Coming back, we're going to start up with our next panel, which is on why self-custody
and privacy are important.
I'm going to let the panelists and then our moderator, Tomas, introduce themselves.
Good afternoon, everybody.
Welcome to our panel here.
I'm Tomas.
I will excuse my English in advance.
I've been tracking this space since 2016 as an enthusiast, self-learner, and also an educator.
And I'm an MIT Sloan alum and also a member of the MIT Bitcoin Club and the Expo Committee
for five years now.
Yeah, so perhaps the first thing is to have a round of introductions from our panelists.
Hi, I'm Jesse Myers, I go by Croesus on Twitter.
You might have saw my having talk earlier today.
I'm with on-ramp Bitcoin.
We are the leading provider of multi-institution, multi-sig custody for Bitcoin.
So I know more about the custody side than the privacy side of things, but that's me.
I'm Jameson Lopp, co-founder and Chief Security Officer at CASA, where we provide self-custody
solutions as well.
Hi, everyone.
I'm Stacy Waleyko.
I'm an open-source Bitcoin developer and educator.
Hi, everyone.
My name is Gustavo Flores.
I work at Wasabi Wallet.
I'm a content writer.
Wasabi is a self-custody open-source Bitcoin wallet that has a coinjoin feature.
So if you have Bitcoin that you want to reclaim your privacy on, you can use Wasabi.
Awesome.
Yeah, so this panel aims to discuss the importance of self-custody and also privacy, and address
some misconceptions and also some myths, right?
So perhaps just to engage a little bit the audience, yeah, maybe it's going to be tricky
to answer this question, but for the reason that we might discuss here, anyways, it's
in a show of hands.
I would like to know who here does self-custody or is familiar with self-custody?
Kind of half, huh?
Good.
Yeah, again, and also in a show of hands, so who here has already used any privacy-preserving
tools while transacting Bitcoin?
Yeah, a little bit lower.
Okay, good.
Yeah, so in the Bitcoin world, there is a mantra coined by Andreas Antonopoulos, which
is not your kiss, not your Bitcoin.
Jameson, can you explain this mantra and by that define what is self-custody and why
it is important?
Sure.
So really what we're talking about is ownership, and the thing is Bitcoin is its own self-contained
system, so normally when we talk about ownership in the world, what we're really talking about
is legal ownership.
What does the ultimate authority in your local jurisdiction consider to be the true owner
of any given asset, and then how can you use various tools and the legal system and justice
system to have recourse in case your claim to property ownership is somehow violated?
Bitcoin doesn't care about any of that.
Bitcoin doesn't care about legal systems, nation-states, whatever.
Bitcoin only cares about whether or not you can cryptographically prove to the network
that you have the ability to spend certain entries from the blockchain.
So if you really want to say that you own Bitcoin, my claim is that having ownership
claims to Bitcoin at a third party, whether that's through an ETF or through an exchange,
some other custodian, while you can have legal claims to that Bitcoin, it's not going to
be very helpful to you if you end up in some sort of rug pull or bankruptcy situation or
a million other things that can go wrong where you ask to take ownership or you ask to be
able to use those essentially IOUs, those claims to Bitcoin, and for some reason, for
whatever reason, the counterparty does not follow along with your request.
So if you have your private keys to your Bitcoin, as long as you're following the rules to the
Bitcoin protocol, you can move that money around, spend it, do whatever you want as
long as you're following the protocol, and you don't have to ask permission from a third
party.
You don't have a counterparty that can refuse or deny those claims.
Yeah, great response.
Is that anybody else wants to add something?
They're good.
So if we compare holding gold, fiscal gold, and Bitcoin, one could naively say that, oh,
it's much easier to self-cursor the Bitcoin because it's a digital asset, right?
But I guess the question is for our panelists.
So what are the risks of doing self-cursor the Bitcoin in any other digital asset?
Yeah, I'll take that.
So any form of custody has some risks involved in it.
So you have your self-custody, which comes with its set of risks.
You have third-party custody where you're trusting somebody entirely with your assets.
