Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Increasing Wallet Usability to Decrease the Anxiety of Self-Custody

Episode Date: December 24, 2019

Managing crypto-assets can be an anxiety-inducing experience for a lot of people. While it's quite empowering to “be your own bank,” it's also scary for a lot of people who understand the risks associated with self-custody. Although cryptocurrency wallets have made tremendous progress since the days when a full-sync of the blockchain was required, there are still significant hurdles that limit broad adoption. This conversation on the future of wallets at SF Blockchain Week Epicenter conference includes Taylor Monahan of MyCrypto, David Gold of FIO Protocol, Dan Finlay of MetaMask, and Ouriel Ohayon of ZenGo. They discuss design, app store policies, and the evolution necessary to enable more people to send, receive, and manage their tokens confidently. The panel is moderated by Epicenter host Sebastien Couture.Topics covered in this episode:Advancements in the usability of cryptocurrency wallets over the last yearThe importance of mobile-first developmentFrustrations with iOS and Android app storesHow to make developing wallets economically feasibleThe future of walletsSelf-custody vs. custodial walletsRegulation of self-custody walletsWhat to look forward to in the near-termEpisode links: MetaMaskZenGo - Bitcoin & Cryptocurrency WalletFIO Protocol Developer HubMyCryptoTaylor Monahan on TwitterDan Finlay on TwitterOuriel Ohayon on TwitterFIO Protocol on TwitterMetaMask on TwitterMyCrypto.com on TwitterZenGo on TwitterSponsors: Cosmos: Compete to win 100,000 ATOM by building and running Cosmos Zones - https://cosmos.network/goz/eToro: Automatically copy every trade of eToro's top crypto traders at the exact price in real-time - https://www.etoro.com/Pepo: Meet the people shaping the crypto movement - https://pepo.com/epicenterThis episode is hosted by Sebastien Couture. Show notes and listening options: epicenter.tv/319

This is Epicenter, episode 319. Hi, welcome to Epicenter. My name is Sebassiakutio. Well, the holidays are officially upon us, and as we wrap up the year, we've decided to take a well-deserved break. So for the next two weeks, we're releasing panels moderated by Sunny and me,

and we'll be back in the first week of January with all new interviews, and we have some really amazing ones lined up for you. This week, I'm really excited to bring you the future of Wallets panel I moderated at SF Blockchain Week, Epicenter in early November. This was truly one of the coolest and funest panels I've ever moderated. The panelists were Taylor Monahan of My Crypto, Oriole Hayan of Zengo, David Gold of the Fire Protocol, and Dan Finlay of Metamask. I really hope you'll enjoy it because there's a lot of great insights in here,

and the conversation was really, really fun. As we wrap up the year, there are a number of people that I would like to thank and recognize. First, I'd like to thank the incredible team who make the show possible. Pida, our production manager, Vedron, our audio engineer, Shinage, our artwork designer, Graham, or CMO,

Martin, or developer, and Anna are accountant. These people work incredibly hard behind the scenes to churn out new episodes every week, and I'm very thankful for their hard work and dedication. and I think that you all should be as well, because Epicenter really wouldn't be possible without them.

I would also like to give a very special tanks to all of our guests for making the time and their very busy schedules to be on the podcast. You know, recording an episode of Epicenter, it takes anywhere between an hour and a half to two hours with setup and everything. And that's a lot of time to block off. Like if you're a founder and you're busy with meetings and everything, like two hours is very precious. And so I want to thank all of our guests this year for taking that time and sharing their

stories and insights with everyone, you know, for free. Like, this is free time that they're giving to us and to all of you. And so we should all be very thankful to them. Also, a big thanks to all of our sponsors this year who make the show possible. Microsoft Azure, TopTal, Cosmos, Trail of Bits, Vultoro, B9 Lab. Starkware, Pepo, and Itoro. We're very happy to work with all of these folks and hope to continue working with them next year and for many years to come. I also want to give a very special thanks to my amazing co-hosts, Brian, Meher, Sunny, and Frederica.

They are all incredibly knowledgeable and inquisitive, and they all bring a unique perspective to the show. their contributions have made Epicenter the best podcast in the industry, and I think I'm very lucky to have the opportunity to work with them, and I know that you all appreciate them as much as I do. And last but not least, I want to thank all of you. I've said this before, but doing this podcast is so rewarding, and it's incredibly humbling. It's been great to meet many of you this year at events, and it's been a lot of fun interacting with you online on Twitter, I really think we have the best audience in this industry, and so thank you for sticking with us for all these years. So if you're hearing this on the day it comes out, today is December 24th.

It's Christmas Eve, but it's also my birthday. Now, please don't go out and buy me a present because there's only one thing that I really want for my birthday this year. I would love it if all of you could give us a five-star review on Apple Podcasts or Stitcher. Reviews are really important because they help us rank higher in search results. And they let people know that we're a great podcast and that they should listen to us. So if you want to make me happy this year for my birthday, please take five minutes and give us a five-star review. Before we go to the panel, I'd like to tell you about our sponsors for today's episode. The Cosmos Hub 3 has launched.

