TFTC: A Bitcoin Podcast - #411: How OnRamp is Bringing Bitcoin Multisig to Financial Products with Michael Tanguma & Jesse Meyers

Episode Date: April 14, 2023

Marty sits down with Michael Tanguma and Jesse Meyers to talk about OnRamp. Check out OnRamp: http://onrampbitcoin.com/ Michael on Twitter: https://twitter.com/MTanguma Jesse on Twitter: https://twitter.com/croesus_btc 0:00 - Intro 5:26 - Marty's chair is stolen 7:11 - OnRamp's use case and problems to solve 14:28 - Legal structure of OnRamp 19:30 - Difficulty in educating on self custody 31:10 - Decentralized control 41:55 - How will OnRamp's launch impact the market? 51:59 - The adoption curve 55:01 - Qualified custodians vs collaborative custody 1:00:36 - A new industry model 1:10:16 - OnRamp's educational mission 1:20:20 - OnRamp's content platform and new podcast 1:26:27 - Plugs Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠Unchained ⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠CrowdHealth⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠⁠ TFTC Merch is Available: ⁠⁠⁠⁠⁠⁠Shop Now⁠⁠⁠⁠⁠⁠ Join the TFTC Movement: Main ⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠ Clips ⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Website⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠ Follow Marty Bent: ⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Newsletter⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠Podcast⁠

This report was brought to you by our good friends at River. River is a Bitcoin company that has an exchange, has mining, has lightning API that you can build on. I was often referring to it as a Bitcoin exchange. It certainly does have an exchange, but it's more than that. It's a Bitcoin company. If you're looking to acquire Bitcoin, you're looking at the banking crisis unfolding right now here in the United States. You're thinking, hmm, there's a lot of counterparty risk there. Maybe I should get an asset that eliminates that counterparty risk. Bitcoin. Go to River. River.com slash TFTC. They have the exchange. You can DCA. If you DCA into Bitcoin, you won't pay any fees on those buys. If you hold Bitcoin on River, they don't recommend

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help you eliminate the third-party custody risk that exists in the incumbent banking system that is taking a lot of people out right now. They have their Vault product, which is a two or three multi-sig wallet where you hold two keys, Unchain holds one. As long as you have your two keys, you have permissionless access to your Bitcoin. It's a beautiful thing. If you're ever in a pension, you need Unchain to be the second in the two or three signature quorum. They're there for you. They have a consultation service that'll walk you through everything, get you hardware wallets, get you set up, get you comfortable. Go to unchained.com slash consultation. Tell them that TFTC sent you, you'll get $50 off that service. They also just released an inheritance

protocol. They have a lending desk, an IRA product, a financial company of the future. Unchained Capital. Go to unchained.com slash consultation. Learn about everything they have going on there. This report was also brought to you by good friends at CrowdHealth. CrowdHealth is here to help you reimagine how you pay for your healthcare. Health insurance is notoriously opaque, impersonal, egregiously expensive. I was on Cobra paying an insane amount. I switched to crowd health. It's not health insurance, a different way of doing healthcare, paying for your healthcare. It's significantly cheaper. I have my family of four on it. We're paying way less than we were on Cobra. So if you're an individual who unfortunately just got laid off

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slash TFTC. Last but not least, this rip was brought to you by our good friends at Bitcoin Talent Co. They're here to help you find a job or find talent. A recruiting firm built by Bitcoiners for Bitcoiners so they understand the different companies in the space looking for talent and what they need, whether it's lightning, a lightning developer, or somebody who knows UX around lightning, or somebody who's working on multisig at the protocol layer, they know what they need to go out and find. And then on the talent side of things, if you're out there, you're in the tech sector, you're in the banking sector, but you're a Bitcoiner, you don't know how to get in, go to bitcointalent.co. Tell them the TFTC sent you. Yeah. If you're a company, hit them up. If you're

talent, looking to get into a company, hit them up. It's a beautiful thing. Enjoy this right for a stick. You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be so i'm guessing we're live i guess michael you're you're you're sitting in my chair this is where the tables have turned are you going to host this this episode definitely not

going to host it we should caveat that you you asked me to come in here i would never sit in another man's seat but uh it was offered for the audio audio quality so i i obliged yeah that mic is much better than the apple headphones you're gonna put in so for the sake of all the audiophiles listening to the show i thought it was very important that you sit in the chair use that mic it's really throwing me off i don't know who to call marty we sort of look like it's a beautiful studio i'm glad we're uh we're getting gets getting used while you're out of town i am as well and i'm glad we're here doing this while i'm out of town uh freaks at home listening and cannot see what's going on on the screen right

now i'm in philadelphia joined by jesse myers and michael tanguma who was sitting in my chair in austin texas to discuss the product that you guys launched today the company on ramp I'm very excited. I've been paying attention and watching you guys build this over the last six months. Disclosure, I'm an advisor to OnRamp as well. But I think it's a very important product and company to get out there that will really turn a lot of heads and really change the game of how institutional capital, high net worth individuals, family offices get exposure to Bitcoin because it's something that they've been a bit apprehensive to do to date.

And I think the solution that you guys have come up with at OnRamp could be a massive unlock for tons of capital to come into Bitcoin. So I guess before we jump in to the mechanics of OnRamp, how it works, and what you guys are building, we should dive deeper into this problem of why capital has been sitting on the sidelines. Why have people been afraid to get into Bitcoin? and I'll throw that to you, Jesse. Yeah, it's a great point. And we've all kind of seen it

playing out in the market of there's one problem of deciding that Bitcoin should be a part of your portfolio or in the case of institutions, whether it should be a part of your treasury management. And that's hard enough, right? That's a hard thing to commit to, to get comfortable with. but then once you've done that you have this additional step this extra problem of how do you get exposure to bitcoin do you do you take self-custody do you trust a custodian do you get exposure through some other vehicle that gives you approximate bitcoin exposure whether that's holding a Bitcoin mining company stocks or investing in the number of Bitcoin funds out there that are actually futures based or even options based contracts. So you're not actually holding Bitcoin, you're holding a contract that approximates Bitcoin.

so you know if you're an institution if you're a high net worth individual and you're thinking about deploying millions of dollars into bitcoin those are kind of your options right now and obviously there's some major downsides with with all of them and no solution is perfect but the current option set is very limited in its capacity to unlock the abilities the attractive properties of bitcoin and why you're investing in it in the first place and future proof that investment too to make it possible for you to take self-custody into the future because a lot of these current options uh if you were to take self-custody in the future you're hit with a taxable event because you don't actually own bitcoin you'll you own something that

approximates bitcoin and then when you want to when you decide actually we need to hold this thing ourselves, you have a taxable event because you're trading out of the thing that's almost Bitcoin, but not, and into Bitcoin. So that's a taxable event. And, you know, suddenly you've got a 30% hit on your Bitcoin holdings. So, you know, right now there's not a great, there hasn't been a great option for solving that problem of how do I get started in Bitcoin the right way while future-proofing what I, you know, what I might want to do and making it possible to take self custody down the road. So that was kind of the problem that we've been noodling on or seeing Michael and I in our respective roles before starting OnRamp Bitcoin. And that was kind of

the starting point of why we decided to make a better solution for getting started in Bitcoin the right way. Yeah. Michael, do you have any other pain points top of mind that Jesse maybe didn't mention that people have? Yeah, I think, um, a couple of things I've been reflecting on, you know, as you mentioned, we've been talking about this for a while and it's been, uh, it's been great to think about setting, setting up this discussion and chatting through, um, you know, what we're working on, getting it out to the market, but then also reflecting on the path dependent nature of how we got here. And there's been a lot of pain in the market. There's been a lot of pain with us as individuals onboarding folks and having them lose funds you do it weekly