That comes with its own set of risks.
On the self-custody side, there's user error.
There's the chance that you could screw it up.
It's a whole learning curve when you're dealing with something new like this, where cryptographic
material has to be created in the right way, maintained, stored, kept safe, all with best
practices, and if you lapse for a second, your assets are gone.
So it's a very unforgiving form of custody where user error can be a big problem.
It also comes with the wrench attack problem of you can keep your Bitcoin as safe as you
can keep that cryptographic material.
Those are some of the problems on the self-custody side.
On the third-party custody side, of course, you have a totally different set of problems
where we've seen FTX or Mt.
Gox or Prime Trust, Fortress Trust, Quadriga, any number of failures of third-party custody
for various reasons over the last 15 years.
Those are because of hacks or fraud or misappropriation of funds.
That's counterparty risk.
So you're either trusting yourself with self-custody or you're trusting a counterparty with third-party
custody, and those are the major two buckets.
I would insert here that what we're working on at OnRamp and we're very excited about is
with Bitcoin, it's possible to use its multi-sig properties to have multi-institution custody
where you're mitigating that counterparty risk, the third-party counterparty risk, by
having a multi-sig quorum where different institutions each hold a key and do not have
a quorum themselves, so they don't have unilateral control of the assets held in that vault.
In that way, you can mitigate counterparty risk while allowing the end-user to retain
control without having to hold keys.
Various risk trade-offs with different forms of custody, self-custody, I think, has some
of the bigger hidden risks of user error or inheritance error where you don't propagate
successfully to the next generation, third-party custody comes with its risks, they all have
some trade-offs.
Also, there's a million different ways you can slice and dice this, and to make it as
simple as possible, I'd say when it comes to risks, it's basically we're always talking
about risk of loss, and usually that's either risk of theft, like the private key material
getting into the wrong person's hands, or just complete loss and the private key material
being in no one's hands and therefore being frozen forever.
Everything else, pretty much every other type of attack and loss scenario falls into that.
But when people try to weigh or quantify the risks of self-custody versus third-party custody,
you can get really overwhelming because there's so many different attack vectors, but the simplest
way that I can put it, as far as I can tell from doing this stuff for a decade, is that
the entire world of risk, of self-custody risk, is actually a subset of the entire realm of
risk of third-party custody, because if you think about it, third-party custody, they
are basically doing self-custody.
They are undertaking the same actions that you would be undertaking for yourself.
But what you're doing when you put those keys, that money, into the hands of a third party
is you're saying, okay, you're going to take care of all of those risks that normally I
would be having to deal with, but now you're also introducing a bunch of risks that are
internal to that organization that's handling the keys.
This is where third-party custody becomes problematic because it's almost always a black box.
You don't know what sorts of internal controls are going on there.
But getting into what he was talking about with multi-institution custody and multi-sig
in general, this is where it gets really complicated, but also interesting because we can create
new security models in which you could call them semi-custodial, you could call them non-custodial
but you can basically put your keys and your money into a setup now where no one really
has full custody.
You can even do it so that even you yourself don't have full custody.
It's going to be very interesting to see how this pans out on the regulatory front and
what the regulators think of this type of thing.
But for now, we're operating in a great gray area and we don't have to consider ourselves
like financial institutions.
And our position is that we're unhosted wallets.
And I just want to emphasize that that's one of the exciting things about Bitcoin right
now is that it's never been possible to have multi-sig with any asset before.
It's only possible with this asset, with this digital asset.
And that is going to be part of the story of Bitcoin becoming the preferred store value
asset for the 21st century because it has these inherent properties that are more attractive
than storing gold in a vault and hoping the IOUs are good.
Because multi-sig makes it possible to risk mitigate in a way that has never been possible
with custody before.
Awesome.
Now, Jesse, your business is around dealing with this challenge with self-custodial.
So can you share some circumstances or situations in which custodian approaches are acceptable
or applicable?
Yeah, that's an interesting thought.
