I envision that there will be some conflicts in terms of privacy.
There will be part of the community who will say no, non-KYC.
It's a must and some of the people who will say no.
We want to KYC everything, we just want the price to go up.
Now they are reaching out to us.
Before we were like knocking on the doors, but it's happening.
Privacy is a feature that you can use or you cannot use.
And that's actually one of the reasons why institutions are using Bitcoin
because it could be treated as a highly transparent asset, which it is.
Some of the Bitcoins, they think that, you know,
because they have discovered Bitcoin,
they can, you know, teach people on other stuff.
There's a lot of examples.
What works for you doesn't necessarily work for other people.
So, I mean, be humble and do your part.
You are doing it, but with the Bitcoin ethos in mind.
That's really cool.
All views expressed by the host or guests are solely their own opinions.
Nothing stated in this podcast should be considered a specific endorsement to make any particular investment or follow any specific strategy.
Max, welcome to All in Bitcoin. Part one was just the beginning, so here we are, part two.
Time to go deeper into Bitcoin and more.
Okay, let's go.
You've built HODLHODL, one of the first non-KYC peer-to-peer exchanges, launched the OG Bitcoin-only conference, and now lead Debitify without custodial compromises.
You are a builder of new beginnings. What would you build for the end of the world?
I didn't build HODLHODL. I contributed to it. So I'm a more contributor or less builder for the end of the world.
If we understand that the end of the world is coming, I don't think you need to build something.
You just need to spend time with the people you love.
I don't think whatever you build, I can say I would love to build a spaceship to fly to the new world, which is obviously obvious questions, but I'm not an engineer.
I cannot build.
I can lead, of course.
Maybe I can build a team who will build a spaceship.
That I guess I can do.
But again, I don't think if we're talking about this apocalyptic stuff, I still believe that human connection is the most important thing.
And if you know something is coming and it's inevitable, just spend time.
With the loved ones.
With the loved ones, yeah.
With the people you like.
How do you see the role of governments in a decentralized world?
well obviously a government and decentralized world could be just one of the parties involved
in the decentralized world right it's not going to be the single party the single point of
authority control and and it will be like a collaborative custody right where we engage in
government but i i think that the government still can bear a certain amount of functions
and i do think still whatever you name it but there should be some kind of authority
over the society.
The difference is that I think that authority
maybe should be a less destructive power
and more of power that can help,
that can guide, et cetera, et cetera.
And definitely if we're talking
from the perspective of Bitcoin,
of course, governments shouldn't be in charge of money.
Or at least they should collaborate
with private entities and figure it out,
the best option how to recharge or restructure the money.
Why is money so misunderstood and how do you figure it out?
I don't think the money are misunderstood.
I think the money is just manipulated significantly by those who are in power.
You think people know what money is?
We have a concept, at least, right?
And we agree on that concept.
It's something that I can use to buy service or goods from other people or to preserve my
wealth or to create the wealth or whatever transfer. That's the concept, right? And that
concept was with us since the very beginning, because people were always striving for, you know,
some economical activities, you know, exchanging and doing this stuff. I don't think money are
generally misunderstood. I think it's like the concept of what we know as money is just different
at this point, but we still, a lot of people still think, and if things have passed, a lot of people
still doesn't get the concept that fiat money is just like, you know, printing papers, right?
It's just your belief that it has a certain level of value. But overall, I think that,
I guess we should be back to the concept where money is actually, there's an underlying
sporty facet like it was gold before i have hopes that the future of the money will be
backed by bitcoin to certain level and how did you figure it out well i mean there's a good concept
at this point it's stable coins you know and stable coin issuers just like tether is doing
this basically they're buying bitcoin as well so you could argue and you can say that tether is
partly backed by Bitcoin. Again, I don't know the mechanics, but I guess it's very generic and
very macro level answer that, let's say, imagine that a certain government is buying Bitcoin on
the balance sheet and continue to print out money. So they have a strategic reserve of the Bitcoin.
And if you connect it with their own currency, it means that currency, kind of the debt of the
of the country is supported by the strategic reserves of that currency.