We're now officially in the third era of the Cosmos Network. It's really exciting. There are a number of improvements and changes in this new hub. one of the things I'm really excited about is the community pool, which is now open and available for people to submit proposals. There are a quarter of a million atoms available here in the community pool, and anyone can submit a proposal, and governance will vote on whether or not Adams should be allocated to that proposal. So it really shows governments at work. It's a great experiment to see blockchain governance working. So I'm really looking forward to seeing which proposals will get voted

and how the community pool will allocate those funds. So go to blog.cosmos.network to learn more. There's an article there detailing all the changes in Cosmos Hub 3. And while you're on the website, go to cosmos.network slash GOZ to learn more about game of zones. It is the adversarial test net challenge in preparation for the upcoming IBC module. This is going to be a huge test net challenge. We've never had an interoperable blockchain before. So, you know, we have to figure out how this works first. And that's what GOZ will allow us to do. A lot of people to learn about how an interoperable blockchain network

will run. And so if you go here, you can join the riot chat and join all the people already discussing Game of Zones, which will launch in 2020. We'd like to thank Cosmos for their support of the podcast. We're also brought to you by Itoro, and I've been having so much fun using Itoro and learning about trading. So if you're interested in getting into the financial markets, but you don't know where to start building your portfolio, Itoro is a great place to start because it makes trading easy. It's unlike any trading platform you've ever experienced. If you're used to using your bank's tired old investment dashboard, you think you're going to find crypto there? Of course not.

With Itoro, you have stocks, bonds, ETFs, indices, commodities, currencies, and cryptocurrencies, all in one easy-to-use platform and mobile app. And Itoro is a social trading platform. That's what's so interesting about this. When you join Itoro, you're joining a community of 12 million traders from around the world and they're talking about trading. They're sharing charts. And they're talking about crypto too. The best thing about Itoro is the copy trader feature. You can automatically copy the trades of the top crypto traders at the exact price in real time. These are people who spend a lot of time researching the markets, developing their own strategies, and building their reputation and their portfolio. So when you copy their trades, whatever gains they make,

you'll make the same profits proportional to your investment. One of the most underrated things about ETRO is their daily update newsletter. I love getting this thing in my inbox every day. It's a quick, easy to read, bullet point format, market insights newsletter that just helps you stay up to date on the markets and know what's happening on any given day. Of course, you should know that this is not investment advice. This is my personal opinion. Investments involve risks, especially cryptocurrencies because they are highly volatile. We'd like to thank ETORO for their support of the podcast. We're also brought to you by PEPO. And PEPO is a community of creators sharing short video content on crypto and entrepreneurship. And the way that I like to describe PEPO to people

is that it's kind of like a mix between Twitter, TikTok, and Steam it. It's like Twitter because the conversations kind of resemble the ones that you would hear on crypto Twitter. It's video. It's like short 30-second videos. And when you like something, when you want to show you. your love for a content creator, you tip them with pepo coins. And when you want to participate in a conversation, when you want to like reply to someone, you show your interest by putting up pepcoins as well. So pepo is developed by the Open Simple token team. We've had them on the podcast before. It's well designed. It's easy to use. It's really built by the community because the team has been really attentive to people's feedback and they've been implementing features based on what people tell them

they want in the app, which is really the way you want to build something, right? The community is still small, but it's growing, and the conversations are really interesting and high quality. And so recently, in preparation for our interview with Charlie Shrem, we had a little, huh, wait a say, was I supposed to say that? Did I just give that away? Well, well, now the cat's out of the back. So Charlie Shrem is going to be on the podcast in January, and him and I had a little back and forth on Peppo. You can go check that out. It was really fun. So go to pepo.com. That's P-E-P-O-com to download the app. You sign in with your Twitter handle. And you can also find me there. My username is the same as on Twitter. It's Seb 2.0,

Seb 2, P-O-I-N-T-0. And come say hi and create your own content on PEPO and see if people will like it. We'd like to thank PEPO for those support of the podcast. And with that, here is the future of Wollett's panel. So let's start with some brief introductions. I'll just Let's you introduce yourselves starting with you, Taylor. Yeah, hi, I'm Taylor Montanan. I'm the founder and CEO of My Crypto. My Crypto is a user interface for interacting with the Ethereum blockchain. A lot of people call it like a wallet.

I just don't really like that word. And yeah, I'm just here trying to make this space better in literally any way, shape, or form. Hey, I'm Dan Finley. I'm a co-founder and lead developer at Metamask. We are a tool for interacting with smart contracts on the Ethereum blockchain. I am David Gold. I'm CEO of DAPix. We are building the Theo protocol, which is a blockchain usability protocol that will do for blockchain what HTTP did for the internet. Make it easy to use through an industry standard that connects wallets, exchanges, crypto payment processors.