So obviously, right now, the ETFs have been the big story this year in Bitcoin, a tremendous
new demand source for Bitcoin and capital flowing into Bitcoin.
They're all using a third party custodian of one kind or another, coin-based mostly
a couple others as well.
And from a regulatory point of view, that's kind of a requirement at this point in time.
In the custody space, there's qualified custodians, which is really just kind of a checklist of
whether or not a custody company is following certain procedures that the traditional finance
landscape has deemed to be best practices.
And that is what makes a qualified custodian.
And from a TRAD-FI point of view, you need that stamp of approval.
And so, but I would beg the question of, are they qualified custodians because they're
the best at custodying digital assets or because of a somewhat arbitrary list of what TRAD-FI
thinks about how custody is best done?
And for that matter, we have a few examples recently of qualified custodians that have
dealt with digital assets and have screwed it up, Prime Trust and Fortress Trust being
recent examples of that.
And so, there may be a mismatch, in my opinion, there are qualified custodians that are not
qualified to be dealing with Bitcoin and digital assets.
There are also Bitcoin-native custody companies like BICO, which is a fantastic custodian that
is a qualified custodian and deserves it, in my opinion, because they know what they're
doing, they're digital natives.
So I think we're going to see over the next decade the regulations with regard to what
is a qualified custodian and what does that mean with custodying digital assets shifting.
And I'm afraid that will probably be in response to some sort of blow-ups that may happen over
the coming years as Wall Street moves into Bitcoin and some of them may make mistakes
about who to trust as their custodian.
Good.
Yeah.
Switching gears a little bit.
Privacy in the financial domain sometimes is perceived as illegal behavior or something
that is bad, right?
With some people stating that, oh, I have nothing to hide.
So I think this question goes to everybody here in the panel.
So what's the importance of privacy and how can we debunk this kind of statement?
So it's very important to note the difference between privacy and secrecy.
And if you want to look more into this, you can read The Cypherpunk Manifesto by Eric
Huges.
In that paper, he defines privacy as something you don't want everyone to know and secrecy
as something that you don't want anyone to know.
So privacy is the act to reveal oneself to the world in the way one chooses to.
So for example, it doesn't have to just be about what you want the government to know
or not.
It can be what you want your employer or your friends or anybody involved in your life.
And that is basically how to debunk the phrase, I have nothing to hide.
Well, we all have private manners because it depends from whom we're choosing not to
disclose that information to.
I don't want to be the Debbie Downer, but it's also, you have to consider that whatever
you put out into the world could potentially be used against you.
You just don't know what someone's going to do with a particular piece of information.
So while privacy is not a substitution for protection or defense, it's certainly relevant
in the context of your own personal safety and security.
Fair enough.
And I mean, I think that it's clear that everyone has privacy, even if you don't want to admit
it.
I mean, everyone uses privacy technologies.
And I'm not talking about crazy encryption protocols and stuff.
Everyone has blinds on the windows to wherever they live.
Everyone likes to have doors on the stalls of the restrooms that they're using.
These are very basic things, but there are many aspects of our lives to which we have
privacy components.
And it's just, it's really weird to me that a lot of people don't seem to see how that
translates into cyberspace in our digital lives.
Yeah.
Perhaps starting with Gustav, what are the implications of a revelation in the privacy
landscape, right, in the public space?
Well, well, there are many diverse implications.
They depend on the nature of the technology or the product.
So, for example, on one end, you have custodial mixers, which are just custodial products
where you can send your coins, they are going to mix it, and then they're going to send
it back to you.
Well, because of the custodial nature of that product, they have to implement KYC, know
your customer, and anti-money laundering policies.
And if they don't, it's considered money laundering.
And we've seen many cases in the US and in other countries where custodial mixers getting
dieted and get charged with money laundering.
That's on one end.
On the other end, you know, you have things just like coin control, which is the fact
that you can decide which UTXO, which coin of Bitcoin, which piece of Bitcoin, how you're
going to spend it.
So you're just going to, for example, label each different piece of Bitcoin you have and
you're going to track that they don't, for example, mix between themselves.
