On The Brink with Castle Island - Nick Neuman (Casa) on resilient self-custody with multisig (EP.208)

Episode Date: April 19, 2021

Nick Neuman, the CEO of multisig software provider Casa, joins the show to discuss how to harden your Bitcoin custody setup. In this episode:  Nick's own journey to Bitcoin and to becoming CEO of Casa Casa's design philosophy The merits of native multisig on Bitcoin Casa's decision to stay Bitcoin-only Nick's experience raising capital as a Bitcoin-only startup Is it easier to be a Bitcoin-only startup today? How complicated is multisig? Why Casa recommends the usage of multiple brands of hardware wallets Why self-custody matters Nick's vision for the future and how private keys will power the decentralized web Nick's responses to common criticisms of Casa The purpose of Casa's new subaccounts feature Sponsor notes: Copper is transforming how institutional investors engage with digital assets by developing award-winning custody and next-gen trading infrastructure. Headquartered in London, the firm is scaling rapidly across Asia and North America to bring its suite of products to a wider pool of institutional investors. To learn more visit copper.co or reach out on Twitter, @CopperHQ Aave is a decentralized, open source, and non-custodial protocol where users can deposits and borrow digital assets, and earn interest on those assets. Head over to aave.com to experience and learn more about DeFi.

Hello and welcome back to On the Brink. Today's episode is brought to you by Copper and AVE. Let's start with Copper. It's the global provider of blockchain infrastructure solutions for institutional investors who are actively trading digital assets. Its award-winning custody application is connected to 25 of the largest exchanges in the world, ensuring safe storage and movement of assets for the biggest crypto hedge funds, market makers, family offices, and high net worth individuals. Their clear loop system, is the first off-exchange settlement network for digital assets. It's the safest way to trade balances in custody across multiple exchanges without requiring on-chain settlement, on-chain movement of assets. To learn more, visit copper.co or reach out on Twitter at CopperHQ. This show is also brought to you by AVEA, AVEE. AVE is an open source and non-custodial liquidity protocol where users can earn interest on deposits and borrow digital assets.

It's a decentralized community governed protocol. Learn more and more about Avey at Avey.com. So today we sit down with Nick Newman, the CEO of CASA. Full disclosure, Castle Island is an investor in CASA, and I'm a personal user of CASA, and I definitely recommend them as far as a Bitcoin multi-sick setup is concerned. When I switch to CASA, I genuinely gained a huge amount of peace of mind, so I'm very happy to be on the cap table and to be a user of the product.

So we talk about, of course, the basics, how Kasa's multi-sig setup works, the tradeoffs, and we cover the critiques the users have of Kasa. What it's like to be a Bitcoin-only startup, NICS experience raising capital as a Bitcoin-only startup and how venture firms reacted to that. And then, of course, the nuances with hardware wallets and why Kasa recommends using multiple brands. Self-Custody is one of the most important. topics in Bitcoin. It can be very intimidating. Cost is one of those tools that really helps you get there. Let's dive right into the episode. Brought down by bad mortgage investments, Lehman,

which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin.

Nick Newman, CEO of Kasa, can't believe it's taking us 205 episodes to get you on the show. That's how many episodes we've done. Welcome. Well, one, I'm surprised you've done that many episodes. That's pretty crazy. But then two, yeah, it's been way too long. Yeah, you're one of our very earliest. portfolio companies in the SIV portfolio. Very proud to be backers, full disclosure. We are

investors in CASA. I'm a personal user of CASA. We're going to talk about that, my journey. It took me a long time, shamefully, to become a CASA user. Almost as long as it took you to get me on your podcast. We weren't going to tell them that. Actually, I had been onboarded to CASA historically, but first time put some of my personal assets on the platform. We're going to leak details of my custodial setup here. That's how confident I am that it's unbreechable. Oh yeah. I mean, we like to say that with CASA, the security is so strong that it's for public Bitcoin personalities, it's actually better for you to tell people that you have CASA because they can't get your Bitcoin if they show up at your house.

Yeah. We've joked about making ADT signs for for CASA, that's say protected by CASA or something like that. That's exactly what I was thinking. I mean, with CASA, the, you want to somehow communicate knowledge to the malevolent actors out there in the wider world that you are a CASA client because it means, look, it's not going to work if you show up my house with a shotgun or something. Yeah, I physically cannot spend my coins. Unless I, you know, I'm not going to get into details, but unless I, you know, perform a transcontinental voyage or something. So, yeah, it's not going to work. Anyway, anyway, we've a lot to talk about, let's just introduce Kasa. We'll talk about, well, before Kasa, your own personal journey. You've got to do the journey question.