Do you think privacy should be embedded in Bitcoin's base layer or added on top?
I think the beauty of the Bitcoin is that it's like fully flexible in terms of privacy.
If I want to show to someone and prove that I have Bitcoin, I can do this pretty easily,
right if i want to hide bitcoin and don't show it to anyone i can do this as well maybe not that easy
as the first one but i can do that so the cool thing about bitcoin and i think it's highly
undervalued feature of bitcoin is that privacy is a feature that you can use or you cannot use
and that's actually one of the reasons why institutions are using bitcoin because it
could be treated as highly transparent asset, which it is. So I think that privacy in Bitcoin,
I'm totally fine with the level of the privacy that we have at the moment. Of course, it would
be really great if we could have even more privacy, but still preserving the feature of disclosing
something if I want to disclose. Let's say I want to go and borrow money from the bank,
and I want to use Bitcoin as a collateral.
I need to show them what I have to some extent,
at least part of what I have.
So I guess it's a really cool feature of Bitcoin.
You can choose.
Do you see a split between KYC and non-KYC Bitcoin?
And what would that imply?
I actually think one of the potential dramas
in Bitcoin in the future could be between people
who are more to the roots in terms of cyberpunk.
They're more like privacy-oriented,
non-KYC stuff, et cetera, et cetera.
And with the people who will say, no, we want it to be like full transparency.
Everything should be KYC.
So I guess there's already happening a certain division in the community.
And again, it's nothing bad.
It's just like part of the evolutional journey.
But I would say I envision that there will be some conflicts in terms of privacy.
There will be part of the community who will say, no, non-KYC.
It's a must.
And some of the people who will say, no, we want to KYC everything.
we just want price to go up and etc.
Do you see Bitcoin primarily as a store of value or as a medium of exchange For me it a store of value That my use case But I know that for a lot of people it a medium of exchange
And I can tell you that I have a theory that for developing markets, it's a medium of exchange
because these people just don't have opportunity to store something.
You know, it's like they're spending everything because they need to survive.
And for developed countries, it's more like a store of value because, you know, it's like developed countries, people are earning good amount of money, they have some extra to save and they use Bitcoin as a store of value.
Next up, Debitify. What's Debitify and why did you build it?
Debitify is a platform for institutions to start providing Bitcoin-backed lending for private individuals and legal entities across the globe.
I build it because, well, first of all, I'm a former banker.
You know, I have a banking background.
I'm from TradeFi.
And then at some point, we just realized that there's a huge demand from institutional
liquidity providers, but they don't have tools.
And we can build tools.
We can build tools and we can provide them with the necessary tools and they can use
them and they can, you know, plug into lending markets and start earning money and using Bitcoin
as a collateral. Why would someone want to borrow against their Bitcoin instead of selling it?
Well, no Bitcoiner wants to sell their Bitcoin, right? At least there's way more people who don't
want to sell it than people who want to sell it. For a newcomer, would you explain why?
Well, for a newcomer, I guess it's like you see the prices going up and you obviously want to stay in that action and price action.
You believe maybe that Bitcoin in a year will go even higher, but you need money now.
How do you derive utility from Bitcoin?
You borrow against it.
And another thing that in some regions, borrowing is a non-taxable event.
So if you sell, you pay taxes.
If you borrow against it, you don't pay taxes.
Let me play you a clip from my recent conversation with Willibu.
Whenever you see a high interest rate,
there's a lot of risk and there's even more risk of rehypothecation,
unless you have a private key.
If you do have a private key, then you can check it on the blockchain.
That's why I want to move into that area of lending.
with like DB5.
That's the start of a whole wave
of these types of lenders
that can give you a private key
so you can verify and not just trust.
Yeah.
Thanks, Willie, for a shout out, right?
Can you explain how private keys
protect both the lender and the borrower?
Yes, it's a multisig.
And with a multisig,
you need to have your own private key, right?
So you hold one of the keys to the multisig
And the beauty of the multisig is that there's, let's say there's a set of private keys, three keys.
