This is Baselayer brought to you by ARCA. I'm your host David Nage. This is Baselayer where institutional investors come to learn about crypto. This is David and this is your new episode of Baselayer. And it's a repeat one, which I'm really happy about. I have Nick Neuman and Jameson Lopp from CASA joining me today. How are you guys? Hey David, doing well. Hanging in there. That's the best we can do these days, I suppose. So CASA provides secure storage solutions for digital wealth and namely focused on Bitcoin. And so their key flagship product is called Keymaster. We're going to have a great conversation about what it means. There's a narrative that's been in digital assets for a while. Not your keys, not your Bitcoin. And CASA has been at the forefront of providing key management. We've had a few people on the show in the past. Matt Walsh rings a bell if you guys want to catch up on that episode. We talked a lot about key management, but we're going to talk about that and what it means. But again, what we like to do from the onset, we didn't have Nick and Jameson on before from CASA. And so both have great backgrounds. Jameson has been well received in the ecosystem as someone who is an expert in security in OPSEC. He has some really great literature that he's written about, about OPSEC. And I highly recommend you checking that out. We'll put some liners, some notes in the liners so you guys can find that. But if you could give us a little general background about both of yourselves, how you got into this world. And we don't do the when Bitcoin moment, but exactly what about the underpinning of the technology really led you to this world and actually founding and now working at CASA? Sure. So my background is in computer science. And I heard about Bitcoin quite a while ago and read the white paper. And it was really the white paper in the technical aspects of solving this new computer science problem that I had never even heard of that really got me fascinated. You know, simultaneously also got interested from the libertarian viewpoint of, you know, what is money, who should control it, how should it be defined, et cetera, et cetera. And so that combined with this open source ethos, I felt like the idea of money as an open collaborative project was just fascinating and I wanted to devote my resources towards working on it. So I've been in the space for about five years now, primarily focused on boring old security stuff because I think that we've still got a lot of work to do if we want this technology to go mainstream. Yeah. And I started my career in investment banking and eventually moved into tech working on products and designing really easy to use products for consumers and really became interested in Bitcoin because it was the cross section between tech and finance. And the idea of being your own bank and rewriting a lot of the existing financial norms was really interesting to me. And similarly to Jameson, I realized that there was so much room to grow in Bitcoin around the user experience and, you know, the security and how products are built and just making them better for the average person rather than for really technical people. And so that's what CASA is really focused on. And so, as I mentioned, we had Jeremy on about a year ago discussing CASA and everything that you guys were doing there. So it's been a while and there's been some updates and some things that you have done there that are new. So for those that are not familiar, have not listened to that episode, have not experienced that for the family offices and the institutional investors out there that listen to the show, give us a kind of a brief on what CASA is and give us a little bit of an update how things have manifested and changed over the last few months. Sure. So CASA is the secure home for your Bitcoin. We believe it's we've always believed that it's really important that people hold their own Bitcoin, but it's been historically really difficult to do. And so it caused a lot of anxiety for people about managing their own keys and potentially losing their Bitcoin. And what do they do with their seed phrase, et cetera? And so we founded CASA because we realized that combining really first class design and security with a more human touch with our support and client services team was something that the industry was just missing. And we could help people get better peace of mind that their Bitcoin is safe by joining those two factors of design and security with that human touch. And so, you know, over the last year, we've continued to grow the company and we tested out a few different product lines between CASA Keymaster and the CASA node. And what we saw was that the need for the security and the ability to protect what matters, which is people's Bitcoin savings, both for themselves and their family, just way outweighed the desire for anything else. And so what we've done is really in the last few months, we've focused the business on CASA Keymaster and on making sure that people have the right tools to keep their Bitcoin secure. OK, so let's do this. I think it would be a worthwhile exercise for anyone who's listening. I spoke to a few family offices in the last few days that have gotten very interested in Bitcoin. Amidst the printing