Why did you choose to work in Bitcoin and join Kasa in the first place? Yeah, so I originally actually got into Bitcoin because I was just looking at, I was working at another tech startup. I originally have a finance background. After I moved out of working in the soulless, soul-sucking world of investment banking, I started working for startups and doing product management. and it was about kind of 2016, 2017 time frame when I started really reading more about Bitcoin in the broader ecosystem. And I got really intrigued by this concept of self-custody and decentralized computing. And I think a lot of people these days come into Bitcoin because they get interested in the economics side of it, I much more came through because I was interested in the tech and what the technology of Bitcoin actually enabled for the world in terms of just how it changes the way that you interact with your money and what it allows you to do with your or could one day allow people around the world to do with their money.

That just isn't possible with the old system. And so that was really what got me interested in Bitcoin. And then I started working at Kasa, actually, because for fun one weekend while working at my previous startup, I went and participated in the first ETH Denver hackathon. And I went into it not knowing anybody. I was just like, I'm going to sign up, fly to Denver and go have fun. And the idea that I had was just that private keys really suck to,

use and it's it sucks that you have to like put all of your your hopes and dreams for protecting your funds in this one key and then write down your 24 word seed phrase and hope you don't lose it and so what we actually ended up building at that hackathon was a social recovery type of mechanism where you could actually split your key and give it to five different people in encrypted form and then if you ever lost your key, you could go recover it from them. We ended up winning the hackathon. And so that was how Jeremy, the previous CEO of CASA, found me. And I was going to go start another company around this since we'd won the hackathon.

And he had, Jameson had just joined the team. And so he was like, hey, come, come join. We got Jameson Lopp, and we're doing something really similar to you. So I joined as head of product and worked as head of product. at CASA for two years before becoming the CEO at the end of 2019. I actually remember that. I believe we were already on the cap table when Jeremy was thinking about recruiting you. I remember that discussion.

Glad you joined the greatest Bitcoin multi-sig startup in the world. How do you feel about your responsibility? Casa, obviously, they maintain one key for some of their clients as kind of a disaster recovery, discretionary extra key. But then building software, which manages people's most intimate setup, you know, their funds, the bullion bars of Bitcoin that they're storing billions of dollars. You know, how do you reckon with that? Yeah. So it's definitely a heavy responsibility, but what's great about it is that what we're building is actually just, it's this another layer of user experience on top of what Bitcoin's already doing. And so we're not doing anything crazy in terms of helping people secure their Bitcoin. We're using the Bitcoin protocol to build up their multi-sig and to actually make that. user-friendly and approachable to where it wasn't before. But we have the utmost trust that Bitcoin is not going to break. And so that actually is one thing that kind of helps me sleep

at night. I think if I was working at Coinbase or something and we were actually holding the keys for a lot of people's funds, I would be a lot more worried about it. But where it is now, where we're just giving people the tools to really make it easy to hold their own keys. That's, it's a lot easier. And so, but we do change some things, right? So, you know, Facebook's famous motto for a long time was move fast and break things. We definitely can't develop our software that way. It's kind of like move pretty fast and test the shit out of everything we do to make sure it doesn't break anything before we release it to, to our users.

And so we definitely have like more. more of a kind of safety focused mindset and security focused mindset with everything that we do. And I guess it's pretty convenient the big one has native multi-sig. So you don't really have to worry too much about that. Whereas ETH by contrast, as you say, started ETH Denver. ETHIS had multi-sig issues in the past. I mean, arguably the biggest and worst ever bug in the history of blockchains, I want to say. like in terms of the enduring damage inflicted was the parody multi-sig contract bricking.

Yeah. I mean, at the time, that was what, $300 million or so of ETH lost, or locked, I think. Yeah. I'm sure that's worth a lot more. I think it's worth over a billion now. I actually looked at, I was writing a paper on systemic risks in crypto, believe it or not. and I was revisiting that and just I was kind of astonished by it because it was a contract written by parody by Gavin Woods organization. He was obviously the inventor of a solidity.