One goes to lender, one goes to borrower, and one goes to Debitify.
And with the multisig, usually you need to have a majority of the keys.
So you need to have at least two.
Then there's a game theory in play, you know.
There's no single party that have unilateral control over the funds that lock in escrow.
meaning that if you're a borrower you can be sure that your collateral won't be moved
for whatever reason usually collateral gets moved only if there was a repayment of the loan
or you failed to repay or there was liquidation so these there's a predefined conditions lender
himself cannot do anything with that money he needs to negotiate or again there should be certain
terms. So holding your private key is giving you more control over the collateral and more
transparency of the collateral instead of just sending the money to, you know, third part custody.
And then you don't know how it's stored. So what's your go to metaphor for explaining
a multi-seek? Let's say it's a safe deposit box. And it has three keys to this box. And one key
goes to banker, one key goes to your lawyer, and one key goes to you. And the mechanism in that
deposit box works in a way that you need to have at least either your lawyer or your banker to help
you open that safe deposit box. And even if you will lose your key for whatever reason, or someone
will stole your key, you can always ask lawyer and banker to come together and open your safe deposit
box. There was actually like, I think in past times there was like safe deposit box with that
concept, you know, multiple keys shared between, you know, family members or business owners.
And everyone has a bit of access, but nobody has a full access. So you need to negotiate. It's not
that simple. In the unlikely scenario that three out of four parties or two out of three parties
lose their keys.
What happens then to the Bitcoin?
If the majority of keys get lost,
then nothing can be done, unfortunately.
I mean, that's why you have multiple parties
and we have different setups.
We have setups with two out of three keys,
three out of four.
We have setups with three out of five now as well.
So if you go out of business...
Nothing will happen with the collateral
and you can still restore the access to collateral.
Debitify is just one of the keys and it's just the front end.
Your collateral, your Bitcoin are still on the Bitcoin blockchain.
And the other three keys, who holds them?
If we talk about three out of four, lender, borrower, Debitify,
and there's always a fourth authorized key holder,
which is a backup key holder, which is an independent entity.
Authorized by you or by whom?
By all involved parties.
So we just provide a list of authorized key holders
and you can choose who you maybe trust more.
For now, we work with a company called Anchor Watch.
So if Debitify goes out of the business for whatever reason, you know who's holding the
forward key.
You always know who is like backup key holder.
And obviously, you know your lender because it's KYC and you get familiar with your lender.
And then you can just contact every involved parties, except for Debitify, obviously, if
we're out of business.
And we have open source extractor tool.
So you don't need Debitify.
There's no vendor locking in the way.
So even if Debitify is not accessible, you can still talk with the lender and fourth key holder and get your collateral back.
It's not like centralized custodial platform when you lock your collateral with them.
And if they're gone, your Bitcoin is gone with them.
Yeah.
Let's say I want to borrow 100k on Debitify using my Bitcoin as collateral.
Can you walk me through the process?
so you as a borrower you go online you see the list of the offers you choose the offer that you
like in terms of like duration of the long currency you prefer the rates l tv ratio you
accept that offer do i negotiate the offers at the moment they're like posted by lenders and
they're non-negotiatable there's different them but we are going to introduce a new tool which
will be like make a counter offer so as a borrower you will be able to try to negotiate an offer
and then you accept that offer you go through kyc process so you basically verify yourself
if lender accepts you for whatever reason we have lenders from different countries
some of lenders prefer to work with certain type of customers so they accept you and then you
provide your key, which was generated thanks to the tech that we have, right? You provide your key,
lender provides key, DebiFi provides, Fortkey Holder provides key, but that happens automatically.
So you just press the button. We take those keys and create a multisig on the public Bitcoin
blockchain uniquely created for your contract You send Bitcoin as a collateral As soon as Bitcoin is there lender gets informed okay collateral is locked in You can wire the money And that how it goes You issue four keys right One goes to you one goes to the lender one goes to the borrower and one goes to the authorized key holder as you mentioned What happens if the B5 and the authorized key holder disappear with two keys I cannot access my Bitcoin anymore because I lacking one key but you cannot access it either can you
No.