press that we're seeing now, another 2.3 trillion dollars, the Fed just came in as a lending program. And obviously we're all familiar in the crypto landscape for the printer goes burr narrative that's been in the meme that's been popping up. For those that are starting to take a serious look at Bitcoin as a salvage, as a untethered asset, as I am saying it now very loudly to other people out there, let's talk a little bit. I want to go into the more dynamics of everything else that you guys are working on. But I want to go through an exercise for someone who's listening right now, who's about to potentially look at purchasing Bitcoin for the first time. Let's go through the normal usual ways from our experience, my experience. They will probably go to someplace like a Coinbase and they will go through the KYC and AML process and allows they will then buy their Bitcoin there. And for many people, they have left it on Coinbase. You know, we can talk Jameson. You know, obviously, I think you have some opinions on that on leaving on exchanges. But let's talk to people who are just getting into Bitcoin right now. And let's go into how they would actually then use Casa as a process and a place to keep their Bitcoin safe. Sure. So, interestingly enough, just from like a personal anecdote, if I had left my coins on the first exchange where I got my first coins, I wouldn't have them anymore. You know, these exchanges have bad things happen to them. But in many cases, like you said, you may go to an exchange, you may go to an OTC desk, you may find some sort of peer to peer marketplace where you can do the actual transaction. And then the question becomes, well, are you going to just use that service as a wallet if they support that? Or are you going to move them into some different security model, preferably one where you are managing your own keys? So from a network perspective of what actually needs to be done, well, all you need to do is request a withdrawal from whatever service that you make that purchase at. Give them the Bitcoin address of your new wallet and off it goes. Usually within 10 or 20 minutes, it'll show up and get confirmed in your new wallet. With with regard to CASA and setting up our service, we can, in fact, help guide you through this entire process, including, you know, depending on your purchase size, try to find like a good OTC desk for you that can offer a decent rate. But the setup process for CASA will be slightly more involved in the sense that you're actually going to have various pieces of hardware devices that will come together to constitute what is your wallet. So you'll you'll be getting a Trezor, Ledger, Cold Card, what have you, and essentially plugging those in, allowing our software to constitute this multi-signature wallet, which requires sign off from each of these devices in order to spend from it. But once you have that initial setup, which only takes maybe 20, 30 minutes, and we can help you, of course, walk through this process, then you can just use your mobile app from there on out to actually get the deposit addresses for, you know, wherever you're purchasing the Bitcoin to then send it into your multi-signature protected CASA wallet. And there's a lot of other factors, of course, that go into this, but we can get into those later. And really what is the really important thing for out of what Jameson said there, that family offices that are new to Bitcoin or even just individuals that are new to Bitcoin really like about CASA is that we have a dedicated client services advisor, a human who is there to walk you through all of this process, to answer your questions about Bitcoin, about why you shouldn't hold your Bitcoin on an exchange and why it's important to use a non-custodial wallet like CASA. And so that's something that is really a huge differentiator. And that's why we're starting to see these new people who are new to Bitcoin coming to CASA. And we've actually started to see people that are coming to CASA before they even buy their first Bitcoin. They're coming to us. They're asking for our help to get their security set up and to make sure that they're doing everything right because they trust that we have their best interests in mind. And then we're walking them through the process of going out and buying their Bitcoin and then storing it securely with CASA. So let's get into it. Historically, we're using the last five years as history, I guess you could say. I think one of the issues is that the idea of having your Trezor or Ledger and then obviously maintaining your 24-character seed phrase and making sure that you understand all the nuances. I think we were alluding to it is that for people who are less technocratic that might not feel comfortable. I find that interesting because I remember back in the late 90s when people said, I'm not comfortable with this Internet thing. And then, obviously, if you weren't on the Internet, a few years later, you're basically a fossil. And so I think there is a periodicity that we all have to go through there where people say, oh, I'm not comfortable with this thing. But then they realize that it's really not that hard and it's really not that cumbersome. But what, in your opinion, has historically been the hiccup? What