you and matt trying to you know explain and some people are saved and others leave their bitcoin on exchange or buying a product that trades at a discount to what the spot price is and um one of the things that when when we were looking at this you know my background being at unchained capital and helping you know when i started i think we had roughly 50 clients and we said close to 5 000 clients now and one of the um big points that came up was there was always this kicking and screaming with certain individuals that are just are not ready to hold cryptographic material it was just a reason and knowing the internal conversion rates and helping onboarding and building out that sales team it's like okay there's a pain point here that individuals

understand that you know custodial risk centralization but then there's still this problem of making this leap from they have their checking account they have their goldman sachs account but now in their mind they're effectively whether it's true or not effectively holding gold underneath a mattress and um there's the other side of that which we all know of like you know custodial risk centralization and that there effectively had to be this like middle ground and so that was the first layer the second layer was starting to have conversations after um you know naively thinking that we figured out the crypto slash bitcoin market with grayscale, GBTC, BlockFi, everybody thought these darlings were the people for the wave of this

adoption, this next generation of money, however we want to refer to it. And the reality is the past six to 12 months, the board has been completely reset from an entrepreneurial perspective. If you've been around, like it's all up for grabs in my mind. And so realizing that all the folks that had the market lead basically gave it up. And then also having discussions with some of the largest institutions, knowing that they're coming into the market because large institutions do not want to face coinbase they do not want to face uh quote unquote web 2 web 3 uh versions because there's no different than coinbase than ftx to them and realizing the likes of you know citadel fidelity these companies are coming in but then also hearing the chatter of what they're

using on the back end and the back end looks exactly what just blew up uh the past 6 to 12 months it's all the same format rehypothecation centralization because they're still have the mental model of the old world and so looking at that and having this thesis that in let's call it three to five years we're going to see the exact same thing that just happened but orders of magnitude larger unless we build something different and that's effectively some of the you know um calculus and ingredients that came into this kind of you know idea and me and jesse you know deciding to pursue and attack this problem yeah i think it's very important and i think you guys are putting a step forward that will change the dynamic of how future companies and products

that give people access to Bitcoin will be built. I mean, Michael, you've seen this at Unchained, the idea of collaborative custody, two or three multi-sig vaults in which an individual holds two keys, Unchained holds one, or on the lending product where Unchained holds the key, Kingdom trust holds a key or another third party and then the user gets one key this this model of distributed keys is something we've talked about over the years is the future of a financial monetary banking system built with bitcoin at its core and so i think this is a good opportunity to dive into the mechanics of how on-ramp the product works from a legal perspective what is what is the structure of the actual company what are people actually buying and then how you guys

leverage bitcoin's native properties particularly multi-sig to give your clients a product that will give them peace of mind and the ability to leverage bitcoin in a way that gives them confidence that that their money is where they think it is yeah just you want to kick off legal and I'll go into tech and multi-sig. Yeah. Yeah, I think that a little bit of background context here is probably helpful to start also. As many people know,

I've been running a fund in Bitcoin space for the last five years. It started as an altcoin fund, got rocked in 2018, had to figure out why realized you know oh there's this whole deeper rabbit hole i was missing it's all about bitcoin shifted to get my investors just 100 exposure to bitcoin but in you know in doing that then then my investors no longer needed um me as a as a hedge fund manager um holding their their assets and so i you know i had to have conversations with them about you guys don't need me anymore. Um, you can hold, you can withdraw your Bitcoin and hold it yourselves and

not pay these fees. And about a quarter of them took me up on that. And for three quarters of them, they didn't want to deal with that. They weren't ready for that responsibility. The, uh, the burden of having to keep cryptographic materials safe and secure permanently all, always at all times um and and just the learning curve involved of you know having to know enough to know to be confident that you're doing everything you need to be doing um so they didn't want to have to take that on so they wanted to keep paying me fees to do this um and so that to me spoke to this this market need um of there's a lot of people out there who are not yet ready for taking self-custody or, you know,

they're not yet far enough down the learning journey to be ready to do that themselves. But a hedge fund structure isn't the right structure to do this. And so Michael and I were talking about, you know, what would be the ideal vehicle for doing this and landed on the solution that we have for OnRamp, which is a trust model, much like how GLD is structured, where it's a single commodity investment vehicle,

which greatly reduces the legal lift involved of this asset and allows for investors to keep the asset on their balance sheet in the form of trust units rather than having to be a part of an LLC where you have to get K-1s every year and include those in your taxes and all of the headaches involved in that. So that was the legal structure and the genesis, the reason for that legal structure and how we arrived at that. And I think this sort of speaks to all of the decisions made

about how we set up OnRamp were to create the best vehicle for the lowest headaches and the best versatility for what investors need now and into the future. The other big part of that is how this trust structure enables in-kind redemptions further down the road. So it's not an immediate thing. it's um after 12 months you're able to do in-kind redemptions and that is not a taxable event because you're going from 100 bitcoin asset and then taking that possession yourself so that's

not a taxable event which is different from how most of the bitcoin funds out there are structured today and i think a big differentiator and a big pain point solved in terms of why the current set of options is not ideal for people who are looking to deploy capital, but not ready to take on self custody and, and looking for a place to get started, learn more, get comfortable with what they need to be doing, and then eventually take self custody. Yeah. I think the looking at the market and I think it's a product of being so early that all the funds are effectively and it took me some learning as we were going through this progress or process and, um, looking at the funds that exist. And there's a couple downsides, uh, before going into the mechanics

of the, you know, the technical aspects of the custody. Um, but the, one of them is that they're all closed in funds as Jesse referenced. So if you want to get exposure, you're going in, you're hoping that they're going to track the spot price of BTC. And if you ever want to get liquidity, you're having to sell it's a taxable event um and there's this other thing that i didn't appreciate as much until understanding what jesse was doing with his fund and it's something we do at unchained is really on the education side because uh when the price is running everybody's buying into bitcoin and whatever product but when it goes the opposite way the right move that we understand after looking at this is this is the this is the last trade that you're doubling down when it goes

the other way instead of you know basically selling and all these funds are not prepared to talk through why bitcoin is this asset uh to do that where if you go look at any other pages won't name any names but if you look at any of the major four funds five funds they all have on the first two pages baskets of cryptocurrencies from solana nft and i was like holy crap like this is the first thing people see trying to get in on the institutional high net worth side and uh it's like okay well education matters because you want to help not only them understand what they're buying so when the price is moving against them they're actually um you know increasing their exposure but then they're also getting educated to the properties of bitcoin

which they get kneecapped when you go through these products whether it's coinbase or you're going through a fun product you're effectively getting like 50 of my mind of btc's properties I won't try to make the analogy, but what's ever if you took 50% of the properties that made gold, gold, and that's what you would be buying if you were buying like a spot exposure. We all know gold in the paper markets.

And so this like idea had been percolating in my mind for a few years at Unchained. I brought it up to Parker. And then when me and Jesse started chatting and finding out what he was doing, I was like, oh, okay, so this is the model. Because independent of that, I had been thinking about custody.