Okay, so there is no incentive to do it.
There is no incentive.
There's only punishment in that case, unfortunately.
We had these questions on Twitter when people were asking,
well, what will happen if you're going to collude with each other
and try to get my...
I mean, what's the point?
We've been building this so hard.
I don't understand how much money has to be in that particular collateral.
And also, if it's a lot of money,
then you know how the Bitcoin network works.
You cannot hide that money, obviously.
What's the point of ruining your reputation that you built for 10 years,
your business that you built for like last three, four years?
And I don't see any type of point.
That's the beauty of the multisig, you know, there's no incentives.
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Where are the risks with both custodial and non-custodial platforms?
Let's say the B5 versus strike.
So first of all, as a non-custodial, again, there's no single company that holds your Bitcoin.
You can verify that they're there.
You have a certain level of control.
Again, there's no custody of your funds.
I mean, we don't have as a Debitify a single control over your funds.
We cannot move it without certain terms or without, you know, combining all the keys
and going to each other and trying to get these keys.
I guess the security is the main point.
Transparency is another.
And you do realize and you understand how your collateral gets stored.
And it's multi-sick.
I mean, you can verify.
We've been through multiple security audits.
the trade-off of that is of course that custodial platforms they the user interface and the user
experience is a bit more better so i mean it's a bit more easier for people who are maybe less
sophisticated to use custodial platforms do you think it's difficult to use debify for a non-tech
person i think it's uh i don't think it's difficult for non-tech person we we had a lot of different
customers who are non-tech person. But I think if we compare DebiFi with custodial service providers,
like just, you know, going with the custodial service providers a bit more easier because in
many cases, you don't need to write the seed phrase, which we require in DebiFi. That's how
you protect your key. And the onboarding takes like very, very less time. You can onboard to DebiFi
in like five minutes, right?
Okay.
But for custodial platforms,
it could be less than one minute, right?
But that's...
Yeah.
But we are talking about trade-offs.
It's true.
I think that both of type of platforms
has their use cases and their customers.
I think there's a huge market and it's only gonna grow.
We're actually very supportive
of more and more platforms appearing there
because this means that there's more and more potential customers for us as well.
So it's like risks between custodial and non-custodial wallets.
Non-custodial wallets require you to write down your seed, protect it.
So for some people, it could be really intimidating,
especially for those who are new ones.
For custodial wallets, it's just sometimes for a lot of people
who are new into space, it's just like password and that's it, you're in.
but then again you don't hold your keys no my keys no my coins and i'm thinking of celsius yeah
ftx yeah that was the the very bad examples i don't think that there are actually any platforms
or companies that are left with that type of incentives at the moment in on the market why
not i think that's most of the custodial platforms are run by bitcoiners and they just provide
different service. You know, I don't think that someone wants to scam someone, etc. It's just a
different, again, it's a different service. Some people want to want to have, I would say, less
responsibility over their own like coins and faster and just, you know, better user experience,
which is fine. Some people like our customers, they want to hold their keys. They want to be
responsible to some extent and they care about security more. It's just different types of
products and, you know, there's a niche and there's a customer for every one of them.
But I mean, it was a lesson and, you know, a lesson proved that our approach with non-custodial
things is a very good thing to have because there's no vendor locating and even if Devify
disappear for whatever reason, you can still access your collateral.
Can I lend or borrow fiat on Devify and which currencies do you support?
Well, as a private individual, you can only borrow.
We currently have, our lenders currently provide fiat.
They provide USD, Euro, Swiss francs.
And as a lender, if you're a legal entity and you're allowed to issue loans,
you can go and provide basically most of the fiat currencies out there if you have liquidity in
certain fiat currency what's the minimum and what's the deal like well the minimum at the
moment for a regular loan is 25 000 but we also have some lenders who have who provide smaller
loans like 5 000 10 000 we also have card project which is a debify bitcoin back cards where you can
borrow from 500 to up to 1 000 it's like basically on the go you get your loan in form of prepaid card
and you can spend that on you know paying bills and i don't know ordering something in internet or
buying some stuff offline at the moment the average interest rate is 12 on the card it's a
bit more bigger because it's like a card and usually cards are a bit more expensive.