And we're backed by Binance and five venture funds and have 28 industry partners. Hello, my name is Oriah Lohan. I'm a CEO of Zango. It's a crypto wallet that has launched recently and that has the particularity to be non-custodial but work without private keys and with a very seamless experience. Maybe we'll talk more about that. Well, let's start on that topic. I like that at least three of you mentioned experience or user experience. I think you said it was a tool. Yeah, but you use a tool. Yeah, you use a tool. So let's start with that. In this self-custody space, because I think I agree with you that like Wall is like a word that's sort of phasing out and people are moving towards more of this idea of self-custody, et cetera.

In the self-custody space, what do you think of some of the major advancements that we've seen in the last year with regards to user experience and usability? So last year, I think there were a lot of new wallets that were starting to try releasing backups with like email or your phone number or something like that. So there's going to be a kind of semi-custodial solution. And then this year, there have also been several, I think, smart contract wallets starting to get some traction and usage. and that's really exciting because smart contracts are kind of what a turn complete blockchain

is good for. So yeah, there's obviously, once you're a smart contract, you get to kind of opt into the security model that you like. It doesn't mean that there aren't keys. So I take odds whenever anyone claims to not have keys in their crypto solution. But it does mean that you can put the keys where you want, that you can be creative about it. And that's great.

Creativity is what the space is all about. Yeah, I completely agree. And I think that we're entering sort of a new, like a new phase of sort of experimentation in terms of where the keys are going to be and where does the balance lay between, you know, the most secure solution versus like the most usable solution. Because as we all know, it's a hard balance to strike. And so I'm really excited to see how these sort of like the smart contract or the smart wallets play out. I'm also really excited to see how some of the usability features, right? So like abstracting away gas, abstracting away the keys in general, how that, you know,

what's actually valuable to users rather than just like we think that this might be valuable. And then most importantly, I'm really looking forward to, I think that the privacy conversation is going to come to the forefront and seeing how and what the wallets do and how they can empower users to do things in a private manner. I'm really hopeful that we can figure something out because, yeah, you know, Libra, China, et cetera, et cetera. Yeah, so we're obviously biased with what we're doing and focused on the usability aspects of moving the value around and custody is a critical issue, which is not something we're solving. And all the innovation that's going on and was just discussed is really cool and important.

But at the end of the day, having custody of your assets is only important if you actually can do something with them. And that means being able to move them. And we launched our test net this week, so we think that's pretty big news because it means that we're on the precipice of these players here and others being able to do things between their products that are fundamentally impossible to do today and to do that in a completely decentralized and secure way. So there's been some progress recently in wallets. To my test, it's that include ourselves not enough. I think we're still very far away from creating product that excites enough people to bring them to the industry. And that's the bad news. The good news is that I think there are step function improvement that are being made in terms of ways keys are generated and transactions are being signed.

So you refer to smart wallet, a smart contract wallet that's interesting, but that applies only to Ethereum or derivatives of Ethereum. So there is the rest of the world. I think there's been a very interesting progress in multi-sig that have been done, a very interesting development with general signatures, threshold signatures, and that start to become adopted by not just wallet, but also type of custodian. Now, I think in terms of application, I think we are still in the first era of crypto, where most people still have to back up their keys and still doing that. So I think something is missing.

I'm not sure quite right, exactly. Apparently, we're not doing good job enough to arrive there, but I think we're getting there. You mentioned these step improvements in usability, and I always like to sort of look at this as two parts of a scale, right? So on one side there's usability and on the other side of this technology. And I'm curious in your minds if you think that it's sort of like a chicken and egg problem. Is it the usability that's arriving and then pushing the technology forward, or are we making advancements in technology that are allowing new forms of, new use cases and applications to be built specific on the wallet side, like, for example, like cryptography that it would allow multi-signiture schemes or this sort of thing. What's your viewpoint on

that? Yeah, so it is a chicken and egg problem, right? You have to have usable solutions for them to be used, and if they're not being used, the usability is kind of useless. But if you look back at the internet as a corollary, I mean, it was around for over 10 years, and it had millions of users, and it was growing, but it was growing relatively slow, and it had a bunch of silence. load protocols that people used to interact with it. And it was clunky and hard, and it was a usability protocol that caused that all to change. So, you know, I do think that in order to get the masses, the people who are not in this room, to actually start feeling comfortable using it, we've got to get it to a whole other level of ease of use and safety and security on the

movement of the value, as well as the custody of the value. And I think that's what's exciting about what's going on now. There's the real work of making blockchain functional and easy to use, I think, has been happening in the last year and is starting to happen much more than what happened in the few years before that. I totally agree with you that like there's this still silent effect kind of similar to the early internet where I think there's a lot of creativity and ingenuity that can bring a lot of value to these platforms. But a lot of times that value is kind of blocked by things like the usability of those protocols. So we've had state channels for like two years, but what's a state channel wallet? Right? So there's kind of been this thing where you need a wallet to integrate. And so

a lot of new protocols and new ideas that have new value to offer end up having to implement a wallet from scratch just to do it. So I actually, I often taking kind of a oppositional role to this thing that like usability is everything and that we just need to solve usability. Because I think ultimately people will actually get over a lot of usability things if there's value for them. We've seen people, you know, I'm not trying to claim that MetaMask is a seamless experience, but for the people that it's made a difference for, they've worked through it. And I feel like sometimes we're like polishing or like widening the doors to a garbage buffet. If we just put some better things on the table, I think people will make their way through. And so that's why

at Metamask, one of our current focuses is on allowing the wallet itself to be more permissionlessly extended to support community ingenuity so that hopefully we can grow the pie in the middle and people can work through and be creative with the usability along the way then. I love that garbage buffet. Yeah, I love that too. Thank you. Yeah. I might quote you on that sometimes.