And in my own opinion, I don't think that custody gets talked about enough in the Bitcoin world or just in the landscape of venture. in the sense of, we assume custody is figured out. In my mind, it's so far from being figured out because what exists today is effectively somebody putting Bitcoin under their mattress, like a hardware device or trusting individuals,

or you go to Coinbase, Fidelity, whoever the third party is. And we all know as Bitcoiners, we know what happened with gold and the centralization risk is real. And both of those can't work if we're going to bring in trillions of dollars. There's not enough institutions

willing to do the gold under the mattress. And so there has to be this middle ground. And so if you think about it in just conceptual spot, Bitcoin tracks exactly the spot price. Nothing would happen with GBTC, the ability to take redemptions or possession of the Bitcoin when you want to. And then when we get into the technical aspects, multi-party custody. So basically having three institutional grade key holders, qualified custodian being one of them, kingdom trust, holding the keys and requiring a quorum a majority of a two of three set to move the asset and so you're effectively getting what you would get with coinbase or any other institutional grade

key holder but you're getting it times three and the requirement would be to have two of three signed to move the asset into possession that you would want or just to actually sell if you wanted to get your dollars back and that obviously has a lot of ramifications on centralization from a hacking rehypothecation cause it's inherently on chain because of multi-sex properties, the ability to audit. There's a laundry list of reasons why this is a superior format in our mind. And, and so we're really excited to kind of get this. And I guess the last part to say is that the key holders it's on chain capital

on ramp and kingdom trust, which again is a qualified custodian. I don't know if this should be a disclaimer, but I'll say it. Ryan Radloff, CEO of kingdom trust pioneer in the space kingdom trust are the first qualified custodian to hold bitcoin they're they're really excited about moving this forefront of keys and getting rid of the honeypots and ryan is a visionary in the sense that he wanted to be a part of this and we're really excited to have him on board and the idea is to really expand this key network um to to build on that these are our key partners now but the idea is that individuals will be familiar with these key agents but in a future state they'll have their own key agents

that they want they'll have their own bank they'll have their own financial institution and this is in our mind how Bitcoin scales in a broader sense because of how trust is built within our traditional banking system. Like we're not going to recreate the rule. We're just repurposing it for a Bitcoin standard. Yeah. I think, I think Michael touched on such an important part of like the ethos of, of where this has come from is pretty much every company that's tried to tackle Bitcoin custody has been focused on self-custody and, and rightly so like that is the gold standard. That's how people should be. That's the goal everybody should be aiming for. But as Michael has seen talking with prospective clients at Unchained and what I've seen with three quarters of my investors not wanting to take self-custody is there's a big portion of the market that wants a solution now that doesn't require them to learn about self-custody. Right as they're just coming around to the fact that they should own some Bitcoin.

That's a big ask. They want a solution now that reduces counterparty risk as much as possible, which is why the multi-party custody does that in a tremendous way. Even going so far as to greatly minimize the risk of a 6102 situation. um and and then also future proofs them for you know when they're ready to take self-custody they can because it's it's not going to trigger a taxable event so you know our our philosophy is that as bitcoin this little blueberry of an asset on the global asset landscape as it you know it gets hooked into the water the city water main as trace mayor used

of all the value in the world flowing into this more attractive asset than anything else that's out there. That connection, that conduit, that pipe needs to be built for the needs of the incoming capital. What are their needs as they're on-ramping to Bitcoin? What do they really need to have in place and what kind of guide do they need to have to welcome them into the space and point them in the right direction and help get them educated in the right way. And when you look at the solutions that are out there right now, these funds, Michael won't name the names, but I'll mention some of them. You've got GBTC, the whole Grayscale environment, you've got BidWise and some others these are businessmen who created products because there was demand for them

and that included crypto right that was they built crypto products because people wanted exposure to crypto whereas what we are doing is building a a the right bitcoin on ramp for people to get them started in bitcoin the right way because bitcoin is the only thing they should be messing with and that's what we're here to do yeah no i mean i i've always described when people people when i try to explain on-ramp to people i'm like it's gbtc done the right way like you shouldn't be buying like shares and some synthetic exposure that you can't call on in the future like If you're getting Bitcoin, this is something Matt and I always talk about, of course, we highly recommend self-custody. But, I mean, as you two have described and as I've experienced myself, there is a large part of the market of potential Bitcoin users that are sitting on the sidelines because they're so freaked out by managing keys.

And bringing it back to discussions that we've had throughout the years, Michael, like the future system is going to be built on these multi-sig quorums. And so this multi-party, multi-institution product that you guys have built at OnRamp, I think, is an incredible unlock for this side of the market that wants to get in, but is petrified. They don't want it sitting on Coinbase. They don't want it sitting under their mattress. And it's crazy that it took this long for something like this to come to market. But I'm extremely excited that it's here because you guys are doing it the right way. my mind like just leveraging bitcoin's native sig properties is probably the most underappreciated uh aspect of bitcoin as it pertains to building out financial products

yeah there's people want exposure to bitcoin yeah there's a there's a something that um i know it gets a lot of slack in our in our circles but uh balaji said recently that until bitcoin there was no such thing as a billionaire that nobody could actually take their wealth outside of like a financial you know you know government system and actually own it and so now to your point you have this asset that has all the properties that we know but then also you can split up the distribution with a with keys and individuals or entities businesses that you trust and what we know and i don't know if it gets discussed enough is that people want exposure to this space like even if they don't know they want bitcoin they know digital assets they see everybody making money

and the buzz it out you know it punches outside of its class from a mind share even though we're you know whatever a trillion a little over a little less depending on where the price is as a total asset not including bitcoin and crypto but the idea is there's like 200 million um supposedly bitcoin holders but the reality and we always talk about this like 1 million to 10 million actually have material exposure to bitcoin meaning over 10 000 dollars and if you go ask anybody like your grandmother or somebody that's you know knows somebody in the space or has heard of it they basically say like i'm kind of interested or i have like that hundred or thousand dollars on coinbase but they never can put material capital because it ends up in two

scenarios in their mind because they've heard enough of it is it ends up in a landfill whatever that hardware stick or hard drive or it gets hacked by north korean hackers funny enough they just put a report out that a billion i think was stolen by north korean hackers last year alone and so like in our in our mind it's like there needs to be better solutions so people feel more comfortable to get the money to unlock that capital and so the reality is if this is a product that is makes sense and unlocks value for the bitcoin ecosystem it is this is the first like step forward but this will be a standard uh from institutions from funds that eventually like the the idea of a consumer or an individual going to an entity a business and saying well how do you

custody your bitcoin is it by yourself like are you susceptible to my server between my phone and your your server coinbase uh because that happens all day long even though nobody hears about it people's bitcoins taken and so that reality of having multiple keys and whatever the quorum is somebody holding one or none uh in our opinion this is how bitcoin scales ultimately so we're excited to you know kick off that process yeah and so to take a step back for everybody listening who's heard what we've described here. So like, all right, what is this? You buy shares in the on-ramp trust, correct?

And then with those shares, you're buying Bitcoin. It gets locked up in a two or three multi-sig. Unchained holds a key. On-ramp holds a key. Kingdom trust holds a key. Yeah, that's correct. So if somebody is interested in getting a Bitcoin allocation, uh they would go through our onboarding process full you know um the kyc aml check the boxes on

all that a credit investor uh then they're onboarded they send money to onramp um that gets executed at market leading lowest transaction cost possible via Unchained's execution desk and then put directly into a multi-party collaborative custody vault. And this is what we've been talking about of the keys for that vault. There's three keys. And for anyone not familiar with collaborative custody, it's like there's, you know,

like you've seen the movies when there's the nuclear codes and then you have to turn the keys, multiple keys at the same time. there are three different keys and to move any of the assets in that vault you need to have two of those keys at least agree and sign a transaction and so since each of those keys are held by a different institutional holder and what we've set up is on ramp is holding one unchained is holding another and kingdom trust a qualified custodian in the traditional asset space is holding the third. Those are the key holders. No single institution there can control the Bitcoin in that vault. It has to go through the process of the collaborative custody process

that Unchained and others have established over the last five years and gotten to a really solid place for you know these new use cases to be developed on top of um so that's the the degree of custody that you're you're talking about here which is very different from the traditional world where you build your fortress and you hold you know the assets safely within your fortress whether that's like fidelity or or whatever um because bitcoin has this property uh because it's a digital asset and has multisig built into it, that we are able to leverage this collaborative custody model to greatly reduce counterparty risk because it's shared between three different institutions that all have their responsibility of, you know, doing right by the end owner of the

