We Study Billionaires - The Investor’s Podcast Network - BTC246: The Future of Insurance using Bitcoin w/ Becca Rubenfeld & Rob Hamilton (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On this week's show, I have Ms. Becca Rubenfeld and Mr. Rob Hamilton to talk to us about the business of insurance and how it might be ripe for disruption using Bitcoin. At the start of the show, we have a discussion around institutional custody, why it's so important with all these Bitcoin treasury companies now coming on the scene, and where that might all go from a key management standpoint. Then, in the latter part of the conversation, we get into this really fascinating idea around insurance and how it might be a competitor to the borrowing and lending space for the free market yields one might receive. This is an idea I've never explored on the show before, and it's really a fascinating concept.

Starting point is 00:00:44 So, with all of that, I hope you guys enjoy this interesting conversation with Becca and Rob. Celebrating 10 years, you are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone. Welcome to Bitcoin Fundamentals. I have two good friends, massive builders in the space with Becca Rubenfeld and Rob Hamilton. Guys, welcome to the show.

Starting point is 00:01:22 Thanks for having us. Yeah, long time listener, first time caller. Yeah, we need to fix that. Long time coming, yeah. Yeah, we need to have you guys back. I already know it's going to be fire. So here's where I want to start off. So I was invited over to the Plan B school over.

Starting point is 00:01:37 in Lugano to give a talk to some of the students there. The only thing I understand or the only thing that I'm like doing in this space is very finance heavy. And so for me, I'm like a pig and mud talking about these Bitcoin treasury companies. Right. Because it's like mixing security analysis with Bitcoin and I'm just loving it, right? But when I went over there, what I realized is I'm talking to the students in the room, there's a lot of people there that are very tech heavy. And I'm there briefing them on like micro strategy and Michael Say, and how these Bitcoin Treasury companies are going to be like really big thing moving forward. And it was funny because in the audience, everybody who's listening to this is looking at me

Starting point is 00:02:16 and they're like, yeah, but don't you think it's a problem? Like all this paper Bitcoin and like we're kind of really getting away from like the roots of everything we've talked about for the last decade. I didn't hear it from one person. I basically heard it from everybody. And for me, I was a little just like, I don't know because I was so excited about the Bitcoin Treasury stuff. where a lot of this went and my immediate thoughts as I was like responding to some of these really

Starting point is 00:02:39 valid points with Bitcoin paper Bitcoin and all of the Bitcoin being held by institutions, it quickly moved to this idea of institutional custody. And which is so different than like how an individual custodies or Bitcoin. And as I'm like having these conversations, Lugana, I'm thinking, I need to get Rob and Becca on the show because you guys or doing this in a way that, in my opinion, is like the best in the business. So first give people, why would I be saying this type of thing? Tell people the vision of Anchor Watch, like, what it is you guys are doing and why you're kind of the masters at this idea of institutional custody.

Starting point is 00:03:17 Well, if we're going to talk about paper Bitcoin summer, definitely robbed me to leave that part of the conversation. I do want to, before we jump in and do the vision, I think it's really interesting and maybe worth conversing about that you say Bitcoin Treasury comes automatic paper Bitcoin, right? So are they, is that a direct correlation? Is every Treasury know a paper Bitcoin situation? No, I think people are just looking at it and they're saying, I don't know whether, I mean, the big beef with micro strategy is Michael's really kind of keeping it close hold,

Starting point is 00:03:50 where he has the Bitcoin custody, how he's doing it. All of that is kind of like a black box. And then you're basically securitizing it by issue. issuing all this traditional preferred stock on top of it to give yield to people that are owning the preferred stock. And I think in the minds of your hardcore Bitcoiner that's been in the space for years, they're looking at this and they're saying, like, what in the world is that? It doesn't look like Bitcoin. It looks like a bunch of paper receipts on top of Bitcoin. And so if the underlying is being custodied by these institutions, how do we know they're doing

Starting point is 00:04:23 it correctly? Is it one person holding the key or is it multiple people holding the key? And you guys have such an elegant design in how you're assisting institutions or people that are really wanting to have a robust custody situation of like, how is that custody being managed? Like, you guys are the masters at that. So, yeah. Yeah, maybe just to level set at a high level. Who are we? I'm Rob Hamilton. That's my co-founder, Becca Rubenfeld.

Starting point is 00:04:50 And where are the co-founders of Anchor Watch? Anchor Watch is an old nautical term referring to the crew of sailors who watch the ship at night when you're at port or you're at. dock or an anchor in the middle of the sea and just kind of watching over the ship, making sure everything's okay. And that's how we do our role, right, when it comes to Bitcoin in custody. Now, the thesis that we've had since we started the company was around this idea of tying in risk markets to the underlying Bitcoin itself, right? Bitcoin is a 15 plus year journey. Up into this point, all of the security practices people talk about with multi-sig, seed phrases, hardware wall, all of these things came from a place.

Starting point is 00:05:28 of there was no insurance market. You're doing what's an insurance is called self-insuring. You're owning the risk. It's your money. You mismanagement. It's your problem. No one else's problem, right? And the long vision when we started the company back in early 22 was ultimately,

Starting point is 00:05:45 as Bitcoin continues to mature as a financial asset, risk markets like insurance are going to develop. It is an inevitability. When you think about it, as everyone likes to most compare Bitcoin to as like a bar of gold, you can pay to have your gold custody somewhere, and part of your custody fee is insurance in the event that something goes wrong, right? And how this extends into the actual custody and management of it is Bitcoin often sometimes gets called to like a digital bar of gold. And there are tradeoffs for something being physical versus digital. Physical, you just physically watch the thing.

Starting point is 00:06:15 You put it in a vault, you put armed guards in front of it. You have to physically access it. Bitcoin, though, since it doesn't have that same physical nature, you're able to leverage it as programmable money and things like a multisignificant. You can don't have to have all, you can't two of three or borrow gold. You can't split it up like that, but you can with Bitcoin. And what we did was we kind of extended the principles of Bitcoin as programmable money to enable greater fidelity and control and redundancy to make sure you can access the Bitcoin at the end of the day, no matter what happens, right?

Starting point is 00:06:45 And the other part of that is we have this custody tech we can go into more that I would say is like very advanced and kind of leveraging the feature set of what Bitcoin can do today without a fork or without any changes, and then additionally, tying that with a traditional financial contract of insurance. And so on the insurance piece, we are a Lloyds of London cover holder, meaning we are direct agents of Lloyds of London. We do the underwriting, we do the distribution, we oversee the product. And with that, we're able to take the best of both worlds of making the most of Bitcoin

Starting point is 00:07:15 as the asset itself and with the best quality insurance market that exists out there, and bringing those two together to provide comprehensive cover. understanding that you are able to at the end of the day have safety and knowing that your Bitcoin will be there. And if something were to go wrong, you directly are named as a beneficiary of a policy that's going to directly renumerate you. This is going to sound very random. And I'm sorry to the list. Go for it. But I never knew that about the name, the Anchor Watch. And I was in the military. And but I was Army. I was Navy. Navy. And I have pulled my fair share of the Guard duty, which was what we called it. We called it. We called it.

Starting point is 00:07:53 called a guard duty. And at the end of the show, when we're done talking, I'm going to tell you, I think it's a hilarious story of one of my guard duties. I don't talk to the end. So stay tuned to the, if you want to hear that, wait until the very end of the episode. I'll tell you the story. That was American Hoddle came up with the name. Oh, he was our first investor in American Idol.

