Hello everyone and welcome to another episode of Mastermind.fm.
In this episode we have Jameson Lopp with us.
Jameson is one of the biggest experts in crypto security, especially in the area of Bitcoin.
And he's the co-founder of Kasa, which is a wallet solution for holding your crypto Bitcoin
keys.
It's a Bitcoin-only solution.
Now in the Bitcoin space we have various solutions for custodying your Bitcoin, and these can
vary from fully custodial solutions like Coinbase, or you can also buy hardware wallets on the
other end of the spectrum where you would take responsibility for holding your keys.
The problem is that with holding your keys in a hardware wallet it's a fairly technical
process and it's prone to people losing their keys unfortunately.
And on the other hand if you hold them with a custodian you're giving up full control
of the keys, which is also something that is dangerous because you're assuming a lot of
risk from third party.
Now Kasa bridges the gap or intends to bridge the gap between these two solutions by offering
a custody solution where they handhold you in setting up a multi-signature wallet.
And we'll get into all this during this episode, we'll explain how the multi-signature solution
works, what Kasa offers, they have different plans depending on the kind of user, and even
they have inheritance planning which is something I find really interesting, and we'll just
talk about security, how to keep your keys safe, how to recover keys if you lose them.
So for anyone who's interested in Bitcoin, buying and holding Bitcoin, I think this is
a very important episode to listen to.
Even if you don't end up going with Kasa, it's very interesting to hear about the different
considerations that one must keep in mind when holding Bitcoin.
So without further ado, let's go ahead and listen to Jameson together with myself and
my dad Joseph.
Hi Jameson, welcome to Mastermind.fm.
With me I have my dad Joseph as well, and today we'll be talking about Kasa and how
to keep your Bitcoin secure.
So again, welcome Jameson, and to start off, I know that you've been on many podcasts,
people know you.
You're one of the OGs in the crypto space, so no need for a long introduction, but let's
give the listeners a bit of an intro about who you are and what Kasa does.
Sure.
I'm a software engineer by trade, spent about 10 years doing infrastructure engineering
for an online marketing company before I came across this thing called Bitcoin.
I spent a few years just doing some open source side projects, trying to better understand
Bitcoin before the space became large enough that there was venture capital flowing in
and a lot of job opportunities created.
So eventually, after three or four years of being a hobbyist, I went full time and have
spent the past six years basically focused on low-level key management, Bitcoin security,
trying to help both enterprises secure their funds that are usually customer funds.
And then the past few years, I pivoted slightly and have been focused on helping individuals
secure their funds and really trying to improve the usability, make this new ecosystem easier
for people to navigate around.
Basically, there's a million ways that you can screw up and lose your money in this system
and we have to figure out how to help guide people down the path of best practices without
requiring them to be really technical or spend hundreds of hours learning all of the intricacies
of the system.
Yep.
Very good.
So in my opinion, I don't know if you agree, but I guess you agree.
So custody of crypto and Bitcoin especially is one of the biggest headaches and perhaps
one of the biggest kind of problems we have as people who want to get involved in this
space just because it works in a totally different way than say the banking system or even buying
stocks where we have a certain level of trust in institutions.
Now Bitcoin turns all of this on its head and demands that people who are holding crypto
or who are buying crypto take responsibility for their crypto.
Now there's also a way of giving away this responsibility to custodians, but people like
yourself are helping people making the process of holding their own keys and taking this
responsibility and making it manageable.
So if you could maybe give us a short description of what's the spectrum right now in terms
of options people have for holding both in custody or in self-storage and where Kaosa
fits in and what's your model?
Yeah, so to kind of back up a little bit to describe what it is that we are actually dealing
with here, normally people are used to having accounts with banks that are tied to their
government identity and all sorts of authentication mechanisms go into that, you may have a passport
or driver license or other government numbers that are assigned to you that you can use
to prove who you are and that you should be able to access the funds in a given account.
And then what has happened with the internet age is we've started putting other forms of
digital access onto that, usernames, passwords, email and SMS to FAA.
It gets fairly complicated, but at the end of the day, you can always fall back to using
whatever your government identity is in case you lose those digital authentication mechanisms.
Now we are moving onto a new system now with Bitcoin, with these public permissionless
cryptographic based protocols that they don't have an understanding of government identity.
Rather the thing that allows you to control your asset is a private key, which is really
just a tiny amount of data where we're talking less than a kilobyte of data for the less
technical people, it's kind of equivalent to a few sentences worth of random characters.
And these really are the keys to the kingdom.
And if you have the correct key, then you can follow whatever the rules of the protocol
are in order to move those funds around.
And if you don't have that key, you can't do anything.
So it becomes very apparent that this is a critical single point of failure.
If you screw this up, you can have a catastrophe where you either have your money stolen from
you by someone else who gets that key and takes it, or you simply lose access to it
and no one in the entire world can get that money back to you.
So what we end up with is a spectrum of different ways that you can store this data or even
have someone else store this data for you.
And depending upon how you do it, there are different tradeoffs for the convenience of
you being able to access it versus the security properties of who can stop you from being
able to access it versus privacy issues.
There's so many different considerations that it's very hard to say that this is the right
way to do it.