has really kind of slowed people down from doing things, removing their coins off of exchanges and doing this themselves? What do you think has been one of the major hurdles and how have you guys have addressed it? You know, one of the things that people that really drew me into this and that is a problem for people is that your private key is like a key to your safe in your house. You know, if you lose that key, there's no person that you can go to to tell you or to say, hey, can you help me remake this key? It's just that Bitcoin is lost. And so that's scary for people. And people really aren't used to that with the current financial system. But that's really what the biggest benefit of Bitcoin is, is that you are truly holding it yourself. Nobody else can control it. And so what we've done with CASA is made a system where you don't have to worry about losing that key. You're still holding it yourself. But since you have multiple keys protecting your funds, losing one key is not a big deal. And so that robustness and redundancy gives people a lot of peace of mind. And really, that's the key that we have found is giving people the ability to feel safe, moving their funds from an exchange into a wallet that they control. I think you touched on the seed phrase issue. And like we said, usually when you set up a new wallet, it gives you these 24 words and it says, OK, keep this safe somewhere. And there's this entire iceberg of boring IT data practices and cybersecurity knowledge that is kind of hidden under there. And most people are not going to be security experts. And even security experts like myself don't generally want to go through the time and hassle of doing boring IT practices and data backups and stuff like this. And like I was spending one to two days every year refreshing my cold storage setup, which was this really insanely complicated thing that my fingers were crossed that if I ever got hit by a truck, my heirs would actually be able to execute the instructions for it. And that's really one of the things that made me realize how much opportunity there was, this big gap in the market for building a more user friendly system that was still secure. And Bitcoin has always enabled people to be sovereign, to be their own bank, et cetera, et cetera. But the learning curve to get there and feel secure and feel like you are protected against everything is so high that, like you said, most people are just leaving their coins exactly where they're buying them. And when you do that, I make the argument that you don't actually own Bitcoin. You actually own an IOU for Bitcoin and you're asking some other party to use the Bitcoin protocol on your behalf. And that means that you no longer get to enjoy many of Bitcoin's most valuable features such as censorship resistance and seizure resistance. And this has always been a challenging issue for users because, like Nick said, it places a lot of responsibility onto people that they're just generally not used to having. And usually if something goes wrong, you have some sort of specialist somewhere that you can call up to fix the problems for you. But in Bitcoin, that's the trade off is you have the power to do things without getting permission. But the flip side is if something goes wrong, if you make a mistake, there is no one who can undo that mistake. I think that's hitting on something really important. I've spoken to many family offices out there in the past. And I remember one about six or seven months ago, their patriarch wanted to get involved because he agreed with the whole Chamath kind of narrative of Bitcoin being schmuck insurance. And we talked through the processes and we said, OK, you know, this is how you would actually go about ascertaining Bitcoin. You could use a treasurer ledger. Obviously, you could use CASA, you can use other things out there. But he is like, well, what if we do like seven figures? He started to feel slightly uncomfortable when you're starting to put that kind of assets and it's not your assets. I think there's a distinction when you're a CIO of a family office or someone else out there. If it's not your assets and it's the assets of the family that you're working for, it feels slightly uncomfortable. So let's talk about multilayered security because I think this is important because I want people to really understand the way and how closely you work with people out there so they don't feel that kind of sense of uncomfortableness. Yeah, I mean, another way of phrasing this is that we have put a lot of effort into architecting a system that eliminates single points of failure. And by that, we even mean our own company, our own servers, our own Internet architecture. And one of the primary ways that we do this is that we try to push as much of the sensitive operations, as much of the security of the system to the edges and by the edges, I mean, to the users, to the end clients and push it away from our servers so that we're not creating honeypots, if you will, on our central server architecture. So we build our clients, our mobile apps in a way that they don't trust the integrity of the data that is provided to them by the servers. We have a number of processes to ensure the security and the integrity of both the mobile apps and the