Right? Like, that's the headline for this talk right now. No, I completely agree. And I think that we saw this with ICOs, right? Like, there was such promise, and most of those promises were very, very empty. but people somehow went from not holding any crypto, right, being true no-coiners, to purchasing, moving it to a non-custodial wallet, and then sending it somewhere else and receiving tokens and be able to view those tokens in like a day.

Now, not everyone was successful. We saw a lot of loss. We saw a lot of loss due to like just addresses in general and sending and like those concepts. We saw a lot of loss from not making proper backups, you know, there's no way to restore. and then obviously there's there's no like revocation either. So you, if you lose your private key or you give your private key to a fisher, it's gone. So yeah, it's sort of there, there's very much chicken and egg. But if the value is there, if the promise is there, people will do just about anything to do it. And as we've seen, the amount of sort

of usability, like the improvements that we've seen since the ICO sort of era have been huge, right? And we learned a lot of lessons. So I think that we'll get. there, it would be really nice if we got there a bit faster and with a bit more thought. But I'm really interested in seeing where the true value comes from, right? Because we hear a lot these days about how this is going to be it or that's going to be it or IEOs are the thing or DFI is the thing. And, you know, the question that I keep asking is, what value does that provide for the user or what value does that create for the user? And if we can get there, we as like wallet creators will actually be better equipped to build a product for them because we will be understanding of

what they're trying to accomplish, not necessarily just like we'll build this thing that allows you to maybe do anything and nothing at the same time. Oriol, I'm really excited about your answer because I know you guys are sitting really at the forefront of like the tech and also the user experience. So actually I'm not going to talk about us, but about something that I think is, it's not at that I don't want to talk about us, but I think something more important than that. is I think, obviously, the future of computing is mobile. It's not a desktop.

There is way more people with a mobile phone and a computer. We all know that. And sadly, this is where the biggest usability problems exist. And that applies to every single player, including those who try to do mobile applications, including ourselves. And it's not necessarily technological. It's mostly due to the fact that the mobile platforms,

and I won't name names, but not so many, are not necessarily allowing us to play by our, our rules, but to play by their rules. So what that means is that the experience that we enjoy on desktop, turfacing the wallet with anything very conveniently, and let's call that permissionless, is not necessarily possible on the mobile. No matter how much you develop on the mobile,

you are not allowed to accept replacement in a purchase to service DAPs and to service anything that is a way of payment. You're not able to have a DAP directory and things of that nature. And if we really want to be usable, if we want to have wallets that are really usable. We cannot just think desktop. We have to think mobile first. So that, I think, is a big hurdle.

And it's very intimidating for people, including in the space, to deal with that friction. Do you think that this friction that's inherent to mobile platforms, do you think that's a hindrance on potential business models for wallets? And just generally,

I'd like your thoughts on what are the interesting business model or business model opportunities that are open to wallets? So, yeah, directly, that directly impacts the business model, Because as you know, I mean, many people never understand that, but wallets don't make money out of transactions.

The fees are paid to minors. And so it's not a banking model where you take a fee every time. There's a transaction. So how do wallet make money? They make money out of basically an affiliation systems most of the time. They link to exchanges, they link to harder wallets. They link to whatever. But if you want to make money with apps, with services, with defy,

and get a cut out of that, you need the mobile platform to allow you to do that. And so I think it's very structural to the economy of wallets. And I'm not sure there will be a solution to that. So maybe we'll have to think about something better, but that obviously has an impact. And I just want to build on that because I think you made a really important point. Even dialing back from the business model use case, the current application stores, the mobile platforms,

they won't allow you to do a variety of things. They have their own policies. And so, for example, a variety of wallets that were very similar to MetaMask, got blocked from the Apple App Store last year because they had a DAPS store, right? You know, just by calling it a store, it's against their terms of use. So there's an amount of extensibility that they want to have on lockdown. You know, we saw Apple take like, you know, nearly a decade to open a Siri API. And they've just opened a sliver of it. They're very cautious about the amount of extensibility they lend. And this extends to applications. So I agree

that it's like a completely critical frontier because crypto is so about innovative. and it's so very carefully regulated by these two companies right now. Taylor, do you have any thoughts? I actually had another question. How did you guys get around some of the limitations? We call them sites. The secrets out of the bag, folks. Are you guys already live in the app store or in this flight?