I think it's important for people to understand the tradeoffs.
But what ends up happening is that naturally, people prefer to do whatever is most convenient
for them.
And that is why we have a lot of people in this space who are not controlling their own
keys.
They are essentially using a third party, usually the exchange where they purchase the
asset, and they just leave it there.
And they allow that third party to worry about all the private key management issues.
And instead, their authentication is just the simple username, password, and perhaps
some other form of second factor.
Now, this is easy for most people to use because they're used to using that type of setup with
bank accounts and thousands of other online services.
However, what a lot of people don't understand is if something goes wrong there, either if
that custodian has an internal issue where they get hacked, they get breached, and they
lose the funds, or if your own authentication gets compromised, someone gets into that account,
which are all the funds, you can still have catastrophic loss.
It's just easier for you to use on a day-to-day basis because that's what you're used to.
So we're trying to get people to move further into new security architectures that these
protocols allow, mainly using your own hardware, your own software to take ownership, to take
control of that private key data.
And while this does place more responsibility on the user in order to maintain that data,
keep backups of it, keep it secure from various types of theft and loss, if you get yourself
into a position where you are doing this self-custody, then you're actually able to take advantage
of some functionality in the protocol, which is basically you no longer have to ask permission
from any third party in order to use your funds to move them around.
All you have to do is create the correct signatures, create the transaction, put it out on the
network and the rest will take care of itself.
Now this can feel very onerous, it can feel like a lot of work for people because if you've
never done this before and you start looking into it, you get inundated with a hundred
different recommendations of this is how you should do it, this is how you should do it.
And most of these recommendations are going to be fairly technical, they're going to throw
a lot of jargon at you that you don't understand and then you have to back up and spend many
many hours learning what all these different things even mean.
So what we're trying to do at CASA is to give people access to these systems but put a really
nice user interface on top of it that doesn't require a lot of outside education and learning
about the intricacies of the system but rather to provide you with essentially a mobile phone
app that has the guidance and the instructions that you need for how to use the software,
how to use these other pieces of hardware in order to maintain those keys and we then
bake in the best practices of how should you distribute your keys, how should you store
them so that essentially if you follow the instructions in the mobile app, you put yourself
into a security setup that is probably better than 99% of the rest of the people in the
space.
Very good.
I think that's a great description of what you do at a high level and I don't know if
my dad wants to chime in here based on this.
Yeah, Jameson, I've learned that you've passed through an unpleasant experience in life and
possibly triggered this idea of providing this security to holders of cryptos.
Can you elaborate on this and from your past experience, what can happen and what are the
risks?
I mean, not only myself personally having been targeted by someone who essentially filed
a false police report and had my entire neighborhood shut down causing me some grief and anxiety
at the fact that my privacy and operational security was not as good as I had assumed
but in the six years that I have spent focused on security in this space, I have learned
a lot more from other people's mistakes thankfully than from my own mistakes.
I have seen many different forms of loss and theft over the years.
I've cataloged as many of them as I've been able to remember and find on some of my blog
posts but essentially every way that it's possible for someone to screw up managing
data, we've seen that played out again in this space and prior to Bitcoin, if you had
some sort of data problem, then maybe you lose some files, you don't have some backups.
Usually it's not a catastrophic issue or usually the worst things that we would hear of would
be things like credit card breaches and identity theft and those can certainly be annoying but
usually they don't result in you losing the vast majority of your net worth overnight.
It's more of an issue where you have to go around and deal with all of these third parties
again to just try to clean up a mess.
So the problem I think in the disconnect between the old forms of data loss and the issues
that we have now with private key management is that you can't go back and clean up a failure
if you have a private key catastrophic issue.
So instead, you have to put in the work upfront.
You have to be a lot more proactive about putting yourself in a good position so that
you are well defended against all of these different forms of threats and loss.
And that's just, it's not the type of environment that people are used to operating in.
We are used to having trusted third parties out there that we can go to if something goes
wrong and ask them to fix whatever problem has occurred.
And now, this is the trade-off that we have with this system where it allows us to have
great power but as the saying goes, with great power comes great responsibility.
So this is resulting in people having to have a shift, I think, in the way that they operate
where they can't just assume that someone out there will be able to save them if something
goes wrong.
They really, they need to help themselves upfront so that they don't have to worry
about having some sort of catastrophe that they can't recover from.
And unfortunately, most people, I think, in this space have to suffer from at least one
small issue or some close call that kind of gives them a wake up that says, you know,
you need to go and put in some effort into putting yourself into a better position here.
But I think in a lot of cases, what happens is someone does suffer from a catastrophic
loss.
And then at that point, they either just completely quit using the entire system because they're
so turned off and that they don't want to think about it, or they just have to start
over from scratch.
Well, people my age, I'm 65 years old, worry about these situations because it's harder
than the money you're saving for the rainy day.
When you get old, maybe you need to go to an old people's home or something like that.
Therefore, it's important that we protect these savings.
There are various threats, as we were saying, loss, debt hacking, tax coercion, whatever.
And this thing of cryptos, holding cryptos, for many people like me in my age bracket
who are not, say, as savvy on computer systems and all that as your generation, feel a bit
vulnerable.