server side code where we're using cryptographic signatures and two man rules on all of the code changes and the build and deploy processes that are happening. We're also creating various levels of security for the private keys that our users are using to constitute their multisig wallets. We're not just putting keys on one device or even one type of device, but rather we're using a diversity of hardware and software, a lot of which is not even created or maintained by us. By using multiple different companies and multiple different hardware and firmware on multiple devices, this is actually creating additive security that is making the attack surface much, much smaller because you would have to penetrate multiple different systems in order to actually compromise enough data to be able to take somebody's money from them. You get protection against physical attack and natural disasters by geographically separating these keys on their different devices. Then finally, like Nick said, we even protect against the user themselves and just normal human mistakes by building a level of redundancy into the system so that you can lose a device or destroy a device and actually be able to completely recover from it without even asking for our help. We have wizards built into the app for that. You can even lose two different devices, two different sets of keys simultaneously and still be able to recover with our help because we hold one key in our own cold storage offline reserves that we can use for emergency situations. What we're really talking about here is an entire wealth of knowledge where we've published about 40 pages of documents on our website that goes through every possible attack and loss vector that we've thought through over the years and exactly how we've designed our system to mitigate against them. That really all combines into when somebody is thinking about storing a large amount of money with COTSA. It combines into the knowledge that we have put a ton of work and time into making an extremely robust, resilient and secure system to protect people's Bitcoin. One of the things that we've seen some clients do is they'll have COTSA as their self-custody set up for their Bitcoin. They'll actually split some of their Bitcoin between COTSA and one of the other institutional custodians because that gives them another hedge against mistakes or against things happening that could affect their Bitcoin in one place or the other. That allows them just one more layer of protection, especially when they're storing such large amounts of Bitcoin. I would love to get your opinion on this, Jameson, as what people would call a Bitcoin OG. Hopefully, you don't mind being called that, but you've been around the block a few times here. The halvening is happening soon, about 30-some-odd days from now. I'm curious, you said that you guys were getting more demand or you're hearing more from potential customers and clients. Do you think that people have gotten to understand what the halvening means and that they could be potentially getting more interested in it because of that? Interestingly enough, I think that a lot of people who own Bitcoin don't even know about the halvening. They don't know much at all about the actual details of the protocol. All they know is that this is a completely different asset that maybe they should invest something in. There's a lot of debate. I guess this is the third halving I've been around for. The same debate happens every time. Is the halving priced in? Do people know what it is? I think even within Bitcoin owners, a lot of them don't know really what it is and how it works. Especially people who have not yet jumped into Bitcoin, they definitely don't understand this. Whether or not the halving directly impacts people, like you can have debates about the stock-to-flow model, etc. I think that it's more of a PR type thing. It gets people into learning more about the economic properties of the system and the guarantees. Coinciding with what's happening right now in traditional markets and in US Treasury and other central banks, I think it's sort of a perfect storm. As people are learning more just about how money works, that's when I think the value proposition of these alternative systems really starts to shine. I think the other question I'd love for you to opine on is that if I'm not mistaken, about 2 million coins have been lost due to key loss. Is that correct? Is that kind of a right statistical number there? Is that something around there? It's hard to put an exact number on it. The blockchain is public, so you can look at things like how many dormant coins haven't been spent in a certain amount of time. Interestingly enough, it's actually worse than that from some of the chain analysis reports we've seen. The estimates that we generally go with are over Bitcoin's 11-year history, there have been around 2 million coins that have been known to have been stolen, but the estimates for lost coins are actually closer to 4 million. Of course, that is also including what are assumed to possibly be Satoshi's coins, which is around a million coins. I think with the idea of losing your coins and obviously the key loss, obviously we're talking a lot about key management today, I think that really is