assets, you know, and legally and there are well-established, you know, through a well-established agreement of um here are the rights and responsibilities of each party involved so that's that's the flow of money coming in for the investor and then what the investor holds is uh trust units which are backed one-to-one by bitcoin so one on-ramp bitcoin trust unit is backed by one bitcoin and of course fractional units and bitcoin um and then that sits in that vault until an investor is prepared to either redeem in dollars or withdraw their bitcoin to a different um custody solution or you know whether that's self-custody or something else that they choose uh in which case they initiate that redemption process and the the bitcoin is

then signed by two of the three institutions to be moved to the new destination for the investor yeah this is something every gptc holder would like the ability to do right now exactly and and that's what's i think that you know a big part of where this came from is my frustration i know michael feels the same way of like what are these existing products like doing they're they're set up um a friend of mine likes to call them the roach motels where the money comes in but it can never leave because you're going to get hit with this big taxable event and gptc has its own issues with the you know the discount to nav because because you're not allowed to redeem it so you can't maintain you know the one-to-one price um because it has

to float on the secondary market because it's it's all trapped there uh and so every investor in gbtc would like to be able to redeem their bitcoin if they were able to do that right now they would make 35 percent you know there's a 35 discount so more than 35 going up um and they're not allowed to. They could be, but it's written into the GBTC contract that GBTC doesn't have to do that. And they don't plan on doing that and they're never going to do that. And so there should be a better solution, a solution built by Bitcoiners with Bitcoin's properties at the forefront for Bitcoin to help new people get into Bitcoin the right way. Yeah. There's a, there's a, there's a fun part of, you know, we're, we're capitalists and we want to make money, but there's a really nice

part of, you know, talking about this now, and we've been talking about it before, but the reality is like, we all win if this is successful and other people adopt this. So whether it's somebody coming in and saying, you know, there's management fees associated with this, it's under 1%. But the reality is somebody says, well, why don't I go to Unchained Capital Casa and hold my own keys? And we're like, yes, please. I will introduce you directly to somebody on the client solutions team. the best people in the world to onboard you to hold your own keys because that's important like that is the most important thing in our mind for bitcoin is having the decentralization of obviously hash rate but also private key ownership which again i don't think is talked about enough and

then um the reality is but then to jesse's point the folks that aren't ready will let us be the on-ramp and educate you and when you are ready then we can hand that off and prepare you to to whether it's unchained your own self-custody and there's different levels of this i think of like MicroStrategy is a great example who you know these firms come in in major size and they may be at a large institution they may be at these honeypots these centralized custodians but the reality is at some point they're going to get uncomfortable with that because of balance sheet risk of what we've seen and insolvencies are they going to be made whole and maybe they don't use an on-ramp or on-chain they probably just develop their own custody in-house it's something we've

always talked about it's like well why doesn't microstrategy just build their own custody model they're going to have so much bitcoin in a certain world that like sailor is going to want to control and have his own team be a part of that versus outsourcing it because if you can't trust your own people why can you trust coinbase and um so this this idea is that you help people get to the place that they're at but then you don't walk them into this model that's an aum game or the properties where you're going against it because that's basically how you get racked right we've it over time like the second you go against the inertia and the equilibrium of the natural state of order of things which is basically what block by ftx the gbc every all did you just end up

a zero or on the way to being a zero i guess gray skill is still alive but um yeah yeah yeah to just to build on what michael is saying i think one of the there's a couple of the features here of having a collaborative custody on-chain model here where we are holding Bitcoin on-chain in a vault that no one of the three key holding institutions can control. That prevents many of the temptations that some of these other cautionary tales recently have succumbed to of first and foremost rehypothecation.

so if you can if you you know are are like a block fi um you build this business around bringing in a bunch of bitcoin and then lending it out and you you generate eight ten percent on that bitcoin because it turns out you're lending it to three arrows capital or somebody like that and they're promising you eight ten percent if they can just borrow your bitcoin because they're going to go crush it in altcoins. Like that's who BlockFi was dealing with. And then BlockFi is promising the actual owner of that Bitcoin, we'll give you 6% of the 10% we're making.

And that's BlockFi's business model, rehypothecating your Bitcoin. And of course, they told you it was safe. And of course, it turned out to not be safe. Who they were dealing with had the veneer of professionalism and risk management, three arrows capital. But of course, that was not the case. So in BlockFi situation, if a user is using BlockFi, they're giving their keys, they're giving their Bitcoin to BlockFi and saying, do with it whatever you want. basically, I just want to get a 6% return. And that wrecked a bunch of people. And that kind of risk management is not something that an institution can tolerate or accept. And so

there should be this better solution. And by leveraging Bitcoin's intrinsic properties here, having the Bitcoin stored on chain in a manner where no single key holder can control it, can possibly rehypothecate it, that just provides a better level of assurance, a better risk management, because that temptation is completely gone. You know, even if OnRamp or a company that does this same sort of model wanted to rehypothecate they literally couldn't and that's an important distinction for anyone who's considering their options about how to get allocation in bitcoin without taking self-custody yet yeah so let's paint a picture of

how you guys see this launch playing out until like so how much capital flowing into bitcoin do you think this unlocks because obviously we've described the archetype of the high net worth individual the institution that desperately wants to get in but has delayed their exposure to bitcoin because they're not happy with the solution it's not an on-ramp is on the market and the they have the ability to get exposure to bitcoin in an extremely trust minimized fashion what types of influence i don't want to force you guys to like be like this is the best product ever is going to come in but just as bitcoiners now that this exists taking off your on-ramp hat and just putting on your your bitcoin thinker hat like what kind of opportunities do

you guys think this this opens up i want to make a little distinction on the frame on the framing there of like you know i don't there are probably are some people decision makers at institutions who are desperate to get their institution to agree to an allocation to bitcoin um but i think that there's an even greater set of people here who see Bitcoin and think that the barrier to getting in is too great. I'm not desperate to get in. I would like to be in, but I don't have time to learn about it. The activation energy to get into this thing is too great. And so I think that what OnRamp does is it lowers that barrier. It lowers that activation energy required for an individual or institution to get to that allocation and so yeah yeah i think um

we were jesse and i were talking about this before um we've kept a limited circle of folks advisors um group and getting feedback and it and it's it's been tremendous it's been incredible you know introductions be made um family offices there's discussions on large institutions thinking about how they can they hold bitcoin on for other business opportunities and how they can market having a better custody model so we see that unlocking in the existing market um but to your your direct question and point this is something we saw at unchained is uh and to jesse's point that there's somebody that's on the the edges and ready or almost ready and a better custody solution and having the the landscape painted in a logical framing by somebody they

can trust helps that initial allocation but then as we know nobody just comes in that really looks at the space and you know a small they come in a small way but then they start looking and they realize oh uh the unlock at least what we've seen and i think this will compound on it is it turns from being an ephemeral thing that's up in the air and in the cloud that can be taken from them at any moment or gone to zero to it's tied and it becomes tangible and whether you're going to an engine capital and you hold two of three keys those keys don't get up and walk away they literally have to be plugged in and a digital signature has to be provided to move those assets similar to the institutions we're talking about these aren't just keys sitting around there's a whole procedure and

process where one key has multiple pieces composed to come together just for one signature at one institution this is how all custody works and so this idea of getting different individuals comfortable with this it's the first step in their allocation but then as we think through well how do endowments come in how do uh because all these endowments are large institutions and pensions they're all comprised of individuals that are all looking at the same problem and they're right now either thinking about it or they'll be clients of on-ramp and then the reality is whenever the price does whatever it does and the macro nature does whatever it does they're going to start looking at well where do we go and that cio and that board is going to start looking at well this

