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Everybody has something in their life that's more important to them than Bitcoin.

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As soon as that thing is threatened with coercive violence, all of self-custody breaks down.

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If you never make a mistake and you set it up perfectly, you have an amazingly secure system.

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But if you make a mistake, you lose everything.

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Fixing the wrench attack problem needs to be one of the top priorities of how do you do that.

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There's been this idea of conflating self-reliance as a virtue to cover the lack of products that do it for you.

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I need to believe in permissionless money.

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I need to use permissionless money.

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I need to do what I can to make everyone in the world have access to permissionless money.

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And I think if that takes the form of safer and easier solutions, that's a win all the way around.

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Have you seen how many people are getting wrench-tacked right now?

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Yes, yes.

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In France, I think it's something like,

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this could be wrong,

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it's like 50 a week or something insane like that

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that happened this year.

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No, is it that high? I had no idea.

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I could be over-exaggerating there.

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Someone told me a stat recently, it kind of blew my mind,

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but the number of attacks are happening,

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for whatever reason, France seems to be

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the epicenter of this at the moment.

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But I have a friend,

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I won't dox him too much, but he was in London

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recently,

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and he was out with some people,

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He's like a bit of a shit coiner.

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And he was out with some people that are known in the crypto space.

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And went out for drinks, left the bar, and got held at Knife Point.

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Oh, my God.

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Unlocked his phone.

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He had terrible security setup.

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And so they managed to steal a significant amount of money from him.

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That's terrible.

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At Knife Point, along with his watch.

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And do you know one of the crazy parts of that story is that some of it was taken from an exchange.

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Yeah.

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And he spoke to the exchange, obviously, like, filed police reports, all this sort of stuff.

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and then followed that, like follow the transaction. And I believe, don't quote me on this,

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I don't want to get in trouble. I believe that they found that it went to Binance and Binance

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didn't refuse to do anything about it. Really? Which is, but regardless of that stuff,

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which is insane in its own way, like the physical threat on Bitcoin is, feels pretty high right now.

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Yeah. Like, how do you view that? Yes. Okay. So

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So I think the wrench attack problem is like a structural issue with Bitcoin and self-custody

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in the sense that like, you know, even though the numbers are small, I mean, they're very

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troubling.

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You like read these reports and they're like scary and like gruesome sometimes.

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I think the reason it's so important is that it kind of gets at the core of self-custody,

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which is if you have full control of your keys,

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then you can be coerced to do something with them.

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And so as soon as something more important

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than Bitcoin is threatened,

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and everybody has something in their life

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that's more important to them than Bitcoin,

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as soon as that thing is threatened

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with coercive violence,

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all of self-custody breaks down.

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And so that's a really structural problem.

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And so looking at it less from,

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well, how often does it happen and all of this,

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So just like from a systems point of view,

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fixing the wrench attack problem,

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I think is one of,

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needs to be one of the top priorities of how do you do that?

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And the one thing that I really don't like

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about the current wrench attack mitigations

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is they're all based on either deception or coercion.

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Sorry, deception or-

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Like avoidance.

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So you're talking about things like duress pins

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on wallets and stuff like that.

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So like, and I'm with you on that.

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Cause like, they're cool.

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They're really cool products.

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Like I like that they exist, but the question always has to be,

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would you actually use it in that situation?

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Exactly. That's exactly right.

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Yes.

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Using a dress pin or whatever, does that just make the potential attacker more angry?

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Like what's the like physical threat that you, well, the physical,

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like action they take if you kind of trick them into like,

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yeah, basically bricking your hardware wallet.

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So yeah, so this is the thing that I really don't like about duress pins and decoy wallets,

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is that I don't think the, like almost the game theory, the mechanics of it play out that well.

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Because if you, you obviously have a way to get back into your wallet, right?

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Or you burned all your Bitcoin in that moment.

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But if you have a way to get back into your wallet, you haven't really changed much about the situation.

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You've just made it harder.

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So like maybe you've gotten rid of the access in your home, but now you've got some backup somewhere else.

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And so the attacker is still there.

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the attacker is still, you know, you haven't ended the attack. And then, but the other version I think

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is even more scary is if you don't have a decoy wallet, but the attacker thinks you have a decoy

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wallet and like, how does that play out? And so like the whole mechanism of decoy wallets feels

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like it doesn't really solve the problem. And so like putting self-custody users into the situation

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of like, am I going to resist the attacker? I'm going to try to trick the attacker. Like,

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How am I going to navigate the situation?

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And some of these solutions are like,

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put your backup key in a bank lockbox

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because then you have to go there or whatever.

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But all of these really put a lot of the onus

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on the self-custody owner in a violent situation.

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And so I think to really solve the problem,

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what we need to do kind of as an industry

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is take on the assumptions of

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if an attacker has full knowledge of your wallet setup

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and the victim is fully compliant,

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can you still protect the Bitcoin?

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And if we can develop solutions that meet that test,

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I think we'll have something that's like actually

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can mitigate wrench attacks and start to solve the problem.

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Yeah, because like if you go through the,

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someone breaks into your house,

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the different setups you can have with your Bitcoin

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is either like from the very basic,

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you might have Bitcoin on an exchange.

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Well, that can be taken if they've got you at knife point.

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If you have it on a single SIG hardware wallet,

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they can potentially take that

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as long as you kind of actually sign the transaction.

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If you have multi SIG, you can have it with keys distributed.

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Like you may not physically be able to move Bitcoin,

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but the threat is that they can chop off your finger

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until you do something.

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And then the one that's very interesting

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is like the anchor watch model

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where they basically say, give them the Bitcoin.

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That's fine.

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We've got you insured.

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What other solutions do you think there can be in that stack?

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Yeah, that's a good question.

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So this kind of gets into the seedless architecture of BitKey

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because I think one of the downsides of seeds,

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and I don't want to bad talk seeds too much because seeds have very good uses,

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but one of their challenges is that they're an instant compromise of the wallet.

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So as soon as you have the seeds, the wallet is-

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I mean, that is the Bitcoin.

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That is the point.

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And so when you have seed artifacts, what you essentially have are the private keys kind of unprotected somewhere.

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And so one way to get the Bitcoin is to just take over the keys.

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When you use a seedless architecture, the way you exit the wallet is not through private key transfer.

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It's through a transaction.

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So you take your two keys and you make a transaction, then you send that transaction to a new wallet.

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What's really nice about using transactions as an escape mechanism, as opposed to seeds as an escape mechanism,

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is transactions can be restricted in a way

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that could give you more protection.

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And so people have talked a lot about this

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in the covenants realm,

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which is like, okay,

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if the blockchain itself had primitives

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that could restrict how Bitcoin was used,

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you could do all sorts of cool stuff.

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We don't have covenants yet.

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Just for anyone who's not like technically on this.

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So covenants, they basically allow you to

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almost like whitelist addresses

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where you can send Bitcoin to.

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Yes, yeah.

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So they're basically an additional layer.

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So it doesn't exist yet.

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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.

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Keys already figure out who can move it, but restricting where it can move, when it can move.

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Is that destination whitelisting? Is that time delays?

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And this is where all the different proposals, but just this idea of having an additional layer of restriction on movement.

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And so what you can do today is you can take your Bitcoin and encumber it by multiple signatures.

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One of them that you control, one of them that is controlled by, say, another party.

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And this starts to get into different collaborative custody models.

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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.

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And once you enter that world, I think there are a lot of solutions here.

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And this is actually something that we're working on on BitKey.

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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.

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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.

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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.

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193
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194
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00:10:16,540 --> 00:10:22,540
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196
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201
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202
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203
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204
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218
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219
00:11:55,800 --> 00:11:57,760
So the new product, can I see it?

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Yes, here.

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Let's have a go.

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00:11:59,980 --> 00:12:03,980
So I'm going to come at you with some of the criticisms that the original BitKey got.

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Okay.

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And let's see if they're fixed.

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So the big one was obviously the screen, the lack of a screen.

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I can see that that's fixed.

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There is a screen, yes.

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00:12:14,260 --> 00:12:16,380
So what are the new features in this?

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Yeah, so the key thing we wanted to address is we really wanted to address verification writ large.

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It's bigger.

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It is bigger.

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We, you know, bigger screen or a screen and a battery, it's slightly larger.

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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.

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And because hardware wallets are typically signing devices, they're not full recovery systems and inheritance and all of that stuff.

235
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BitKey is a full system.

236
00:12:48,280 --> 00:12:59,060
And so because it has recovery mechanisms, recovery contacts, inheritance, all of these security settings, the screen is used to verify all of that.

237
00:12:59,140 --> 00:13:09,140
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.

238
00:13:09,220 --> 00:13:15,220
And so we really wanted to look at verification writ large, not just transaction signing.

239
00:13:15,900 --> 00:13:17,500
So one of the cool things about the BitKey,

240
00:13:17,600 --> 00:13:18,420
I've always thought,

241
00:13:18,540 --> 00:13:21,280
is that it's like the hardware wall

242
00:13:21,280 --> 00:13:22,200
that anyone could use.

243
00:13:22,600 --> 00:13:22,820
Yes.

244
00:13:22,920 --> 00:13:26,240
So if my mom and dad wanted to set up self-custody,

245
00:13:26,400 --> 00:13:27,420
this is where I sent them.

246
00:13:27,840 --> 00:13:29,620
Does the screen add complexity?

247
00:13:30,460 --> 00:13:31,760
It certainly adds more steps.

248
00:13:32,460 --> 00:13:36,320
And that was the point of the screen

249
00:13:36,320 --> 00:13:37,200
is really to say,

250
00:13:37,500 --> 00:13:41,460
make sure that anything that the app ever asks me to do,

251
00:13:41,520 --> 00:13:42,400
I can double check first.

252
00:13:42,520 --> 00:13:43,240
Yeah, that's awesome.

253
00:13:43,240 --> 00:13:44,840
And so what'll happen is,

254
00:13:44,840 --> 00:13:49,440
when the app wants something from the hardware,

255
00:13:49,440 --> 00:13:50,940
whether it's changing a security setting

256
00:13:50,940 --> 00:13:51,680
or doing a transaction,

257
00:13:51,780 --> 00:13:52,500
the screen will show it

258
00:13:52,500 --> 00:13:53,240
and you have to approve it.

259
00:13:53,320 --> 00:13:54,800
And so it adds that extra step.

260
00:13:55,420 --> 00:13:56,620
We did a lot of work

261
00:13:56,620 --> 00:13:57,780
to make it as easy as possible.

262
00:13:57,940 --> 00:13:59,860
You'll see the screen is really beautiful.

263
00:14:00,100 --> 00:14:01,120
It's like easy to read.

264
00:14:01,240 --> 00:14:02,540
It's touch and swipe.

265
00:14:02,760 --> 00:14:06,340
And I think your parents will-

266
00:14:06,340 --> 00:14:07,620
They'll still be able to use it.