Starting point is 00:08:14 We were like trying to figure out like a good name and the domain was available and I just pounced on it. They called and we did a three-way call. So it was Rob and Hoddle. and me and they were like, okay, we think we have a name and the domain is available and they described it. And it's like insurance is, we want people to feel safe. You know, there's a long history and insurance. Insurance started as shit. Maritime. Yeah, it was a maritime. Yeah, that makes sense. In 1600s here. Yeah. In the 1700s. So that's the history of it. So nautical stuff. You see a lot of

Starting point is 00:08:46 notical and insurance kind of old dodgy. That was okay. Like we want people just feel secure and safe. And then just the way that like while at Anchor, that was just like, that's cold storage. That's like we got to protect the Bitcoin wall. It's safe and sound. It's there. It's locked up. We're going to look out for it. I'm impressed.

Starting point is 00:09:05 Becca, I'm impressed because this is before the AI thing was really hot and heavy. So he came. Yeah. So huge props. This is just American from the brain of American law. Wow. And so there's like a lot of pieces here, right, on the insurance side and the tech side,

Starting point is 00:09:20 the very compressed version, just for. how it technically works. We leverage a tech stack called Miniscript, which originally came out of Blockstream as free open source software in 2018 and 2019. And then without getting too much in the mechanical details, it allows you to express more of the feature set of Bitcoin. And the main things we're leveraging it for are a multi-sig of multisigs, right? So for the start of the policy, you as the customer have a two of three.

Starting point is 00:09:46 We have a two of three. We both have to sign. And instantly, you can think about that from a security mindset. that Anchor Watch cannot unilaterally move the funds, which means that you have to kind of like, at Star, be able to authorize it. And then inevitably the questions would come, would be like, well, perhaps if I lose more keys. We then leverage another property of manuscript, which is time locks. But this is just a fascinating trivia fact of how Bitcoin actually works. Bitcoin is an entirely endogenous system. It's self-referential. Preston, if I send you Bitcoin, it's only because

Starting point is 00:10:15 someone previously said me Bitcoin, or I mind a block, right? Everything is like, this is the whole blockchain concept of that, you have this entire canonical history that's all within the system. The one thing that exists outside of Bitcoin that enters the Bitcoin protocol is the timestamp, the miners put in the block header when they find a new block. And think about this, this is how the difficulty adjustment works. How does the Bitcoin network know that in two weeks passed or more than two weeks, right? And for those at home to understand the difficulty adjustment, every two weeks, and you have 144 blocks a day on average because it's every 10 minutes.

Starting point is 00:10:50 every 2016 blocks, the Bitcoin network says, okay, we've mined what should have been two weeks of work. How long did it take? Did it take three weeks? Okay, it's too difficult. Let's decrease the difficulty adjustment. Did it happen in 10 days? Okay, we're finding blocks too quickly. Let's increase the difficulty adjustment.

Starting point is 00:11:07 So what we are able to do is we're able to leverage that timestamp that the miners put into the block as a means for the time locks. So some people may be familiar that you can time lock based on what the current block height is. we do time locks based on the calendar date, because this is one of the interesting innovations when we were designing the product realizing is if you have an insurance contract and it's dated for a year, you need to know a year from now that the conditions will change in how you can spend the money, right? And so we leverage those Bitcoin native time locks in the security of the vault itself, leveraging the same exact mechanics that the Bitcoin network uses for the difficulty adjustment. And the really interesting part of our tech is, after your

Starting point is 00:11:45 insurance contract expires, you don't have a relationship with us anymore. you unilaterally can take the money yourself and walk away. So unlike any other custodian, you're getting on the phone and be like, hey, I'd like my money back please. Or are you going into the UI and sending it a Bitcoin address? On chain, it natively settles just to you at the end of the day. The way I describe this when I'm talking to like family and friends with the time lock, I tell them, imagine you have a safe in front of you and there's two keys. And I'm going to give you one key.

Starting point is 00:12:11 You go to your house. You put it wherever. I have the other key. And as we come there, we both, if we're going to open the lock while there's two key holes, both of those keys have to be there. But after, let's say, a year, the safe through magic will change to just the one key, which would be mine. And it helps the person kind of wrap their head around how.

Starting point is 00:12:32 Conceptually, that's right. Yeah. Yeah. Sometimes even kind of experienced bitcliners, just because time locks haven't been used a lot in kind of general custody, it's been used in lightning. But sometimes there's confusion that a time lock means that your money. your Bitcoin is locked until X. And you certainly can use time locks that way.

Starting point is 00:12:54 But I think it's better to think of it as an unlaw. Yeah. Because really what happens at the time unlock, and it says when X amounts of time is fast, a new way to spend Bitcoin becomes available. And so then what we can do is we can stack these conditions and have more or less multiple spinning rules that it's all checking again.

Starting point is 00:13:14 So first it's checking the decays turn, right? So in your safe example, did the keys turn? Yes or no? If they didn't turn, it's not going to unlock. Yeah. It's also been checking the time. Did one year pass? The keys may have turned, but if one year passed, you didn't meet the rule, right?

Starting point is 00:13:32 So at the same time, we can, for example, have two layers at the same time. We can say, okay, the first one is, did the key sign and no time pass? Cool. Then we're using a time lock to say, look, effective immediately, you can sign. and then at the same time, we have a different rule that says it behaves differently after a year. So after a year, it unlocks an additional way. Because once a time lock is available based on the way it works, how Rob was describing it, it's once it's available, it's always available.

Starting point is 00:14:02 Right? So you're not locked out, actually. It's like another way is becoming available. The original way was still there. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo

Starting point is 00:14:22 Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience. powerful main stage talks, hands-on workshops on freedom tech and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June.

Starting point is 00:15:27 If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedom Forum.com with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI Cloud

Starting point is 00:16:08 ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the Netsuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, NetSuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, demystifying AI at netsuite.com slash study. The guide is free

Starting point is 00:16:55 to you at netsuite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place.

Starting point is 00:17:33 inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful AI tools that write product descriptions and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing... Sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB.

Starting point is 00:18:16 All right. Back to the show. So for me, the first time I saw this demoed by Rob was up at Bitcoin Park. And I was walking around and Rob, you know, tap me on the show. He's like, hey, I want to show you something. this is really neat. I was like, oh, okay, so I think we were upstairs or wherever. And he pulled out his laptop. He's like, check this out. And he's showing me this graphical user interface. And he's showing me like the if and then statements of like an institution.

Starting point is 00:18:46 You'd be like, what if you wanted your CFO to be one of the signatures? But for him to sign, he also needed the CEO or whoever. This was the moment where I'd heard countless times, Bitcoin's not programmable. You can't do any, like what we're describing here. You can't do that on Bitcoin. And Rob was like, you know, I forget who you said the source was, Rob, that was talking about miniscript. And then you were like, oh, well, let me play around with this miniscript thing. And then you go in there and you're building like all of these things. So what I want to do is, Rob, can you pull it up on your, I'll make sure I'm sharing. For people that are listening to this and not seeing it on YouTube, I would highly encourage you. Go pull up the YouTube video of this

Starting point is 00:19:26 discussion. For me, like really, really important for this idea of institutional custody moving forward. So I have it live here. This is our dashboard of Trident Bolt, right? I just put in, now, for those at home, this is running on Bitcoin's test network. I'm not casually moving around two, three Bitcoin at a time, just on a hot wallet in my house. And the only difference is, is one, it's on the test network. And two, for the sake of expediting demos, we have hot keys just to show conceptually how it works rather than making everyone to pull out their either their cold card or their ledger and try and get all of these things. And just at the start, you know, at the high level, one, one half step back, you actually

Starting point is 00:20:04 can have multiple vaults for maybe different levels of control or just your own accounting. You want to have segmentations of funds. But within the dashboard itself, just a cumulative view of like what your holdings are, your transaction history, pretty straightforward. Your address book of previously used addresses where your money is currently sitting on chain with your labels. And then we would have like policy details for like your insurance policy payments you've made. But this right here is actually where I would want to take the attention to.