is how i custody it and we're we're we're uh we're not naive enough to think that well these keys will be the only keys that will ever exist for on-ramp and say that this is what they'll feel comfortable with they'll probably have relationships with the largest banking institutions and other trusted partners and the reality is they'll probably lean on them and whether through on-ramp or another vehicle they'll say hey like look at this model look at what it does and maybe it's three of five you know the the future is yet to be painted in the picture but the reality is like that's the kind of unlock it starts building on what's already happened the past 12 plus years in bitcoin bitcoin space what unchained and other multi-sig providers have done and now you can

start seeing you can if you squint you can see how like you're looking at what somewhat the existing old world look like but with institutions that have trust models that have other business models that aren't reliant just on signing so the game theory isn't oh well if they go offline or move their funds like no they have a whole multi-billion dollar business on other things so So they'd be blowing up their business if they didn't fulfill their obligation in this key signing. And that's how you can start seeing basically how this plays out, whether it's lending, banking on Bitcoin, and everything else that gets financialized. You'll have these trusted parties holding keys. Yeah.

No, I think that's a really exciting part, too, because it adds this whole social aspect to it as well. because the big question will be like well why wouldn't kingdom trust and unchained and and or unramp and kingdom trust and or on ramp and unchained collude to move the bitcoin out of the phone and steal it like you just said like like they have other business lines that the reputation depends on and knowing parties involved at the three individual institutions to make up this multi-party custody like it doesn't make sense number one you'd have lawyers coming after you because it would technically be illegal and then number two like you said this is just the beginning the the risks will get distributed even further as more key signers join the potential

quorum so you guys can build on top of this yeah that's exactly right i mean we we recognize this uh early on in unchained getting the first key agent on the loan construct you know back in 1718 was a difficult task think about again holding cryptographic material having somebody come on board what's involved in the process the slas and it's still not easy um but it's progressively like the what's existed if you think about again in the context of unchained onboarding individuals like the keys don't get up and walk away so there are no hacks with like multi-sig if somebody does things and leaves keys and opens up their attack vectors like that's a different situation but there is no penetration between like a digital server and being able to log in or fish an

individual and so explaining that to other key holders and as you go through this vision starting to come out and when it becomes a standard and this is like the the view or our hope is that individuals that have um you know certain credibility within other organizations they can start leaning and they can start explaining this hey you should look at this model you should understand these properties because the reality is like this is a big thing that actually is an interesting component where it's like well why haven't we seen this and most people aren't in the bitcoin only train and so when you think about fireblocks and anchorage all these providers aren't actually incentivized to do this they know they've said it if you go listen to specifically

the ceo of fireblocks he's referenced that multisig is superior to multi-party computation mpc uh not to be confused with multi-party custody that's the onrem's model um but that they uh they they have to support the long tail of crypto assets and so you have this like new form of cryptography to support all the shit coins that are created and if you look like three weeks ago uh npc they just had a huge bug there was a bunch of money loss and what's so you add that but you have to support the long tail so that's why there's not money to be made it's open source anybody can spin up their own multi-sig vault caravan you know if you want to just do this without anybody knowing you can go to unchained's website go to i think it's the um labs part you

can go build this but the reality is that what's also interesting is multisig similar to like a tcpip is um interoperable and npc is not so it's a closed system and that's what is really exciting that you can start leveraging again 305 405 whatever you want in your m of n you can have other key agents so it's not like oh i'm going to city bank or chase or be in wine saying hey adopt this new standard it's like you're basically able to plug and play you'll probably have some you know sales engineer go in and basically you know bring it to them and show them the best practices and how to do it but the reality is it's just one click away from them having their own key and xpub to sign where nobody else can do that because they're not they're playing in a closed

sandbox uh and which is really exciting because then once that picks up steam that just becomes a standard yeah yeah mpc multi-party computation the competitor to multisig i think is maybe red herring's the right term but it is a distraction and like you said michael they're forced to focus on this technically deficient compared to multisig architecture and because they're trying to service all all the shit coins and so i think again what you guys are doing what Unchained's doing with its focus on Bitcoin, Bitcoin only, leveraging Bitcoin's native properties to build products is going to have very large benefits in the long run. Yes, short, medium term. Companies like Fireblocks providing the crypto space with custody,

insufficient custody solutions via MPC. They may make some money in the short term, But in the long run, I think we all agree that multi-sig is the foundation that the future financial system will be built on. Yeah. And to the question you had earlier, Marty, about, you know, what does this unlock? You know, I've been thinking about the adoption curve that applies here as well, because we forget as Bitcoiners how early it is in the adoption curve. The classic adoption curve has your innovators, your early adopters, your early majority, late majority laggards. And the innovators typically is classically 2.5% of the population.

And if we have 10 million meaningful Bitcoin adopters currently, that's uh that's uh a quarter of a percent or less of um of adoption of you know eight billion people in the world and so it's very very very early we're still in the very early part of the innovators piece of the adoption curve and why that's important is because the early majority they don't think like the innovators the innovators are tech forward by definition they are prepared to you know figure out what they don't know and take a leap and that's not the psychology of the middle of the bell curve not even the psychology of of the next group the early adopter group and so that you know it has to be easier the friction

of getting into bitcoin um and feeling confident about it feeling like you're in a safe place you are on the right track you know what's going on or why you hold this thing and and you understand the reasons for why bitcoin is an attractive asset in your portfolio you understand the reasons why you're you're holding it in a in a in our case a fund where it's on chain and you can take self custody later. You understand that. That needs to be clearer and easier to understand that whole process, all the friction of coming into Bitcoin can and does need to be reduced in order to make it possible for the middle of the bell curve to wrap their heads around what's required of them to take that leap and to feel comfortable and confident enough that they can do this without

getting burned. And that's just an organic process. That's the free market playing out. Entrepreneurs will build better solutions in order to reduce the friction of people coming into Bitcoin. And this is, I think, a major part of this frontier of building custody solutions that are for people who are not yet ready for self-custody but allow for self-custody in the future is a big part of that that the bitcoin landscape has been missing agreed and part of that need for an easier solution is obviously part technical with multi-sig but then it's part social too people look for these social cues for these stamps of approval from certain types of institutions. And Jesse, you've mentioned it a couple of times. Kingdom Trust,

one of the parties and the first multi-party collaborative custody model for OnRamp is a qualified custodian. What is a qualified custodian and why do people feel more comfortable when a qualified custodian is part of a particular financial product? Great question. So in simplified terms, a qualified custodian is just an official designation that a particular company is, you know, in the good graces of the SEC to hold assets, like stocks, you know, on their balance sheet in their custody. and and that that's you know a whole bunch of hoops that have to be jumped through in terms of regulatory processes and and verification and ongoing checks to maintain that status and so there's you know this is from the traditional world of how traditional assets stocks and other, um, securities are, are held. Um, you know, when you have your brokerage account,

when you've got your Schwab account, uh, yeah, the, the numbers on the screen say that you have this many stocks. Um, but where does that sit? It doesn't even sit with Schwab. Usually it sits with some qualified custodian whose entire business is keeping that stuff safe, the actual assets. And that's what Kingdom Trust is and does. And so having them as a part of our custody solution is a landmark step, actually, because there's never been a qualified custodian that's a part of holding Bitcoin. As far as I know, as far as Michael, I think as far as we know. And so this is a big step in the professionalization of how Bitcoin is held. And the multi-party collaborative custody model is a big part of making that possible.