And that is just using Bitcoin by itself, that if you ban Bitcoin, you ban coin control,
but there's no difference between coin control and Bitcoin.
And you also have things like Monero, where it's not regulated at the individual level,
but it's regulated at the exchange level.
So for example, nine days ago, Kraken removed Monero from their Belgium and Ireland websites
because of upcoming European Union regulations.
And then there is the toughest spot, I would say, which is products like Wasabi or protocols
like tornado cash, where you have a centralized component of it, but it is non-custodial.
So for example, in tornadoes cash cases, the two main developers got arrested about two
years ago and basically they are charged with knowingly having facilitated a sanction
evaded by sanctioned entities.
And in Wasabi's case, for example, Wasabi is a coin joint coordinator that is non-custodial
and it's also built in a zero-knowledge manner, so Wasabi cannot collect information on you,
but it is still a centralized coordinator, a server that belongs to an entity.
And can that be regulated?
I'm not part of the management team or the ownership team of Wasabi, but what they decided
is to implement a blacklisting policy where sanctioned entities, well, at least coins
that are suspected to be in relationship or in ownership of sanctioned entities, are not
allowed to be part of a Wasabi coin joint.
This is based on public information because some of this can be known just looking at
the blockchain.
So this is a preemptive measure that the executive team and ownership team at Wasabi took and
it's a top spot to be in because there's a lot of personal liability and potential risk
involved with operating and running these privacy protocols.
My opinion on this is that it's better to have multiple options than just to find yourself
with none.
So in short answer, there are many diverse implications and there are different places
you can be on the regulatory front, and it would be better to have more clarity because
right now this is still a big gray area.
Okay, cool.
So yeah, perhaps this question would be more for lawyers, but so is it legal to use privacy
preserving tools in Bitcoin specifically?
Yeah, well, just to continue on that, well, first of all, it's not illegal from a user
point of view.
If I'm using a coin joint, I'm just being part of a collaborative transaction.
So I'm just using Bitcoin.
Bitcoin is legal in some countries, very few of them.
So in those countries, it would be illegal to use coin joint.
As Tor, for example, is legal in some countries and it would be illegal in those countries.
But in general, coin joint, pay joint, these technologies are just doing regular Bitcoin
transactions so they're not illegal.
Unfortunately, unfortunately, if you are a person who uses cutting edge strong privacy
protection technologies, you will be treated as a second class citizen.
One example of that, I use like VPNs and Tor 100% of the time.
I'm really, really good at captures now.
Just an added bonus that I wasn't expecting.
Well, that's at least for the sites that allow me to use a capture.
There's a lot of sites that simply won't load at all, they just completely blacklist
even trying to connect from any sort of Tor or known VPN address related to that.
If you're doing Bitcoin privacy, pay joint, you should be okay.
But if you're doing any of the big coin join pools out there and then you try to send
those coins to a KYC regulated service, you're probably going to get your account shut down.
Yeah.
Cool.
So since we are talking about regulations, so is there any regulation implication on
the self-cursive part?
Yeah, so privacy and security are closely intertwined, like Stacy was saying.
I think there have been some movements in European legislation that basically are seeking
for anyone who wants to have the security of self-custody to have to do a lot of additional
reporting or at least when they're like withdrawing money from any regulated services.
So essentially destroying any privacy they might have, I'm not sure what any additional
ramifications they might have if they tried to do coin join stuff.
Probably same thing as their exchange might shut down their account.
We've seen exchanges even shut down people's accounts simply because they were like several
hops away on blockchain transactions.
So it really starts to be a sort of guilt by association thing.
And of course, if anyone is familiar with the like seven degrees of Kevin Bacon type
of thing, it's like if you go more than three or four degrees away, you're going to capture
like half of the world in whatever drag night you're setting up.
Yeah, Stacy, you are a Bitcoin Core developer and also have broad experience in developing
wallets and stuff, right?
So, according to you from the perspective of a regular user, how hard is to use Bitcoin
while present privates?