Starting point is 00:20:31 This is how our vault works out of the box today. And quickly looking through this, when the policy gets bound, it's a two of three from the customer key set. And then there's an Anchor Watch key set, which operates as a two of three as well. So at first, if you want to move your money, day one of the policy, is that two of three from you as the customer and the two of three from us at Anchorwatch. This enables several just security things of one, hypothetically, if someone broke into your house and in your places where you're storing your keys and started making you forcefully signed things, the money can't move because we haven't signed yet, right? That allows us to have an opportunity to step in and make sure everything is above board. It's kind of within your policy expectations. There are certain things that we enable already a security features of one, whitelisted addresses.

Starting point is 00:21:14 And two, your velocity control. So a majority of our customers actually opted to something we call the Hoddle discount, where after you set up your vault, you do a test transaction, we disable the send button. People are like, this is my long-term cold storage. I just want to be able to look at it. Maybe at renewal, I'll update something, right? But I don't have to worry about it. This is then the next use of what it actually looks like to leverage time locks.

Starting point is 00:21:37 180 days, six months into the policy. We go from a customer two of three to a customer one of three, which gives you extended flexibility in the event. two of your keys have gone missing. We're able to, with one of your keys and two of our keys, be able to step in, right? The next layer is like in the last month of the policy, day 335, this is an interesting, it has several properties. We call us our recovery layer. It is a two of three from Anchor Watch, and it's one key from our recovery partner. And today we have Coin Corner based out of the aisle of man. They've been a Bitcoin exchange in business for 10 years. They have a long track record of keeping customer funds safe. It is us plus them who are able to

Starting point is 00:22:15 move the funds. And then finally, day 380, after your policy is expired and the tail has expired and your policy's over, it goes to your sole control. Now, to take a half step back up to layer three, just to explain how this actually operates under the hood, when Beck and I initially designed this, we were thinking about, okay, if someone breaks into your house and stole all of your keys, this is a new concept in Bitcoin where your keys can be lost, but the Bitcoin isn't lost yet, right? You could lose all of your keys and then we can have contingency availability for our ability to recover your funds for you. And this is a really powerful concept as we were building out the product is understanding that the distribution of fees as distribution of risk to be able to

Starting point is 00:22:54 unlock traditional insurance players like a Lloyds of London to feel comfortable underwriting this risk. We're able to underwrite a policy up to $100 million per customer out of the box today. Wow. That's for each individual that we have the writing line capacity to go up to. And we can even go higher. It's just more of a manual process, right? So I can throw it over to Becca shortly talked the insurance, but technically what we have here, this also turns into a really great inheritance protocol. We can actually have your funds be recoverable where if you have a beneficiary, you have a spouse or you have children, in the event you were to pass and your keys are now gone, right? Because effectively, like, no one knows where they are, you can actually enable inheritance protocols where

Starting point is 00:23:34 your heir doesn't need to know anything about how Bitcoin works to be able to recover those funds for you, right? And this is on the technical side, how it all gets executed. There's a lot of people that just paused the tape. Yeah. Totally. I want to pause the tape. Let's talk more about that. I know.

Starting point is 00:23:52 My family has no clue how to do this. And that would be really important. Yeah. Super important. The one last thing I'll show is it just trustfully settles on chain. I'll save the audience for this call. But this is actually what a Bitcoin native smart contract looks like on chain. For those that are listening audio-wise, I'm pulling up the transaction on Menpool space.

Starting point is 00:24:10 And these are all of the different spending conditions dusted. And it's all the different spending conditions. natively settled on Bitcoin, right? This is not, trust me, like, you can independently verify the execution of how this all runs and manages in a way where you don't have to worry about that. Right. So it's just an interesting concept of taking a traditional financial contract and also just extending the programmability of Bitcoin to offer new kinds of financial services. Preston, will you scroll back down, or Rob, I guess it's your screen? Will you scroll back down to the bottom of the vault configuration? Because the one thing that I just want to make sure is

Starting point is 00:24:40 crystal clear is at the very, very end, when your insurance policy, you know, ends, if you don't renew with us for any reason, it becomes pure self-custody. So the final timewalk says right after your insurance policy ends, Anchor Watch and Lloyds of London no longer have liability, it becomes and it acts like a pure self-custody multi-sig. And you're able to control that even without us. So if you tried to log in one day, the website is gone, your like Anchor Watch is gone, as long as you still have your signing devices on the output descriptor, which we make sure you do. You would be able to use either Bitcoin Core or Rob has built a recovery wallet that he can

Starting point is 00:25:20 speak to, but that long and short of it, it becomes self-custody. It is self-custody. And so you need to hold those private keys. That recovery layer and just then go back to the inheritance thing, that recovery layer, that multi-institutional recovery layer, one, I want to call out that is while you are insured. Sure. Because a lot of bitcoins rightfully question any custody.

Starting point is 00:25:42 model where they are not in control. And transparently here in this layer, you can see that the recovery layer is multi-institutional. So it's Anchor Watch and our recovery partner. And it's there for a reason, right? It's there to enable inheritance. It's there to protect you if you got your keys stolen or lost for any reason, but it is also insured. So very specifically in our insurance contract, it says that if Anchor Watch misuses that layer, if we use that layer to effectively abscond with the funds that's covered by insurance. And so you're either protected by the tech or you're protected by the insurance where the tech kind of itself can't protect you. And what we think we've put together is this holistic solution where you're really protected, not just from like one point

Starting point is 00:26:28 of failure, but from many points of failure. On the inheritance thing, like, let's go back to it. Because I think like the way you reacted is the way we hear everybody react to, which is like, wait, so the treasure map that my wife is supposed to follow and like the scavenger hunt that I put her on that I'm just, sweetie, I hope this makes sense, right? Like, that's gone. That's gone. Yeah. What I say is the only thing that I hope that I would really prefer is that she knows that you're a customer. Because then she would know to reach out to us.

Starting point is 00:26:59 Yeah. Even if she doesn't know you're a customer, we would still be able to recover the assets because we will collect from you. let's just use you as an example. We would collect your primary beneficiary and contact information and the secondary beneficiary. And when we're getting to the end of the year, we're like, hey, Preston, it's time to renew your insurance contract. We want to turn over the time locks. Let's get together. We don't hear from you, right?

Starting point is 00:27:24 Then we start emailing more. We're trying to get in touch with you. We're not hearing back from you. Your policy then lapses. It goes to self-custody, which is okay. Right? And we'd be sending out notes being like, It's okay if you don't want to continue with Anchor Watch, but just keep in mind, next week your vault is going to be to your self-custody.