We have a live mobile app. So if you go to Metamask.io, you can install our mobile app. Oh, the app store. Yeah, yeah. So the good news is that these app stores are maintained by bureaucrats who enforce the letter of the law. but we'll see how long that lasts. I think at a certain point,

we're going to need a more open platform. Yeah, I completely agree. Because I remember talking to you back in the day about the different concerns. And I think one of the most interesting things about the mobile platform and the fact that you are, you're basically relying on Apple and Google

to allow you to distribute your application. That's like a very dangerous place to be in, in my opinion. And what's even more sort of, I guess you guys looked deeper, right? And you looked in and you saw exactly what they were enforcing and it turns out it was like the semantics or whatever, which is great because you can get around that. But yeah, there's a lot of policies that I think will hinder a lot of things. And I also think that the security and the technology in general, you know, everyone has their opinions on whether iPhones or Android phones are secure at all. But I think that that's going to be probably a huge

conversation that happens, especially if people are holding more than like, you know, a couple dollars, you know, worth of crypto on their phones. Yeah, first of all, I think it's a great question because the companies that are providing the usability products that people use, like those on the stage here, they have to make money, right? Otherwise, ultimately, they're going to go away. And so business models are important. That's the goal for sure. Siri's, you're in trouble now, Siri's been listening. Seri just, Siri just heard what you said.

This is literally why we need more privacy guys. So, but anyway, that was, that was a quarter driver behind, you know, the FEO protocol being set up as a decentralized autonomous consortium, where the economics of our protocol from the actual structure of it are built to drive tokenized income to the wallets and others that participate in the ecosystem. So that plays part and parcel because of that knowledge that, look, the wallets have to continue to be there and the endpoints have to be there for users to use and they have to make money to do it. So on that point, what we've seen with wallets is that wallets are incorporating an increased amount of services. So there's obviously key storage and everything comes around that. And then take a smart contract wallet, for instance. There's an awful lot of additional layers of services like abstracting a gas, for instance, social recovery, etc. But, you know, there are a few ways to look at this. One is, okay, well, we're adding functionality

in wallets. The other is that, you know, we're making wallets more and more bloated and adding, creating a wider attack vector. Perhaps starting with you, David, because you're working on sort of another abstraction layer. Where do you think this balance stands for wallets? Should wallets be trying to incorporate more of these features internally? Or do you think the space will move towards one where all these additional services will be abstracted and wallets will ultimately end up just being key storage. I don't think that wallets as a product as they exist today will just be key storage, not software wallets at least, hardware wallets, yes. If they are just key storage five years from now, I think they won't exist as a standalone product because key storage will

be integrated into other things that do a lot more than just store your keys. And the usability and the ways in which people can interact that value in commerce and for utility will be in ways we can't even have any thought about today. And those solutions have to be the portal and tools that they use for that, right? And so the companies in the stage here and other ones, I think, are going to grow and involve and become more and more robust in the types of things that their wallet enables users to use beyond just storing the keys. Otherwise, really, they'll just store, key storage is something that'll be commoditized, I think, honestly, eventually. Yeah, I did a talk, I think it was like over a year ago now. It was called The Future of Ethereum

doesn't have wallets. But it really drove into the question of like what the hell is a wallet and what, where did these different like, you know, features of wallets today, where do they lie and where are they most optimal? And I ask a lot of questions, like way more questions than answers, but I've definitely, I think that what's going to happen is that there's going to be some core functionality that is just functionality, right? And that's not a product. That's just a thing that exists that can be sort of at different layers of the stack. And then I think that, you know, looking at how we interact with like traditional applications today or traditional products and services, like say Uber, right? Like you go and you like open your app and you order a car and then like at some point it's just like

you automatically pay for your ride, right? It's not at the forefront. You don't go into, you don't open another application that's going to connect to your Uber so that you can send to this and then, oh, wait, but the gas and you don't have enough gas because of the token, like none of that exists. And so it'll be really interesting to see, especially as actually valuable DAPs evolve. And there's real use cases where you have a product that the product itself wants users to come to their site, land on their site, be sold on their product or service or game or what be it. And then the user just starts using it, right? Because the flow right now, at least in Ethereum, is very commonly, like, the user lands on the site. And then hopefully they're convinced to, like, use this game or buy

this product or use the service, whatever it is. And then they're like, okay, cool, go install Metamask and then come back when you're done. And then Metamask is like, hey guys, I'm going to onboard you real quick to the entire crypto ecosystem. Oh, by the way, you have to go buy some ether. You know, go KYC in exchange. We'll see you when you're done. And the reality is, I don't know what the drop off rates look like, but I can't imagine they're good. Like, they would be terrifying, right? And so I'm really interested in seeing if,

right now I don't think that we have like an invisible interaction layer, right? And I think that that might be a solution. I have no idea how technically it would work and how it would preserve privacy and how it wouldn't be, like it has the potential to take a lot of information from both sort of like the wallet functionality and the doubt functionality.