And they say, OK, but can I buy cryptos or Bitcoin and sort of deposit them with somebody
like a bank, as you said, and then I put my mind at rest.
And I also earn some returns because they promise returns as well.
The other two alternatives are either to keep everything yourself and do your own thing
and with all the sort of dangers that there are.
And the other alternative is your solution, which I found quite intriguing.
I also heard your slogan, help people to help themselves, which sounds great, actually.
Don't you think that the public might perceive this to be too generous and altruistic to
be sincere?
And in this mission, again, does your personal experience affect you?
And when I ask you, why should I put the money with the Bitcoins, with Gaza, rather than
with another company that gives me returns?
What are the advantages and disadvantages?
Sure.
Yeah, so it's an interesting space because a lot of the self-custody wallet solutions
that exist are completely free.
It's software that you download, you run, and you have to figure out how to use it yourself.
Kasa is an interesting kind of hybrid situation in that we are charging for the services that
we offer.
But one of the reasons for that is that we actually offer a higher level of support.
Pretty much all of these free wallets that you can download and run yourself.
If you want help, you are probably going to end up using community and volunteer resources.
You may be able to send help tickets to the actual developers themselves, but there's
not going to be any sort of service level agreement around when or if they're going
to respond to you, depending upon current conditions of how overwhelmed they are.
On the other hand, if you go with a full custody provider, you may or may not have a good level
of help.
What we've really found there is, especially with exchanges, it depends on whether it's
a bull market or a bear market.
If it's a bull market, you may not get a response for weeks, if not months.
We've seen some incredible backlogs there trying to get requests through.
This can also affect you if you want to move your money.
What we've seen happen a number of times is you deposit your money with the custodian
and you have a withdrawal limit that is probably well over your total account balance if you're
starting out small, but then your Bitcoin goes up 10x and you can no longer withdraw
your account balance because it's over the limit, so you request a limit increase.
I've done this with a variety of providers myself, and if it's during a quiet period,
maybe that limit increase gets approved in a week or so, but I've had some limit increases
that took over a year to get approved just because that exchange was so busy and I was
not considered a priority.
Why does CASA want to help people help themselves?
It is a business model.
We are trying to get revenue and profits and all of that.
It is, I would say, probably not nearly as profitable as a fully custodial business because
unlike a lot of custody providers, we don't charge based on the amount of money that you're
storing.
The enterprise and institutional level custodians will charge, I think, usually around 20 bips
per year for whatever you're storing with them.
Whereas we're just doing flat fees, which is really based on the level of customer service
that you're paying for.
How many hours of service are we essentially offering to you to help you when issues come
up, help you onboard, help you move things around, and so on and so forth.
But at an even higher level, I think that it's important for us to be able to get more
people onboarded into self-custody because this is relevant to the security of the ecosystem
as a whole.
You get into some interesting game theory issues.
If the vast majority of Bitcoin is held by a small number of entities, then it starts
to become questionable as to what level of power do they have over potentially trying
to change the system or even just being attack targets.
You could have just a handful of governments come in and essentially seize all of the Bitcoin
that's at a few different companies.
We, for example, at Casa, do not want to be a target where a government could not come
in and seize the Bitcoin that is held by our clients because Casa only has one out of N
keys.
We don't have enough keys to prevent someone from moving their money or to move their money
without their authorization.
It's a new type of, you could call it like a hybrid custody model or a shared custody
or semi-custody.
This was the model that I actually was working with six years ago when I started being full-time
in Bitcoin.
I thought it was interesting because we can be a third party and we can help people use
their keys, we can give them guidance, and we do.
We hold one key in their multi-signature key set, but that means we can only facilitate
transactions if they get into an emergency situation.
We can't actually create a transaction and send money out of the wallet.
It's an interesting setup where, at least from a regulatory standpoint for now, we are
not a bank.
We are not providing banking services.
We're not a financial regulated service provider.
We're just a software and a service provider where we can kind of sit in this gray area
where we can help people, but we don't have power over their funds.
Actually, I was going to ask you about this, therefore, you're not regulated and that's
the reason why you don't ask for your client information, any documentation, etc.
And a new subscriber can possibly go into the system under a different name to preserve
his identity.
And I think that this also ensures that nobody who is working with Kaza, maybe eventually
who would have some wrong intentions, if he leaves, he cannot really do any damage.
Do you confirm this?
Yes.
So for creating an account, we require an email address.
We have plenty of people just create a unique Proton mail or some other privacy email address
that is not associated with anything else or with their identity.
You can provide us with a pseudonym, it doesn't have to be a real name, and it can get a little
tricky because for our premium clients, we ship physical hardware devices.
So in that case, we recommend either having a private mailbox set up somewhere that's
not your address, or you can forgo having the devices shipped to you and you can buy
them yourself directly from the manufacturer.
The only other trade-off basically comes into play with the authentication of requesting
sensitive actions on your account.
So if you want to make changes, say to your email or login, or if you want to request
that Kaza signs a transaction, then this is something that is decided when you get onboarded,
but there are a variety of different options for what authentication gets used in those
scenarios.