Yeah. Qualified custodian. I don't know if it's 1940s. I think it's 1940s Securities Act, but it's a basically trust companies and banks have the status and it's for traditional assets like Jesse mentioned, but what it's turned into is basically a CYA for large institutions to, and this is actually came out. I don't think it's like official guidance. It's like forward guidance from, I think it was the SEC about now like financial advisors,

wealth managers have to be required or in the future state would be required if they were going to part client assets to be with a qualified custodian, uh which limits where assets can be held and that furthers the the honeypot so to jesse's point it's really important for kingdom trust to take um this forward action but what's interesting is that um you know this term is actually kind of i don't even know if i'm supposed to say this but i will it's like qualified custodian the bitcoin world is actually an unqualified custodian because a lot of the times they're not even uh custodians like in the in the physical sense of bitcoin private keys and so you get the cya from the institution but it's inherently um

like not state-of-the-art it's not best in class and you end up using uh like a gemini gemini is a qualified custodian believe they have a bank charter or a trust charter and um but it's still a single entity and this goes to the point we talked about before of like the future of this asset as it's being built out by these institutions it's leveraging qualified custodians but they're all the same there's no difference between the qualified custodian from a physical custody perspective than ftx it's somebody sitting somewhere with servers with private keys either online or offline that have somebody can steal it hack it re-hypothecate independent of the status and it's very similar to the brand affinity too because the the obvious question this came up

earlier with jesse and i was like well what if i'm at name whatever big institution that has bitcoin well they're going to make me whole if they're hacked or they lose the bitcoin it's like yes until bitcoin's too big and then it's a zero because that was what everybody said about block fight it's like oh peter teal and their investors and it was something i thought about it's like block fight could they really go to zero like there's somebody bail them out the equity value and that's just not the case and so if we're all right about bitcoin and its appreciation the market cap eventually supersedes whatever the equity loss or value in that entity that gets rugged whether because they're hacked they misappropriate funds and the reality is now

you have a zero um and the last part of this is we talk about the path dependent nature of getting to this point like i'd be curious on your guys if you guys like i can't imagine a better time to be having this discussion because we started talking about this six to eight months ago and it's been like every month it's been validated all the way to svb like you cannot trust a single institution with your money it's just whether it's in the fiat world or in the bitcoin world and you just have this one form of money that happens to have programmability and scripting logic that you can segregate with multiple institutions that are trusted um so it's it's a great time yeah that that can't be emphasized enough that in the last six months you can't trust

any single institution to hold your money. And that's where this model just unleashes what Bitcoin natively has within it of introducing this totally different philosophy to the traditional asset world. In the past, you've had your fortress, you've had your qualified custodian that's keeping everything nice and safe. But as Michael pointed out, that's not as safe as distributing your risk through a multi-party collaborative custody model where it's a quorum rather than a single honeypot where all the assets are held. And so, you know, we should absolutely be moving into a world where we have this better solution in terms of risk mitigation because it's in bitcoin it's been there and now you know with with unchained capital and other

multi-sig providers that this has been proven out and established and it you know on a on an individual um you know for the individual market in particular and now this can be rolled out for how institutional level custody is handled um you know and it's only possible in bitcoin because Well, it's possible with other cryptos, but it's natively in Bitcoin and Bitcoin is going to win. So, you know, this is this first step towards a different industry standard for how Bitcoin is held for large institutions or even just individuals who want to reduce their counterparty risk as much as possible without taking self-custody. yeah i mean michael you mentioned timing i i don't think the timing could be more perfect for a product like this considering everything that's happened in crypto in the last 12 months uh then you mentioned the banking crisis as well and on top of that the price breaking 30k

uh is definitely going to have some people have been sitting on the sidelines like okay uh i should probably have some urgency to get exposure to this in case it runs away from me again and and and it's going to now's the time right that we've got the next halving and in gosh it is now uh 12 months and two weeks until the next halving and the supply shock of the halving will happen you know it'll be a smaller supply shock than previous halvings because that's the mechanics of this thing but a supply shock will happen there will not be as much supply going out into the market to meet incoming demand the price will drift upwards and everybody will be wondering is this going to happen again is the thing that happened in 2021 and in 2017 and in

2013 going to happen again and i'm missing it right now and people are going to pile in the way they did in 2021 the way they did in 2017 and the price is going to run and here is this solution now to make it a little bit easier to position yourself in advance of those mechanics playing out a year from now. Yeah. And then you have to imagine too, this type of investor who's waiting on the sidelines to jump in. They see Coinbase getting Wells notices served to them. They see Kraken getting some attention from the SEC. They see the Gemini twins having to loan a hundred million dollars to their own company to bail out the earned users who got rugged by genesis i mean the the solutions that they have at their fingertips right now would it be coinbase

kraken gemini that they would typically go to you you have to imagine there's doubts in their head that are that are holding them back from engaging with them so again i'm extremely excited uh that on-ramp exists and it's doing it the right way michael like you said the board's been reset And hopefully what OnRamp does, if it does anything, it just sets the standard for providing solutions like this to the market moving forward. We should not have Coinbase holding a million to two million Bitcoin that they control by themselves. We should not have GPTC offering hundreds of thousands or selling secondary shares of hundreds of thousands of Bitcoin's worth of exposure to their customers. And they're at a 35% discount price to spot price right now. We should not have the FTX situation or the BlockFi situation and go all the way back to Mt. Gox.

This is something, a lesson that probably should have been learned back around Mt. Gox, but just has not come to market. And again, timing thing, maybe just took a lot of time for people to learn these lessons and appreciate the nature of multisig specifically. FTX is a great example because of the hole as well. Like we still don't fully know the full, the shakeout of how much downward pressure exists that was meant to be spot Bitcoin that, that got washed for dollars. We know their hole was a billion. We don't know like the total of BlockFi, but as Jesse alluded to earlier, it's like the concept of this and it'll it'll expand over time is there's a pooled vehicle or pooled you know address of assets and we're still tbd but on an institutional level of over x you

know amount of dollars you'll have segregated address you can always audit and watch on chain that's prevented from what happened at ftx where you're giving dollars you have a number on a screen that says you have five bitcoin or whatever but in reality you have zero bitcoin it was actually sold uh it was actually double whammy because now you don't have bitcoin it was probably uses downward pressure to like sell into crypto or whatever and uh yeah to your point where it's like the it's the idea of like the the standoff where if you have a better product and the market requests it that's how you go and get these other players to adopt it because people move their flow similar to the banks coming into the space they see the flow going out one way to these exchanges

and going into btc never coming back and so that's how they started coming into the space even though they didn't want to similar way if the btc is leaving into solutions like this because again if this is successful other people will do it and i believe it will be we believe it will be successful then the reality is they have to adopt it or their hands are tied and then nobody uses them because it's just a trust model and you shouldn't have to trust one of them to provide a little color on the ftx thing it was a 10 billion dollar hole some roughly um which means that there were many people who thought they were holding in total $10 billion worth of Bitcoin on FTX, when in reality, that Bitcoin had been sold into other altcoins via Alameda,

the attached hedge fund. And so people who thought that they had taken the step into Bitcoin had actually contributed towards cell pressure on Bitcoin and had boosted altcoins just because they chose FTX and trusted FTX as the place to keep their Bitcoin. You've been around a lot longer than us, Marty. So you've seen these shenanigans play out for a very long time. And so there will be other players doing exactly what Jesse just described

in the next run. no it's inevitable until like you guys said you guys set the standard that acts as a forcing function for other players to act virtuous and virtuous probably isn't the right word to act appropriately and on behalf of their customers like at the end of the day if i look at the solution i mean obviously i hold my own keys i'm comfortable with that i don't fit into the the archetype of the type of bitcoin that you guys are trying to get in or where they are in their journey i'm much further down the path than they are right now but um i'm will be extremely excited to recommend on ramp to the high net worth individual in my life who's been wanting to get

into bitcoin isn't comfortable with coinbase isn't comfortable holding their own keys it's an easy yes here's a solution leverages bitcoin's native multi-sig properties you can audit the chain you have certainty that that you actually have bitcoin you can verify that you have distributed risk with different key holders uh right now between different institutions here in the united states in the future hopefully different institutions that exist in different geographies and different jurisdictions to further distribute that risk like it just makes sense and then on top of that another forcing function that you guys have again you're called on ramp because you want to be the on-ramp to Bitcoin for these individuals where at the end of the journey, you guys are