Right. So it's just kind of astonishing. But it speaks to the complexity of developing multi-sigs on Eath. Casa famously is a Bitcoin only organization. Is that something you expect to be the case in, perpetuity? I mean, the way that we look at it is Bitcoin is by far the largest, most valuable, and most secure protocol out there. And so it makes total sense for us to be purely focused on supporting that, especially as a startup where we've got a limited team. And so in order to be

successful, you really have to focus your efforts. And when you're talking about security of people's assets, you would much rather be a, you know, inch wide in a mile deep in terms of the security that you're offering than a mile wide and an inch deep. And so that's why we're focused on Bitcoin. And, you know, we've actually written blog posts about this in the past where we've evaluated Ethereum, multi-sig back in 2018 or something like that and basically decided that where we were, where the ecosystem was at the time. The parity hack had just happened within the last year. We just didn't really feel comfortable building multi-sig on top of Ethereum with all of the additional risks that there were involved. Raising as a Bitcoin-only startup, this is more popular now

in today's day and age as Bitcoin has grown and the sort of design space for Bitcoin applications has grown. What was it like? What was, I mean, obviously we were on the other end of that, but what was it like going to market as a Bitcoin-only startup? And a, you know, corollary, do you feel that that is easier today as opposed to when you conducted the fundraise? Yeah, I mean, I think that you have to find the right investors, just like with any business, you have to find the right investors. But there's definitely a lot of the, you know, crypto investors out there. there that pretty much, I mean, they turned us down because we were Bitcoin only. And that was legitimately the reason. And so it makes sense. Their investment thesis really revolves around

a multi-chain, lots of tokens out there type of world. And with us only supporting Bitcoin, it didn't really fall into their thesis. So it's one of those things that, you know, you have to find the right people and we found people like you and and still mark and avon over at fidelity and you know they you find the people that have the the belief that what you're doing and the strategy for how we're approaching it as a business makes sense and then that's you know maybe it takes a little bit longer but you find those right people and and you get the deal done so that's that's what we did when we when we raised from you guys previously and then also when we raised our last round with Avon in January.

And our faith didn't waver for a second. Exactly. Let's talk about Kasa. So on the brink has a really genius set of listeners. I don't want to pander to them, but, you know, supremely intelligent listener base this podcast has. So many of them will be aware of multi-sig. I just want to say that I'm a listener of this podcast, so that includes me, right?

See, and there we go. Case in point. You should join our Sphinx chat. We have a dedicated Sphinx chat to talk about the episodes. It's all built on lightning. It's very cool. So many on the brain customers will actually, or listeners will be Kasa clients already. Many of them will be very familiar with the setup.

But let's just do a quick refresher. So how does Kasa work? Tell me about the sort of two of three and the three of five models and the tradeoffs involved there. Sure. So before I get into the actual multisig side, I'll give a little bit of detail on our free wallet because this is something that less people know about. But it's actually a great tool for getting people started with self-custody, even if they have, you know, 0.01 Bitcoin or something. But we have a free mobile wallet in our app that actually is a seedless mobile wallet. So it's not truly seedless.

You can get the seed if you want to. But a lot of mobile wallets, when you sign up for them, they just, the first thing they do is say, write down this seed phrase. And we just thought that wasn't a great user experience for somebody who were trying to get to move from Coinbase over to Casa. Right? They're already kind of, they're using Coinbase because it's really simple. They don't have to worry about it. So we built that same kind of experience, but for self-custody, where you're holding your own keys. And so you can sign up.

You have one key that sits on your phone. And then we actually encrypt it with a key from CASA and then upload that phone key to iCloud or Google Drive. And so then let's say they'll lose their phone. And then they, you know, they would be worried, oh, I lost my Bitcoin. Well, with CASA, all they got to do is get a new phone, log into their iCloud. account, log into their CASA account, and it'll automatically pull that encrypted key down from the cloud, sync it, decrypt it, and save it in their secure element. And so it's a really simple way to have like a Coinbase-like experience, but actually be

holding your own keys. So then you move up to our paid plans, which are the multi-sig plans. And your listeners are familiar with multi-sig. it basically just means that more than one key is protecting your Bitcoin. And so losing a key is no longer a big deal. And you don't lose all your Bitcoin when you just lose one key. So with our gold plan, which is $120 per year, you basically have what's called a two of three multi-sig.

So this means that you have three total keys protecting your Bitcoin. and you only need two of those keys to actually send your Bitcoin. So you can lose one of those keys and not lose access to all of your money. So the way that these three keys are set up is that one key is on your phone. It's actually backed up with the same method that the mobile wallet is backed up. One keys held on a hardware wallet like a treasurer or ledger or a cold card. and then one key is held by CASA for emergencies. So let's say you lose that treasur.

Well, instead of having to go to your seed phrase and restore it from the seed phrase and you're kind of worried about whether it's going to work or whether your seed phrase is still in your sock drawer, you are able to just swap that key out. You just say in the app, you just say, hey, I lost this key. And the app totally walks you through the full process of adding in a new hardware wallet. And then using the phone key and the CASA emergency key to transfer those funds from the old unhealthy key set that was missing a key to the new one, which now has three keys and is fully healthy again. And so it just gives you a lot more resilience and removes that single point of failure that people have if they're just keeping their funds on a treasor, for example. And then, you know, if you move up one level higher with CASA plans, this is really made for people who have a lot of Bitcoin.