Yeah, it's really hard to use Bitcoin in a way that's private if you are a regular person.
And even if you're a really skilled person, it's also really hard.
We're talking about really regulation.
I think it's worth mentioning that the majority of people acquire their Bitcoin, at least
right now through exchanges.
And here in the US, they are subject to KYC, that's know your customer.
It was introduced as part of the Bank Secrecy Act of 1970.
And that means you need to provide your driver's license, your home address, your social security
number, your phone number and a selfie with all that, just to be able to use that platform.
And then we're talking about moving coins on and off that.
So they know who you are.
But even if you're going to withdraw to your own self custody, they know where you're sending it.
So they can make assumptions that like you probably own those addresses.
So that's not great.
Also, in terms of wallets, most many wallet providers as a courtesy to their users, they
allow you to use their Bitcoin nodes.
Why do we need to use Bitcoin nodes?
Well, in order to use the Bitcoin network, we need to broadcast transactions or we need
to check our balance and you need access to a node for that.
Well, guess what?
If that's not your node, then whoever's node it is sees what you're doing.
They see what transactions you're broadcasting.
They see what addresses you're interested in and they can make assumptions like, oh,
these addresses probably belong to the same wallet.
So it's hard.
And I was going to end this on a high note, but it's not.
Address reuse used to be a thing.
Like you're not supposed to reuse addresses.
It's just not good practice.
And it's really low hanging fruit.
Like it's very easy for wall developers to just generate a new address.
Um, and so I thought that problem had mostly gone away until I saw a tweet from
Jameson in December that address reuse in 2023 has gone up from 48 to 70%,
uh, which is wild to me.
So you want to give me a reason?
Well, some speculation and rumors that I heard were actually, uh, that a lot of
people came from the Ethereum ecosystem into some of the newer Bitcoin
metaprotocol stuff, and they were just so used to using the same address for
everything that, yeah, why not model.
So yeah, well, lots of room to improve.
Cool.
So, uh, Stacy, uh, so which, uh, a new, uh, Bitcoin developments and also new
projects that you consider that are exciting and, uh, you think that we'll have
a positive impact either on privacy or self-scaling.
So one that I really would love to talk about, and I'm glad it got a shout out in
the previous panel is pay join.
And I think like right now we're seeing a lot of momentum around off chain
technologies, which is great, but pay joins really cool because it gives you
privacy pretty much instantly on chain at the time of payment.
And it's almost free.
The sender pays like a little bit, uh, because the way it works is instead of
a transaction having inputs only from the sender, the receiver contributes
an input as well.
So now you've broken that assumption that all those inputs belong to the sender.
Now you don't know.
And I presume you can add like more than one too.
Um, so that, that seems really promising to me.
We're actually at a point where pay join v two is currently being worked on.
I think it was last summer.
There was a draft BIP that went out to the mailing list.
And in December, it was given a BIP number, BIP 77.
So that's really promising.
Um, another technology is Chami and mints.
That's also really exciting.
We're basically you, you take your asset to the mint.
So in this case, it would be Bitcoin and the mint is able to do something
called a blind signature where they sign it and create an IOU for it without ever
knowing who it originated from.
And, and you take that IOU and you pass it around, you trade it for goods
and services and whatnot within the mint.
And then when it's time to cash out, you, you, you trade it back for that Bitcoin.
Um, so I think that like there's some really good stuff being worked on.
And I think there's a reason to be optimistic.
Yeah, um, I would just note that, uh, Debbie Downer again, um, uh, is that
I think this is actually from the cypherpunk manifesto, but you know,
privacy only extends so far as the cooperation that we have amongst
each other in society.
Uh, if I'm the only one who's doing privacy preserving stuff and nobody else is,
you know, I have an anonymity set of one, which is no anonymity.
Uh, so to put that in constant context of like pay join, uh, pay join works
when you have a counterparty that also follows the pay join protocol.
So like it would be awesome if we got every wallet, every provider, every
custodian in the Bitcoin ecosystem to support the pay join protocol.