So on the card, it's around, I think last time I checked was 14%.
On the regular rounds, the minimum that we have is 9.5% for Swiss francs and it goes up to 12,
13, 14%.
I would say the average on the market at the moment, not only for Debitify, but the whole
industry is like between 10 and 12. Can I lend or borrow stable coins as well? And what would
the conditions be? Yes, you can. You can borrow USDT, you can borrow USDC. As an institutional
lender, you can also lend stable coins and the interest rates are mostly the same, around 12%.
You can get that type of loan for 12%. And the duration is starting from one month ending to 24
months. Who should use DebiFi and who should stay away?
Well, if you ask me, everyone should use
DebiFi. I don't think anyone should stay away. But as I said,
I mean, there's different type of customers.
Some customers using us some customers using other platforms It a matter of experience education being comfortable There still like TradeFi mostly still works
with the concept of custody.
And what we're trying to achieve with DebitFi
is we're trying to change that approach.
We're trying to show that, hey, there's a new asset,
which is Bitcoin.
And that particular asset allows you
to build this collaborative systems,
like collaborative custody for collateral.
Do you think you need to be financially savvy?
I don't think you need to be financially savvy
or I don't think you need to be technically savvy.
We were building this tool for any level of the knowledge.
It's just, again, it's just different types of people.
Some people do care about holding their own keys
and having a bit more control.
Some people doesn't care.
It's like that.
Are there any new partnerships or features you are excited to talk about?
Well, yeah, we announced just two days ago the partnership with Swiss bank, with Signum.
So we're building a product which will be called Multisig.
And it's basically the first regulated bank that's going to use collaborative custody approach, right?
Multisig.
So as a customer of Signum, you will be able to borrow from them,
but you will be able to do this through the multisig that Debitify will provide together with Signum.
So that's probably the most exciting thing I can talk about now.
But there's more stuff coming in, so hopefully there will be more exciting announcements.
What's the biggest challenge when explaining Debitify?
Education.
And, you know, again, as I said, we go to the banks, we talk with funds,
We talk with trade companies and they all get used to the concept of the custody.
That's how that industry works.
So for us, biggest challenge is to change that view.
And it's happening.
So we have first proof of concept, you know, first bank is joining and we just, we already
have some requests from other banks.
So it's like very exciting.
They're reaching out to you.
Now they are reaching out to us.
Before we were like knocking on the doors, but it's happening.
We want to make banks supercharged.
We want to help them to, you know, serve new customer base
because there's a lot of customers that would love to use bank
through by and holding their own key
because it's like grounded in the ethos of Bitcoin, right?
Holding your own key, having certain level of control
and, you know, being less reliable on the third party
and more on the collaboration between the third party.
So yeah, I guess this announcement hopefully was a turning point
not only for us, but also for the whole industry.
A few final questions before we wrap up.
Over these years, how has the feeling changed
from when you first started to now?
You're getting more pragmatic, but I guess it's less about Bitcoin changing.
It's more about you getting older.
I'm talking particularly about myself.
And I guess that I've realized that if we want to achieve mass adoption, it's not enough
to go from the bottom to the top.
So basically, we were, I would say, let's say before 2022 or 2023, everything was like,
okay, we need to onboard the masses of the people and they will force these changes,
which they did to some extent.
But now I believe that there's also should be an approach from the above to the bottom,
which means that we need to onboard institutions.
And institutions will spread Bitcoin across their customers and other people.
So this is what we're trying to do with Debitify.
We're going to institutions who serve a lot of clients.
We provide them with the tools and customers will be engaged as well.
And that's how we will spread.
because it's cool if you will be able in five years to go to your local bank and borrow against
your Bitcoin by holding your key. You are doing it, but with the Bitcoin ethos in mind. That's
really cool. If everything you've built disappeared tomorrow, what part of you will be untouched?
