taking, let's say, the cold card approach, you're not just comparing the cold card hardware to the BitKey system.
• 52:31
  You need to compare the cold card hardware plus whatever multisig you've set up, plus whatever recovery you've set up, plus whatever inheritance you've set up.
• 52:39
  And is that system and the complexity of that system compared to the complexity of the BitKey system, I would expect the BitKey system to be far more elegant in its design because you're not doing a DIY project yourself.
• 52:52
  Yeah, that makes sense.
• 52:53
  I think there'll be a lot of Bitcoiners out there that think they have a really secure setup.
• 52:59
  And if push came to shove, maybe that wouldn't be the case.
• 53:03
  And it's one of the things that really scares me in terms of pushing people who I know who are getting into Bitcoin into self-custody.
• 53:10
  It's like there's a really steep learning curve there into doing it.
• 53:13
  Not just like buying a hardware wallet and sending Bitcoin to it, but then actually protecting those keys is a big step.
• 53:20
  if you're doing it like the seed phrase way?
• 53:22
  Yeah, so one of my,
• 53:24
  when I was doing some like product research
• 53:27
  for designing BitKey,
• 53:29
  I was at, I think it was the OpNext conference
• 53:31
  because I wanted to talk to like the hardcore Bitcoiners.
• 53:34
  And what I was going around asking folks
• 53:36
  and I thought it was really illuminating,
• 53:37
  this is a little bit technical,
• 53:39
  but I think it's really helpful,
• 53:40
  is that a lot of them had multi-sig setups, right?
• 53:45
  So let's say you have a two of three multi-sig setup
• 53:47
  and you've done all of the things.
• 53:50
  these are people who are really good at it.
• 53:51
  You've done, you've put them in geo-separated locations
• 53:55
  and you've done your, you've got your descriptor backup
• 54:00
  and you've done all those things.
• 54:01
  Okay, so then a scenario happens
• 54:04
  where one of your keys gets compromised
• 54:06
  and it's just like, it's gone missing.
• 54:07
  You go to check on it, it's gone, whatever.
• 54:09
  Or your device is dead or something.
• 54:10
  One of your keys is in bad shape.
• 54:13
  So now what you need to do
• 54:14
  is you need to move to a new wallet, right?
• 54:16
  You need to sort of fix your setup.
• 54:18
  And so the question I ask them is kind of given this scenario, do you A, take your two existing keys, get a new third key, and create a new two of three with those keys?
• 54:31
  So you have instead of ABC, which is the original, you have ABD.
• 54:36
  Or the alternative is, do you get three new keys, whatever, DEF.
• 54:41
  Okay. And the reason it's a, it's a, it's not like a philosophical question. It's more of an
• 54:48
  operational question because it's how many signing devices do you need to do a migration like that?
• 54:53
  Like, are you, do you have one key on each device or are you loading different descriptors onto it
• 54:58
  and have one hardware wallet that's actually, or one hardware signing device that has multiple
• 55:02
  wallets loaded onto it? And so my question is like, which one have, when you did your testing,
• 55:07
  which approach did you use?
• 55:10
  And for most people, they've never tried it before.
• 55:13
  And they could do it, like they have the know-how to do it.
• 55:17
  But the fact that you haven't tested your recovery system
• 55:20
  or even sort of done it, to me,
• 55:24
  is a signal of just how complex this stuff is.
• 55:27
  And so even the like hardcore folks
• 55:29
  who haven't done a multi-sig recovery
• 55:32
  and thought through the number of devices they want to use
• 55:34
  and how they're going to micromanage those devices,
• 55:36
  to me says, BitKey is for you, because we have tested it.
• 55:39
  We know how to do it.
• 55:40
  I can give you the BitKey answer.
• 55:42
  I can tell you the BitKey answer takes 10 seconds
• 55:43
  of a loading animation in the background and it's done.
• 55:46
  And that I think is really the strength of BitKey.
• 55:49
  And so it says like, it's doing the thing
• 55:51
  that you would probably choose.
• 55:53
  And so when I tell people,
• 55:53
  this is exactly how BitKey does it.
• 55:55
  It's like, oh, this isn't a normie wallet.
• 55:57
  Like this is the solution I would do
• 55:59
  that I haven't tested yet,
• 56:00
  but I could test it in a few minutes on BitKey.
• 56:02
  Yeah, the problem in that scenario as well
• 56:04
  is it's probably the most high stress scenario
• 56:06
  when you're trying to figure this stuff out.
• 56:07
  Like you're not gonna be thinking straight
• 56:09
  when you're worried that like your life savings
• 56:10
  in Bitcoin is gone.
• 56:11
  Right, yeah, it's a wild, yeah.
• 56:14
  Being in that situation for real is like,
• 56:17
  I mean, I get nervous when I'm like,
• 56:18
  cause when we do all these testing, it's like,
• 56:20
  I don't wanna lose the like 20 bucks on my wallet
• 56:22
  that I took out of the treasury for testing.
• 56:23
  And I was like, oh, but like to do it
• 56:25
  with your life savings is stressful.
• 56:27
  Yeah, I think the BitKey thing is awesome.
• 56:29
  And I think the screen is a huge addition.
• 56:32
  Thank you.
• 56:33
  Is there anything else you want to talk about before we close out?
• 56:36
  Oh, no, I don't.
• 56:37
  I don't think so.
• 56:38
  Well, I'm excited to see how this goes.
• 56:40
  Vegas starts tomorrow, man.
• 56:42
  It's going to be a wild few days.
• 56:44
  Yeah, it's I always love these conferences.
• 56:46
  I've already lost generational wealth at the table again.
• 56:50
  This is two years running.
• 56:51
  There's still time.
• 56:52
  There's still time to win it back.
• 56:53
  Exactly.
• 56:54
  It never works that way though.
• 56:56
  But thank you, man.
• 56:57
  This has been really cool.
• 56:58
  I appreciate you doing this.
• 56:59
  And let's go have fun in Vegas.
• 57:00
  Yeah, let's do it.
• 57:03
  You