So more than 100K in value. It's our platinum plan and then we have our diamond plan above that. And those are three of five or three of six multi-sigs, which just means you've got five total keys. One's on your phone. Three are on hardware wallets. And then one's held by CASA still. And so that just gives you an additional level of resilience and redundancy against loss and theft that when you're holding a lot of Bitcoin, it really makes sense to have that that next level. And this is interesting.

You guys actually recommend diversifying your hardware wallet portfolio with the key setup, right? Yeah, exactly. So the whole Jameson Lopp says this all the time. The whole point of CASA is to remove single points of failure. And so the first single point of failure that we've removed is storing your funds on one key. Because if you lose that key, you lose all your money. The second one that we want to remove is actually removing or removing dependence on a single hardware wallet manufacturer. So let's say you have our three of five setup.

What we would recommend is that you actually have a mixture of keys. in as those hardware wallets. So you've got one key on your phone. And then what our default package is that we send people is you've got two treasors and one ledger for those three hardware keys. And then the last key is held by CASA. And so what that means is that let's say there's a hack and Treasurer has a problem where, you know, anybody who grabs a hold of your treasurer can get all the funds off of it.

Well, actually that already happened. But that doesn't matter when you're using Kosser. because you've still got the other keys that are required to protect your funds, and you actually also have your ledger there. So let's say the treasurer is totally bricked one day, your ledger is still able to sign, and that can still act as one of the three keys that you would need. So that's the benefit of having hardware manufacturer diversification.

And then just one little kind of extra nugget, the third layer of kind of removing single points of failure that we have, is that you can actually remove CASA as a single point of failure. Because everything that we have built is based on the Bitcoin protocol, you can recreate your CASA wallet using any other multi-sig software out there like Electrum or Specter. And that means that if CASA were to ever go under as a business, you wouldn't lose access to your Bitcoin.

We send you, the day you finished setting up your CASA multi-sig, we send you an email that has all of the instructions to recreate that multi-sig in another piece of software in case CASA were to ever go under. And that's something that our clients really appreciate. Something that is interesting about multi-sig, which I didn't appreciate for a while or I didn't understand, is that you actually need to have the public keys of all of the signing address, all of the addresses composing the multi-sig, not just the ones that are signing that particular transaction.

Yeah, and that's why it's beneficial to be using a coordinator software like CASA, because CASA can, when you first set it up, you're basically sending CASA your public key, and then we can make it really easy. So instead of having to access each of those keys to get a public key the next time you want to spend your funds, you only need to actually use the keys that you are signing with, and CASA can remember those other public keys for you. And since the public keys are just the public receiving keys, you know, you don't have to worry about CASA stealing your funds,

but we can make things a lot simpler and reduce a lot of friction by coordinating that for you. Yeah, I remember reading some blog posts from Jameson Lop, CASA CTO, about standardness issues with multi-sig setups, inconsistencies, just like weird edge cases that emerge with multi-sig that I guess derive from different interpretations of different wallets. And as these wallets become unsupported, these key setups basically become stranded. And it becomes a task trying to remember how you actually compose them in the first place. Yeah, it's definitely a risk. And that's why CASA is very transparent

with everything that we do with your keys. So if you're a CASA user, you can open the app and see all of the cryptographic level details of what we're doing with your keys. So you can see what XPUB we're using for each key. You can see what derivation path we're using for each key. It's all in the app in the detail for each of the keys in your multisig.

And so most people aren't going to touch that. But for the people who really care about it, it's there, and we're making sure that they have the tools that they need. So CASA, another interesting feature is that you can optionally sign up anonymously. So you do not have to disclose your identity to CASA as you sign up. Right. How is that even possible? Well, basically, you know, there's other services out there where when you first sign up, you have to KYC no matter what.