important for people to understand because this is something I've heard a lot. If you want to opine on this too, that would be great, but I've heard from people who do not know Bitcoin, obviously as well as you guys do and others do, but I've heard from the outside that they think that Bitcoin can be hacked. I know you can probably opine about that for hours and we don't need to do that, but I think this is a really important distinction is that where you hold your Bitcoin, those places have been hacked, as you alluded to, but the actual Bitcoin network itself has not, correct? It is an interesting question. If you go into some really, really old history back in the very early days, there were a bug or two that resulted in bad things happening, but those got fixed very quickly and that's part of the reason why Bitcoin is basically antifragile, but I think the short version of all of this is that it's highly unlikely at this point that the entire Bitcoin network gets hacked in a way that everyone loses their money simply because Bitcoin is its own bug bounty. If anyone can find a bug that allows them to take people's coins, then they become a billionaire overnight. Now, if someone did find such a bug and managed to exploit it and people would notice immediately and then there would be a huge outcry and everyone would come together and basically say, okay, we obviously need to fix this and how quickly can we fix it? There have been events in Bitcoin history where major things have gone wrong and they usually get fixed within a matter of hours. Absolutely. Spot on. I think people, as they're learning more about it, they need to learn that yes, it has had about a 99.8% or 9% uptime and then it has had very early on, very, very early on. It's had a few hiccups, but relative to the traditional financial system, which banks have had their ATM machines go down for two days and other things, it is a very stable environment. So this has been awesome. One of the things that we like to do with our guests on the show, too, is just to get a little bit out of the lightment about some of the things that they might be doing on a personal level and the two things that we like to hone in on or anything that you've been reading lately that could be books or that could be articles and hopefully it's not this all crypto specific, but anything that you've read recently that could be interesting for people to learn about and then any music that you guys like. Yeah, so when I read lately, I've been doing my best to escape the world. So I've been listening to the Wheel of Time series by Robert Jordan on Audible and that's a great series of books. That's super long, so it really has a lot of meat to dig into and that's been really enjoyable. On the music side, I've been doing a lot of Dave Matthews recently, weirdly enough. I haven't listened to DMV in years. Wow, okay. I will say I read the We Are Legion series recently, also known as the Bobiverse book. That's some interesting sci-fi, which is also interesting to me because I find transhumanism basically digitizing your consciousness to be an interesting concept to think about and it actually kind of overlaps with what I've found in the Bitcoin space. There are a number of people who are interested in cryogenics as well. I didn't know that. And any music that you like, Jameson? You know, I kind of got out of music a few years ago when I was actually paying more attention to music. I had a very odd eclectic taste, which was I was actually very interested in mashups of music and more specifically, mashups between artists who did not live together at the same time and thus never would have been able to perform together in the first place. Wow, so something like a Beethoven and a Rihanna? Yeah, and in fact, there's actually a fairly prominent crypto trader now who used to be one of my favorite mashup artists and he would create mashups that were things like 90s hip hop with classical artists or stuff that was basically centuries apart. Wow, that does sound interesting and that's something I'm going to have to go find out now too. So the last thing that we'd like to do for a guest on the show, where can people learn more about CASA? How can they get in touch with you guys and learn about what you guys are doing? Yeah, so our website is keys.casa and you can also check us out on Twitter at CASA HODL, H-O-D-L. And then if you're interested in learning more about becoming a CASA member or if you're a family office interested in getting into Bitcoin but not sure where to start, send us an email at membership at team.casa and that will go directly to our client services team. We can get in touch with you and help you figure everything out. Awesome. So this was Nick Newman and Jameson Lopp for a great conversation about CASA, about key management, about Bitcoin. Thank you guys for joining us. Be healthy, be safe, and we'll be catching up with you guys in a few months to see how things are going. Take care. Thanks, David. You too. Bye. If you like what you're listening to on Baselayer, let us know. Subscribe, give us a like, or hit us up on Twitter. Arka at Arka or myself, davidnage at davidjn79. Let us know and we'd love to obviously hear from you. 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