Starting point is 00:27:42 We want to make sure you have your keys in a safe location. Best of luck. But like, just one last warning, right, that you're going into self-guestity. Three months and 90 days after your policy has ended, if we didn't ever hear from you, we will actually start looking for your beneficiaries. So we will be reaching out to her. We never take ownership. Like we never claim that because we haven't found her yet, that it's ours. It's not.

Starting point is 00:28:06 Yeah. And we're looking for your beneficiary, your secondary beneficiary, and eventually your estate with probate and we're looking for the rightful honor. And when we find that rightful owner, the Bitcoin will be returned. And we would help them if she wanted to continue hoddling and wanted to be our customer. We would educate her. We'd get her set up on a brand new vault. We would take that on.

Starting point is 00:28:27 No additional fees for that. No additional recovery fee if we do end up helping somebody after passing away. That's all just a service for being our customers. If she needs to liquidate it to deal with family things, we would just assist. And so what we like to say is that you're protected from the range attacks. You've got the insurance from all these different failures. But man, inheritance is scary. And that treasure map is scary.

Starting point is 00:28:50 And we have just removed that fear, that confusion, that trust. I give the story of before our platform was built doing my own treasure map, right? And I tell the story that I think I did a good job. It was clear. And I went through with my son and other family members and said, okay, all you have to do is start in this one location. If you start here, you'll be fine. It's all written out. It's very clear.

Starting point is 00:29:17 It's got helpers. Just can you start in this one location? Yes, absolutely. About four to six months later, I checked in with all the different people, three different sets of family. None of them knew what I was talking about in the location. I'm not surprised. I was able to like get him there. But it was very troubling.

Starting point is 00:29:38 And so I think that it was always top of mind when we were designing the inheritance protocol. I think everybody has the same family dynamic for a Bitcoiner. Yeah. Yeah. Yeah. Rob has been helping. Like people have reached out to Rob and I mean, Rob, if you want to brief. Yeah.

Starting point is 00:29:57 I mean, people get to this place in Bitcoin where you're the Bitcoin guy. And so I've had to deal with grieving widows. parents of kids, and it's not a place you really want to be in. And so independent of what we're talking about with our product, just like make sure you have an understanding and you've actually tested your backups and your recovery process. You could have it just be like, pretend you don't exist and tell your loved ones to make sure that they can access your Bitcoin, right?

Starting point is 00:30:21 Like, these are just things that are just part of your ongoing hygiene. I like what we've built as a way to kind of clean that up and make it very, have a trusted person who's able to step in and help you out. But independent of however you choose to hold your Bitcoin, I think it's an important factor. Something that I think is really important for a listener of this, especially somebody who isn't self-custiding their coins and maybe they're just having Ibit in their stock ticker.

Starting point is 00:30:46 They're listening to us talk about all of this. And I imagine what they're thinking in their head. And this is probably a lot of the people in our audience. They're thinking, why would I go through all this? Why wouldn't I just own I bit? And I guess my answer for the person is there, I suspect, and I think you guys both agree, that there's tremendous value, especially in the coming 10 years, for people that actually have control and custody of their coin. As an example,

Starting point is 00:31:14 we have the director of Fannie Mae, Freddie Mac, that just came out recently and is saying that your creditworthiness for a loan can be actually tied to your Bitcoin holdings. And so if you actually have control of the Bitcoin and you're willing to put it on the pause, it at an institution. You can now use this as collateral to go out and get a loan for going and buying a house. If you've got $100,000 of an I-bit, ETF or whatever, that may not be the same setup or same scenario. The fact that you actually hold the keys comes with, I mean, it's just, this is just human nature, folks. Like, if there's something hard to do, usually there's a reward associated with that hard thing that you're doing, which is custody of your own coins.

Starting point is 00:32:01 So for you guys, as you're looking at this, help people wrap their head around some of them maybe get into this story that just happened with the family of Freddie May and just kind of like how you see a lot of this kind of transpiring in the future and why self custody is so important. Well, I think what we're seeing a lot of this year in particular in 2025 in particular is actually bringing Bitcoin up to match. So before there were actually some pretty not from a Bitcoiners perspective, but it's like a Tradfi. Normaid perspective, there were some downsides to self-custody. You couldn't borrow against it. It wasn't to what you're talking about it. It wasn't considered part of your assets when you were trying to buy property. There were all these kind of limitations to self-custy. There were positives too, right? Like that we'll talk about. But all those limitations this year are being removed. There's plenty of ways you can borrow against your Bitcoin, right? There's lots of providers coming on.

Starting point is 00:32:58 And then most recently, this FHFA guidance from Fannie and Freddie, what it's saying is that now if you own Bitcoin, unlike a month ago, the bank is allowed to take your ownership of Bitcoin into account when they determine if you are eligible for a mortgage. So it's not going so far as saying they will accept Bitcoin as collateral for a mortgage. I think there are providers. There's a couple of providers in the Bitcoin space, starting to look into that. But the guidance is saying, look, bank officer, guy assessing this particular risk. You are allowed to look at that.

Starting point is 00:33:37 And I think that is a huge, huge bullish in the care. I think it's huge. Like, Bitcoiners have a really hard time getting mortgages if their net worth is in Bitcoin. And so just to say, look, you can at least like take my income into account. And then, yeah, take my Bitcoin holdings into account and give me credit for that. On the limitation side or why I think it's like a great first step, but we got to keep really educating the regulators. And I think Anchor Watch is in the right direction here. Is the current guidance that was in Hulte's letter to bank officers. It specifically words the guidance as you can use the

Starting point is 00:34:16 Bitcoin in your assessment if it's held at a regulated exchange. So that was the specific words used. And I tend to think that that is more just a particular wording, and we as an industry have the opportunity to educate them. Because why would they do that? They would say, like, what the spirits of what we're trying to get at for the bank's purposes is what we're trying to get at is assuring the bank that if they claim to have this Bitcoin, it's real, it's somewhere, it can be verified. And so I would just say, like, okay, that's a start. Yeah, it's a start. That's reasonable. The bank should be healthy, right? Well, Rob, let me just say this.

Starting point is 00:34:57 From a risk standpoint, your model is way less riskier because it's not funds on the exchange. This was actually what I was exactly on that point, the risk. Hold us back to the insurer because we've been going into the tech side of this. The reason I've been self-custiting Bitcoin for over a decade. The reason why I do is this understanding of managing my own risk, right? And that the reason why I wouldn't want to hold an I-bit versus spot-based. Bitcoin, personally. It has, like, for me, it ultimately comes down to understanding and in control of my own

Starting point is 00:35:28 assets and risk management around that. To tie this into the insurance and the risk piece, the ETFs largely use Coinbase. A lot of the Treasury companies use Coinbase. There's maybe three, four players out there of where these funds are currently sitting today. And for me, I view this as an aggregation of risk. And the insurance coverage that exists at these players is fractions of a penny on the dollar.

Starting point is 00:35:51 I think it's public that Coinbase has somewhere like three to 350 million dollars of cover for their assets. One, they have like tens of billions, hundreds of billions. I think it's like in assets. I think what is the number back of like 300 billion between Bitcoin and all of the long-tale crypto assets? Yeah, yeah. So you're talking like a fraction of a percent of coverage. You don't know as an individual retail customer if people have seniority in the debt claims. Typically larger account holders get seniority in debt claims in the event that you're an

Starting point is 00:36:21 unsecured creditor and something goes wrong. So you're at the back of the line. You're not named in the insurance policy directly. What we did with the bundling of this tech of securing your coins and tying them to your insurance policy gives you that full risk transfer. Risk transfer and buying and selling insurance is a whole segment of risk management that has been entirely non-existent when it comes into the market for Bitcoin today. What we've had is risk distribution.