And that's a bit worrisome. But if there's some invisible interaction, layer that could be created. I think that that might replace most of the quote-unquote wallet. And then you can have choices at each end, right? The choices of the DAP or what you want to interact with or what you want to give your data to, what you want to play with. And then where the key is, who has the key, is the key being held by a custodian or is it yourself or is it your hardware wallet? Yeah. It's sort of like commoditizing each layer, each service that connects to your wallet. I think I agree with both of you that they have to evolve a lot. And then

what does it look like? Can we make that look more? invisible. We've been working on this initiative at Metamasker. Sorry, not to shamelessly promote, but it's like a, it's a permission system. And so the goal is that you initially prompt, you delegate a key, a spending allowance, encryption rights, whatever. And so now the application can do some interactions without further bothering you. And so one of the things we're using that for is to extend functionality because I don't know what the end protocol is, is it with the state channel or the plasma chain or whatever. So we're hoping that can facilitate that. You know, even when you're using Uber,

like it's invisible once you're in it, but there was like an initial like handshake, right? You entered your credit card number, you Apple paid or whatever. And I think we can really reduce that initial handshake down to something that's like a user coherent, like terms of agreement that's being digitally enforced. And so I kind of think of the wallet and where we are trying to mold it is kind of into your like personal trust kernel. It's like the thing which takes, you know, your cryptographic keys, which yeah, you can commoditize a signer, but can you commoditize the human representation of what you can do with those keys?

And so I think that we're really crafting our product into, we're basically, what does it mean to prompt the user and get informed consent? Because keys are meaningless. The user isn't doing the cryptographic operation themselves. So they need somebody that they trust. And why not the thing that's holding their keys? Because they're trusting it quite a bit there to represent to them what they're doing under the hood. Do you think Zengo will be commoditized? I don't know. I mean, one thing is certain is that people are not going to download 50 wallets

and use them all the way and it's not possible. It's always interesting to see those blockchains that also develop their wallets, believing that people will use them, so I still don't understand that. But eventually people will have a very limited choice of wallets, and they will expect those,

whatever we call them, password managers, interfaces, tools, wallets, but they will expect them to a company them across all the needs that they have, the services they want to use, whether this is on mobile, on desktop, and whatever computing platform tomorrow, including those watches and whatever AirPods we have in our ears. And so what that means is that no matter how the wallet services are developed, they need to be thought as services and not as software.

So I think that's very important as a conception. You can see that in the Fiat world that has happened during the past 20 years, And you can see, for example, companies like Square doing that and Stripe doing this, enabling their services being built on top of the same payment trails, wherever you need them. I do expect that to happen at some point on crypto. Of course, respecting the principles of crypto. But I think it will depend on the wallet that people will prefer to use. I think that we'll have to do with convenience and security and portability to different platforms. The future will let us know how that plays out.

Cool. So switching gears a little bit, I'd like to bring this up a little bit to somewhat of a higher level. Today, the majority of crypto funds are locked up in exchanges. Some would say upwards of 80 to 90%. Where does the future hold from this perspective? Is the future a non-custody or a self-custody future or a custody future? I think the future actually is neither a self or a centralized custody future. I think it's going to be solutions that we're seeing happen that give you a better and best of both worlds. The reality is, I think the average person on the street, if you truly ask them, they do not want to be solely responsible for all of their assets. That's really scary to them. They also don't want to be subject to a hack attack on the centralized bank or financial institution. So I think we're going to see some really cool solutions that have wallets

involved, self-sovereign wallets, but also have some sharing of that risk with trusted third parties that create a better outcome and an exciting future for what we're doing here. I do not claim to have the answer, but I do think that, you know, nobody actually wants to be their own bank. And I say this as someone who has made a non-cassodial wallet for the past like three and a half years. You know, I'm acutely aware that people are, there's a very, very, very, very specific user that actually wants that and actually wants to take on that responsibility and actually understands what that responsibility is.

And I think that one of the most interesting things about this sort of crypto space right now is that the more involved you are, the longer you're around, like the scarier it gets. You actually learn about these risks that you didn't know were risks. You know. Yeah, like the 10th time you send like all of your money or, you know, the 100th time you're sending like a large amount either to or from an exchange for whatever reason, it's actually scarier. And that's a really peculiar thing, especially from a user experience perspective, because typically we can at least rely on the fact that as time goes on and as people use your product more, their anxiety level will go down. Right?

Like that's naturally what should happen. But because of all the sort of external forces, because of the hacks, because of the number of things that can go wrong, and simply because of how new and different this space is, we're not seeing that. And so I think that in order to, like the solution we should be going after is one that that reduces anxiety, right? And I think that's why people do tend to put them in exchanges and leave them there is because they're like, well, the exchange has it. Like, everything's fine. You know, it's not sort of near, it's not as much in front of their face as if they're, they're holding their

own funds. So, yeah. And centralized exchanges, you know, also exist not just because of custody issue. They exist because the centralized exchanges enable things that are impossible to do other ways today, such as trading one token for another token or for fiat. But in the future, it will be possible. Projects like Cosmos and Pocodon are going to enable you to, in a decentralized way, start to trade tokens. Projects like ours are going to enable usability that you can't do out of centralized walled gardens today. And then it does come down to the issue of custody. And with better solutions, we will end up in a much more decentralized world than crypto and blockchain exists today. I'm not a maximalist of user custody, but I think there's something just