267
00:14:07,680 --> 00:14:08,820
They'll be able to use it.

268
00:14:09,020 --> 00:14:10,560
And so let's go through

269
00:14:10,560 --> 00:14:12,380
the sort of criticisms of BitKey,

270
00:14:12,840 --> 00:14:13,980
sort of the original BitKey.

271
00:14:14,080 --> 00:14:14,240
Yeah.

272
00:14:14,240 --> 00:14:26,747
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

273
00:14:26,747 --> 00:14:27,867
is like what a seed phrase is

274
00:14:27,867 --> 00:14:29,508
because I think this is one of the questions

275
00:14:29,508 --> 00:14:30,888
we get at the booth a lot is

276
00:14:30,888 --> 00:14:33,188
how is this self-custody if you don't have a seed phrase?

277
00:14:33,608 --> 00:14:35,247
And I think that's the right place to start

278
00:14:35,247 --> 00:14:38,728
because it is a misunderstanding of what a seed phrase is.

279
00:14:38,788 --> 00:14:42,207
And so a seed phrase, it's a way to regenerate your key.

280
00:14:42,348 --> 00:14:43,327
It's not a private key.

281
00:14:43,327 --> 00:14:46,827
And so Bitcoin existed for years before seed phrases existed.

282
00:14:46,987 --> 00:14:51,867
Seed phrases were an invention to make managing private keys easier.

283
00:14:52,388 --> 00:14:55,348
And so with BitKey, you have private keys.

284
00:14:55,587 --> 00:14:56,447
So it's self-custody.

285
00:14:56,548 --> 00:14:59,528
You have two of the private keys fully in your control.

286
00:14:59,628 --> 00:15:00,628
You can always move your Bitcoin.

287
00:15:00,808 --> 00:15:04,587
You never need Block or BitKey or our servers or our apps or anything.

288
00:15:05,428 --> 00:15:11,928
And so what we wanted to do is we wanted to look at when we were thinking about self-custody,

289
00:15:11,928 --> 00:15:17,388
we wanted to design not just like a hardware wallet, which generates keys and then does signing.

290
00:15:17,867 --> 00:15:22,947
And then what most hardware wallets do is they'll generate a seed phrase and give it to you and say,

291
00:15:23,028 --> 00:15:28,108
okay, backups, go figure it out. Inheritance, go figure it out. And so now you're left with a seed

292
00:15:28,108 --> 00:15:33,087
phrase and you have to figure out like, how many copies do I make? Where do I store the copies? Do

293
00:15:33,087 --> 00:15:36,388
I need a descriptor? You know, and you have like your own treasure map and all that stuff. And so

294
00:15:36,388 --> 00:15:41,888
what we felt was that once you introduce a seed phrase, what you've done is you've said the hardware

295
00:15:41,888 --> 00:15:43,947
is now allowed to export its secrets.

296
00:15:44,388 --> 00:15:46,408
And then you give the user

297
00:15:46,408 --> 00:15:48,728
the challenge of protecting those secrets.

298
00:15:49,228 --> 00:15:51,247
And so that's just like a system design decision.

299
00:15:51,827 --> 00:15:54,648
And that's a really big thing to put on customers.

300
00:15:54,728 --> 00:15:55,788
And frankly, it's really hard.

301
00:15:56,067 --> 00:15:57,348
Like doing it well is hard.

302
00:15:57,808 --> 00:15:58,848
Keeping it up to date is hard.

303
00:15:58,967 --> 00:16:00,108
Checking that the backups are still there.

304
00:16:00,168 --> 00:16:00,967
Like all of that is hard.

305
00:16:01,048 --> 00:16:03,808
And so you've basically given the recovery system

306
00:16:03,808 --> 00:16:05,528
as a DIY project to customers.

307
00:16:05,728 --> 00:16:08,148
And so that's essentially what seed phrases do.

308
00:16:08,148 --> 00:16:09,988
And for some people, that's very empowering

309
00:16:09,988 --> 00:16:11,207
and they're very good at it.

310
00:16:11,207 --> 00:16:13,168
And so, great, you seed phrases.

311
00:16:13,168 --> 00:16:15,207
For most people, it's a product they didn't want.

312
00:16:15,207 --> 00:16:16,867
And so what we said is, okay,

313
00:16:16,867 --> 00:16:18,567
what if we started from a different point of view?

314
00:16:18,567 --> 00:16:21,508
What if we said the hardware never exports its secret?

315
00:16:21,508 --> 00:16:24,908
Not as a seed phrase, not as a raw key.

316
00:16:24,908 --> 00:16:27,648
What we know then is that there is exactly one copy

317
00:16:27,648 --> 00:16:30,028
of your key on one physical piece of hardware

318
00:16:30,028 --> 00:16:31,967
gated by your fingerprint.

319
00:16:31,967 --> 00:16:33,247
And now let's build a security

320
00:16:33,247 --> 00:16:35,148
and recovery system around it.

321
00:16:35,148 --> 00:16:37,148
And so we say, well, what happens if you lose your hardware?

322
00:16:37,148 --> 00:16:38,867
And we've got a recovery system to solve that.

323
00:16:38,867 --> 00:16:39,947
What if you lose your phone,

324
00:16:39,947 --> 00:16:41,067
a recovery system to solve that?

325
00:16:41,067 --> 00:16:41,908
What if you lose both?

326
00:16:41,908 --> 00:16:42,408
We can do that.

327
00:16:42,408 --> 00:16:43,148
What if you die?

328
00:16:43,148 --> 00:16:43,988
You can do both.

329
00:16:43,988 --> 00:16:47,447
And so we went sort of case by case

330
00:16:47,447 --> 00:16:49,028
to figure out like what it would take

331
00:16:49,028 --> 00:16:53,608
to build a self-custody system, not just a hardware signer.

332
00:16:53,608 --> 00:16:55,688
So do you think that users,

333
00:16:55,688 --> 00:16:57,608
especially the more like technical,

334
00:16:57,608 --> 00:17:00,947
hardcore Bitcoin users lose anything from using a BitKey?

335
00:17:02,408 --> 00:17:03,827
Like who is it designed for?

336
00:17:03,827 --> 00:17:06,268
Like is this a mass market product

337
00:17:07,268 --> 00:17:08,568
or is this a Bitcoiner product?

338
00:17:08,568 --> 00:17:10,487
No, it's a Bitcoiner product for sure.

339
00:17:10,487 --> 00:17:12,888
Yeah, and I mean, the people that build it are Bitcoiners.

340
00:17:12,888 --> 00:17:17,888
Like, and the idea here is full control

341
00:17:17,967 --> 00:17:20,608
and to make it very strong.

342
00:17:20,608 --> 00:17:24,168
And here's, I think, where maybe our approach

343
00:17:24,168 --> 00:17:28,168
differs a little slightly from others

344
00:17:28,168 --> 00:17:30,527
and makes it seem like more of a normie product

345
00:17:30,527 --> 00:17:33,408
when really we are trying to attack the very core

346
00:17:33,408 --> 00:17:35,727
of self-custody, which is, I think,

347
00:17:35,727 --> 00:17:39,608
most self-custody products focus on security

348
00:17:39,608 --> 00:17:42,027
as like the one dimension to optimize.

349
00:17:42,027 --> 00:17:44,928
And we like to use the word safety instead of security

350
00:17:44,928 --> 00:17:47,527
and say that safety has a couple of different dimensions.

351
00:17:47,527 --> 00:17:48,768
And so one is security

352
00:17:48,768 --> 00:17:51,967
and security is really protection from like adversaries.

353
00:17:51,967 --> 00:17:53,128
There's also recovery,

354
00:17:53,128 --> 00:17:56,108
which is protection from loss or natural disaster.

355
00:17:56,108 --> 00:17:56,928
Then there's privacy,

356
00:17:56,928 --> 00:18:00,987
which is really the first line of defense against wrench attacks.

357
00:18:00,987 --> 00:18:02,428
And then there's ease of use,

358
00:18:02,428 --> 00:18:04,047
which is like protection from mistakes.

359
00:18:04,047 --> 00:18:05,928
And I think this is one that's really undervalued

360
00:18:05,928 --> 00:18:06,768
in our products.

361
00:18:06,768 --> 00:18:07,608
I totally agree.

362
00:18:07,608 --> 00:18:12,368
Because this is like, everyone always sets up their Bitcoin as if like the state is going

363
00:18:12,368 --> 00:18:13,727
to come after them and try and steal their Bitcoin.

364
00:18:14,008 --> 00:18:17,408
When in reality, I think the biggest threat to your Bitcoin is always you.

365
00:18:17,768 --> 00:18:18,168
100%.

366
00:18:18,168 --> 00:18:18,628
Yes.

367
00:18:19,128 --> 00:18:25,287
And like, well, yeah, the security model of Bitcoin, of most Bitcoin self-custody products

368
00:18:25,287 --> 00:18:28,908
is don't make a mistake and you're fine.

369
00:18:29,128 --> 00:18:29,868
And you know, that's true.

370
00:18:29,967 --> 00:18:33,868
If you never make a mistake and you set it up perfectly, you have an amazingly secure

371
00:18:33,868 --> 00:18:34,227
system.

372
00:18:34,328 --> 00:18:36,008
But if you make a mistake, you lose everything.

373
00:18:36,008 --> 00:18:41,608
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?

374
00:18:41,947 --> 00:18:44,227
It's you can't compromise on any of those four.

375
00:18:44,408 --> 00:18:48,127
And so, like, how do you build products that raise the bar?

376
00:18:48,487 --> 00:19:00,227
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.

377
00:19:00,227 --> 00:19:05,568
and once they have to do that themselves,

378
00:19:06,188 --> 00:19:09,848
the quality of that solution depends on how perfect they are

379
00:19:09,848 --> 00:19:13,047
and how well they can not make mistakes and set it up properly.

380
00:19:13,588 --> 00:19:15,447
And so what we wanted to do was bundle it all together

381
00:19:15,447 --> 00:19:16,888
into a cohesive system.

382
00:19:17,307 --> 00:19:21,447
And so if you have the technical know-how

383
00:19:21,447 --> 00:19:25,648
and the operational discipline to DIY a system

384
00:19:25,648 --> 00:19:29,168
that's better than BitKey, you should.

385
00:19:29,168 --> 00:19:31,487
but I think it's an incredibly high bar

386
00:19:31,487 --> 00:19:33,868
because it's exactly what we do internally.

387
00:19:34,047 --> 00:19:36,467
How do we raise the bar of the system overall?

388
00:19:36,668 --> 00:19:39,987
And so it is designed for hardcore Bitcoiners.

389
00:19:40,508 --> 00:19:44,888
And there's all sorts of advanced things you can do with it,

390
00:19:45,008 --> 00:19:47,947
like exporting the descriptor and checking it on Sparrow

391
00:19:47,947 --> 00:19:49,408
if you want to make sure the wallet's set up

392
00:19:49,408 --> 00:19:50,368
the way you want it to.