Now, the strongest form of authentication is we do an actual audio-video chat, and
we can keep an encrypted photo on file of you so that when we get on audio-video chat,
we can be sure that we're actually talking to that client.
If someone does not want to give a photo and they want to, say, remain audio only and not
give up any other information, then you can also take a photo of some other object that
is important to you, use that as a second factor of authentication.
And then there are also additional things that we can do regarding sort of duress scenarios,
emergency contacts that we can reach out to if something goes wrong, because we also have
a feature in the app, which is basically this emergency lockdown that turns off all of the
functionality of the app until we reach out and authenticate that everything is okay with
you.
But this is really a part of the higher level of white glove service that our premium tiers
get.
It's just a lot more customization.
And this is because we realize that everybody has different levels of security and privacy
models that they are willing to go through, different trade-offs they're willing to make.
And this is why it is helpful to have your security experts that you're essentially paying
for their consultation, because there are many different decisions that need to be made.
And every one of these decisions really comes down to security versus convenience.
Okay, let's talk about how the setup actually works.
I think we can just go directly to the three of five keys setup, just because I think given
the fact that it includes that hand holding and the initial shipping of the keys, that
would be what most of our listeners perhaps, and I guess that's the biggest selling product
that you have.
Yeah, this was our original product and since then we've released the higher tier and we've
released a lower sort of self-service basic multi-signature tier.
This is the platinum tier, the three of five key shield.
So essentially, the way that these Bitcoin transactions work, like we've already said,
is you have a private key and that controls the funds in a given address and if you want
to spend the funds, you have to create a signature with that private key and then you broadcast
the transaction to the network and it validates that everything is correct and that allows
the funds to be moved.
But that is only the simple single signature way of doing things.
For about eight years now, the protocol has supported something called multi-signature
and essentially what that means is that instead of only signing with one private key, you
can create deposit addresses that have more complicated spending conditions.
So you can say the funds in this address can only be spent if three out of these five keys
add signatures to the transaction.
If you only have one signature or two signatures, then it's not a valid transaction and the
network should reject it.
And as you can imagine, this gets a bit more onerous because you have to go around and
get private keys from various places.
But the idea here is that this is for highly secure long-term storage.
And so the way that we accomplish this is that we've designed a system that is eliminating
single points of failure and that means absolutely anything that can go wrong.
We don't want there to be a single thing that can go wrong that can cause you to lose access
to your funds.
So the way that we do that is through diversity.
That's diversity in where the keys are stored, diversity in how the keys are stored, diversity
in different manufacturers and companies that are used for the key storage.
So the standard three of five setup, you'll have, like I said, five different keys.
One of them will be held by CASA, completely offline, can't get used unless you go through
all the authentication mechanisms that we set up with you.
One of them will be stored on your phone and will be secured by the secure elements that's
in the hardware on your phone.
So that means in order to use it, whatever unlocking mechanism you have on your phone,
whether it's a PIN or biometrics or facial recognition or whatever, that will be sort
of the authentication mechanism for accessing that key.
Then you will have three different air-gapped hardware devices.
These are Trezor, Ledger, Coldcard, and so on.
We'll continue adding support for more, whatever is popular and well-affected on the market.
And each of these three devices will generate its own set of private keys.
And that will never be touched, essentially, by the internet.
And so what you end up with here is five different keys.
Only one of them is on an internet-connected device, which is the phone.
And that is really used to add the first signature to a transaction when you're initially creating
it.
Then in order to finalize a transaction, you will need to travel around to two different
other devices and have them add signatures.
Normally, this is where it really comes down to the client and what their own situation
is.
You may keep one of those devices in a safe in your home.
You may keep one at a secure area at your office.
We recommend keeping one at a highly secure vault, either at a bank or a private vaulting
company.
And the whole idea here is the geographic separation, of course, gets you security from
attackers.
An attacker is not going to want to have to take you hostage and move you around through
multiple locations.
It's too risky for an attacker to have to do something like that.
Using the different air-gapped hardware devices will protect you from hackers, like we said.
Only one of those keys is even on an internet-connected device in the first place.
And you're also just getting a lot of robustness.
Even if there's something like a fire or flood, some other sort of natural disaster, then
it's unlikely to affect more than one of those keys.
So even if you have a key get lost or compromised or destroyed or what have you, you make it
very easy inside of the app to actually mark that key as compromised.
And then you can go get a new device and plug it in, and we guide you through what we call
a key rotation to essentially roll over your key sets and get rid of that old key and basically
reestablish your key set with the new device.
There's a lot of considerations that have gone into this, more than we could even feasibly
go into.
We have about 30 pages on our website that describe the security architecture and all
the decisions that went into why we set up certain things in a certain way.
But one of the nice things, I think from the usability standpoint, is that the user no
longer really has to worry about managing these seed phrase backups on their own.
They can basically rely upon the security of the different hardware devices and the
ability to rotate out a device if something goes wrong.
A nice thing from a backup perspective is that the mobile key has an encrypted backup
that happens automatically to your cloud storage.
The CASA key, of course, has multiple redundant offline backups.
And then if you want to, you can, of course, always make additional backups for the seed
phrases of the hardware devices that you set up.