fundamentally empowering about having your own key, at least like for an account or your first account when you're learning because there is no higher authority than a account that's controlled by a key. Now, that said, we can do so much better. But every single other thing, like Taylor said, has other risks. So it's like, oh, great, you got a multi-sig. Well, I hope it doesn't have any bugs. Or like, you know, and you're putting it into a new piece of software. I hope you can trust that team and their distribution channel. And there's really just a huge stack of assumptions. And so I'm just glad that we're building on protocols that let you move the keys where you want. and take the risks that you hopefully can take in an informed manner,

where you, you know, hopefully in a wallet that's flexible and adaptable, it can progressively onboard you, initially, you know, okay, sign up for the service, they'll back it up maybe, and then maybe now you want to have some friends who can help you recover, and maybe once you become like a real buried under your mattress kind of guy, you can take your seed phrase for yourself. But I think there's something really empowering about having the keys at a base layer available. I'm not going to reveal breaking news or things that people don't know, but people like convenience. They like things that work and that are, like you said, anxiety reductors.

And the reality is we already know the majority of people have chosen custodian solutions versus non-custodian solutions. Because those are the best today to serve that purpose. It's just simpler. And you have a phone line that you can use. expression and to bark on if you have a problem and hopefully you're going to get your problem solved. And as we know in self-custodic solutions, you always have these giant disclaimers. We won't help you, you'll loan and deal with your own shit, right? And be your own bank, deal with your own shit.

So that's not something that I think the majority of people will want. Maybe there will be ways that self-custody will be improved via the help of, I don't know, guardians or peers. I'm very sceptics about that because I think people don't know how to make those choices. I do tend to believe that the future has to do with the user being in control. So I think that is a fundamental need that today doesn't exist enough, but is not alone. And for example, what we've tried to do is to decentralize the process of key management without getting in too many details where only the user is able to make transactions.

but we can help in the recovery and set up backup in a way that is really magical because they don't have all this anxiety to deal with but we are unable to spend their money even if we want to. So I don't know if this is the solution but what we are learning from our first user base is that they breathe after they use this kind of approach.

So maybe that will be the future or we'll see. That's a good point. I hate to bring up the boring regulatory question but I'm curious, I mean, in the context of mostly favorable regulation with regards to self-custody wallet developers in the U.S. and in Europe at least, is this a question that keeps you up at night? But what are the sort of regulatory considerations which have to do with each of the products that you're working on, if any? I don't know if this is a relevant question on this panel or not. My answer is quick. So where we're at right now, we're fine.

if we dip our toe into that pool, then I'm in a very different boat, and I need a very different team, and I need a very different set of skills, and I need, like, 80 more lawyers in my life, and I don't want 80 more lawyers in my life. What pool exactly? The, like, any sort of, if you go down, like,

custodianship, if you go down anything that would classify us as, like, a money transmitter, you know, you need a lot. And I'm very glad that there are people willing to go down that path. For me personally, and the people around me, the people on my team, the people I've hired, we're very excited to be taking a challenging path in a different way of empowering users to control their own money, control their own keys, you know, and successfully interact with the blockchain, you know, without needing the approval of us or the U.S. government.

Mine is also really small because we're a non-custodial wallet, right? You're holding your keys, so right in our regulatory environment is simple. We've been kind of begging services to start emerging to take on custody or semi-custody for a while. The first time we met Coinbase, we were like, you guys should host keys. They're like, we don't want to be liable for arbitrary transactions that we can't comprehend. So there's been like a real need for that. I've heard murmurs about regulation around non-custodial wallets that made me lose a couple winks, but I haven't heard more about it. So I can see that coming up for more like consumer protection reasons. I mean, especially like in Europe, I could see the European regularly is waking up and saying like, oh, people are holding

crypto. Yeah. They need to be protected. Yeah, there's like one line that says, if you interpret like one of the money transmitter lines in a very, very, very specific way, you can, you can lose a couple night's sleep saying that, like, a non-custodial wallet is technically, like, sending money for a user. But, you know, if you literally kind of, like, I don't know, spend five more minutes looking at it, or looking at what non-custodial actually means, you know, the way that we've interpreted, obviously is, like, that's silly. That's pretty, pretty well-rafted up. I'm, like, especially curious to hear, because you're doing a slightly recovery thing. Does that affect you anymore? Yeah, so, so we're good. We looked into the topic, but I tell you, I'm not very optimistic.