Bitcoiners, you understand the importance of holding your own keys at some point toward the end of your journey. I guess another forcing function that probably will be a massive net benefit for Bitcoin overall in the distribution of private key ownership in the long run is you guys are educating people about, hey, this is just the first step. This is your on-ramp. we're going to teach you how to realize the full potential of bitcoin and the full security of bitcoin and the full benefits of bitcoin by holding your own keys at some point in the future i guess that's a good a good point to bring up to to throw it to you guys to explain like on the education side of things like what are the types of things that you'll be providing on ram's clients to get

them comfortable, to educate them, to get them more confident in Bitcoin just as an asset that they want exposure to, and then eventually that they want to possess themselves. Yeah, I think to start, it's kind of like, what is our educational mission? And what have we, you know, through Michael and I talking about this last eight months and sharing our experiences from two different sides of um the bitcoin industry over the last few years um you know what are the sticking points what what's the the thing you have to get through um in your first few years of being in bitcoin and and the the first thing is you got to make it through your through your first cycle because it's a crazy asset. This landscape is unlike anything that you're familiar

with from the stock market. And you arrive on these foreign shores and there's insane marketing from people like BlockFi promising things that seem too good to be true, but they're saying it and they're backed by the right people. And so you might fall for it and you might get sucked into, you might be pulled off the path, the righteous path of making it through the Bitcoin journey to self-custody. You might get pulled into altcoins. You might get pulled into yield products. You might get freaked out when Bitcoin drops 50% overnight, which happens and will probably happen again at some point. You might get freaked out and sell the bottom. And so I think our first responsibility that we've learned over the last few years um in terms of education

is to be that outsourced confidence and conviction to help people understand what it takes to hold through a cycle and why they're holding um and so i think that's like that's the first challenge in terms of bitcoin education as being being a guide for people holding their hand yeah you you've got them to allocate dollars, but now the work begins of showing them why and reminding them why, without being annoying about it, why they're holding this and what it is going to take. They're going to have to withstand some volatility in order to reap the rewards of this incredible store of value asset that gets more valuable over time.

So that's, I think, the first real objective for us as in terms of education. And then, you know, as people get more comfortable and they learn more, then they become more ready to learn about self-custody and other issues about like inheritance or, you know, what their options are in terms of all of these things. and um so that comes second in my mind and michael we can you can talk about how we're trying to do that yeah i mean i think um two parts it's like i've been convinced that independent of what the business does in this space they're an education company first these are still so early and until you can educate on why the product or value prop exists like it doesn't matter anything secondhand uh and then the second part is um this has really been a journey like as we've gone through it and just the maze of understanding our own logic, the market's logic. And there's this number that I've been, it's based off nothing,

but I hold it to be true or directionally true that over 50% of people that have bought in Bitcoin since its inception don't hold it anymore. And the thought is it's very easy to buy Bitcoin, but it's extremely hard to hold it, whether it's through the volatility, rug pulls, exchange hacks, insolvencies, rehypothecation, trying to get yield. and so to jesse's point like the first thing is this is something that you want this form of custody or to think about custody in this model it's not like a share where somebody hacks it you

can just print it back or pull it back in your your exchange account and then also this is why it cuts in half because of supply demand all the things we all know really helping them get through and understand that so um they basically can hold it through the volatility because the realization is most people don't get to see a return or the return that we know exists because it's it's not a it's not a trade it's the last trade it's the thing you're going into and you're protecting your wealth and a store of value and um most people are just chasing it's what it's the old quote it's like uh bitcoin is a get rich a slow scheme dressed up as a get rich quick scheme uh but most people invert that and then they sell it because they're like oh shit like gotta get rid

of it or they double and they're like everybody knows the person bought a 200 sold a 400 um and that's equally as bad as doing in half and cutting it right it's probably even worse because you had the right trade but you just got it out too early yeah yeah michael michael like to say uh um we're we're in the business of of saving people from making a 2x it's true i mean that outcome no we get this a lot i mean michael we get this a lot of 1031 where people are like oh how are you guys going to outperform bitcoin it's like well we do think we're going to find equity stakes but also locking capital up in a venture vehicle for 10 years is a good way to to hold on to exposure where many people would sell too early at some point within that 10 year time frame

yeah yeah and i think um yeah it's it's it's interesting like how our minds trail off because there's like two versions of that there's one of like well how can bitcoin work because if everybody um is getting rich or wealthy and purchasing power then they're never going to sell and that's crazy because we have needs and wants and you transfer your bitcoin for those and then there's the other version where it's like well i'm going to always hold it to that point uh so why would i go anywhere else for that and it's like well the reality is that the market hasn't shown that like people have needs and wants or they just you know they go into different solutions um so this is real difficulty and like this alien technology what this effectively turn into and

then how do you like actually think about it and it's until you can like have the pattern recognition and it's only a function of time right this is basically what we're talking about accelerating somebody's time uh and proof of work and so letting the people that have done it and have the vision that not to say we know everything but we've seen it play out um we had the slide at 1031 where it showed six months to 12 months ago it was about like eight companies that were 100 billion plus and everybody said we were crazy for trying to you know position bitcoin versus the solana and ftx of the world it's effectively zero in enterprise value similar to six or eight months ago we were talking about all these different things and blockfi goes down and we

see the gbtc dislocation and genesis and gemini like we can see these things because he's just been around long enough and so rather than somebody coming in and getting rugged or selling at that 2x we're just here to support and give them the different tools that are native to like what's happening here not trying to just think about own self-interest yeah it's a bit funny it's like hey we recognize this once in a species opportunity uh and we're benefiting from it but we really want you to been it's like it's almost counterintuitive for most people like in this fiat world that we live in it's always like how it is rent-seeking world like how can i get a out of you how can i buck it's like no i want i think as many humans as possible need exposure

to bitcoin we're trying to make it as easy as possible for you we're going to educate you like we're it seems like you guys are actually trying to help of course capitalists make money as well but it's much different to the coinbase of the world where you go on to the first uh first uh screen of the app you can't even find bitcoin you have to scroll like 10 or 11 pages to find it Yeah. And that's the crux of it here is like, you know, telling people why Bitcoin, why Bitcoin only and conveying that educational message. That's hard. But then there's, you guys both touched on how this is such a foreign way of thinking because it's this asset that is deflationary in the sense that if you hold it, your purchasing power grows over time. everything in the future costs less than it does today and that changes behavior so that that's completely the opposite of how we've been conditioned as a as individuals and as a society to operate now we we get money in a dollar is worth more today than it will be tomorrow

so we spend it we buy the thing that we want and obviously with bitcoin it's the opposite so it changes your consumption behavior you might you're going to spend less on things you don't really need you're still going to buy the things you you do need um and that is part of this educational journey with bitcoin um and obviously a soapbox i like to get up on um with with my content that i put out of you know you have to think about this in a different way yes it's a volatile asset but it's an asset that that grows your purchasing power the longer you hold it if you can make it through successive cycles that is how you get rich slowly and it's painful 90 of the time but this is what you're signing up for and it makes sense because of