393
00:19:50,627 --> 00:19:51,047
That's cool.

394
00:19:51,207 --> 00:19:54,768
You can take the private key material.

395
00:19:55,328 --> 00:19:57,588
You can create backups of your app key

396
00:19:57,588 --> 00:20:00,148
and make it decryptable by hardware

397
00:20:00,148 --> 00:20:02,328
and store those on your own in other places.

398
00:20:02,467 --> 00:20:03,707
And there's all sorts of things you can do

399
00:20:03,707 --> 00:20:05,307
to kind of extend it.

400
00:20:06,328 --> 00:20:09,068
But yeah, it's a Bitcoin or product.

401
00:20:09,227 --> 00:20:10,068
Can I play devil's advocate

402
00:20:10,068 --> 00:20:10,908
and ask you another question

403
00:20:10,908 --> 00:20:13,127
that people have always sort of raised about Bitkey?

404
00:20:13,328 --> 00:20:15,348
Is like, are you reliant on block servers?

405
00:20:15,908 --> 00:20:17,967
And what does that mean for the user?

406
00:20:18,227 --> 00:20:18,508
Yes.

407
00:20:18,828 --> 00:20:20,668
So you are not reliant on block servers.

408
00:20:21,168 --> 00:20:23,688
And so the core definition of self-custody

409
00:20:23,688 --> 00:20:27,428
is the wallet owner can move their money

410
00:20:27,428 --> 00:20:31,928
unilaterally and no one can move the money without them. And that is true for BitKey.

411
00:20:32,428 --> 00:20:39,008
And so the way that it works in BitKey is when you set up your wallet, there is a PDF that's

412
00:20:39,008 --> 00:20:45,888
uploaded to your cloud. And that PDF has one of the keys in it. So BitKey has three keys. It's a

413
00:20:45,888 --> 00:20:50,268
two of three multi-sig setup. One key is on the hardware, one key is on the phone, one key is on

414
00:20:50,268 --> 00:20:58,748
server. So the app key, the one on your phone, is encrypted by the hardware key and then uploaded to

415
00:20:58,748 --> 00:21:04,268
your cloud account as a PDF. And we call it the emergency exit kit. And what that allows you to

416
00:21:04,268 --> 00:21:09,467
do, you can then download it, make copies, do whatever you want. If your cloud provider, let's

417
00:21:09,467 --> 00:21:13,307
say Apple or Google, get access to it or somebody hacks your cloud, what they have is an encrypted

418
00:21:13,307 --> 00:21:17,068
file. They can't use it unless they can decrypt it. And the only way to decrypt it is with your

419
00:21:17,068 --> 00:21:23,148
hardware and your thumbprint to unlock the phone. And so they basically haven't compromised any

420
00:21:23,148 --> 00:21:29,148
keys just from gaining access to it. You can always take that PDF, you can take your hardware,

421
00:21:29,148 --> 00:21:33,868
decrypt the PDF, so now you have two keys, and then with two keys you can move Bitcoin.

422
00:21:33,868 --> 00:21:38,668
And so you can, it's all open source, so you can write your own software if you don't care,

423
00:21:38,668 --> 00:21:43,627
if you really want to go tinfoil hat, to create a transaction, sign it with your two keys and

424
00:21:43,627 --> 00:21:44,668
and broadcast it to the network.

425
00:21:45,207 --> 00:21:50,528
We provide another piece of software

426
00:21:50,528 --> 00:21:51,447
that does exactly that,

427
00:21:51,508 --> 00:21:53,008
hosted on GitHub that anyone can use.

428
00:21:53,268 --> 00:21:54,068
But you don't have to use it.

429
00:21:54,127 --> 00:21:55,328
You can write your own.

430
00:21:55,447 --> 00:21:57,268
And so with no BitKey app,

431
00:21:57,348 --> 00:21:58,028
no BitKey servers,

432
00:21:58,148 --> 00:21:59,368
no block company, nothing,

433
00:21:59,868 --> 00:22:00,528
you can move your Bitcoin.

434
00:22:01,148 --> 00:22:01,408
Cool.

435
00:22:01,528 --> 00:22:03,868
Because between the screen and that,

436
00:22:03,947 --> 00:22:05,408
they're probably the two biggest criticisms

437
00:22:05,408 --> 00:22:06,487
I've seen thrown at blocks.

438
00:22:06,487 --> 00:22:07,928
So with adding the screen,

439
00:22:08,268 --> 00:22:09,388
I guess you've removed that.

440
00:22:10,428 --> 00:22:11,328
It's very cool.

441
00:22:11,648 --> 00:22:11,947
Thank you.

442
00:22:11,947 --> 00:22:18,947
And it's interesting to see how like Bitcoin security, hardware wallets have kind of adapted over the last few years.

443
00:22:19,028 --> 00:22:24,928
Because one of the most interesting things to me is like when I got into Bitcoin, the path to self-custody was really clear.

444
00:22:25,508 --> 00:22:28,388
Like for me, like I first bought Bitcoin on Coinbase.

445
00:22:28,727 --> 00:22:34,627
And then like if you want to actually have real Bitcoin, the path to move that self-custody is very simple.

446
00:22:34,787 --> 00:22:38,748
It's like literally one transaction to a hardware wallet and you then own your Bitcoin.

447
00:22:39,227 --> 00:22:41,848
And that has changed so much in the last few years.

448
00:22:41,947 --> 00:22:44,328
In the sense that I think if you're coming into Bitcoin now,

449
00:22:44,787 --> 00:22:47,227
like where are you getting your Bitcoin?

450
00:22:47,508 --> 00:22:50,028
Like there's still a good chance you're using like a river or a swan

451
00:22:50,028 --> 00:22:51,168
or a coin base or whatever.

452
00:22:51,508 --> 00:22:54,727
But there's now a greater chance that maybe you're buying it

453
00:22:54,727 --> 00:22:56,608
through like an ETF in a retirement account

454
00:22:56,608 --> 00:22:58,967
or maybe you're going straight to a treasury company.

455
00:22:59,447 --> 00:23:03,248
Like how do you see that kind of institutionalization of Bitcoin

456
00:23:03,248 --> 00:23:04,428
affecting self-custody?

457
00:23:04,908 --> 00:23:06,068
Yeah, it's a great question.

458
00:23:06,068 --> 00:23:13,867
So I think where I would start is that why self-custody is important.

459
00:23:14,068 --> 00:23:16,608
And I think there's a couple of different layers to that.

460
00:23:16,668 --> 00:23:19,028
The first is just like, why is it important to Bitcoin in general?

461
00:23:19,148 --> 00:23:29,268
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.

462
00:23:29,487 --> 00:23:32,487
And in order for permissionless money to work, you need to have decentralization.

463
00:23:32,487 --> 00:23:37,367
In order to have decentralization, you need to have decentralized mining and decentralized ownership.

464
00:23:37,867 --> 00:23:40,568
And so self-custody is really that pillar of decentralized ownership.

465
00:23:40,707 --> 00:23:43,328
And so you need self-custody for Bitcoin to work.

466
00:23:43,487 --> 00:23:45,348
So I think that's kind of point one.

467
00:23:45,727 --> 00:23:50,288
But that doesn't quite answer the question, which I'll get to, which is like, OK, I'm getting into Bitcoin.

468
00:23:50,367 --> 00:23:50,947
What should I buy?

469
00:23:51,068 --> 00:23:53,487
But to kind of like walk it down from sort of first principles.

470
00:23:54,108 --> 00:24:01,168
I think the other reason self-custody is still super important is that access to ETFs and all of these things is not equal.

471
00:24:01,168 --> 00:24:06,008
Like, you know, of all the people in the world, very few people have access to these ETFs.

472
00:24:06,047 --> 00:24:10,688
And so, you know, very few people even have access to bank accounts or a reliable currency.

473
00:24:10,888 --> 00:24:17,848
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.

474
00:24:18,688 --> 00:24:20,307
Self-custody is still tremendously important.

475
00:24:20,928 --> 00:24:24,288
But if you then kind of sort of narrow it down to, all right, I have access to both.

476
00:24:24,348 --> 00:24:25,028
Which one should I buy?

477
00:24:26,028 --> 00:24:29,207
When you buy the ETF, you're not buying permissionless money.

478
00:24:29,207 --> 00:24:31,348
you're buying price exposure.

479
00:24:32,088 --> 00:24:32,668
And even worse than that,

480
00:24:32,688 --> 00:24:34,348
you're buying permissioned price exposure.

481
00:24:34,888 --> 00:24:37,268
And so what you're giving up when you're doing that

482
00:24:37,268 --> 00:24:40,967
is Bitcoin has a lot of utility beyond just price.

483
00:24:41,108 --> 00:24:43,447
And that's everything from being able

484
00:24:43,447 --> 00:24:45,188
to take out a loan against it as collateral,

485
00:24:45,528 --> 00:24:47,967
to spend it, to purchase things.

486
00:24:48,068 --> 00:24:50,688
And so you're sort of giving that up in the ETF world.

487
00:24:51,508 --> 00:24:53,707
But even still, to kind of walk it down even more,

488
00:24:53,788 --> 00:24:54,428
what if you say like,

489
00:24:54,487 --> 00:24:56,487
look, I really don't care about the utility of Bitcoin.

490
00:24:56,588 --> 00:24:58,207
I just care about price exposure.

491
00:24:58,207 --> 00:25:06,207
should I do ETF or self-custody? I think even then it's not super clear because in the ETF world,

492
00:25:06,348 --> 00:25:10,748
you have all these additional restrictions on your Bitcoin, which is when can you trade it?

493
00:25:10,947 --> 00:25:15,487
You know, well, when the market is open, if you don't like an ETF and you want to move to another

494
00:25:15,487 --> 00:25:22,307
ETF, do you have to sell and take a tax gain and then buy in again? Like you can't just move it from

495
00:25:22,307 --> 00:25:27,608
exchange to exchange the way you can with Bitcoin. And same problem with even if you want to sell

496
00:25:27,608 --> 00:25:31,408
your ETF to buy real Bitcoin and move it to a hardware wallet, there's still going to be a tax

497
00:25:31,408 --> 00:25:37,088
hit at that point. Yeah. And I think maybe one or two ETFs do in-kind redemption, but most don't.

498
00:25:37,088 --> 00:25:42,547
And that's kind of the point, which is it depends on the provider. And so you're definitely in the

499
00:25:42,547 --> 00:25:48,008
permissioned world. And so I think you're definitely taking on more restrictions.

500
00:25:49,068 --> 00:25:55,788
But one of the things about how the question is typically framed, I think embeds in it some

501
00:25:55,788 --> 00:25:59,648
priors, which I think have been true, but may not be true anymore, which is like self-custody

502
00:25:59,648 --> 00:26:01,848
is harder and self-custody is less safe.