This is sort of an edge case question, though, is because really the extreme scenario that
could result in funds loss, it would require all three of those hardware devices to be
lost or destroyed simultaneously.
So generally, if you don't keep all three of those devices in the same place and there's
not some sort of cataclysmic solar flare that fries all of the electronics on one side of
the world, then you should generally be OK.
But some people want to protect against that, too.
So you can always make backups, and CASA has no way, of course, of knowing if you've done
that.
OK.
I know that on the website there is a really deep explanation of all these threat models
and how you protect against them and why you chose to not do certain things.
So I highly encourage people to read them.
I want to go through a few maybe points related to this, and we can keep this short like a
Q&A on why you chose certain things.
First of all, the seedless things keep coming up, and I know that some competitors actually
criticize you for choosing this as being anti-Bitcoin thinking, to throw away, so to speak, the
seed words.
How would you convince someone who's freaking out about seedless and that being the main
reason why you wouldn't move to CASA?
Well, the first thing is it's a choice, right?
Like I said, we can't stop anyone from doing it.
We have no way of knowing what you're doing with the seeds.
But I think I have a lengthy blog post from a couple of years ago of why I consider seed
phrases to be overly complex and not user-friendly.
And one of these issues is just the fact that when you set up one of these hardware devices,
it'll tell you, okay, here's the seed phrase.
Now write it down and keep it in a safe place.
And there is a whole mountain of security knowledge and issues hidden underneath that
keep it in a safe place is that now you have once more, you have this tiny amount of data
and you're trying to figure out how to keep it secure.
Well, they tell you to write it down on a piece of paper.
Well, of course, that paper is not going to be safe against a fire or flood or anything
else.
So then what happens?
Well, people say, okay, maybe I'll put it and stamp it in metal.
And this is actually another side project I've done is testing a lot of these different
metal seed backup devices.
I would say about half of them are decent.
About half of them are not decent in my testing, it would actually not survive a house fire.
So you have to be careful about that.
Even if you get, I would recommend something like a seed plate, a very simple piece of
steel and you put basically divots in that.
That's going to be robust against really any type of loss, but you still have the issue
of physical attackers because this is not encrypted data, it's just in the clear.
So any physical adversary who manages to find it, now they have that seed phrase.
So if you want to protect against physical attackers, now you start going down this other
rabbit hole as well.
Do I put it in a highly secure bank vault?
Well, even if you do that, you should probably assume that a rogue bank employee, or sometimes
banks have been known just to drill open safety deposit boxes and empty them out, or they
might get coerced by agents of the states to do that for who knows what reason.
This is basically, you can see we're going down, we're trying to figure out what is the
actual threat model, how do we secure it against everything?
The reason that I really like these hardware devices is that they've already done all of
the heavy lifting on securing you from physical adversaries because basically, if an adversary
gets a hold of one of these devices, if they don't know the pin to unlock the device, they're
not going to be able to get the private keys off of that.
This can be a controversial topic.
My take is that it actually simplifies things, it makes it easier to reason about the security
model.
When you have a security architecture that is using all these devices, but then you also
have the seed phrases in the clear and basically backups of this data, then you have to figure
out how does this possibly make the security model weaker?
For example, if you were keeping the backup in the same place as the actual device, then
you've completely lost any protection against physical attackers and having those keys distributed.
If you keep them in a different place than the device, then now you have six different
places that you're worried about, three for the actual devices and three for the seed.
This goes back to what we really started out with, with saying that there's no way that
you can say this is the perfect way of doing key management because every decision you
make has trade-offs.
When it comes to having the seed backups, what you're really saying is, I am interested
in trading off some security against attackers in order for more security against loss.
By having multiple redundant backups, I know that even if I lose this one over here, I
can always recreate it over here, but now you're kind of ping-ponging between two different
issues.
At CASA, we tend to lean towards user-friendliness and simplicity.
I think actually that with one key, the seed backup is pretty manageable and I can figure
a safe way to do it, but when you have three keys to protect, that becomes a major headache
and anxiety-inducing exercise to protect them as well as your keys.
If you keep backups of all three hardware devices, then that is a spendable threshold
of keys right there.
If an attacker got all three of those, they could spend from your three of five key set.
This is generally our recommendation if someone wants to do backups, as we say, keep one backup
and keep that in the highly physically secure bank vault that you are sure that almost nobody
is going to be able to get into.
Even in the extreme case where the bank goes rogue or they get coerced, then you're going
to be okay because that's only one out of five keys.
In terms of bank vaults, I think they're common in the US, but here in Europe, they're kind
of on the way out.
I know that in Malta where my dad is, they closed them off and here in Spain, when I
last looked, no major bank was offering them, so it's not that easy to find this bank vault.
In terms of the iCloud, this is another thing, the iCloud backup.
Some people here, iCloud, they remember the hacks and they freak out about iCloud.
What exactly is the model there and can somebody use CASA without using iCloud?
Sure.
Also, this is another thing that we have a blog post about how the mobile key backup
system works.
The default is that if you're on an Apple device, of course, it uses iCloud.
If you're on an Android device, it uses Google Drive.