Starting point is 00:36:44 Like you could have a multi-sig. All of your eggs are in one basket. But actual, the financial contract of risk transferring has been non-existent. And so on that insurance side, and even taking, we've been talking about like the individual with like inheritance, I view this as just like corporate governance and control. Why would you not want to have your money secured somewhere where maybe you have a trusted person who's able to step in kind of in a role that we're sitting in, but also know that baseline, that money can't move unless you explicitly authorize it cryptographically, right?

Starting point is 00:37:13 And I think that's like kind of the big leap of what we've built out here. We can have multiple users, right? You can have your CFO and your CLO and your CEO all have different accounts, each holding keys, be able to abstract this out. And if your business is managing Bitcoin, I think fundamentally the biggest risk of these treasury companies in aggregate is something were to happen to the coins being cut in some rules. Absolutely. Absolutely. That has to be the foundational risk. There's disclosure in the bottom of every ETF that says, by the way, this is uninsured.

Starting point is 00:37:45 if the actual Bitcoin that underpins the ETF is compromised, the ETF becomes worthless. What I'll say actually for those that are more interested in holding ETFs, I always throw this out as an interesting consideration, fidelity, self-custodies. So if you're actually thinking through a risk distribution lens and you want to hold Bitcoin ETFs, have exposure to FBTC because they're at least not correlated with this entire segment of risk. And this is like this is something in insurance and in gambling, I used to play poker, this concept of risk of ruin. You never want to be in a position where one assumption falls apart and it has this larger cascading effect of like irreparable loss.

Starting point is 00:38:25 That is what we're mitigating around. These different keys, these different setups, you having a named policy, being able to have this comprehensive set of coverage, I think this is just an obvious step as the ecosystem and capital formation matures. With all of these treasury companies, I've talked about like, it's almost like the initial capitalization of Bitcoin banks. Like, I just do it as like you have these corporate entities that are accumulating massive amounts of Bitcoin, and it's going to get to a place of saturation where they're going to want to do things with that Bitcoin eventually. As the arbitrage opportunity closes and they now have a large Bitcoin position, they're going to want to do other things. You're going to want, I think foundational to all of these is the custody of the asset itself.

Starting point is 00:39:03 Yes. Your entire asset of what your company is worth is sitting somewhere else. It's like if I was Apple and all of my proprietary tech in my asset was sitting in Amazon somewhere else, yeah. Yeah, right? It's sitting somewhere else, right? And you're at the mercy of them. And I think that's just viewing Bitcoin, and this is kind of like the evolution of the ecosystem, Bitcoin has been viewed up to this point largely as a software technology play.

Starting point is 00:39:26 And that's why people charge it like a SaaS model where you walk in the door. It's a SaaS model, but we charge you based off bips of like how much the money is worth, even though like at a certain scale, it doesn't cost like, do you understand Bitcoin? Yeah. To be able to send one Bitcoin to it versus 10,000 Bitcoin to a single address. It's the same amount of security and overhead to be able to manage that, right? So it's a great business where you get to accrete all of this right to your bottom line as a SaaS business. But if you view Bitcoin as a capital asset, the actual fix to this is a risk transfer and insurance market of Bitcoin actually being treated as such.

Starting point is 00:40:01 Yeah. Like as a capital asset. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up. And customers now expect proof of security just. to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're

Starting point is 00:40:25 prepping for a SOC or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at Vanta.com slash billionaires. That's vanta.com slash billionaires. Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and Plus 500 futures is the perfect place to start.

Starting point is 00:41:16 Plus 500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trade. you've been waiting for. See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit plus500.com to learn more.

Starting point is 00:42:05 Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise income fund in just minutes. The fund's total

Starting point is 00:42:56 return in 2025 was 8% and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right.

Starting point is 00:43:24 Back to the show. It's amazing because at the core of what banking was, like you go back 500 years ago, banking was, hey, you give me a gold bar. I will give you a paper receipt. I'm not going to issue more paper receipts than what's in the vault. And then I'm going to do a really, really good job at making sure nobody can get the gold in the vault. That's the job of a bank. And we have, under this Fiat fractional reserve, like, monster that has existed over the last hundred years,

Starting point is 00:43:54 we've just gone so far away from what it is banks do, which is secure in custody and don't issue more. paper on top of it. And you guys are like demonstrating what banking is and why it exists. Because at the end of the day, the people, if you got a billion dollars, you don't want to just like secure that in your bedroom and a safe, right? Like you, that's a lot of value. You need to do something that actually has real security and safety associated with it. So. Yeah. Well, all these, let's say more advanced financial. financial product that will be coming out that are built on top of Bitcoin. I think at least the first step or the required step is to ensure that whatever the

Starting point is 00:44:45 supposed amount of Bitcoin is that's underpinning the financial products, at least we can start by saying, look, if there's paper Bitcoin being created, it's clear. And the amount of real Bitcoin that's underpinning the paper is clear. So proof of reserves, the Bitcoin is where, like, this is all provable. So you actually, there never need, in Bitcoin, there never needs to be a question about where the Bitcoin is. And so I think what we built is just something that we built with that premise from the very start, which is like the tech, the custody, like it enables lending and enables escrow. You can use it for so many different financial products. That's fine.

Starting point is 00:45:27 But at the core of it, at the base layer of it, there's X amounts of it. There's X amount of Bitcoin. It's held in these locations. It's verifiable. We can do proof of assets. We can do proof of reserves. Like, truth. You know what's interesting?

Starting point is 00:45:39 Bitcoin should be there. To your point here, Becca, one of the issues that a lot of the talking point that a lot of people have had with proof of reserves is there's no proof of liabilities. This is a really interesting dynamic with the Bitcoin treasury companies. Because in order to do the, the sailor move, the strategy move, you have to have access to public markets. You can't do this in private market. You can't go out and get the liquidity in a private market to issue more common stock or to go out and issue more preferred stock on the day and raise capital and do this thing that they're doing. And what I find so fascinating about all of this, almost like it's intended to go in this direction is with a publicly traded company, now the proof of liabilities is really kind of being solved for. Right?

Starting point is 00:46:32 It's really crazy. The other big four really are doing a solid on that. Yeah, the accountants are actually open us out quite a bit. I also just love the juxtaposition to crypto where the whole critique the whole time was that you were doing unregistered fly-by-night securities. And it turns out doing a registered security and just going through traditional disclosure processes and running an honest operation and doing that is actually the capital unlock. Like, who would have thought that like doing your audit? and doing your quarterly filings and doing all these things and just running an aboveboard business is actually the way you can unlock the next tranche of institutional capital.

Starting point is 00:47:08 Yeah. It's massive. And it's just, it's not lost on anybody that's watching this very closely is you're looking at how much micro strategy is growing and how much they're able to compound by implementing this strategy. And you're comparing it to a traditional bank that for all intents of purposes is just fully engaged in the Ponzi scheme. and of fractional reserve banking.

Starting point is 00:47:32 And micro strategies eating their lunch by being full, not just backed one to one, but like backed five to one. And you would think that that would be impossible because they're playing the game in a very fair way in which all participants in that system are winning. Whereas the other one is one, a team is clearly winning. And everybody else on the other side is losing. And really interesting, the intersection of this, too, is the convertible debt notes, which was Sailor's first move. Yes. I'm going to take my cash by Bitcoin.