503
00:26:02,867 --> 00:26:04,227
And I don't know.

504
00:26:04,807 --> 00:26:05,348
Than the ETF.

505
00:26:05,727 --> 00:26:05,928
Yeah.

506
00:26:06,348 --> 00:26:13,028
And I think that those, maybe if they were true, require another look.

507
00:26:13,108 --> 00:26:15,967
I think self-custody has come a long way in the past two, three years.

508
00:26:16,148 --> 00:26:19,848
It's probably harder for people that maybe already have like a brokerage account.

509
00:26:20,127 --> 00:26:20,288
Yeah.

510
00:26:20,307 --> 00:26:22,848
They can just buy the ETF on their phone.

511
00:26:22,848 --> 00:26:25,088
Like self-custody is harder than that.

512
00:26:25,127 --> 00:26:25,348
Yes.

513
00:26:25,348 --> 00:26:26,588
But it's like, what's the trade-off?

514
00:26:26,707 --> 00:26:27,987
Is it worth the work?

515
00:26:28,148 --> 00:26:29,307
Is it worth it?

516
00:26:29,508 --> 00:26:34,547
And I think one of the things that people undervalue is, what are the risks of the ETF?

517
00:26:34,828 --> 00:26:41,428
And these are like, while they are kind of long tail, tinfoil-y hat risks, they have all happened before.

518
00:26:41,588 --> 00:26:50,788
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.

519
00:26:50,928 --> 00:26:52,588
I mean, like that happened with gold.

520
00:26:52,588 --> 00:27:00,627
or maybe the exchange is negligent and can't fulfill it.

521
00:27:00,707 --> 00:27:01,888
You don't take it like a Lehman Brothers

522
00:27:01,888 --> 00:27:04,127
or maybe it's full on fraud,

523
00:27:04,227 --> 00:27:06,268
like more of an Enron or like an FTX.

524
00:27:06,848 --> 00:27:10,108
And like there's a small percent that happens,

525
00:27:10,188 --> 00:27:11,508
but if you hold Bitcoin over a decade

526
00:27:11,508 --> 00:27:13,888
and you stack up kind of all of these catastrophic events,

527
00:27:14,008 --> 00:27:15,707
like you're not taking on no risk.

528
00:27:15,707 --> 00:27:16,248
It's not zero.

529
00:27:16,648 --> 00:27:18,648
And so I think what it comes down to

530
00:27:18,648 --> 00:27:19,608
at the end of the day is,

531
00:27:19,608 --> 00:27:27,248
would you rather your risk take the form of political, governmental, business risk,

532
00:27:27,328 --> 00:27:29,408
so like the people who make the rules,

533
00:27:29,588 --> 00:27:33,688
or would you rather your risks take on the private key risks,

534
00:27:33,688 --> 00:27:35,788
which is like, can I manage it safely?

535
00:27:36,248 --> 00:27:38,328
Is it safe from natural disaster?

536
00:27:38,487 --> 00:27:41,047
And so you're either taking on self-custody risks

537
00:27:41,047 --> 00:27:44,748
or politician, business, government risk.

538
00:27:44,987 --> 00:27:47,568
And I think that when weighing those two,

539
00:27:47,568 --> 00:27:51,688
it's not clear to me that there's, you know, like the ETFs are the obvious answer.

540
00:27:51,828 --> 00:27:55,788
No, I know which side of that I fall on. Like I want to take the risk on myself. Like I want to

541
00:27:55,788 --> 00:27:59,447
be in control of my destiny. Yes. And I think what's been great about self-custody over the

542
00:27:59,447 --> 00:28:03,388
last, you know, forever, but like, I think a lot in the last few years is that risk has been

543
00:28:03,388 --> 00:28:07,307
getting smaller and smaller as the tools have been getting better and better. Like the risk

544
00:28:07,307 --> 00:28:12,008
of self-sabotage I think has decreased dramatically in the last two years as you start to get these

545
00:28:12,008 --> 00:28:17,127
collaborative custody solutions, these seedless solutions, things that make it harder to make a

546
00:28:17,127 --> 00:28:22,008
mistake and make it easier for you to have recovery, to have inheritance, to have safe

547
00:28:22,008 --> 00:28:27,367
keys without having to deal with all of the details of setting it up.

548
00:28:27,367 --> 00:28:33,947
And do you think there's any argument to say that with the move away from the sort of

549
00:28:33,947 --> 00:28:45,815
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

550
00:28:46,035 --> 00:28:52,615
And I might not be reflective of the most OG, hardcore Bitcoiners,

551
00:28:52,995 --> 00:28:56,115
but I've been a product manager for a long time, 20 years.

552
00:28:56,355 --> 00:29:01,735
And really, for me, it all comes down to what problem are you solving for who?

553
00:29:01,735 --> 00:29:23,315
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.

554
00:29:23,315 --> 00:29:26,375
which is to say like, hey, take your seed phrase,

555
00:29:26,475 --> 00:29:28,435
protect it yourself, you know, put it in metal plates,

556
00:29:28,515 --> 00:29:29,895
buried in the ground, distribute it.

557
00:29:30,175 --> 00:29:33,875
Like self-reliance is a virtue in and of itself.

558
00:29:33,955 --> 00:29:36,195
You are now practicing like this higher form of,

559
00:29:36,215 --> 00:29:37,815
you know, Renaissance man.

560
00:29:38,135 --> 00:29:39,675
And I kind of look at that and say like,

561
00:29:40,095 --> 00:29:41,815
that's not what people want to do.

562
00:29:41,915 --> 00:29:43,055
They want permissionless money

563
00:29:43,055 --> 00:29:44,315
they can own easily and safely.

564
00:29:44,595 --> 00:29:49,375
And that's like, and this using the ideal

565
00:29:49,375 --> 00:29:52,695
to cover the gap in good products

566
00:29:52,695 --> 00:29:55,815
has always never has really sat right with me.

567
00:29:55,935 --> 00:29:59,655
And so I don't see the ethos personally,

568
00:29:59,875 --> 00:30:01,115
I guess it's more of a personal statement

569
00:30:01,115 --> 00:30:02,075
than a statement about the industry,

570
00:30:02,155 --> 00:30:03,655
but I don't see the ethos as

571
00:30:03,655 --> 00:30:11,275
I need to DIY it myself to be a real Bitcoiner.

572
00:30:11,535 --> 00:30:13,135
I need to believe in permissionless money.

573
00:30:13,215 --> 00:30:14,315
I need to use permissionless money.

574
00:30:14,395 --> 00:30:16,855
I need to do what I can to make everyone in the world

575
00:30:16,855 --> 00:30:18,635
have access to permissionless money.

576
00:30:18,995 --> 00:30:21,815
And I think if that takes the form of safer

577
00:30:21,815 --> 00:30:24,435
and easier solutions, that's a win all the way around.

578
00:30:24,675 --> 00:30:24,855
Yeah.

579
00:30:25,255 --> 00:30:27,675
So if you think, like with the BitKey,

580
00:30:27,775 --> 00:30:31,535
obviously in terms of seed phrases, they're gone.

581
00:30:32,795 --> 00:30:33,655
It's collaborative.

582
00:30:33,995 --> 00:30:35,515
There's two or three where you have a key,

583
00:30:35,755 --> 00:30:36,995
one here, one on my phone.

584
00:30:37,715 --> 00:30:38,935
It has inheritance.

585
00:30:39,555 --> 00:30:40,295
What's missing?

586
00:30:40,455 --> 00:30:42,395
Like what's the piece that you want to build next?

587
00:30:42,535 --> 00:30:44,735
Like what do you think the hardware market needs?

588
00:30:44,995 --> 00:30:45,255
Yes.

589
00:30:47,395 --> 00:30:49,295
Because we were talking before about wrench attacks.

590
00:30:49,475 --> 00:30:50,735
Like how do you look at that?

591
00:30:50,795 --> 00:30:51,695
Do you have something in mind?

592
00:30:51,815 --> 00:30:52,435
We do, yes.

593
00:30:52,555 --> 00:30:54,495
Yeah, so let me just kind of take the trajectory there

594
00:30:54,495 --> 00:30:55,995
because this is exactly how we developed BitQ,

595
00:30:56,075 --> 00:30:57,715
which is we sort of looked at the self-custody markets.

596
00:30:57,835 --> 00:31:00,095
Okay, what are the biggest problems to solve?

597
00:31:00,215 --> 00:31:03,415
And so the first one was people's recovery systems

598
00:31:03,415 --> 00:31:06,735
are really uneven in their effectiveness

599
00:31:06,735 --> 00:31:08,715
and their thoroughness

600
00:31:08,715 --> 00:31:10,535
and how well they resist different types of scenarios.

601
00:31:10,855 --> 00:31:13,555
Let's build a wallet with a recovery system built in,

602
00:31:13,735 --> 00:31:15,355
and that led us down the seedless route.

603
00:31:15,775 --> 00:31:17,915
And then when we got there, we said,

604
00:31:17,995 --> 00:31:19,355
okay, well, inheritance is the next biggest one.

605
00:31:19,395 --> 00:31:20,395
That's one of the hardest things to do

606
00:31:20,395 --> 00:31:22,415
because right now inheritance is like treasure maps

607
00:31:22,415 --> 00:31:24,135
or KYC solutions,

608
00:31:24,195 --> 00:31:25,515
even if they're self-custody, they're KYC.

609
00:31:25,615 --> 00:31:27,335
So then we said, okay, let's tackle inheritance.

610
00:31:27,975 --> 00:31:32,755
And then we looked at our solution and said,

611
00:31:32,815 --> 00:31:34,435
well, because this is collaborative custody,

612
00:31:34,435 --> 00:31:36,275
we have one of the keys.

613
00:31:36,955 --> 00:31:39,395
And one of the things we don't like about having the keys

614
00:31:39,395 --> 00:31:41,755
is we had visibility into the wallet

615
00:31:41,755 --> 00:31:42,695
because when you have the keys,

616
00:31:42,755 --> 00:31:43,715
you can see all the transactions.

617
00:31:44,455 --> 00:31:46,315
And so we were very uncomfortable

618
00:31:46,315 --> 00:31:48,615
with having that sort of visibility

619
00:31:48,615 --> 00:31:49,635
because we don't want that data.

620
00:31:49,635 --> 00:31:53,635
So then we invented Chaincode Delegation, which is a BitProposal.

621
00:31:53,635 --> 00:31:54,635
This was Jesse Posner and...

622
00:31:54,635 --> 00:31:55,635
And Jervis.

623
00:31:55,635 --> 00:31:56,635
Yeah, that's right.

624
00:31:56,635 --> 00:31:57,635
Yeah, so the two of them...

625
00:31:57,635 --> 00:31:58,635
That's really cool.

626
00:31:58,635 --> 00:32:00,635
And that's something that's just good for Bitcoin as a whole.