And excuse me, the way that CASA works is that we're not a regulated custodian because you're holding the keys. We're just giving you the software to actually help you do that. And so since we're not a regulated custodian, we don't, we aren't required by regulatory institutions to actually like KYC our customers. And so that means that as a customer of CASA, you can sign up with a proton mail email that doesn't have anything tied to your name in it. You can use a alias instead of a name when you're actually signing up in the app. And then we really, you know, we never know who you are and we don't need to know who you are. And we think that this is really important for the few. of kind of the internet generally. We've gotten to this place where companies are trying to

track every single thing about their customers and their identity. And when it comes to people's money and their personal sovereignty, we don't really want to have all of that data. That's almost a liability. You know, you see companies get hacked and all of their customer data, like their addresses and everything gets dumped. And it's just a huge liability. for that company. And so it's actually better for us to not keep all of that stuff too. So we do things like regularly purge our address database from when we send you your onboarding package. So there's a lot of things that we do to really try and protect our customers' privacy. Now the difference is if you want to buy Bitcoin through CASA, you're going to have to KYC because that touches the traditional

financial system. But what's important to us is that it's an opt-in feature. so you don't KYC by default when you sign up. So I love the idea of buying Bitcoin directly to a nicely poised, super robust multi-sig setup. How is that Bitcoin trade actually executed currently? Yeah, so we work with a partner in the background called Wire. And so you're actually transacting with Wire, not Casa, but we just put a really nice interface on top of it. And what's great about it is it's really the only solution out there where you can buy Bitcoin and have it sent directly to your cold storage where you're holding the

keys. And, you know, right now you have to buy it on some custodial service, an exchange or whatever other on-ramp you're using. And then every once in a while, you have to go in and send some money from there to your cold storage with CASA. And it's kind of a pain. And some of them have limits and like I've heard of people getting into like with cash app which I think is a great user experience you get into this they have a limit on how much you can withdraw every day and you get into this cash app death spiral whereas the price of Bitcoin increases it's impossible to get all of your Bitcoin out of cash app so we're just we're skipping all of that kind of friction and just making it really simple for people to buy to their wallet where they hold the keys and they don't

have to worry about somebody else holding keys for them. So returning briefly to the hardware wallets in my setup, I guess we should talk about my setup at some point. One of the wallets I used was cold card, which is my favorite. Because cold card is like CASA, they are laser focused on Bitcoin. And so that gives me additional trust that they basically have put all their attention on making something that's super ironclad for Bitcoin. they're not distracted by anything else. And the cold card is so cool to set up because you just use SD cards

to communicate between the device and the computer. Yep. For when you're doing the signature. And this cold card has never, you know, been connected to an external device ever. I mean, it's completely air-gapped. Right. That was, that just gave me a ton of comfort, honestly.

It's kind of like having, you know, people used to set up like, you know, the Glacier Protocol and stuff. You'd have to buy four computers that you took the Wi-Fi chip out of before you even turned them on and stuff. Was that part of the Glacier Protocol? Yeah, yeah, it was. It was insane. How did you load the software onto the computers, though?

Like with a USB stick. Yeah. Wow. So it's similar to using an SD card with Cold Card, but it's just way less cumbersome, right? cold card's a nice little calculator basically it does say calculator um when on the customs certificate which is which is sneaky so you don't recommend cold card as the preferred hardware wallet i guess because it's a little more cumbersome to use yeah i wouldn't say that we we don't recommend it it's just that we don't include it with our our default package that we send to our

premium clients and that's just because the majority of people signing up for cost are coming for the simplest experience possible. And as you probably experience when you're setting up, there's a little bit more that you've got to do with cold card when you're using it as your hardware wallet. But we've tried to make a lot of that really simple. So it's not even that much harder with cold card, honestly. You just have to be familiar with transferring files from your computer

to your cold card via SD card and that kind of thing. So it just takes a little bit more work. But if you're really looking for that fully air-gapped solution, then having cold card is one of those three hardware wallets that you're using can be beneficial. Yeah, it's just peace of mind. I mean, my setup was fragile. The problem with custody is that it's sort of terrifying to alter your custodial setup at any point. So that was why I kind of held off tweaking it at all.

And it's kind of perverse because, you know, you put a lot of thought into it up front. You know, you got some high fixed costs. And then you want to set it and forget it forever. Right. And, you know, eventually bequeath the Bitcoin to your heirs or whatever. And so there's this built-in resistance to altering it in any way. Or even looking at it. Or look, yeah.

It's like you don't want to know. Right. Yeah, Jameson calls it Schrodinger's Bitcoin, which is basically, if you've ever heard of Schrodinger's cat, it's like you put a cat in a box. And if you don't look at it, you never know if it's alive or dead. Well, Schrodinger's Bitcoin is you've got Bitcoin on a paper wallet or on a ledger that you haven't touched in four years. And if you don't look at it, you don't know if you've lost your Bitcoin or not. And that shouldn't be how Bitcoin storage is. You know, Kasa's approach is much more of like, we're going to make this very easy for you to interact with your keys and you're going to feel really comfortable doing it so that you can check in on your keys actually multiple times a year and have a little bit of upkeep for your setup so that you know if you discover one of your wallets as bricked or something like that well you just switch it out for a new one before it becomes a problem and it's no big deal and so we're really trying to make it very easy for people to interact with their keys so that they don't get into this set it and forget it type of situation