Starting point is 00:48:05 On the convertible debt side, the largest buyer of the convertible debt is Allian's, the insurance company. Okay. And the reason why is that because if you are familiar with the FASB accounting rules, there was a certain statutory standard on how you would do all of this gap accounting for Bitcoin, and it would be very, you would have to mark to market at the lowest price. In insurance, at a very high level, the health and strength of you. your insurance company is how big your surplus is. And that gives you leverage to write more and more

Starting point is 00:48:31 policies the more you have in reserve. Today, in the United States, insurance is a state-by-state regulated industry. And there is a self-directed, like a self-regulatory body called the National Association of Insurance Commissioner. So every state and territory sends their own insurance commissioner and there's this loose governing body. Bitcoin is an unadmitted asset, meaning if you have a billion dollars of Bitcoin on your balance sheet for your insurance company accounting, you get $0 and zero cents credit on it. But these convertible bonds don't fall under that. Oh, interesting.

Starting point is 00:49:02 Because it's a registered bond of a publicly traded company. And so now you can get the Bitcoin call option in the upside and not blow up your balance sheet in the process. Wow. Yeah. Yeah. So this is a massive piece of like the understanding of like there's so much capital sitting out there that is looking to get Bitcoin exposure and they are statutorily blocked

Starting point is 00:49:21 from doing it. So you walk in and they're like, yeah, I'll take a 0% coupon to get the call option on Bitcoin. all day with a portion of my balance sheet. And it's a perfect thing too. When you think about it, insurance companies have a massive duration problem where they have liabilities that extend really far out. It's just structurally a better way to get that exposure. And the nature of how our product works is also a nice yin and yang because let's say Preston, if you're a customer and you had an issue, that doesn't impact the rest of our book. Whereas if I'm just insuring coinbase, the likelihood that an incident for a file claim happens just at Coinbase and it's only going to be for

Starting point is 00:49:55 $20 million and not like all of the money is like you have a high concentration in a couple key players whereas for us we're enabling that risk distribution so you have more than just the big four or five custodians to help managing stuff so this would be like to get exposure on both ends on the capital side and the buying and the selling of insurance in the physical space this would almost be like you're a bank you're cusseting customer deposits right but you've put a thousand different lock boxes in a thousand different places all over the world that if you go to If you go to the front door and knock on the door to rob the bank, it's not there, right? It's all spread out because you're in cyberspace.

Starting point is 00:50:33 Exactly. Right. And this is the asymmetry and what we're able to offer and why we were able to get the underwriting authority we did at $100 million. Yeah. Because if it was just, let's just say, it was just anchor watch and it was just us managing keys for other people. We'd be the same exact position as all of the incumbents. All the risk is sitting in one spot. And to be clear, like companies like Alley owns and others, they will use.

Starting point is 00:50:54 this market and these Treasury posts to get exposure to Bitcoin. Okay. So remember, insurance companies, big ones make money two ways. They sell insurance, right? So they make money off premiums and hopefully their. Stats were good. Are enough to cover their law. And then with that pile of reserve capital, they invest it for a secondary revenue stream,

Starting point is 00:51:19 which is investment returns. And so what Allianz and others are saying is, like, hey, okay, I'm allowed to invest a portion of my giant pile of billions of dollars. I'd like some exposure to Bitcoin. I can't have it because I'm impaired if I, if I have it. But now there are these bombs. And so do I have Bitcoin? I don't. And that's too bad. But what I do have is some exposure now. And so that I'm allowed to do. And so smart insurers, Pollyon's leading the way, are saying, that's a really good way to juice my investment right now. And remember, the investment, sorry, the insurance industry, there's $7 trillion.

Starting point is 00:52:00 That's how much money is sitting there. And Allianz has made a little, a little sprinkle, right? Yeah. It's huge. And that is just in today. So that's something that can start happening today. And then the future, the flywheel that gets turned on is where then those insurance commissioners that Rob mentioned in the NIC say, you know what, just like the FHA FHFA letter that we talked

Starting point is 00:52:26 about a few minutes ago, just like that, we are advocating to those insurance commissioners to say, you know what, at this point in Bitcoin's maturity in this asset class, we're not going to say that it is an unadmitted asset and you get zero credit. We'll give you 50% credit. We'll give you 75% credit. Maybe we'll just give you credit, right? Maybe we'll make it an admitted asset and we'll just treat it like it should be treated in its dollar value and it's marked market when that happened then we start denominating bitcoin in or sorry denominating insurance in bitcoin right watch there's there's pros and cons actually in today's world we're not on a bitcoin standard companies are not on a bitcoin standard for the most part so they have to do their

Starting point is 00:53:11 books in dollars so there's there's reasons that the dollar denominated makes sense it makes their insurance expenses predictable in dollars, right? It gives them access to the current market, the A-rated, A-plus rated current market. They want that. They need it. Sometimes it's required. So there's reasons to do denominated in dollar policies. But Bitcoin denominated is where we're headed. We certainly believe as an industry. And what that looks like is something a little different. That's where Allianz and the other insurers out there, they actually have Bitcoin in that pool of capital. That's what the transition. So now they have...

Starting point is 00:53:48 This is such a big deal. This is what you're talking about, such a big deal. This is the original idea. Beck and I got really excited about building Anchor Watch. We realized we had to sequentially build out steps to get there. Yeah. And so now they have this pool of capital. A lot of it is still Fiat, but now there's Bitcoin in it too.

Starting point is 00:54:05 And the Bitcoin can underwrite Bitcoin denominator insurance. So instead of always having to be like, okay, well, my Bitcoin is fairly worth a million and I bought a million dollars insurance, but then the price is fluctuating, and I'm always having to do that. When we go to Bitcoin denominated, first of all, that's subtracted away. So now you also don't necessarily know how much your insurance bill is going to cost in fiat. So there's straightoffs, but you certainly know what your coverage is. You are maximally protected on the Bitcoin side. And now that Bitcoin and those reserve pools, that is a yield generation machine.

Starting point is 00:54:42 Yeah. That is a new way, an additional way to take what historically has been a relatively unproductive asset in terms of generation, right? The value went up, excellently. But in terms of using it as a productive asset, now we can do that with insurance. And so now an investor can say, you know what? I actually want to put my Bitcoin in that pool of capital because I understand it's not risk-free yields because I'm literally underwriting insurance risk.

Starting point is 00:55:09 So it's not risk-free. But it is very predictable risk. There's a prospectus. There's historical lost information because Anchor Watch has been running this policy on the Fiat side for a while. So we now have safe their custody platform is. And that's going to be a huge part for you guys long term of people wanting to make deposits on your platform is you have the history and no-how.

Starting point is 00:55:32 And so now we are raising that we have others. Like this is where the whole industry will head, I believe. leave. Yeah. We raise Bitcoin. We say, okay, investors, whether you're a treasury co or a whale or a bank or whomever, okay, you've got Bitcoin that you want to deploy. We will take that Bitcoin. It's going to sit safe and sound in cold storage. It's going to serve to underwrite insurance risks. And we will deliver you a annualized return on that capital of X percent. It can be debt-based or equity base. And ultimately, it allows them to put their Bitcoin in a productive place where we're paying them yield, but it's still relatively safe, meaning that the losses are predictable. And you're doing so not only gets you that yield, but it actually encourages continued ongoing investment into Bitcoin because it lowers the cost of lending.