627
00:32:00,635 --> 00:32:01,635
That's awesome.

628
00:32:01,635 --> 00:32:02,635
It is so cool.

629
00:32:02,635 --> 00:32:04,635
I love both of them so much and they're like...

630
00:32:04,635 --> 00:32:06,635
Yeah, I'm a big Jesse stan.

631
00:32:06,635 --> 00:32:08,635
Yeah, yeah, for sure.

632
00:32:08,635 --> 00:32:09,635
Yeah, no, they did such a great job with that.

633
00:32:09,635 --> 00:32:12,635
So basically what they did is they invented a way for multi-sig,

634
00:32:12,635 --> 00:32:18,635
which typically every key has both signing ability and visibility of the wallet.

635
00:32:18,635 --> 00:32:24,555
of the wallet to say, even if the key can sign for the wallet, it cannot see all the transactions

636
00:32:24,555 --> 00:32:31,295
of the wallet. Fancy cryptography, and it's applicable to any multisig wallet, we implemented

637
00:32:31,295 --> 00:32:36,335
it in ours. And so the key that block holds cannot look at the transactions. And that's on by default

638
00:32:36,335 --> 00:32:40,735
now, right? Yeah, it's just how the wallet works. Yeah. It's not an option. It's just, we don't want

639
00:32:40,735 --> 00:32:44,415
the data. Like we don't want it in our systems. And so it's just the way how the wallet works.

640
00:32:44,415 --> 00:32:47,775
and so privacy was the next big one.

641
00:32:48,215 --> 00:32:51,495
Then the next big one after that was verification

642
00:32:51,495 --> 00:32:53,695
and so we say, hey, we have all this infrastructure now

643
00:32:53,695 --> 00:32:55,935
to do like recovery and inheritance and all of this stuff.

644
00:32:56,055 --> 00:32:59,235
How do you make sure that you can verify

645
00:32:59,235 --> 00:33:01,395
everything that's doing all of that stuff

646
00:33:01,395 --> 00:33:02,215
is telling the truth

647
00:33:02,215 --> 00:33:04,435
and so we put a screen on the hardware

648
00:33:04,435 --> 00:33:06,335
not only to just do transaction signing

649
00:33:06,335 --> 00:33:07,975
which every hardware screen has done forever

650
00:33:07,975 --> 00:33:10,395
but to validate all of the steps

651
00:33:10,395 --> 00:33:11,435
of all of the other components.

652
00:33:11,615 --> 00:33:13,655
Was it partially to shut the Bitcoiners up as well?

653
00:33:13,655 --> 00:33:16,515
Well, not to shut them up, to get them as customers.

654
00:33:16,615 --> 00:33:19,855
I mean, we want to build a product that Bitcoiners love.

655
00:33:20,575 --> 00:33:22,135
The thing that keeps me up at night

656
00:33:22,135 --> 00:33:24,635
is the idea of a critical error with my Bitcoin cold storage.

657
00:33:24,975 --> 00:33:26,635
And this is where AnchorWatch comes in.

658
00:33:27,055 --> 00:33:28,915
With AnchorWatch, your Bitcoin is insured

659
00:33:28,915 --> 00:33:32,095
with your own A-plus rated Lloyds of London insurance policy.

660
00:33:32,595 --> 00:33:35,295
And all Bitcoin is held in their time-locked multi-sig vaults.

661
00:33:35,735 --> 00:33:37,835
So you have the peace of mind knowing your Bitcoin is insured

662
00:33:37,835 --> 00:33:39,135
while not giving up custody.

663
00:33:39,695 --> 00:33:41,515
So whether you're worried about inheritance planning,

664
00:33:41,835 --> 00:33:43,415
wrench attacks, natural disasters,

665
00:33:43,655 --> 00:33:46,755
or just your own silly mistakes, you're protected by Anchor Watch.

666
00:33:47,595 --> 00:33:50,815
Rates for fully insured custody start as low as 0.55%

667
00:33:50,815 --> 00:33:54,975
and are available for individual and commercial customers located in the US.

668
00:33:55,635 --> 00:33:59,615
Speak to Anchor Watch for a quote and for more details about your security options and coverage,

669
00:34:00,035 --> 00:34:01,875
visit anchorwatch.com today.

670
00:34:02,315 --> 00:34:03,915
That's anchorwatch.com.

671
00:34:04,455 --> 00:34:06,735
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672
00:34:07,155 --> 00:34:07,875
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673
00:34:07,875 --> 00:34:10,355
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674
00:34:10,915 --> 00:34:13,215
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675
00:34:13,215 --> 00:34:16,555
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676
00:34:17,095 --> 00:34:21,015
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677
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678
00:34:24,375 --> 00:34:28,695
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679
00:34:28,695 --> 00:34:31,375
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680
00:34:32,295 --> 00:34:34,255
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681
00:34:34,535 --> 00:34:38,135
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682
00:34:38,675 --> 00:34:42,455
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683
00:34:42,455 --> 00:34:46,975
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684
00:34:46,975 --> 00:34:50,175
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685
00:34:50,695 --> 00:34:53,955
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686
00:34:54,275 --> 00:34:57,875
If you already self-custody Bitcoin, you know the deal with hardware wallets.

687
00:34:58,275 --> 00:35:02,755
Complex setups, clumsy interfaces, and a seed phrase that can be lost, stolen, or forgotten.

688
00:35:03,535 --> 00:35:04,615
Well, BitKey fixes that.

689
00:35:05,135 --> 00:35:08,615
BitKey is a multi-sig hardware wallet built by the team behind Square and Cash App.

690
00:35:08,615 --> 00:35:12,175
It packs a cryptographic recovery system and built-in inheritance feature

691
00:35:12,175 --> 00:35:16,075
into an intuitive, easy-to-use wallet with no seed phrase to sweat over.

692
00:35:16,815 --> 00:35:19,775
It's simple, secure self-custody without the stress.

693
00:35:20,335 --> 00:35:22,895
And time named BitKey one of the best inventions of 2024.

694
00:35:23,855 --> 00:35:27,495
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695
00:35:28,075 --> 00:35:32,335
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696
00:35:33,015 --> 00:35:35,195
Okay, so that takes us to sort of where we are right now.

697
00:35:35,275 --> 00:35:39,935
So now we think the next big thing to solve is this wrench attack solution.

698
00:35:39,935 --> 00:35:47,615
So we do have a solution in mind and it's almost there. And so we'll be publishing this in probably

699
00:35:47,615 --> 00:35:51,455
a couple of weeks to sort of solicit feedback from the community and get people to poke holes

700
00:35:51,455 --> 00:35:56,895
in it and do all that. But this is the basic idea, which is you put your Bitcoin into a vault.

701
00:35:57,455 --> 00:36:02,415
And the vault has essentially two doors and both are important, but we'll talk about the first one

702
00:36:02,415 --> 00:36:09,455
first, which is the normal door is just, it requires a signature from both you and BitKey and

703
00:36:09,455 --> 00:36:10,615
and block.

704
00:36:10,615 --> 00:36:13,635
And what block will do is block will withhold the signature

705
00:36:13,635 --> 00:36:15,215
until certain conditions are met.

706
00:36:15,215 --> 00:36:16,775
And so this becomes like a two of two.

707
00:36:16,775 --> 00:36:17,615
It's a two of two.

708
00:36:17,615 --> 00:36:19,635
The first door is a two of two.

709
00:36:19,635 --> 00:36:23,555
And the block will say, okay, in order for me to sign,

710
00:36:23,555 --> 00:36:26,335
you need to first pass a biometric scan.

711
00:36:26,335 --> 00:36:28,615
Second, wait a certain amount of time

712
00:36:28,615 --> 00:36:29,735
that's configurable by you.

713
00:36:29,735 --> 00:36:31,695
So this could be days, weeks, months.

714
00:36:31,695 --> 00:36:34,575
And then third, pass another biometric scan

715
00:36:34,575 --> 00:36:35,795
on the other side of it.

716
00:36:35,795 --> 00:36:37,855
And so what this is meant to protect against

717
00:36:37,855 --> 00:36:40,175
any sort of smash and grab wrench attack.

718
00:36:41,315 --> 00:36:43,635
Because you need to pass that biometrics check

719
00:36:43,635 --> 00:36:45,075
at the end of the period,

720
00:36:45,455 --> 00:36:48,335
it forces the attacker to force compliance

721
00:36:48,335 --> 00:36:50,515
throughout the entire length of that period,

722
00:36:50,555 --> 00:36:52,235
and that could be days, weeks, months.

723
00:36:52,875 --> 00:36:54,675
And one of the things that we used to frame this

724
00:36:54,675 --> 00:36:56,815
was we looked through James Lopp's GitHub

725
00:36:56,815 --> 00:36:58,575
where he lists out all the wrench attacks,

726
00:36:58,615 --> 00:36:59,475
and there's hundreds of them there,

727
00:37:00,015 --> 00:37:05,535
and looking at if you make the attack

728
00:37:05,535 --> 00:37:06,995
last longer than one week,

729
00:37:06,995 --> 00:37:10,395
you're already down to 1% of the attacks on that page.

730
00:37:10,555 --> 00:37:12,355
If you make it last longer than a month,

731
00:37:12,435 --> 00:37:13,795
there's not a single attack on that page

732
00:37:13,795 --> 00:37:14,975
that lasted longer than a month.

733
00:37:14,975 --> 00:37:16,715
Very few people are going to kidnap you for a month.

734
00:37:16,815 --> 00:37:17,855
To get your thing.

735
00:37:17,955 --> 00:37:19,055
So that's the first door.

736
00:37:19,135 --> 00:37:21,695
So that I think mitigates

737
00:37:21,695 --> 00:37:24,995
the sort of first problem of rent or tax.

738
00:37:25,595 --> 00:37:28,355
The new problem you introduce with that

739
00:37:28,355 --> 00:37:30,235
is that it's not self-custody anymore.

740
00:37:30,475 --> 00:37:31,495
It's joint custody.

741
00:37:32,155 --> 00:37:34,255
And so now what you need to do

742
00:37:34,255 --> 00:37:37,255
is put self custody back into the solution.

743
00:37:37,255 --> 00:37:39,095
So this is where the second door comes in.

744
00:37:39,095 --> 00:37:43,255
So the second door is controlled entirely by your own keys,

745
00:37:43,255 --> 00:37:45,355
but it's time locked to when the vault ends.

746
00:37:45,355 --> 00:37:46,595
So when you put it into the vault,

747
00:37:46,595 --> 00:37:49,215
you say, hey, I want this vault to last for two years.

748
00:37:49,215 --> 00:37:50,375
Over the course of those two years,

749
00:37:50,375 --> 00:37:52,595
you can use the first door as much as you want.

750
00:37:52,595 --> 00:37:55,255
That's the normal door, add, you know, to withdraw Bitcoin,

751
00:37:55,255 --> 00:37:57,015
you just go through whatever settings

752
00:37:57,015 --> 00:37:59,295
that you've configured and the vault just works.