That would just like supercharged privacy across the entire network.
And the great thing about pay join is that it can just be built into the software.
Like people don't need to know that this is happening.
The software just negotiates it automatically.
But a similar type of thing, like if you're using Tor VPN or whatever, it's,
it's because such a small percentage of society is using some of these more
cutting edge tools that it's a lot easier and convenient for, uh, the rest of the
internet infrastructure to just put up various walls and say, no, we don't want
to serve you.
Uh, it's, you know, it's not at the point where it becomes economically
infeasible to reject a large portion of your potential customer base.
Yeah.
And on the self custody part and marrying that with what James was just
saying of, um, regulation for self custody, uh, it's free speech, ultimately.
And it's property rights.
And, you know, there, there could come a time when governments try to
encroach on allowing that, um, gladly there happily, there's some precedent
from the nineties of cryptography being, uh, having this battle, um, where it was
deemed a weapon and then the, uh, legal battle that ensued allowed cryptography
to be securely, uh, recognized as speech.
It's ultimately it's text and it's speech and it's not a weapon.
Um, and in this country, we have, you know, our first amendment, um, and having
12 words in your head is speech.
Um, and so having a wallet where you're self-custing because you happen to
have a special code that is fundamentally text.
It's just information that is speech.
And so we, we may have that, uh, battle ahead of us a bit more, but I think
we have precedent, uh, and momentum on our side.
So, you know, on, on the, on the regulation front for self custody, we, that
should be a fight that, that we can win easily, but, um, it, we may have to
scrap a little bit more.
Yeah, that's awesome.
Yeah.
So, uh, I want to allow some time for, uh, take questions from the audience.
And, but they are, so, uh, I would like, uh, uh, each of you or some, uh, to
share some passing thoughts and, uh, and most importantly, some tips for us
regular labs to enhance our practices, uh, while, uh, while dealing with, uh,
privacy and self custody, not only on the Bitcoin cryptocurrency space, but also
in the, yeah, when do we are, uh, dealing with cyber space in general?
I mean, the, the lowest hanging fruit that every internet user should be
doing is installing ad blockers.
I mean, the, you know, corporate surveillance regime that is just blasted
all over the internet, you know, every website you're going to, often
getting tracked by dozens of different aggregators that are then packaging up
and reselling your data.
Um, I actually worked in that industry for a decade before, uh, completely
flipping around, uh, learning about the cypherpunk movement, becoming a
cypherpunk, um, I was there, like I was on the back end, sucking up your
data and, and analyzing it and providing it to corporations to, you know, try
to target stuff to sell at you.
So I'm, uh, I'm fully cognizant of just how much surveillance is actually
going on.
And it's, you know, it's not government surveillance.
It's, it's, it's for profit surveillance.
But of course, then the government has found out that, Hey, we don't
need to worry about your constitutional rights.
Uh, you know, we don't actually have to infringe upon your rights because
these corporations will just sell us your data now.
And that's completely legal.
Um, I will say this one's not free, but if you're on the fence or I've
been thinking about it, it makes sense to get a PO box.
There are so many things out there that want your address that don't need it.
Uh, and it's given me a lot of peace of mind having it.
And, and you'll start to see opportunities to use it, um, as it goes on.
So that's, that's my advice.
The, the tip I would give on privacy is something that I see a lot of people doing.
So for example, they coin join, but then they don't protect their network privacy.
So they're not using tour and they're, you know, putting their IP address
out there or they're not running a note.
So they're contacting another server to get their transaction data.
Uh, so if you want to be private on Bitcoin, you not only have
to protect your blockchain privacy with things like page on and coin join,
but you also have to protect your network privacy.
We're fronting a note and using tour.
Yeah, this is less on the privacy side, but more on the self sovereign side.
Take on self custody, um, Bitcoin allows that.
Uh, and, and that's particularly attractive with multi-sig.
Um, you know, whether that's through CASA or any other, the provider
or, or through on ramp, um, with our multi institution version of multi-sig.