where you come back 10 years and discover your Bitcoin is no longer there because you forgot the password right there's this constant sort of low level tension it's like uh it's like a you know like a high pitched like a barely audible wine that you know percolates in your brain when you've got like a crypto steel sitting in a safety deposit box somewhere and you're wondering did someone drill the box or you've got a ledger sitting in a safe and you're wondering did a you know a stray electron flip a bit on my ledger i mean you got to account for these things yeah right yeah yeah and it's people underestimate how much that kind of weighs on them i think yeah and i mean Whether or not, you know, these risks are credible.

I mean, you know, those safety deposit boxes do get drilled and bit rot does occur and people forget the parameters of their setups. I think that's probably the greatest threat. That is, yeah. It's really just their own, they're themselves. Right. Is that they devise these overly complex DIY setups. So there's merit in just standardizing it.

But yeah, I certainly felt that when I finally bit the bullet. and set it up and, you know, felt an enormous weight off by his chest. And you probably realized that you weren't even biting the bullet. It was actually probably much easier. We hear that from a lot of clients. It was much easier to set up than they expected it to be. Yeah, it really wasn't that difficult. It's basically, you know, emails and cryptographic payloads and a handful of signatures.

Very straightforward, actually. Yeah, one thing I'll say is that CASA has a good, strong commitment to UX, which I think is rare for Bitcoin companies. It's very deliberate commitment. But I think it's pretty underappreciated. Yeah, we think that if we're going to be bringing Bitcoin to a large amount of people around the world, you know, there's estimated to be about 100 million people that own some form of cryptocurrency. cryptocurrency around the world right now, if we're going to bring that to a billion or two billion, we're going to have to build better user experiences than what we have right now. And so that's that's one of CASA's really core competencies and main focuses is just making key

management as easy as possible for people so that we can enable people to really, you know, take advantage of all of the features that Bitcoin everybody knows about the kind of inflation resistance that Bitcoin gives you. But what a lot of people, especially those who are new to Bitcoin don't understand is also the systemic resistance, which comes with self-custody. And it only comes if you self-custody or Bitcoin. So I think there's a lot of benefit to holding your own keys. And that's why we're trying to make it as easy as possible. would you say that key management is actually sort of one of the great unsolved problems with bitcoin or one of the greatest frictions and barriers to kind of genuine mass adoption for bitcoin

yeah and that's why when we stopped making the casa node in at the end of 2019 slash early 2020 you know we were doing the casa node and we were doing um key management through the casa app And we were just taking a step back and realizing that, like, key management is, is probably the biggest technical user experience related barrier to adoption for Bitcoin around the world because it feels complicated. It feels anxiety inducing. And a lot of bitcoinsers today, especially early bitcoins, who are kind of espousing certain key management techniques on Twitter or whatever, they don't really, they take for granted

that they've spent years learning this kind of stuff. And there's a lot of people who don't have the time to do that and they don't want to do that. And so making it something that feels really simple and intuitive to use is really important. So, and I agree, because like, it's this odd tension where Bitcoiners kind of assume that new entrants have this capacity to, you know, listen to 50 hours of podcasts and read all these endless wikis and deeply understand these 50-step processes to sort of true sovereign ownership of Bitcoin and learn how to verify signed binaries. I mean, which is, you know, something I I do, but like, does everyone have the energy to do these things?

And it's also like, if you have this bullish view of Bitcoin, you think that, okay, we have a couple single digit percentage of the world's population. In 10 years, the median Bitcoin is someone that has not adopted Bitcoin today. You know, there's way more people that don't own Bitcoin that currently own it. And so, you know, the population of Bitcoiners is going to be people that are just new to And it sounds like a completely trivial thing to say, but you have to think about your sort of marginal adopter today, not someone that is present and active and sort of deep in the Bitcoin community. Exactly. And it's it is the right thing. And it's more valuable for current Bitcoin

holders, the Bitcoin network as a whole. If we think about how we can enable that next wave of adoption rather than thinking about everybody kind of matching our, you know, how you do things as the most pure bitcoiner. I think that's something that people get caught up in sometimes. And they don't realize that it can be a journey where, you know, you can start, it's okay to start at some place that is less pure where you aren't doing everything yourself, verifying every single binary like you were saying. And if you have the desire to, you can work your way up to that point. But what we're building at CASA is really meant to be that bridge. So like I was saying even at the very beginning of explaining the product, when you're using our mobile wallet,