these mechanics underneath all of it so there's a lot to educate on and part of that is you know on ramps content strategy is going to be multifaceted we we've already established that we're going to have uh you know regular newsletters um and and educational pieces um from me and from other writers that will be syndicating uh and and some of some pretty awesome um folks in the space in particular and then on top of that we're also going to be having a regular drumbeat of uh things going on in the market that michael you maybe want to tee up for everyone yeah i think um jesse alluded to some of the content we're putting out we have uh one of the things that i'm most excited about or we're most excited about launching this is um i think

that so far in this space we've had the we talked about the funds and there's the crypto side that are you know coming tradition from traditional finance and really just seen as an opportunity to extract value uh and then the other side where we have the bitcoin ethos and um this is in my mind, one of the first times we've like married both. And so we have folks, um, from BNY Mellon, former green and light capital, um, Bain and co coin shares and on the advisor board to really support, um, that saw this vision and realize that they were, you know, something that they needed that their network needed. And they plan to really help on not only the content, but also, um, just really opening up their network. So we can really expand this offering from keys to

different subcustodial agreements uh but then also part of that something we've been discussing and thinking and the market has really needed um this mix between the traditional world and the bitcoin world but how do we pull forward because the reality is the traditional world is a lot larger than this uh bitcoin world and finance and also just like human and intellectual capital and so we're going to launch a podcast called the last trade uh which will be uh myself jesse marty and then we'll have a revolving third guest to talk about the macro market landscape different happenings in the bitcoin world and how it maps to the traditional weather world whether it's tech venture finance uh and that'll be uh yours truly marty bent being the uh the host you know

putting something on his plate if he didn't have enough already but we're really excited about it yeah i am too what's another podcast you know i love recording the podcast yeah marty how do you feel about how do you feel about this this extra helping of uh of mashed potatoes has landed on your plate now i mean i love it i was telling you guys before we hit record uh i'm really excited about it because it's going to force me to stay as sharp as possible on the macro stuff and what's going on in the traditional financial system applying that to bitcoin and that's something maybe my wife may not be as happy but um the uh i always that's the one thing with the content with writing the newsletter jesse you know this michael you will learn this as you

become part of a podcast is like it forces you to level up because people only come back if you're providing value you can only provide value if you know what you're talking about to some degree so this is going to force me to stay sharp and to stay on top of things not that i haven't been but uh, an extra bit of motivation never hurts. Well, what better transition than somebody that's provided extreme value to the space? Uh, our first, uh, we have to figure out what the term is for revolving guests, but, uh, Parker right before walking in, in the comments committed to being the first guest, uh, only if it was the first guest. So we gotta, you know, this is the first one we'll have them on and we'll see if we can get them back. But, uh, next Friday, that'll,

that'll have Parker joining. That'll drop. Yeah. I'm really excited for that. And I'm just excited for you to, again, I've been watching from an arm's length and obviously having a lot of conversations with you guys over the last six to eight months about building this out. And I'm really impressed, uh, not only by you two as individuals, but you two putting your minds together and getting on ramp together in a relatively short amount of time and buttoning up to a point that I think, uh, it's, it's going to be again, like we said earlier, it's going to set the standard, a new standard moving forward. I think it's extremely good for Bitcoin. I think it's extremely good for individuals getting access to Bitcoin for the first time. I think

this is a massive net benefit. And again, I've said it many times on this episode, many times in the past, but the future of finance banking, investing on a Bitcoin standard is going to revolve around multi-sig and you guys getting this out there is going to be a massive nudge in that direction obviously we have to shout out unchained probably unchained for really setting the standard for individual multi-sig custody but i think to unlock that archetype that we've been describing throughout this conversation this is exactly what people need yeah that that's a good point and reminder, there's some really

props to give out for a few folks. One that I didn't mention on our advisor list is Jeff Vander, who's the general counsel at Unchained. He is a wizard. He's been on pods before with Marty, but when it comes to legal and Bitcoin mine, just incredible. He founded Keykeeper

IRA, which was acquired by Unchained. Now he's the general counsel. Help us put the structure together and really think through a lot of the mechanics. Joe Kelly, ceo of unchained you know when we approached him with this uh he was for it understood it was a different market it was a net benefit for the space unchained and us building this business and really showcasing unchained capabilities from an infrastructure and then uh you and parker as well you know just riffing on these ideas we we've talked about we've gotten feedback and

you know you're on to something when like bitcoin is like oh yeah that makes sense uh you know these were pretty skeptical and adversarial in nature and so it's been great to riff on it as well with you along with jesse and everybody else on the sidelines yeah so beyond this episode where can people go to learn more about on-ramp yeah we uh we have a website uh you can if you're like me and you like to see it uh to understand things like this um you can go to onrampbitcoin.com and take a look around and see we have our announcement post there that runs down why we're doing this, what its features are, and how it differentiates and improves upon what's out there.

And you can take a look at the team that we've assembled to do this and get a little bit more familiar with the custody model. And then you can get in touch with us. So if you want to talk more about this, whether it's for you, an institution you're a part of, or for most people, this is going to be something that if you're listening to Marty's podcast, you've already solved this problem for yourself. But there's probably somebody in your life who is not yet ready for Bitcoin, self-custody, or somebody in your network. And this could be something for them. And we'd love to talk to you about getting in touch with that person and getting them started in Bitcoin the right way. Yeah, that's a good call.

I encourage anybody. I think this unlocks a lot of other financial use cases for Bitcoin. So whether you're at a financial institution, one of them to hold a key, participate, feedback. We're still very much in the education phase when it comes to this and institutions. So happy to chat with them. But yeah, this is still very early. And so there's on the website to schedule time or just to submit feedback. we'd love it I should also mention this is this product is you know what we had

to do to build this is a particular type of fund model that is for accredited investors and as part of that the the minimum that we have is $100,000 so this is not for the you know people who are looking to put $5,000 and they don't trust coinbase this is for folks who are looking to deploy a little bit more capital just as a heads up to everyone yeah no and again one one thing one parting note i think what you guys are building again talk about multi-sig but like highlights the beauty of bitcoin the open source nature is being able to build this product leveraging bitcoin's open source code and then provide like that's what bitcoin needs right now like obviously the tftc and rhr for six years of

tftc five years at rhr we've been really beating the drum self-custody self-custody self-custody many of you listening to this right now already do self-custody but again if we want to take bitcoin to the next level in terms of like really integrating it into our financial system whether you like it or not these solutions need to exist the optionality needs to exist i as a cypherpunk who really gets a lot of peace of mind holding my own keys is comfortable doing that. But it would be ignorant of me not to acknowledge the millions and millions of people with a ton of capital out there who do not have the same confidence that I do. And so just providing this option to the market with the eventual call option to take self-custody in

the future, I think is, again, incredible. And I'm extremely excited for you guys and very appreciative to be on this ride with you as an advisor and as a as the host of of the last trade yeah we're excited yeah we're super excited to have you marty pumped to just riff on riff on business and bitcoin next week on the last trade we kick that off and ideally we get uh jesse down to austin sooner rather than later we can all do it in person in this nice beautiful studio get parker in here nice friday afternoon have some drinks send our wives out to happy hour we're gonna get uh we're gonna get four cameras in there too so we can each sit in the corner of the room and we'll have good camera structure and uh be done nice and right we're just gonna egg parker

on being like the revolving uh guest every week and then he's just uh he's a co-host yeah you heard it here first parker uh you may not you may not know it yet but you are the fourth host of the last trade um gentlemen number one congratulations number two let's go out there an orange pill the world i think uh i think you guys are going to be a potent orange pill for some very important people let's do it yeah here's hoping now we're ready we're ready to bring that uh water main of capital into this infinitely expandable blueberry let's go let's go you heard it here first go forth prosper enjoy your weekend freaks peace and love