What happens is the phone itself generates another random bit of data in addition to
the seed phrase, and that bit of data is used to encrypt your seed phrase.
That encrypted seed phrase data is then stored either on iCloud or Google Drive.
What this means is this protects you against either Apple or Google snooping and trying
to get your keys because there's only encrypted data there.
It also protects you against any other hacker who might somehow get access to your cloud
account.
The important part here is that that decryption data is actually sent to CASA where it is
then additionally encrypted with hardware that we have.
But you can think of this as creating a two-of-two multi-sig just for that one mobile key.
If, for example, you lose your phone or your phone breaks or whatever, you buy a new phone,
then you download the CASA app, you log in, and this is important.
You also have to be logged into the phone on that same Apple or Google account.
What happens is you log in, it notices that your mobile key is missing, and then goes
and looks on iCloud or Google Drive for that encrypted piece of data.
It then goes to CASA and says, hey, I'm authenticated as this user, send me the decryption key,
and CASA sends that over, and they get reconstituted on the phone itself.
Now, we did this because we think it is about as user-friendly as you can get.
The user never actually has to think about private keys.
They don't have to do anything other than be logged into their various accounts, which
this day and age, people can generally figure out how to log into your various online accounts.
Now, it is not a requirement, however.
In fact, I use an Android phone that is not connected to Google Drive, so this is not
an option for me.
In this scenario, what you can do is use our alternative mobile key backup system, which
it basically creates an encrypted mobile key backup in the same way, but instead of having
that encrypted data go off to the cloud, we present it to you as a QR code.
You can save that QR code as a PDF, you can print it out, you can really do whatever you
want with it.
We also like this as opposed to giving the person the actual seed phrase, which is also
an option we can talk about later.
But once again, the reason we do this is because we can't make any assumptions about how the
client is going to store that data.
We have to assume that it may not be safe against physical attackers.
Since this is only encrypted data, we know that even if a physical attacker finds that
QR code, that paper print out, whatever, they are not going to be able to access those private
keys.
Now, there is an option in the app to export the actual seed phrase for the mobile keying.
We only recommend doing this in what we call a sovereign recovery situation, where you
are trying to recover funds without talking to CASA, and if you do that, it will actually
mark the key as compromised in the app and will then basically force you to do a key
rotation because at that point, we really don't know about the integrity of that seed
phrase.
Okay.
Very interesting.
So yeah, the flexibility is also available within CASA to kind of set up things the way
you want them if you think a particular setup is more secure for you.
So that's really great.
And now in terms of hardware devices, you chose to use the Trezor and the Ledger in
terms of sending them out to your clients.
Is it because they're the most commonly used?
Because for example, the question might arise, why not use a calls card or a Bitbox?
Yeah.
So Trezor and Ledger are by far the most popular and I would say battle tested.
They tend to work quite well.
They have different security models themselves and this is why we recommend using a diversity
of devices.
Now we also support cold card, though it is not a default device that we ship out.
We will ship it out to our top tier customers if they ask for it.
The reason for this is it's a little bit less user friendly.
It requires instead of just plugging in a USB cord, you actually have to do file transfers
with little micro SD cards and so you have to have some additional adapters and stuff.
However, cold card is nice in the sense that it makes it easy if you want to, for example,
do transaction signing while you're in the middle of a bank vault, which is essentially
a giant Faraday cage that probably does not have internet access.
Your phone probably doesn't work in there.
So once again, there's more trade offs.
I am a fan of cold card.
We've also started beta testing foundation devices, which is actually based off of cold
card.
So it's a very similar experience and we'll have I think a similar security model.
So it is once again an issue of sort of convenience and other trade offs.
And there are many other hardware devices on the market that we could add support for,
but each time we add another device, that just creates more complexity, more things
for us to have to support.
And one of the trickiest things that we've found over the past few years is it's actually
a result of the high level of security that we chose for this architecture.
And that basically is the trade off of the fact that we're using a lot of hardware and
software that CASA has no control over with all of these devices.
And that is a good thing because it minimizes the trust that you have with CASA.
When you are signing a transaction, obviously you're creating it and adding that first signature
on the phone, but then you're having to go around and you are additionally verifying
all of the details of that transaction with multiple other manufacturers, hardware and
software so that you know that even if there is a bug in the CASA software, you would catch
it while you were validating like on your Trezor or Ledger.
And this is great for security.
The downside is it's possible for these other manufacturers to change their software in
ways that makes it less user friendly.
We even had incidents where it was actually the Trezor Model T firmware was incompatible
with our signing for almost two months last year.
So this is one of the things that we're working on trying to improve the communication between
the different hardware vendors and software wallet vendors in this space so that we can
stay on the same page and not step on each other's toes.
Is there a threat where the app itself gets compromised and does something and towards
within that time period where it's compromised, where it changes the model say out of three
of five, it might siphon off the funds or?
Yeah, this is actually a fairly common question, at least from the more sophisticated people
is like, you know, what is the worst case scenario if CASA either went rogue or was
coerced into essentially putting malware in the app?
Could CASA steal my funds?
So the the short version is, you know, we can't steal funds because we only have one
of the five keys.