753
00:38:01,075 --> 00:38:02,815
If for some reason you wake up one day

754
00:38:02,815 --> 00:38:04,055
and you're like, I don't trust block anymore.

755
00:38:04,055 --> 00:38:04,915
I don't want to work with them.

756
00:38:04,955 --> 00:38:06,435
I don't want them co-signing my transactions

757
00:38:06,435 --> 00:38:07,615
or block goes out of business

758
00:38:07,615 --> 00:38:09,655
or the BitKey app gets pulled from the app store.

759
00:38:09,735 --> 00:38:10,995
Anything that you can imagine,

760
00:38:11,575 --> 00:38:14,955
that second spend path with your own keys

761
00:38:14,955 --> 00:38:17,115
can now get the money back out of the vault.

762
00:38:17,895 --> 00:38:20,175
And so now you've fixed the self-custody.

763
00:38:20,315 --> 00:38:22,375
But how, wait, I don't know if I understand that.

764
00:38:22,455 --> 00:38:24,555
So like how would the second door of the vault

765
00:38:24,555 --> 00:38:26,755
like know that block's gone out of business?

766
00:38:27,435 --> 00:38:29,475
So it wouldn't know that block's gone out of business.

767
00:38:29,475 --> 00:38:32,675
The door just becomes usable at a certain time.

768
00:38:32,775 --> 00:38:33,555
Okay, okay, okay.

769
00:38:33,555 --> 00:38:35,875
So you still have to wait the two years.

770
00:38:35,935 --> 00:38:36,655
You still have to wait.

771
00:38:36,755 --> 00:38:36,975
Yeah, yeah.

772
00:38:36,975 --> 00:38:40,595
So you have self-custody inevitably.

773
00:38:41,675 --> 00:38:46,635
And you can unilaterally decide you're not signing anything until the second door opens,

774
00:38:46,715 --> 00:38:47,875
then use the second door yourself.

775
00:38:48,655 --> 00:38:51,895
And so it's just like if you were to like a really kind of crude example is you take

776
00:38:51,895 --> 00:38:55,015
a Bitcoin, you time lock it for a year, it's still your Bitcoin.

777
00:38:55,235 --> 00:38:56,155
Is this using Miniscript?

778
00:38:57,255 --> 00:38:58,595
There's a couple of ways to implement it.

779
00:38:58,835 --> 00:39:03,475
I think we're, depending on the shape of the solution, we're not sure exactly how we're

780
00:39:03,475 --> 00:39:07,635
to do it, but yes, we're using, I mean, you can also do it with just some time locks,

781
00:39:07,635 --> 00:39:12,515
just basic time locks on the second spend path. Okay, so then there's one more piece

782
00:39:12,515 --> 00:39:17,475
of the solution. So, and this is the thing with self custody is like, it's all trade-offs.

783
00:39:18,675 --> 00:39:22,035
And so what happens, okay, first door, you kind of solve the attack problem,

784
00:39:22,035 --> 00:39:27,315
but you break self custody. Second door, you fix self custody, but you've actually reintroduced a

785
00:39:27,315 --> 00:39:33,395
new attack, which is, I'll just take your keys and hold onto them for two years, and then get

786
00:39:33,395 --> 00:39:37,075
your Bitcoin. So we have to fix. So that's the last thing to fix. And so our idea here

787
00:39:37,875 --> 00:39:43,555
is that we would restrict where that Bitcoin can be sent to. So this is back in kind of a

788
00:39:43,555 --> 00:39:48,435
covenants pattern. And so, okay, this Bitcoin can only be sent to a predetermined address.

789
00:39:49,315 --> 00:39:54,195
And so that way, even if the attacker steals your keys, they can only send that Bitcoin

790
00:39:54,195 --> 00:39:57,795
to a predetermined address that you may still control.

791
00:39:57,795 --> 00:39:59,075
Assuming they didn't steal that as well.

792
00:39:59,075 --> 00:40:05,355
So here's, yes, no, this is your, yeah, this is exactly right. So 100%. And so the way that would

793
00:40:05,355 --> 00:40:11,735
be enforced, because Bitcoin doesn't have covenants yet, is you can do it on the hardware's

794
00:40:11,735 --> 00:40:16,635
firmware. And so you can say, hey, the firmware will only sign transactions of a certain shape.

795
00:40:16,635 --> 00:40:22,835
And that shape is going to be the shape we decided when we set up the vault. And so you can configure

796
00:40:22,835 --> 00:40:27,335
what that shape is, and then it's locked forever.

797
00:40:27,335 --> 00:40:31,735
And this is another reason why the seedless architecture gets you there, because if the

798
00:40:31,735 --> 00:40:36,435
key is inside the hardware, then the hardware can determine how the key is used.

799
00:40:36,435 --> 00:40:41,295
If the key is exported out of the hardware, which is what seed phrases are, then no system

800
00:40:41,295 --> 00:40:43,515
can make any decisions about how the key is used.

801
00:40:43,515 --> 00:40:48,515
So anyway, so the last piece of this, which you've already started poking holes in, and

802
00:40:48,515 --> 00:40:52,595
this is the piece we need help with, is what should that final destination be?

803
00:40:52,595 --> 00:40:57,515
Yeah. Because if it's just another wallet, then they could steal that too.

804
00:40:57,775 --> 00:41:01,655
Can I tell you my really non-Bitcoin perspective on this?

805
00:41:01,715 --> 00:41:03,375
Like people are going to hate me for saying this,

806
00:41:03,435 --> 00:41:07,495
but I wonder if the best place is like a Bitcoin exchange address.

807
00:41:08,175 --> 00:41:11,015
That's where we ended up to. That's where we ended up to.

808
00:41:11,115 --> 00:41:15,715
And I love that you got there. We didn't get there maybe quite as fast.

809
00:41:16,035 --> 00:41:19,075
But yes, I think so.

810
00:41:19,075 --> 00:41:23,175
And it's weird to say being such a self-custody maxi,

811
00:41:23,615 --> 00:41:25,515
but one of the things that institution

812
00:41:25,515 --> 00:41:27,875
and custodial Bitcoin does really well

813
00:41:27,875 --> 00:41:30,795
is it's not susceptible to physical violence

814
00:41:30,795 --> 00:41:32,315
the way private keys are.

815
00:41:32,495 --> 00:41:34,495
Institutions cannot be physically coerced

816
00:41:34,495 --> 00:41:36,295
the way private keys can be physically coerced.

817
00:41:36,635 --> 00:41:38,135
And so even though I would pick self-custody

818
00:41:38,135 --> 00:41:41,935
over custodial Bitcoin 100% of the time,

819
00:41:42,415 --> 00:41:43,535
actually not 100%.

820
00:41:43,535 --> 00:41:46,535
If there is a violent attacker trying to steal my Bitcoin,

821
00:41:47,015 --> 00:41:48,495
where do I want my Bitcoin at that moment?

822
00:41:49,075 --> 00:41:51,235
in a KYC-based exchange.

823
00:41:51,235 --> 00:41:55,275
And so one of the nice things about a solution like this

824
00:41:55,275 --> 00:41:59,895
is it says, okay, you can basically put it there

825
00:41:59,895 --> 00:42:02,435
in that moment that you need it there,

826
00:42:02,435 --> 00:42:04,655
and then it's identity-based.

827
00:42:04,655 --> 00:42:06,475
And it's like, don't let perfect be the enemy of good

828
00:42:06,475 --> 00:42:07,895
in this situation.

829
00:42:07,895 --> 00:42:11,135
Like, I agree that I don't hold Bitcoin on any exchanges,

830
00:42:11,135 --> 00:42:11,995
but in that situation,

831
00:42:11,995 --> 00:42:13,975
I can't think of a better place for it to go.

832
00:42:13,975 --> 00:42:15,275
But I guess the best solution

833
00:42:15,275 --> 00:42:18,295
would probably be allowing users to decide.

834
00:42:18,295 --> 00:42:19,295
It would be put an address in.

835
00:42:19,295 --> 00:42:20,555
That's how we would implement it.

836
00:42:20,555 --> 00:42:21,555
You put an address.

837
00:42:21,555 --> 00:42:23,915
You want it to be, you know, the other things we thought about is, could it be another bit

838
00:42:23,915 --> 00:42:24,915
key?

839
00:42:24,915 --> 00:42:26,455
And like, how do those start chaining together?

840
00:42:26,455 --> 00:42:27,455
Could it be someone else's bit key?

841
00:42:27,455 --> 00:42:30,975
The problem is then you get into this situation where you have to like educate users on how

842
00:42:30,975 --> 00:42:33,675
to keep the second bit key and all this stuff.

843
00:42:33,675 --> 00:42:37,655
And like, I'm sure you don't want the headache of that because then if something goes wrong,

844
00:42:37,655 --> 00:42:39,415
they're going to be like, this is what you told me to do.

845
00:42:39,415 --> 00:42:40,415
Yep.

846
00:42:40,415 --> 00:42:42,855
And so the other one is like, could it be inheritance?

847
00:42:42,855 --> 00:42:46,535
Like should we plug out the inheritance solution into that escape route?

848
00:42:46,535 --> 00:42:47,995
And so this is really where we're looking

849
00:42:47,995 --> 00:42:49,295
to solicit feedback, which is like,

850
00:42:49,295 --> 00:42:51,555
because we only want to build things that people want to use.

851
00:42:51,555 --> 00:42:53,715
And so if people look at this and they're like,

852
00:42:53,715 --> 00:43:07,482
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

853
00:43:07,482 --> 00:43:11,682
it again. Like it's, yeah, exactly. And that's the other thinking too, is almost everybody,

854
00:43:12,182 --> 00:43:15,902
everybody, unless you're a miner, has an exchange that registered to, that's where they got their

855
00:43:15,902 --> 00:43:20,002
Bitcoin from. And so like you already have an account set up, you already have a relationship

856
00:43:20,002 --> 00:43:24,362
there. And most likely your Bitcoin came from there in the first place. Do you want to be able

857
00:43:24,362 --> 00:43:29,222
to teleport it. That's not actually how it works, but do you want it to be able to go there in a

858
00:43:29,222 --> 00:43:37,222
wrench attack? Yeah. The thing that that doesn't fix, and I actually think is potentially impossible

859
00:43:37,222 --> 00:43:44,622
to fix, is the attacker that comes into your home who wants your Bitcoin can't get it. And it never

860
00:43:44,622 --> 00:43:49,982
stops the physical side of that attack. And this is where, because they still might chop your finger

861
00:43:49,982 --> 00:43:53,742
off. But I do think this is where things like Anchor Watch are really interesting, where you can

862
00:43:53,742 --> 00:43:57,823
just send them the Bitcoin. Just have it go away. And then you've got the insurance claim.