Starting point is 00:56:29 It lowers the cost of capital. It makes capital allocators in TRAB-Fi feel comfortable, feel safe. okay, there's price volatility risk, but now I don't have losing the end. What's fascinating about this too, a small half step back into time locking Bitcoin, the 5,000 or so Bitcoin on the Lightning Network are time locked. Most Bitcoin isn't. You can leverage this tech and you can actually start locking up the float of supply of coins floating out there into these kind of financial contracts and arrangements.

Starting point is 00:56:56 And we could build that out where like this is your insurance pool. We have certain tranches of being able to pay out. Maybe you have a coupon clip from a share of the premiums that gets time locked and earned to you over time. and you're starting to take coins off the market again. Like literally the coins cannot move until like these certain covenants or certain restrictions are open and available. That idea of people taking their Bitcoin to put in the vault to back up insurance

Starting point is 00:57:18 policies, they're getting paid yield. All I can keep thinking is we're locking up massive amounts of Bitcoin. Yes. What in the world does this do to the underlying price? Like holy moly. We live in a world where no one really uses time locks except for the Lightning Network right now. And if you could start thinking about this, like, we started with insurance because it's so foundational to the custody and the safety of it. Any financial product, a Bitcoin bond, if you want to do coupon

Starting point is 00:57:44 clippings and locking up the principle and like over time, it's also almost like an on-chain native yield curve too. Like, Sailor's doing it with all of his different preferred offerings on the financialization side. You can mirror that on the technical side and just start taking coins out of the circulating supply. And it's very safe understood tech. Timelocks have been in Bitcoin for over a decade. It's how the Lightning Network works. This is not, I did not in my basement discover or implement time locks. This is something that's very just codified into how Bitcoin operates and runs. And this is kind of like, what do you think that that would pay? And I know this is a really far. Yeah. Here's what I'll just say for some context. Double digits or single digits.

Starting point is 00:58:23 What's that? Double digits or single digits? Here's what I'll say. Okay. Here's what I'll say. We know that Bitcoin owners, investors were willing to hand over the keys to their Bitcoin to earn yield in the block buys and others of the world. They were willing to take on relatively, not relatively, very high risk grading strategies, first for 8%, and then they were willing to do it for 6%, then 4%, then 2%. So Bitcoin investors have shown an incredible risk tolerance for relatively low yield. I think this product to be a long-term viable product is something where both sides will be taken

Starting point is 00:59:08 into account. On one side, we know what the market investors are willing to accept. And so we'll be looking to offer competitive rates, meaning attractive, right? And it's important to have long-term aligned investors who understand what we're doing. So, and who are going to do it for a long time, right? because insurance needs to be very stable. So we'll be looking to offer yields that certainly work well for us. Maybe it is more affordable than Fiat insurance, right?

Starting point is 00:59:40 Because we maybe have to pay less for the capital than we would in Fiaf's side. But it will be attracted. It will be attracted because we are trying to attract investors to that. There are two things I'll say. One, it's ultimately a market force, right? When everyone thinks of insurance, they're usually viewing it as the customer. buying insurance for someone there's a certain rate of cost to get the insurance. The other side of the desk, though, is I have this massive pool of capital as an insurer or

Starting point is 01:00:06 reinsurer, and I need to deploy this risk into different buckets, and each of those get me different kinds of returns. Property and casualty, which is kind of like one half of the insurance bucket, but the other half being life and health insurance. So property and casualty, which is kind of the world we live in, reinsurers are earning low teens, mid-teens as their average return on equity and capital for this stuff. And that's just like how that works. how it's going to work in our market. It's a new market. So who's to say, right? But it's going to be a supply and demand dynamic of what are people willing to pay for their insured custody and then balancing the supply and demand curves on both sides and finding out

Starting point is 01:00:39 what that market clearing rate is. But what I find so fascinating about it is that insurance gets its leverage not through kind of lending and borrowing, but through risk distribution. And the fact that you can get for every, you know, no insurance carrier is dollar to dollar or Bitcoin to Bitcoin back because then the unit economics don't scale. But if you can prove, over a long enough time period with your actuarials and your provable, like, loss rates, how scalable and kind of like the expected rate of returns, you're able to start modeling that out. And you can offer that in different tranches too. Like, this is where the entire world of insurance comes in, where you have maybe the first dollar loss has a much higher yield because

Starting point is 01:01:15 you're more likely to have some loss versus no loss. And then you actually have a whole yield curve. It's called a risk tower in insurance, right? Let's say, if the losses are over a billion dollars, then my trunch of capital starts paying. And that has a lower yield. because it's safer because up to a billion dollars, you don't have to pay out a penny. But if it's over a billion dollars, you have to start paying. So this is like the many layers of financialization to be kind of built out and discovered and kind of like flesh through. But I also, at the end of the day, I view this as like structurally, this is where Bitcoin

Starting point is 01:01:46 custody is going to go. And that's why I talk about these treasury companies becoming the new version of Bitcoin banks because they will have a pool of Bitcoin, be able to underwrite this risk. They'll be safely understood. It's aligned for them. They want the additional income, yeah. And additional income stream. And also, it's distributing the risk so all of the Treasury companies aren't using the same three players.

Starting point is 01:02:06 And the nature of how our tech is being leveraged, you can have the best of both worlds. You can have an enterprise level security solution that has to co-sign, but they can't abscond with the funds without you coordinate it. The thing I love about it, though, Rob, at the core is you are incentivizing the person who does custody the safest, right? and has the best way to actually do this thing called banking and security, right? That's where these treasury companies are going to want to stick the Bitcoin. They're not going to want to go stick it on some exchange that has a black box of just trust us, bro, it's safe. Yeah. We call it fiduciary flight where when you're a fiduciary and you have responsibility for these massive, just massive amounts of wealth, where are you going to put it?

Starting point is 01:02:52 Are you going to put it with the honeybot, the uninsured hunting bot? are you going to do it in the most advanced way to distribute risk backed by the additional protection layer of traditional insurance? And we think because these two options are quite comparably priced, right? So there's not like a massive delta right now in the marketplace between uninsured and insured custody. There's a delta, but it's not massive. And so given that, as fiduciaries become educated and being like, wait, full insurance is available and it's only bits more than uninsured? Yeah.

Starting point is 01:03:30 How can I do that? Or how can I go with the honey puck? So, you know, we're out here. We're building our name. We're building comfort in the commercial space and getting them comfortable with us and the platform and love opportunities to show off the security model and everything like. But it's going to be really big. I mean, it is going to be.

Starting point is 01:03:48 While you guys were talking there in this last. 15 minutes. You know, I didn't, usually I wait until we're done recording to write down the title of like what the show is going to be. But like, it is so crystal clear, the future of insurance. This is the future of insurance. Good Lord, this is. It's crazy. Yeah. And you might ask like, why not already? So why did Anchor Watch start with Fiat denominated policy? So one reason is, is what we described about the regulators and not admitted asset. The other reason is that to have this future, like there just needs to be sufficient volume, right? Because there are hundreds of Anchor Watch already has been offered casually hundreds of thousands of Bitcoin to put towards this.