I would say the the greatest threat against CASA software becoming malicious would actually
be in generating deposit addresses that don't have the spending conditions that you believe
that they have.
And in this case, the way that you can actually verify that that is not happening is by creating
a watch only wallet that you run on separate software.
So much like how we recommend you're using multiple different vendors for verifying the
transactions when you're spending them.
You can also and we have instructions for this on our blog and on our website.
You can use other multi-sig compatible software like Electrum or Spectre to essentially recreate
your CASA setup.
And when you do that, you are you're specifically saying, you know, I'm creating a wallet that
requires three out of five signatures.
And then you give it the public keys for each of those five keys.
And the software will then generate all of your addresses and find your transactions,
so on and so forth.
This gets really deep into the technical weeds.
But the reason why this provides assurance against CASA changing the spending conditions
is that a Bitcoin address is actually based off of a cryptographic hash of all of those
spending conditions.
And a cryptographic hash is essentially a fingerprint.
If you change a single byte of information that's going into that hash, the hash completely
changes and therefore the Bitcoin address will completely change.
So if you have your watch only wallet and you look at the deposit address of that and
compare it to the deposit address that you see in the CASA wallet, they should match
up perfectly.
If they don't match up perfectly, then something has gone wrong.
Something is in your change with the spending conditions.
Okay.
So to recap, the only threat would be if you try to spend, if you're just passively storing
your Bitcoin for the long term, the app itself, even if it gets hacked for a few days and
nobody notices or whatever, it's not going to change anything because your funds are
still protected.
Exactly.
Yes, really the only sensitive operations are when you are transacting either a deposit
or a withdrawal.
And I think the withdrawal mechanism, well, it's a lot more straightforward because you're
actually looking on the screen and having to say, you know, this is the amount and this
is the address where the funds are going.
The deposit authentication or validation requires a little bit more effort to set up
initially, but I would say it's maybe like 10 minutes to set up.
It's really copy pasting and following our step-by-step guide.
And for those who have maybe some anxiety about depositing a big chunk of Bitcoin into
CASA, exporting from the exchange or previous wallets, is that something where it's foolproof
or is there something that can go wrong there?
This is an interesting thing that comes up fairly often, I think, with people who are
newer to the space is they want to send a test deposit for $10 or something.
And yeah, you can certainly do that.
I would note that we actually offer Bitcoin test net support in the app.
And so what you can do before you even do anything where you're using real Bitcoin or
real value is that you can just toggle on the Bitcoin test net functionality.
And we'll send you some test net Bitcoin, which has no value, but it works exactly like
Bitcoin.
It's just a different network.
And you can play around with all the different functions, you know, deposit, withdraw, creating
sub accounts, moving money between your own accounts, so on and so forth.
And this is, you know, part of the onboarding practice that people who are doing their due
diligence definitely like being able to do, I would say the most extreme level of diligence
that you can do is to then go through the sovereign recovery process, which is a separate
guide where essentially once you finish creating your CASA key set, we send you instructions
for how to recover your money outside of CASA.
So this is, like we said, eliminating every single point of failure, including us as a
company and us as a software provider, that we're essentially proving to you that we're
following the various standards of the Bitcoin protocol and that there are multiple other
pieces of compliance software that you can download and recreate and spend your funds
from, even if CASA gets hit by an asteroid or something, if we cease to exist for some
reason.
Okay.
Jameson, you have four plans, right?
Yeah.
If somebody wants to start with a small holding with the plans for an increase, a systematic
increase, a yearly increase, what do you suggest or do you actually have a discussion with
the potential client before he starts so that he chooses the right plan for him?
And what about the fees?
Are they fixed, irrespective of the holding?
How does it work?
Yeah.
So we have multiple salespeople who are available to schedule calls with.
If you want to better understand what the offerings for each plan are and what level
of service probably suits you best, you should have a button at the very top of our website
where you can get a calendar set up to call one of them.
But the high level explanation is we have our free silver tier, which is just a single
signature wallet on the phone.
You really don't want to put more than a few hundred dollars in that because that is a
single point of failure.
It's just to get people used to seeing what the user experience of the app is like.
Our lowest level tier that I would use for actual value, that's the gold tier.
It's really a self-service type of multi-signature wallet where you bring your own hardware device.
You can essentially buy whatever hardware you want from any of the supported manufacturers.
And we have both tutorials online and we do, I think, bi-weekly group onboarding walkthroughs
if you need help getting set up on that.
That's a two out of three multi-sig.
So it gives you some redundancy.
It's not the sort of extreme level of security and redundancy that our higher tiers have,
but it's definitely good to get started.
And going up from there is the platinum, which is the one that we've really been talking
about most of the time.
Our highest level tier, all platinum.
Let's see, I believe platinum is around $1,500 a year and all of these are unrelated to your
actual holdings.
Let's see.
Yeah.
So gold, if I didn't mention gold is $120 a year, platinum is $1,800 a year.
And then the final one is the diamond, which is our extreme level of white glove service
for $5,000 a year.
What that offers on top of platinum is just a higher level of service, like being able
to call us around the clock if anything goes wrong.