it feels like you're using Coinbase or Robin Hood or something like that. Is it the most secure self-sovereign mobile wallet? No. But is it a very simple, on ramp to holding your own keys for the first time, yes, and that's what's important about it. And then they can graduate to other levels of security and sovereignty, where they will start to do more and more, to take more responsibility for their own Bitcoin. So one thing, because Kasa, it has grown in stature and now is one of the most credible tools for engaging in custody, in self-custody. Cosa gets a lot of flack. Maybe some would say disproportionate, but I mean, I guess all Bitcoin companies get critique. And there's certainly

some inane critiques. What are the good critiques that you've seen? What are the criticisms of Casa that you thought, oh, this is actually reasonable, you know, I should address this. there's a couple of criticisms that we get that I think are we've addressed this many times but can can definitely address them here so one of them is that we're not open source and this is something where we definitely are like always kind of evaluating this and it's a it's a trickier question when you are a business that has IP and I think we've actually seen this in the crypto industry more broadly, like over on the Ethereum side of things, Metamask just changed their open source license in order to protect their IP,

for example. So this is something that we're always kind of evaluating and we may still go open source at some point. But the benefit of CASA is that there's always a check and balance on what we're doing. So CASA doesn't, since we're not holding on. all of the keys. And actually, you're using, for example, a treasurer or a ledger or a cold card, some of which are open source as part of your multi-sig setup. Those hardware wallets are validating any address that you're sending Bitcoin to, and you're validating it on the

hardware wallet screen. And so there are these checks and balances against CASA where if we really wanted to do something malicious, there is a very high probability that you would catch us doing that with your hardware wallet when you are sending a transaction. The other thing is just, and the other thing is that, you know, with our sovereign recovery setup, which I was explaining earlier in the show, you can fully set up your CASA wallet using separate open source software that CASA has no control over like Electrum or Spector. and you can use that to verify any receive address that the CASA app shows you. So you can really verify everything that CASA is doing with external software, hardware that we don't control. And so there's a lot of people that criticize us for not being open source. And that's the main thing that we point out is that you can fully verify this with

separate software that we're doing exactly what we say we're doing. And the other thing is if you really think about our incentives as a company, We are trying to build a company as big as Coinbase, which just IPOed for, you know, $70 billion, right? And exit scamming our customers for their Bitcoin is not going to help us do that. And it's just not in our interest. We can create a lot more value for ourselves and not have to worry about, you know, being chased down by the government for stealing everybody's Bitcoin. if we just do build a legitimate company. And that's where we see the real opportunity.

So there's a few different kind of counterpoints to the open source question. And then the other one is just that when you're using CASA, you know, you can, you're giving us your public keys. And so we can see your on-chain activity. And some people worry about this because they're worried about, you know, what happens if the government comes knocking on our door and asks for that. on chain activity or something like that. And the first thing I'll say is this is true.

When you use CASA, you give up a little bit of privacy in return for user experience where we are making things really simple for you. Now, if you are the type of person who values your utmost hardcore privacy above all else, then it's going to be better for you to go a DIY why kind of setup. But there are some ways that you can make it better with with CASA, which we were discussing earlier, which gets you almost all the way there, which are basically you can sign up for CASA with a special purpose proton mail email that has nothing related to you in it. You can use a

fake name and you can use a fake address and everything like that and buy your own hardware wallets if you don't want us to send hardware wallets to you as part of your package. And then CASA will really never know who you are. And so in that scenario, even if we could, you know, even though we do have your public keys in order to help show you things like your balances and your receive addresses from the app, there's really no way for us to correlate that to you as a person. And so there's definitely ways that you can protect yourself and still have a lot of privacy that is more than enough for most people who are using the app.

Well, that's very well said. You guys recently released a new feature, subaccounts. And this seems maybe somewhat trivial, but tell us what that actually allows your users to do. Yeah, so sub accounts is something that, what the feature does is within your CASA account, you can now have multiple sub accounts of Bitcoin, which are like separate pools of Bitcoin that never touch each other, but it's protected by the same set of keys. And so this sounds kind of trivial,

but it's actually a huge undertaking to do it with multisig because there's just a lot of little things that get touched when you have multiple keys and multiple sub accounts. And so we had to do quite a bit of building on our side to make that really usable. But we just released that yesterday. And what this is useful for is a few different things.