863
00:43:58,563 --> 00:44:01,802
Would you ever look into doing insurance type stuff within BitKey?

864
00:44:02,242 --> 00:44:05,462
Oh, I don't know. I thought you were going to ask me what my thoughts on it. And I was going to say,

865
00:44:05,523 --> 00:44:09,602
yeah, I think the insurance angle is very powerful. Would we put it on our roadmap?

866
00:44:12,323 --> 00:44:19,843
I don't know, to be honest. So the BitKey product in and of itself, very narrowly,

867
00:44:19,843 --> 00:44:21,402
it's a non-KYC product.

868
00:44:21,582 --> 00:44:24,662
So I don't know if you can do insurance without KYC.

869
00:44:24,762 --> 00:44:25,862
I seriously doubt it, but I don't know.

870
00:44:25,882 --> 00:44:28,222
If maybe someone figures that out, sure.

871
00:44:28,843 --> 00:44:31,063
Would it be a better Block product?

872
00:44:31,343 --> 00:44:33,262
So Block does a lot for Bitcoin.

873
00:44:33,462 --> 00:44:35,762
They've got Cash App for buying Bitcoin,

874
00:44:35,882 --> 00:44:37,082
Square for spending it,

875
00:44:37,202 --> 00:44:38,563
BitKey for storing it,

876
00:44:38,622 --> 00:44:40,543
and Proto for powering it.

877
00:44:41,162 --> 00:44:42,202
Spiral for developing it.

878
00:44:42,202 --> 00:44:43,442
Spiral for developing it.

879
00:44:43,823 --> 00:44:45,182
Would one of those other brands,

880
00:44:45,182 --> 00:44:47,582
could we do some ecosystem play

881
00:44:47,582 --> 00:44:49,402
where you can get insurance through

882
00:44:49,402 --> 00:44:55,482
like cash or something. Maybe it's not on the roadmap, but like I think looking at the synergies

883
00:44:55,482 --> 00:45:00,442
between the different Bitcoin solutions is really where like we turn Bitcoin into like true

884
00:45:00,442 --> 00:45:06,043
permissionless money, where it has all the features of traditional finance in its own ecosystem.

885
00:45:06,922 --> 00:45:15,722
So yeah, it's a great idea. And I do agree with this piece of even when you take on the assumption of

886
00:45:15,722 --> 00:45:19,082
the attacker has full knowledge and the victim is fully compliant.

887
00:45:19,642 --> 00:45:24,043
Will they be pissed if they can't get Bitcoin? You can't really design away that piece.

888
00:45:26,282 --> 00:45:29,722
Yeah, I think there are interesting insurance angles here.

889
00:45:29,722 --> 00:45:34,202
Yeah. You've obviously thought about this a load and you said you've been a product manager for 20

890
00:45:34,202 --> 00:45:38,523
years. Can we take a step back? Why are you in Bitcoin? What happened? How did you get here?

891
00:45:38,523 --> 00:45:51,582
Oh, so my career up until about 2020 was all in big tech, internet firms, and AI.

892
00:45:52,343 --> 00:45:58,122
And then right around 2020, I kind of caught the, I want to say Bitcoin bug, but honestly,

893
00:45:58,222 --> 00:45:59,382
it was the blockchain bug.

894
00:46:00,602 --> 00:46:06,462
And I really believed in this idea of decentralization and permissionless.

895
00:46:06,462 --> 00:46:14,843
And then I kind of sort of came to realize that Bitcoin was really the only truly decentralized permissionless protocol.

896
00:46:15,142 --> 00:46:17,843
And it had real product market fit with permissionless money.

897
00:46:18,362 --> 00:46:20,302
And that's what I wanted to work on.

898
00:46:20,323 --> 00:46:21,702
And that I found my way to block.

899
00:46:21,882 --> 00:46:29,682
And like, you know, like Jack Dorsey's Bitcoin ethos was like really refreshing after sort of the DeFi, DGEN tour.

900
00:46:29,682 --> 00:46:36,543
and so I joined the Bitcoin team about a year before we launched the first version of hardware

901
00:46:36,543 --> 00:46:41,962
and have been there ever since. Nice and so you obviously spent a load of time looking into the

902
00:46:41,962 --> 00:46:47,202
hardware wallet side is there anything else you look into in Bitcoin deeply? I mean no not as

903
00:46:47,202 --> 00:46:51,982
deeply as self-custody hardware wallets I mean that's like my full-time job and I and I love it

904
00:46:51,982 --> 00:46:58,742
but just being like you know a nerd and like liking the Bitcoin space. So you're not getting

905
00:46:58,742 --> 00:46:59,642
into the quantum debate?

906
00:47:00,962 --> 00:47:03,323
I mean, I've listened to so many people on it

907
00:47:03,323 --> 00:47:05,922
that like know a lot more than I do.

908
00:47:07,962 --> 00:47:10,442
My take is probably naive, but it's,

909
00:47:12,722 --> 00:47:15,142
I think, I don't think we can freeze coins.

910
00:47:15,502 --> 00:47:18,902
I think that's just, that's just theft.

911
00:47:18,982 --> 00:47:19,982
It's just another version of theft.

912
00:47:20,982 --> 00:47:27,182
And so, okay, and this is, this is my current thoughts,

913
00:47:27,282 --> 00:47:28,602
but like, I don't know.

914
00:47:28,602 --> 00:47:33,362
I changed my mind sometimes on this, but are stolen coins that big a deal?

915
00:47:33,362 --> 00:47:41,202
And so like the one, so let's say whatever, the million coins get broken by quantum computers.

916
00:47:41,202 --> 00:47:46,942
So there's a ton of, there's a huge supply shock, the price crashes, all the real believers

917
00:47:46,942 --> 00:47:49,802
pick up a ton of super cheap sats.

918
00:47:49,802 --> 00:47:52,682
Is it an existential threat to the Bitcoin network?

919
00:47:52,682 --> 00:47:57,402
And I've seen people argue yes, that like, okay, if that happens, then miners do this.

920
00:47:57,402 --> 00:47:59,762
And then once the miners do this, then this thing happens.

921
00:47:59,762 --> 00:48:01,102
And now Bitcoin's gone.

922
00:48:02,002 --> 00:48:03,802
I don't know that I buy that.

923
00:48:04,282 --> 00:48:10,142
What to me feels like of if we confiscate people's coins, that's an existential threat

924
00:48:10,142 --> 00:48:10,602
to Bitcoin.

925
00:48:11,082 --> 00:48:16,842
If the supply instantly increases by 5 million, like not increase to 26 million, but obviously

926
00:48:16,842 --> 00:48:18,142
all these coins just flood the market.

927
00:48:18,782 --> 00:48:20,242
Is that existential to Bitcoin?

928
00:48:20,362 --> 00:48:21,123
I don't think so.

929
00:48:21,742 --> 00:48:23,722
And so I think it would suck.

930
00:48:23,722 --> 00:48:32,582
But anyway, I feel like my take is that the quantum resistant algorithms exist.

931
00:48:32,582 --> 00:48:37,502
Bitcoin will upgrade the protocol in time.

932
00:48:37,502 --> 00:48:40,323
Most people will upgrade their coins in time.

933
00:48:40,323 --> 00:48:47,942
And then would I rather be in a world where Bitcoin broke the promise of property rights

934
00:48:47,942 --> 00:48:51,002
or in a world where the price crashed tremendously?

935
00:48:51,002 --> 00:48:53,123
I take the price crash.

936
00:48:53,123 --> 00:48:56,523
So there's nothing else to say because I agree with everything you just said.

937
00:48:56,523 --> 00:48:58,162
I passed the test.

938
00:48:58,162 --> 00:49:03,882
Do you think there's anything that we've missed on the hardware wallet conversation that you pay a lot of attention to?

939
00:49:05,402 --> 00:49:05,842
Yeah.

940
00:49:06,082 --> 00:49:11,902
So the one thing I think a lot about is this idea of like, what is a hardware wallet?

941
00:49:11,982 --> 00:49:13,602
Which seems like kind of a trivial question.

942
00:49:14,182 --> 00:49:20,142
But if you think about hardware, it is an air-gapped piece of technology that does signing.

943
00:49:20,142 --> 00:49:23,262
And it necessarily, you don't want it on the internet because it keeps your keys super safe.

944
00:49:23,982 --> 00:49:29,023
If you think about a wallet, it has to be connected to the internet because its job is to

945
00:49:29,023 --> 00:49:33,823
scan the blockchain, tell you your balance, construct transactions and broadcast them to the

946
00:49:34,462 --> 00:49:39,182
network. So the idea of like a hardware wallet is a little bit ambiguous and it doesn't mean like

947
00:49:39,182 --> 00:49:44,222
a wallet that has a hardware signer. There's no Bitcoin in there. Right. And so like, is this a

948
00:49:44,222 --> 00:49:47,982
hardware wallet? Like this by itself, well, Bickey's a little special, but like if you take a hardware

949
00:49:47,982 --> 00:49:52,342
wallet, usually they're like a better name would be a hardware signer. A signing device. Right. It's

950
00:49:52,342 --> 00:49:59,842
a signing device. And the reason I think that's important is because wallets should have not only

951
00:49:59,842 --> 00:50:03,563
like transaction capabilities, but recovery capabilities. Like where do you put these ideas

952
00:50:03,563 --> 00:50:09,422
like recovery and inheritance and all of the things you might want from your like bit key

953
00:50:09,422 --> 00:50:14,862
self-custody system. And we don't really like have a good phrase to talk about self-custody as a

954
00:50:14,862 --> 00:50:21,202
system. And, you know, that's how we think about BitKey. It's how we build BitKey. And so, you know,

955
00:50:21,242 --> 00:50:25,262
are we a hardware wallet? Well, we have a hardware signer. Are we a collaborative custody solution?

956
00:50:25,362 --> 00:50:33,282
Well, we have a collaborative key. And so like, what category are we in? And I think of it

957
00:50:33,282 --> 00:50:38,222
personally of like self-custody as an overall solution. Self-custody solution, self-custody

958
00:50:38,222 --> 00:50:45,102
system. And so this idea of like hardware wallets, I think, unless like you're ready to go really deep

959
00:50:45,102 --> 00:50:49,642
with someone about it, can give people like a misconception about like what, like the different

960
00:50:49,642 --> 00:50:55,742
components that are being put together. Especially when you get into like multi-sig, it's like if you

961
00:50:55,742 --> 00:50:59,642
have multiple keys and some of them are hot keys and some of them are cold keys, like how do you

962
00:50:59,642 --> 00:51:03,742
refer to that? And so I just, I just think of like thinking of self-custody as an overall system and

963
00:51:03,742 --> 00:51:08,123
how it handles security, recoverability, privacy,

964
00:51:08,123 --> 00:51:11,323
and ease of use is like the framework to bring to it.

965
00:51:11,323 --> 00:51:13,722
And then looking at the system as a whole.