But, um, you know, in the past, holding gold under your mattress, uh, you know,
wasn't really a winning strategy.
That's why banks came to be, you know, because you'd store your gold in their
vault and they'd give you a promissory note.
Um, and great, but Bitcoin makes it possible for you to take control of your assets
with a level of security that's not possible with physical assets because of,
because of multi-sig in particular, um, and geographically distributed multi-sig
makes it so that you can control your assets.
And, and, and that's just, that just wasn't possible, uh, in the past.
And it's a big, I think it's a, you know, the number one thing you can do
to become more self sovereign.
That's great.
So yeah, it looks like that.
I'll be wet some, some of them to my checklist.
Well, so let's take some questions from the audience.
Um, thank you.
Thank you.
Right.
I think it's a great idea.
If I had to recommend to a family officer, grandparents, how to buy Bitcoin, I think
I'd say buy a ETF as long as there's, um, there's not a premium that I'd say and
have it as fidelity because if they lose it, their exposure is so big, they're
going to make a good queue, even if you screwed up for Morgan Stanley or, you know,
St. Street.
I mean, how would you recommend to someone who's not at MIT?
It's a normal person.
I simply feel I'd say if you want the 1%, 2% of your money in Bitcoin, yeah.
Yeah, great question.
There's a certain, um, tech proficiency that, that comes with it.
Basically what you're, what you're running there is a calculation about their risk of
screwing it up versus fidelity's risk of screwing it up and you're deciding that
you're going to point them towards fidelity.
Um, and that's, that's fair.
However, um, as time goes by, these self custody solutions get better and better.
They're, you know, we're, we're in the early days of the internet in terms of
usability, um, and they will continue to improve and get easier.
And collectively we will all learn, um, about how to engage with, with these
technologies, how to, how to manage, um, a Bitcoin wallet.
Um, uh, on top of that, there's, you know, that's where multi-institution custody
comes in of, of you're, you're assessing that fidelity's risk of screwing it up is
lower than, uh, than an individual.
Um, but that is one of the frontiers where you may not need to trust fidelity.
Unilaterally, you can trust a core realm of institutions and mitigate risk further.
Um, they're actually, uh, as Bitcoin grows as an asset, though, um, you know, will
they be able to, uh, lower terms?
Fidelity is a very large, a very large asset manager.
So that will remain true for a very long time.
Um, that may not be true for smaller wall street firms for as long.
So I mean, that's kind of, uh, this is too big to fail mindset.
Uh, and we've had a number of people suffer catastrophic losses because they
use that same mindset with other large Bitcoin providers.
Now, fidelity is a very different beast.
It's just a different scale.
Um, I will tell you from experience, we have plenty of boomers and people in
their seventies and eighties using Casa and it's not just because we've made it
simple.
It's because we have a really hands-on support team.
So, um, you know, with Casa, you're, you're actually getting people who are
able to help you get past any of the tricky technical hurdles there.
So it's, it's definitely possible with handholding.
Now here's one thing we haven't covered, which is there's some weird trade-offs
and friction, uh, between privacy and self-custody and the sense that if you
want the ultimate level of privacy, the downside is you can't depend upon anyone.
You have to do everything yourself.
And this is probably your, the assumption you're making if I'm doing
myself custody, I'm doing everything myself.
Now, if you're able to trade off a little bit of that, so, uh, so Casa, for
example, uh, we don't do KYC.
We allow our clients to be pseudonymous.
You don't have to tell us your name.
We just need to have ways of authenticating you and communicating with you.
But if you're willing to trade off that little bit of privacy in return, you know,
we can give you a lot of help.
We can get you unstuck.
We can, uh, you know, be one key holder for you in case you lose a key.
Something goes wrong.
Uh, so it's all about trade-offs and, um, it's, it's a complicated space.
But I think I will say that I certainly don't believe that like a lot or the
majority of people will do self-custody on their own without any help whatsoever.
Oh, yeah.
Bear with me here.
I'm, I'm really new, but I'm curious.