I would say there's a lot of parts of me would be untouched. Again, as I said, I do value people
around me and being just a good person. It's not going to change that I'm not building something or
something has disappeared. I'm still going to be a person. I'm still going to have people around me
that I love and respect. I don't think that a lot of people might hate me for that or disagree.
I don't think that the Bitcoin is the most important thing in your life.
Bitcoin is important and Bitcoin helps you to achieve a lot of stuff and Bitcoin helps you and
your loved ones to be more independent. But again, as I said, there are far more important
things in life. And sometimes it's just good to remind yourself that your life, it's not just
only about Bitcoin, it's far more bigger. And you need to sometimes go outside, touch the grass,
and just enjoy nature and the world around you.
Life is beautiful.
What's one thing you wish Bitcoiners would talk more about?
More about other things than Bitcoin, I would say like that.
I really enjoy going on the conferences and talking with people,
of course, about Bitcoin, but also about other things.
Travels, life experiences, etc.
etc however i have an opinion that a lot of bitcoiners they think that they have you know
discovered this cool thing bitcoin and master it and they can and almost all of the bitcoins can
educate other people on bitcoin but then some of us start thinking okay we can master other things
in our life you know we're going to be not only just about bitcoin but we're going to be cool
nutritionists and experts and all other stuff usually doesn't go well.
You still can share your opinion, but being very persistent and, you know, pushing your
opinion doesn't go well.
So a lot of some of the Bitcoins, they think that, you know, because of they have discovered
Bitcoin and they have somehow in a different position than other people, they can, you
know, teach people on other stuff.
but I mean there's like there's a lot of examples what works for you doesn't necessarily work for
other people so I mean be humble and do your part if you're sharing an opinion share it as an opinion
don't share it as like you know it's it's either white or black statement statement yeah it should
be like that or it shouldn't be at all what's your favorite contradiction in yourself contradiction
I mean, sometimes I can be super focused and sometimes I can be super like defocused,
I would say.
And sometimes it actually helps you to, you know, refresh to some extent.
And I guess that's my favorite contradiction about myself.
Yeah, I think it's like, it is like this.
I mean, sometimes you can just, you know, stop being, stop focusing and maybe relax a bit.
When was the last time you changed your mind about something important?
I actually tried to preserve a really, really flexible mind in a way that I think that if
there's a good reason why not to change your mind about certain things.
So I cannot remember because if I'm wrong for whatever reason, or I have new information
about some topic, I can change my mind pretty much easily.
I'm okay with that.
I think that it's also important and the most successful people that I know in life, they're
always, you know, they're in a constant state of, you know, okay.
I was thinking it was like that, but now I have a new set of information.
Maybe it's not like that.
Maybe it's something different.
And they're always like being open-minded just in general, even about Bitcoin, I mean.
Yeah.
And last one, what scares you more, losing privacy or losing trust?
I already lost the privacy in the way that I go on podcasts.
I speak from the stage, you know, I travel to the conference.
So, but trust is very important.
My reputation is very important for me.
So that's, I would say that's super important thing for me.
Privacy, I don't, I never thought about it because, you know, I go to the conferences,
I speak, I run one.
So it's really hard to preserve privacy for me and for any speaker that goes to the conference.
You need to understand that if you're invited and you're going to go, it's like parting
to some extent with part of your privacy.
The good thing is that we still live in a small bubble
and people outside of the Bitcoin world
doesn't know much about famous, influenced people
within the Bitcoin world.
So, I mean, it's okay.
Trust is way more important, way more important.
Well, thank you, Max.
Thanks for your time and this generous conversation.
I've learned a lot from it.
Where can people follow you and your work?
Twitter and Noster.
I'm going to provide you with all necessary links
so you can follow me there.
And I'm happy to, if there will be any questions
from the people and comments, I'm happy to answer them.
It's been an honor having you on.
Can't wait to have you back.
Until then, stay sovereign.
Thank you.