966
00:51:13,722 --> 00:51:15,282
It's just, it's not as marketable

967
00:51:15,282 --> 00:51:17,462
to call it a signing device as a wallet.

968
00:51:19,063 --> 00:51:22,102
So one of the shade that gets thrown at things

969
00:51:22,102 --> 00:51:25,402
like Trezor and Ledger and these hardware wallets,

970
00:51:25,402 --> 00:51:28,502
signing devices that have multiple coins on,

971
00:51:28,502 --> 00:51:30,502
is that complexity is the enemy of security

972
00:51:30,502 --> 00:51:31,662
in a lot of ways.

973
00:51:31,662 --> 00:51:36,582
And so comparing you to, I'm sure, one of your bigger competitors being like Colcard,

974
00:51:37,342 --> 00:51:43,302
this is far more complex in its design, in the sense that it's collaborative custody,

975
00:51:43,422 --> 00:51:47,582
it has inheritance, it has potentially wrench attack protection in the future.

976
00:51:47,842 --> 00:51:50,342
Does that add any issues with security?

977
00:51:52,123 --> 00:51:55,362
Whereas if you buy a Colcard, it has your keys.

978
00:51:55,543 --> 00:51:56,462
That's kind of it.

979
00:51:56,462 --> 00:51:58,563
It is just a plain signing device.

980
00:51:58,642 --> 00:51:58,962
Yeah, yeah.

981
00:51:59,063 --> 00:52:00,382
No, it's a good question.

982
00:52:00,382 --> 00:52:09,523
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.

983
00:52:09,922 --> 00:52:17,962
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.

984
00:52:18,523 --> 00:52:23,123
But what I would sort of urge you to do in that comparison is to say, well, what's your recovery solution?

985
00:52:23,123 --> 00:52:30,563
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.

986
00:52:31,002 --> 00:52:38,702
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.

987
00:52:39,023 --> 00:52:52,063
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.

988
00:52:52,063 --> 00:52:53,582
Yeah, that makes sense.

989
00:52:53,582 --> 00:52:59,282
I think there'll be a lot of Bitcoiners out there that think they have a really secure setup.

990
00:52:59,762 --> 00:53:02,523
And if push came to shove, maybe that wouldn't be the case.

991
00:53:03,262 --> 00:53:09,962
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.

992
00:53:10,123 --> 00:53:13,802
It's like there's a really steep learning curve there into doing it.

993
00:53:13,862 --> 00:53:20,422
Not just like buying a hardware wallet and sending Bitcoin to it, but then actually protecting those keys is a big step.

994
00:53:20,422 --> 00:53:22,402
if you're doing it like the seed phrase way?

995
00:53:22,762 --> 00:53:23,962
Yeah, so one of my,

996
00:53:24,882 --> 00:53:27,543
when I was doing some like product research

997
00:53:27,543 --> 00:53:28,523
for designing BitKey,

998
00:53:29,043 --> 00:53:31,722
I was at, I think it was the OpNext conference

999
00:53:31,722 --> 00:53:34,162
because I wanted to talk to like the hardcore Bitcoiners.

1000
00:53:34,762 --> 00:53:36,563
And what I was going around asking folks

1001
00:53:36,563 --> 00:53:37,802
and I thought it was really illuminating,

1002
00:53:37,962 --> 00:53:39,002
this is a little bit technical,

1003
00:53:39,182 --> 00:53:40,462
but I think it's really helpful,

1004
00:53:40,922 --> 00:53:45,563
is that a lot of them had multi-sig setups, right?

1005
00:53:45,563 --> 00:53:47,823
So let's say you have a two of three multi-sig setup

1006
00:53:47,823 --> 00:53:50,023
and you've done all of the things.

1007
00:53:50,023 --> 00:53:51,502
these are people who are really good at it.

1008
00:53:51,502 --> 00:53:55,623
You've done, you've put them in geo-separated locations

1009
00:53:55,623 --> 00:54:00,342
and you've done your, you've got your descriptor backup

1010
00:54:00,342 --> 00:54:01,222
and you've done all those things.

1011
00:54:01,222 --> 00:54:04,222
Okay, so then a scenario happens

1012
00:54:04,222 --> 00:54:06,462
where one of your keys gets compromised

1013
00:54:06,462 --> 00:54:07,742
and it's just like, it's gone missing.

1014
00:54:07,742 --> 00:54:09,382
You go to check on it, it's gone, whatever.

1015
00:54:09,382 --> 00:54:10,462
Or your device is dead or something.

1016
00:54:10,462 --> 00:54:13,142
One of your keys is in bad shape.

1017
00:54:13,142 --> 00:54:14,942
So now what you need to do

1018
00:54:14,942 --> 00:54:16,462
is you need to move to a new wallet, right?

1019
00:54:16,462 --> 00:54:18,862
You need to sort of fix your setup.

1020
00:54:18,862 --> 00:54:31,543
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?

1021
00:54:31,543 --> 00:54:35,002
So you have instead of ABC, which is the original, you have ABD.

1022
00:54:36,123 --> 00:54:41,222
Or the alternative is, do you get three new keys, whatever, DEF.

1023
00:54:41,222 --> 00:54:48,482
Okay. And the reason it's a, it's a, it's not like a philosophical question. It's more of an

1024
00:54:48,482 --> 00:54:53,462
operational question because it's how many signing devices do you need to do a migration like that?

1025
00:54:53,563 --> 00:54:58,282
Like, are you, do you have one key on each device or are you loading different descriptors onto it

1026
00:54:58,282 --> 00:55:02,563
and have one hardware wallet that's actually, or one hardware signing device that has multiple

1027
00:55:02,563 --> 00:55:07,623
wallets loaded onto it? And so my question is like, which one have, when you did your testing,

1028
00:55:07,623 --> 00:55:10,582
which approach did you use?

1029
00:55:10,582 --> 00:55:13,702
And for most people, they've never tried it before.

1030
00:55:13,702 --> 00:55:17,262
And they could do it, like they have the know-how to do it.

1031
00:55:17,262 --> 00:55:20,762
But the fact that you haven't tested your recovery system

1032
00:55:20,762 --> 00:55:24,382
or even sort of done it, to me,

1033
00:55:24,382 --> 00:55:27,442
is a signal of just how complex this stuff is.

1034
00:55:27,442 --> 00:55:29,802
And so even the like hardcore folks

1035
00:55:29,802 --> 00:55:32,323
who haven't done a multi-sig recovery

1036
00:55:32,323 --> 00:55:34,222
and thought through the number of devices they want to use

1037
00:55:34,222 --> 00:55:36,082
and how they're going to micromanage those devices,

1038
00:55:36,082 --> 00:55:39,722
to me says, BitKey is for you, because we have tested it.

1039
00:55:39,722 --> 00:55:40,543
We know how to do it.

1040
00:55:40,543 --> 00:55:42,023
I can give you the BitKey answer.

1041
00:55:42,023 --> 00:55:43,942
I can tell you the BitKey answer takes 10 seconds

1042
00:55:43,942 --> 00:55:46,842
of a loading animation in the background and it's done.

1043
00:55:46,842 --> 00:55:49,642
And that I think is really the strength of BitKey.

1044
00:55:49,642 --> 00:55:51,602
And so it says like, it's doing the thing

1045
00:55:51,602 --> 00:55:53,043
that you would probably choose.

1046
00:55:53,043 --> 00:55:53,882
And so when I tell people,

1047
00:55:53,882 --> 00:55:55,262
this is exactly how BitKey does it.

1048
00:55:55,262 --> 00:55:57,362
It's like, oh, this isn't a normie wallet.

1049
00:55:57,362 --> 00:55:59,202
Like this is the solution I would do

1050
00:55:59,202 --> 00:56:00,762
that I haven't tested yet,

1051
00:56:00,762 --> 00:56:02,582
but I could test it in a few minutes on BitKey.

1052
00:56:02,582 --> 00:56:04,142
Yeah, the problem in that scenario as well

1053
00:56:04,142 --> 00:56:06,342
is it's probably the most high stress scenario

1054
00:56:06,342 --> 00:56:07,682
when you're trying to figure this stuff out.

1055
00:56:07,682 --> 00:56:09,123
Like you're not gonna be thinking straight

1056
00:56:09,123 --> 00:56:10,842
when you're worried that like your life savings

1057
00:56:10,842 --> 00:56:11,782
in Bitcoin is gone.

1058
00:56:11,782 --> 00:56:14,362
Right, yeah, it's a wild, yeah.

1059
00:56:14,362 --> 00:56:17,202
Being in that situation for real is like,

1060
00:56:17,202 --> 00:56:18,602
I mean, I get nervous when I'm like,

1061
00:56:18,602 --> 00:56:20,162
cause when we do all these testing, it's like,

1062
00:56:20,162 --> 00:56:22,023
I don't wanna lose the like 20 bucks on my wallet

1063
00:56:22,023 --> 00:56:23,702
that I took out of the treasury for testing.

1064
00:56:23,702 --> 00:56:25,342
And I was like, oh, but like to do it

1065
00:56:25,342 --> 00:56:27,502
with your life savings is stressful.

1066
00:56:27,502 --> 00:56:29,682
Yeah, I think the BitKey thing is awesome.

1067
00:56:29,682 --> 00:56:32,462
And I think the screen is a huge addition.

1068
00:56:32,462 --> 00:56:33,302
Thank you.

1069
00:56:33,302 --> 00:56:36,023
Is there anything else you want to talk about before we close out?

1070
00:56:36,023 --> 00:56:37,523
Oh, no, I don't.

1071
00:56:37,523 --> 00:56:38,523
I don't think so.

1072
00:56:38,523 --> 00:56:40,942
Well, I'm excited to see how this goes.

1073
00:56:40,942 --> 00:56:42,262
Vegas starts tomorrow, man.

1074
00:56:42,262 --> 00:56:44,262
It's going to be a wild few days.

1075
00:56:44,262 --> 00:56:46,402
Yeah, it's I always love these conferences.

1076
00:56:46,402 --> 00:56:50,323
I've already lost generational wealth at the table again.

1077
00:56:50,323 --> 00:56:51,323
This is two years running.

1078
00:56:51,323 --> 00:56:52,323
There's still time.

1079
00:56:52,323 --> 00:56:53,323
There's still time to win it back.

1080
00:56:53,323 --> 00:56:54,323
Exactly.

1081
00:56:54,323 --> 00:56:56,323
It never works that way though.

1082
00:56:56,323 --> 00:56:57,323
But thank you, man.

1083
00:56:57,323 --> 00:56:58,323
This has been really cool.

1084
00:56:58,323 --> 00:56:59,323
I appreciate you doing this.

1085
00:56:59,323 --> 00:57:00,823
And let's go have fun in Vegas.

1086
00:57:00,823 --> 00:57:01,823
Yeah, let's do it.

1087
00:57:03,302 --> 00:57:05,302
You