We give you this additional three out of six multi-sig, which you can either just use that
on your own or you can use it as part of our inheritance and estate planning service.
And that's one of the main reasons for the jump up in the price is if you choose to onboard
with the inheritance, then essentially what we end up doing is onboarding either your
attorney or your estate advisor, whoever is going to be executing your last will and testament.
And we are onboarding them as a key holder.
So the short version of how the architecture of that plan works is that you have three
out of six keys set.
And at any given time, you have access to four out of those six keys.
But then one of those keys is going to be held by CASA and one of them is going to be
held by the estate advisor.
One of them is also going to be held in some sort of deposit box that has beneficiaries
listed on it.
And so, of course, you can access that key at any time, but the trick here and the important
part and the way that this was designed is that at any given point in time, there are
also three keys that can be accessed through the estate process.
So that is the one key with beneficiaries in whatever safety deposit box or other deposit
institution and then CASA and then the estate planner.
So the whole point being that with essentially death certificate or a court order as part
of the estate process, those three keys can be accessed even if your phone and other hardware
devices can no longer be accessed.
Very interesting.
Last question from my end would be if there is someone who wants to hold his money, maybe
his children's or his parents' money in Bitcoin and maybe his company's Bitcoin, could he
use one CASA account to manage these multiple accounts, so to speak?
Yes, so the nice thing about the way that wallets and Bitcoin work is that once you
have created that root level public-private key pair, you can essentially derive a nearly
unlimited amount of private keys off of that.
And so we have functionality where you can create what we call sub-accounts, but at a
low level, you're essentially just creating different segregated buckets of Bitcoin.
They are still all managed by the same high root private keys, but they at a much lower
level are actually managed by separate private keys.
And what this results in is just sort of a logical separation of the addresses and of
the funds that get deposited into those addresses.
So within the app, once you have your key set set up, it's very easy to create a sub-account.
You really just click a button and you say, create a sub-account with this name.
And at that point in time, it will generate another set of sovereign recovery instructions
and you'll be able to interact with that sub-account the same as with the original main account
that you set up.
Okay.
And that would be using then the same five keys and the 305 model?
Yes.
And even I want a separate account for like day-to-day spending.
Does that work in the same way would be a sub-account in that case?
Yeah.
So there's a couple of ways to go about doing that.
Really if someone wants more of a day-to-day spending account, then you're actually probably
going to want a different security model.
You're not going to want to have to travel around to multiple places to spend.
So there's two different options there.
If you're a premium platinum or diamond tier where you have that three of five or three
of six key set, first of all, everyone at every tier gets the single signature wallet.
You can always keep a small amount on there.
Like I said, I wouldn't put more than a few hundred dollars on it, but that's good for
day-to-day spending.
Though if you want more sort of a medium tier, like if you want to be able to spend say,
I don't know, something less than $10,000, then what we can actually do is we can enable
the two of three multisig in your same account.
You would want a separate hardware device for that, but you could essentially have one
key on your phone and then keep the second hardware device somewhere that's not too hard
to access, and that would be a way for you to be able to spend medium tier amounts of
money without having to travel all over the place.
And you could also annotate expenses, add a note, say, for accounting purposes.
One final question from my side, Jameson, when it comes to payment, how is it affected
in a way that maybe you protect your identity?
Is it by wire transfer?
But you have to disclose your name, no?
Yeah.
So if you want to sign up and you want to be pseudonymous, then I would say most of
our clients end up choosing to pay in Bitcoin.
The more hardcore ones will essentially send us coins that they have mixed.
Another option, I'm not sure what your availability is in Europe, but there are various privacy
debit cards or prepaid debit cards that you can set up.
It just depends on what our card processor will accept.
Sometimes those get rejected, sometimes they get accepted.
Yeah, they're not easy to find, as in the US, where you can just walk into a store and
buy a $20 voucher.
Yeah.
Most of the time I found that they work for me.
I also use privacy.com a lot, which allows you to create virtual debit cards and those
very rarely get rejected, but I'm also not sure if they're available outside in the US.
Yeah.
Have a look at that.
You can always pay via bank transfer, no?
We do support wire transfers.
I'm not sure offhand how private those are, though.
I don't think they're as private asà
I don't think they're private.
Yeah.
So I would say very few of our customers end up going that route.
It's a bit more onerous for us.
We don't have an automated checkout system for it.
We have to actually email you the wire transfer information and then go check the account
every once in a while.
All right.
Well, thank you very much, Jameson, for this quite interesting discussion.
As you kept repeating during the podcast, rightly so, all this information is available
on your blog, the CASA blog, and I also highly recommend people to look into your personal
blog where, like I said, you can spend probably years looking through all the material.
And there's also a list of extra resources that you collected from all over the web.
So people, even if they're new to Bitcoin, they can probably just start from your blog
and take it from there.
So thanks a lot for joining us.
And yeah, if you have any places to direct people, both to contact you and to check out
your products.
Sure.
Our website is keys.casa, k-e-y-s dot c-a-s-a.
And you can find my website, all my resources at lop.net, l-o-p-p dot n-e-t.
Thank you, Jameson.
It was a real pleasure.
Excellent.
Thank you very much, then.
Thanks for having me.
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