So I did transaction on Coinbase.
So my question was, I think it was mentioned that when you lose it, you just,
it's just gone.
And you mentioned also what is that they called a frozen bit, something like that.
But anyway, what I'm, I'm interesting is what happened with that frozen bits
behind the scenes and will that be valuable along the line?
Let's say I imagine if a lot of people tried to, to put money and then they
lost it.
So I just tried to imagine, will that be somewhat valuable along the road?
Let's say the company floor is and then become what is that acquired.
So is that, is that what happened with that frozen bit?
Is that, is that makes sense?
Yeah, a couple of different scenarios there.
I think you're talking about like, if you send a transaction to an address
that nobody ends up controlling, right, then it's frozen and stuck there forever.
It's lost.
It's a donation to the Bitcoin network.
It's a donation to other Bitcoin holders.
It's a donation to society within Coinbase.
Like if you were to be sending that from a Coinbase account to another Coinbase
account, they would have the keys to all that.
So it would end up as a frozen transaction.
They would have access to it at all times.
But I think the frozen transaction thing was more of a on chain
transaction it when a user ends up losing the keys to that particular address.
Does that make sense?
Yeah.
So maybe let me repeat.
So what happened with that lost transactions that the owners of that
let's say me losing that money, it's gone.
So my, my impression that I will never get that back.
Correct.
So what happened behind the scenes, that lost money of mine that I put it in
in the long run, will that be somehow valuable for that company?
No, I mean, no one, not even the company has access to that.
So it's estimated that like millions of Bitcoin are permanently lost.
And you should basically just make that mental calculation of, okay,
so the actual usable supply of Bitcoin is never going to be 21 million.
It's going to be well under that.
Yeah.
So just to clarify, and I think Jesse was getting to this, if the scenario
you're talking about happens within Coinbase, yeah, they can recover it at some
point because they, they are cussing those coins.
But if that scenario happens in a situation where you are self cussing
and holding the funds yourself, then yeah, totally lost.
As Satoshi would say, it's a donation to us all.
Thank you.
So I guess we have time for one short question.
It happened to me.
I am.
I'm a poverty team, you know, invested in you go.
They persuade, you know, I invest like 150,000 into the crypto platform.
When there's platform there, first I trade, the other money is in mine.
When we cash out, when I decide to, you know, cash out, and they disable my account,
how do we handle that?
And I do, I, I think we have a lot of exchange, I, I'm not fully used right now.
There can be regulation rules in the future.
No, so, so this is the common type of saying really where people will set up
fake exchanges and allow you to deposit money.
And in some cases, they'll even tweak your account to make it look like you've
made a lot of money.
And then if you try to go withdraw, they'll probably ask you to like pay your
taxes upfront, you know, this is a sort of like affinity fraud scam.
So, you know, unfortunately, the only way to protect yourself from that is to use
like the big name exchanges, you know, and how do you know what those are?
Well, that's, that's where having to do a lot of research, look around on
different websites and see, you know, what are the biggest and most reputable
places to do business.
But, you know, probably the vast majority of places out there that claim to be
exchanges or websites where you can buy and sell crypto assets, probably
completely fake and you'll never get your money back.
But one easy way to try to test the waters, if you're not sure, is only put
a little bit of money in and then immediately try to take it out.
You know, like see, like, are they even letting you take anything out in the
first place, but even that's not a guarantee because they might just be
trying to trap you to get you to make a really big deposit.
Oh, yeah, I've regulated, look, FTX was the most highly regulated company in
the crypto ecosystem.
So it's like, who do you trust?
Right.
And this is why we're here telling people to take self custody because you can
only really trust yourself.
You, there might even be government authorities and regulators out there who
have like rubber stamped.
Yep.
This is a real company.
They exist.
That doesn't mean that they're a legitimate.
Okay.
I, unfortunately, I think that all the time is all we have for this panel.
Uh, so, yeah, fascinating discussions.
So thank you very much.
So yeah, uh, join me in for a round of applause to our speakers.