So if you have, let's say, some Bitcoin that you're holding personally, and then you've got some Bitcoin that's owned legally by your business, you can protect those with the same set of keys so you don't have a million keys floating around, but still keep them totally separate in a cryptographic manner so that those Bitcoins never actually touch each other. and you don't have to worry about running into tax or accounting or reporting problems for your business in case your business as Bitcoin accidentally gets mixed with your personal Bitcoin. Another good example of ways that some of our customers I think will want to use this is let's say you have some Bitcoin that you bought on an exchange. So you KYC is tied to your identity. And then you have some Bitcoin that you bought on local Bitcoins that you're not doing anything illegal with, but you just want to have that not tied to your KYC Bitcoin. You can keep that in a separate sub-account.

And from an on-chain, you know, chain analytics perspective, those two pools of Bitcoin are never correlated. And so your KYC Bitcoin would never, never touch your non-KYC kind of bought from a friend or on local Bitcoin's Bitcoin, and you can keep that pool private to yourself. So those are a couple of ones. ways that you can use the sub-accounts feature, and it really ports over a feature from the traditional banking system of having multiple savings accounts, for example, where you've got one for a vacation

fund and one for your kids and something like that, to Bitcoin. So before the call, we were talking a little bit about the sort of long-term vision for key management and what you envision there and how you expect things to involve. Maybe just touch on how you expect private keys more generally to become sort of a key part of people's lives. Yeah, for sure. Key part, no pun intended. But yeah, the basically private keys have been around for decades, right, ever since public private key cryptography was invented. But for the average consumer, they just didn't know about it, didn't need to use it, didn't care about it. And Bitcoin changed that, where it gave people a reason to use private keys.

And that gave people a taste of what private keys can do for them, because they're an inherently empowering technology where when you hold a private key that secures some piece of data, like Bitcoin, which is just a piece of data, no person. somebody else can access that data without your permission. And so what this kind of leads itself to is as our world is becoming more and more online, our identities are moving more and more online. We're just spending more time online. Private keys can give us real ownership over things like our online identity or over our

digital money or over our communications in the form of. of end-to-end encrypted communication. And when you're using a key for that, you don't want to be in a situation where if you lose your private key, you suddenly lose your identity, right? And so there's going to need to be a really great way for you to securely, easily manage those keys.

And that's really the long-term vision for what CASA is going to be. We really started with Bitcoin as kind of our wedge into the market, and the first way that people are using private keys. But over time, we think you'll be using CASA to manage your digital identity, to secure keys that protect your communications with your family, friends, and coworkers, to encrypt files that you're keeping in the cloud,

but don't want other people to be able to access. There's a ton of different things that you can do with private keys, and you're going to need a place to manage those. And so that's really what we're building at CASA for the long. term. Yeah, I mean, it's a vision of the future we very much align with. And I think integrating keys as identities or sort of signifiers is the only way that we're going to be able to bust these sort of Silicon Valley tech oligopolis that basically amass everything into these gigantic data silos and take ownership over our own digital identities.

And I think you've written a great article about that, like around the like social media profiles as property, right? And that's obviously not how it is today. Twitter can shut down your Twitter account if they want to. But with a, you know, cryptographic key based identity, let's say you get shut down on one platform, well, you just take your key and move it to another platform and plug it right in and there you go.

So I think it's one of those things that will really enable a lot of freedom for people in our world today. Yeah, Ballagy has this great line where he says private keys are private property. And certainly they are on Bitcoin. And it's just a matter of building new internet architectures whereby your identity is mediated by a cryptographic signature. It's funny because that takes us back to the days of PGP and the sort of web of trust. but it's almost like we had to take a detour through Bitcoin to subsidize people, businesses, you know, facilitating key management such that we could finally get to this much more egalitarian internet topology.

So in a sense, Bitcoin is the greatest ever subsidy for people to care about key management. And I consider that one of the great positive externalities of Bitcoin. We have all these great tools to manage keys now as a consequence of its existence. Yeah, I completely agree. I think it's, you know, Bitcoin, because people were saying for years when PGP was invented that, hey, this is going to be revolutionary for people's personal privacy. And what ended up happening was nobody built great tools around it. It was hard to use.

And people just didn't, they cared, but they didn't care enough. to get over that user friction. And then what Bitcoin has done is built incentives into using private keys. And our world runs on incentives. And so it's like this kind of Trojan horse for getting people to care about key management. And now it's up to companies like CASA to really build simple key management, build a personal key manager that people can use to secure these keys, that secure their life.

And I think that's something, I totally agree with you. It's something great that Bitcoin has done for the world. Well, Nick, this has been really fantastic. Thank you for building a product which I personally use and trust. And thanks for coming on. Yep, thanks for having me, Nick. Maybe I'll see you at episode 410. That's right.

Assuming we get there. Thank you again. I