Starting point is 01:04:35 Every company that has Bitcoin is like, yeah, that's a great story. I want to put Bitcoin into that collateral pool. Yeah. In order to pay all these investors yield on their Bitcoin, the insurance has to be sold. So, right, you actually need the flywheel needs to be on. Right. And so we're in our first year of operations. There's other insurance players trying to figure out how to enter this space, right? And so we need to get the volume up to just support the volume of investors. Yeah. I would love to be like, yes, then that's all 200,000. But it's, it's not the hurdle yet. Yeah. I think everything that's happening from an admin policy standpoint. Now that the floodgates are being turned on, this is all going to start going. Very quickly. The next grade of five years.

Starting point is 01:05:25 Go ahead, Rob. Let's say, what I love about this whole story is not, is it just a massive capital opportunity. It's an actual alignment of actors where I can custody my fund somewhere and it's insured. Like, you're talking about consumer protection, right? Like, how it's being managed today is not it. It is a live. We're in the Wild West days of the early formation of just Bitcoin as an industry, and it's gone because there was no better option. And this linking of the capital markets, there's a massive financialization and opportunities to make money and put Bitcoin to work as a productive asset. But it also just at the end of day protects consumers. So it's a very virtuous like alignment of this of this piece of insurance. And just as the one piece, like insurance

Starting point is 01:06:05 started like underwriting ships doing spice trades all over the world. It underwrote the expansion to build the United States of America. Like the financialization of capital markets for risk. And like Lloyd's one of my favorite things is when people say that insurance is fiat, is one, it predates fiat currency by hundreds of years. And two, it's the ability for you to be able to take risk in the world and being able to step forward and like take chances and not be totally destroyed if one thing goes wrong. It is a massive capital for capitalism.

Starting point is 01:06:34 It's just a massive entire vertical in industry that I think it's a bad rep because you have state mandated health. insurance and you have state mandated car insurance and all these things. But like, foundationally, it's such a beautiful way for just making Bitcoin a safer asset for people to hold and have all these other positive flywheel effects too on capital formation. With all investment, all investment, right? It's a risk reward calculation that somebody is making. And when you de-risk various aspects, their appetite for investment goes up. So lower risk, more investment. And where you can see that already happening is Bitcoin

Starting point is 01:07:10 back loans. Really, every loan provider is talking to us. Like, hey, both our liquidity providers and our borrowers, like, both sides are both saying, like, hey, we would feel better if the collateral is insured. Thanks are saying, hey, we don't let you have a mortgage on a house unless that house is insured. We're just simply not willing to do this deal unless the collateral is insured. The same premise. What we see is that everybody wants the collateral insured on Bitcoin back loans. As it's insured, more lenders are willing to come in brings down the cost of capital, right? Because we have eliminated a portion of the risk that we can through technology, through cryptography, through distribution of fees. We have eliminated a portion of the risk. So banks,

Starting point is 01:08:00 even though you don't, maybe you're not Bitcoin experts, but you can feel confident because it's insured. You don't have to understand the Bitcoin hurt, but you do understand insurance. And okay, all right, all that tech stuff, you just explain that I'm nodding my head like I understand blockchain, but really I understood none of it. But I do understand that at the end of the day. It's insured. Okay, that's interesting. And it's insured by an A plus rate. Okay. Okay. All right. We're willing to do this. Right. And we're seeing that today. So I just, I think we're going to see that, but on a macro level. Yeah. And I think the next three to five years is like when you say, yeah, it's the future of insurance. Yeah. Let's put a notes on our calendars for three and five years from now. Let's see how insurance has changed because I'll bet it's going to have changed a lot to the benefit of Bitcoin.

Starting point is 01:08:46 All right. Do you guys want to hear the stupid? Yes. Guard duty story. I'll make this quick. I'll make this quick. I'll make this quick. So this is my second year at West Point. And it was always the worst when we're out in the field. This is during the summer. This is obviously not during the school year. The summer you go out, they put you in. in the woods and you have to pull your guard duty. And sometimes your guard duty is like, oh, Preston, you got guard duty from 3 a.m. The 4 a.m. You got to wake up. You got to go out there. You got to sit there. And because we had weapons with us out in the field, you'd have to sit there at the arms room

Starting point is 01:09:22 and make sure the weapons didn't leave the arms room. And I was, I'm tired. You're out there slugging around in the woods like all day. It's miserable. You haven't had a shower. You're just like all of it, right? I remember I'm sitting there and I'm guarding you. I'm guarding this guard.

Starting point is 01:09:38 Quiet, not a peep. And this skunk comes up. This skunk just starts, boop, but bo, he's just walking right up there like, hey, bro, how are you doing? I'm sitting there. And all I can think of my head is if that thing sprays you, you're always going to be known as the guy that got sprayed by the skunk during the summer camp while you were on guard duty. and I have never in my life stood so still, like didn't move an inch for at least. And the thing didn't move. It came trotting up there, sniffing around.

Starting point is 01:10:18 He knew I was there. He was just kind of, he's like, yeah, I see you there. Like, are you going to freak out and then I'm going to spray you or are you going to sit there and just like, let me do my thing? And he went up there. He took his sweet time, just meandering around. And thank God. Thank God. I did not get sprayed by this thing and be known as the skunk guy or whatever.

Starting point is 01:10:39 You would have absolutely. If you could have seen my heart rate, like, it just went a million. I was like, oh my God. But anyway, that's my, that's my guard duty. That's my anchor watch. There you go. There you go. The anchor watch.

Starting point is 01:10:56 That's right. That's right. Guys, if people want to learn more about you, more importantly, if you have somebody that's listening to this from Wall Street or you have somebody that's working at a large institution and they're hearing this conversation. They're like, oh, my God, like, this is going to change all of insurance. Who is that? What's their call to action? How can they get in contact with you so we can start getting this thing going? Yeah, anchorwatch.com. If you're interested in a policy, you can sign up for our newsletter. You can reach out to agent, A-G-E-N-T, agent at anchorwatch.com.

Starting point is 01:11:28 If you're interested in a policy, if you're on the commercial side, didn't mention it, but everything I showed and demoed is totally white labelable. So if you want to run your own custody solution and kind of go tap it in and leverage our infrastructure, so you don't have to go figure out how the Bitcoin stuff works. You just want to run your own banking infrastructure. Like we're in conversations with multiple people right now around that. You can reach out to myself at Robb at Anchorwatch.com and then Becca at Anchorwatch.com. And the last thing I would add for that particular audience as well is we can also do

Starting point is 01:11:55 custom policies and very large policies. Okay. So we can do billion plus. Lloyd's policies for a given entity. It's just going to be custom, where we're going to go through underwriting and write a formal business plan for Lloyds, and we're going to advocate on their behalf to get them a policy that size. But we can also cover unique things that are not on our platform as well. We're working with multiple commercial entities to write custom policies for Bitcoin being held in different ways,

Starting point is 01:12:25 and we just have to assess each one of those individually. So if you're an institutional player, what we're, we've described today, you're like, well, the concepts are really interesting, but it doesn't exactly fit our business model. Definitely just reach out to us. Hit us at BeckerRob at anchorwatch.com, either one of us. And just let us know what you're trying to do. We'd love to chat about it. And chances are we'll be able to help you out with anything Bitcoin insurance related. Guys, I love it. Thank you for your time to come on the show today. Becca and Rob will have links in the show notes if you guys want to reach out to them.

Starting point is 01:12:57 Thank you so much. Thanks for having us on. Thank you for listening to TIP. Make sure to follow Bitcoin Fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - BTC246: The Future of Insurance using Bitcoin w/ Becca Rubenfeld & Rob Hamilton (Bitcoin Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.