I'm actually pretty worried that the regulation will change. And the reason why is that we tend to associate the fact that because we don't have the liability of the private key or able to spend, that we don't have any liability. And the reality is that we do have the liability of the software that we built. And so that conveys a huge weight into the equation. Number two, I don't know if you kind of heard the hearing of Mark Zuckerberg, was very enlightening not so much about the answers that were not very always convincing, but about the questions. And many questions were extremely clear about the worries about the possibility of what they called anonymous wallet, which basically is a translation for self-custody wallets. Politicians do not like it at all because no control, no transparency, no anything. So I think they might change their mind about self-custodial wallet unless, and that's the bonus,

there is a technical solution that enables us to also decentralize identity. So like real world identity. So we wouldn't be able, we would be charged to KOC customers and everything, but we would have kind of this gateway to say, well, this guy is not a bad guy. And this guy, he says who is as he is without going through the process of knowing who is. But if not, I'm very worried that they change their mind, especially in the U.S. Yeah, so we have a different situation. And so when you said regulation, I winced a little bit because we're building a decentralized

protocol with a decentralized business model, if you will. And governments and regulations were not written or built to even contemplate that blockchain is innovating business models and creating ways to do things like we're doing that just simply are impossible without tokenized economics. And so, yes, we are working through with too many attorneys. A lot of different aspects. That goodness is we have a really clear roadmap about how to do that now. But it's time and money that is just fundamentally at the end of the day a waste.

It doesn't really add to innovation or creativity or any value to society. So for us, we've had to work through that. I think, you know, it's an interesting struggle. And it's really at the core of some of the essence of what blockchain is about, this struggle between individual privacy and liberty and the need that governments feel to be able to monitor every single person to stop the small percentage that are bad actors. And none of us want bad people to use money to go and do bad things to people. No, nobody wants that.

But, you know, that's at the end of the day is a struggle. And you can even have federated KYC. I think someday that concept will exist. I met with a company just yesterday that's trying to work on that idea of, gee, could you have federated KYC where you do it once? It can be used everywhere. But, you know, if you have that and it's attached to you everywhere, I mean, you know, surveillance state. It's, it doesn't matter if it's decentralized at that point. They know who you are. And so it's, it's an interesting social struggle for sure that we've got. I mean, let's remember people, the government want

at the end of the day to be, to get their taxes paid. Really, like, really their number one area of of worry, more like stopping the bad guys. I mean, of course, this is a noble goal to have. But what they want is to make sure that people who have to pay taxes. And I think it's a legitimate request. I mean, I don't think everyone wants to escape the taxes. This is our societies are built. After all, you know, we can discuss about it if they do it right.

But you need that to happen. So I think we don't want a system where we escape our fiduciary duty as citizens. And so if a non-custodial, self-custodial wallet, enable that in some way. And the economy, a large part of the economy goes to self-customer wallet, then there is an area of worry that is legitimate, and then maybe that will drive them to go against the core principle of crypto, which is like, all right, let's do whatever you want,

and let's not know who you are. I know more than one person in the space who's looking to escape their fiduciary duties. I'll tell you that much. Very quickly, because we're out of time in one or two sentences, what are you most looking forward to in the next year or two with regards to either the evolving tech around self-custody or even user experience advancements? What should everybody be looking into?

That's a good question. I'm actually going to zoom out a little bit just because of the sort of the conversations that we've had up here. And I think that we're not necessarily at a transformative point in this ecosystem, but I do think that there are some really big sort of subjects that are front of mind, Libra and the recent hearings and then the recent China announcements. I think that it's going to be massively important that we understand and we think about and we talk about openly and publicly, you know, what is the value of the things that we're building? You know, why are they valuable? And what do we really want to get out of this? And, you know, what compromises are we willing to make in order to get there? And obviously, like, some of the most obvious examples are, you know, sacrificing usability for things like privacy or things like self-custody or, you know, everything. thing, right? And I think that it's a, it's been a conversation in a different light, but just knowing,

like really knowing that China is in this space and they're going to be doing stuff and the potential of what that means if we don't have, if we do have things like, you know, every single account is KYC'd, or, you know, simply the knowledge that, hey, you know, nation states are going to be watching every single transaction and they're going to be linking the accounts. And they're probably going to be linking these accounts to real world identities. So when you think about all of that and then you add it to, yeah, you know, you add it to the usability issues in the space and the security issues in the space. I think the next couple years are going to be very, very interesting. Kind of just reiterating, I'm hoping that making the wallet a more permissionless space will

put gasoline on the fire of innovation and let all these exciting things. Mixers and layer two protocols and contract accounts, I think this will be the year to show that permissionless decentralized innovation beats the heck out of whatever well-funded authoritarian project. It might be intimidating you otherwise. Looking forward to us now starting to really see the use of blockchain and tokenized value and commerce and for utility actually doing meaningful stuff with us and our part of enabling that with our launch of our main net early next year to enable abstraction away public addresses, payment requests, cross-chain metadata, all kinds of things that are impossible today do between

different wallets to help that happen. Something really transformative that could happen to the industry is see gigantic players making a real step, not just intentions and white papers in the real world. So I really looking forward to see what happens with Libra, with Telegram, with Cacao in Korea, Clayton and DeSep, we see what happens how they roll it out. And finally, I really, really wish that mobile platforms,

no names, would embrace more, both at the technical and terms of services, level, the crypto industry that we're about to play with the security enclave in a more better way to secure better our apps and that the tools of services and also just the rules of being featured on an app store and what we can do with mobile apps would be fairer, meaning equal to every other category of mobile apps. Not better, but just equal. That's a great way to end it. Thank you. I want to thank our panelists. Thank you for joining us on this week's episode. We release new episodes every week.

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