The Last Trade E062: The Evolution of Bitcoin Custody with Brian Cubellis & Bradley Chambers

Brian Cubellis (00:05.88) Hey everyone. Welcome to The Lash Trade. Today we have a special edition of the show to highlight our recently published report, The Evolution of Bitcoin Custody. It's a comprehensive white paper that walks through the history of custody and finance, Bitcoin's unique custodial properties, fundamentals of Bitcoin custody, evolving custodial solutions and the incentives inherent to multi -institution custody. You can find the report directly on our website at onrampbitcoin .com and we will be hosting a webinar on Tuesday, September 10th to discuss this in more detail and offer a live Q &A to the audience. We also shared more details about the webinar, so you should have found that in the OnRamp Research newsletter and our social channels for more information on how to sign up there. So without further ado, to discuss this report and all things Bitcoin custody today, we're joined by Bradley Chambers, an OnRamp client and marketing advisor to the firm, and Brian Cabellus, chief strategy officer who authored the report today. Gentlemen, how are we doing? Doing well. Great to be here. Yeah, I'm very excited to have this discussion and hear how Brian went about the report and the research given custody so multifaceted. I think whenever we come into Bitcoin, there's a certain snapshot we start from and then only move forward. And we never really get to go back and hear how we got this far and where we're going. So excited for this conversation. Absolutely. Yeah. So Brian, maybe we'll start with you then just because you authored the report and I could pull up on my screen. So folks that are listening through YouTube and other video platforms can follow along. So I'll pull that up now, Brian, and maybe we can just start wherever you'd like to in terms of a high level and get into some of the aims of the report and some of the key takeaways you found. Yeah, absolutely. Thanks Jackson. This is an exciting one because, you know, honestly, this is a report that Brian Cubellis (02:04.662) you know, internally we had been talking about for many months and we all sort of knew that this would be a sort of cornerstone piece of collateral for the firm because it really speaks to in many ways why OnRamp exists and how, you know, OnRamp and our solutions for custody emerged. But, you know, the goal and the aim of the report at a high level was really to take a step back and say, you know, why does asset custody even exist in the first place? How did the earliest forms of custody emerge? And why did humans coalesce around different forms of custody for assets? And so, you know, if you take it back hundreds or even thousands of years to the earliest forms of custody, there was a notion of, you you needed sort of different ways to secure and protect communal resources. And that sort of evolved into the earliest forms of banking and so different services that get layered on top of, you know, asset custodians. And so, you know, the fascinating part about where we are today relative to, you know, these earliest forms of custody is that sort of in the traditional world for most assets, you know, it hasn't changed a ton in the sense that most assets are custodied by single entities. And so there's been this sort of inherent trajectory of asset custody that has been prone to different forms of centralization. And so there's typically one single entity that's managing the custody of a given asset. And for most assets, whether it's stocks or bonds in someone's portfolio, custody is kind of an afterthought in the sense that There are fallbacks in place in case something goes wrong with the custody, whether it's reversing a transaction, papering over losses, or different methods of recreating shares of a business if something went wrong on the custodial end. And that's just not the case for Bitcoin. So Bitcoin has these very unique custodial properties, it being a digital bearer instrument. And sort of the biggest takeaway from that difference is Brian Cubellis (04:27.104) If something goes wrong with the management of the private keys associated with the Bitcoin, the Bitcoin's just gone forever. There's no sort of bailouts or fallback plans like there are for these other assets. And so if that is true, then custody is really the most important thing for allocating to and owning Bitcoin for the long term. Like your investment thesis on the asset, its price appreciation going forward. sort of becomes irrelevant if you can't secure the asset into the future 10, 20, 50 years indefinitely, you ideally, you want to have assurances that that asset's going to be there in the future. And so because of, you know, these sort of these centralizing forces with traditional forms of custody, we've seen how that hasn't necessarily mapped to this new world of Bitcoin in a super clean way, right? Whether it's Mt. Gox or FTX, there's countless examples of centralized custody for Bitcoin specifically going wrong. And so that could take the form of negligence, malfeasance, any form of mismanagement where private keys are lost in some way and the Bitcoin's just gone forever. And so that's really... sort of the core differences in terms of how custody has been done for hundreds of years. I think in the early days of custody, if we're zooming out 15 years of Bitcoin's history, it's a relatively short period of time. And the solutions we've put forth thus far are you manage the keys yourself, which is a great sort of trust -minimized fallback option for people to be able to actually take possession of this digital bearer instrument. And then the other option has been trusting a single party custodian. so, like I said, we've seen very countless examples of that going wrong. so really a lot of the impetus for OnRamp being launched and us putting forth and pioneering this new form of custody is we want to evolve the space in the sense that as Bitcoin's price grows, the market cap gets larger. Brian Cubellis (06:45.654) It's attracting the eyes of larger pools of capital. And those larger pools of capital genuinely are going to need better assurances over their ownership into the future. They're likely thinking very long term about the asset and they want to protect it and secure it into the future. And trusting a single entity, as we've seen, isn't necessarily the best way to do it because things can go wrong and there isn't a ton of recourse if something does go wrong. And so this concept of multi -institution custody is really critically important to understand sort of the incentives at play when you introduce multiple participants into custody as opposed to just relying on one counterparty. And it really shifts sort of the game theory that underpins custody and shifts the incentives such that less things should go wrong in the sense that if you're a single entity and you're managing custody of Bitcoin, you know, in order for you to quote unquote collude, you don't need to convince anyone. And so you can act unilaterally because you have unilateral control of the asset. And so whether it's again, you know, negligence or malfeasance, some form of mismanagement, it's just on a single party. And there's, you know, as a client of that single party, there's not a lot of recourse for, you know, holding that firm, that entity accountable, holding them to task to act in good faith. And so by introducing multiple participants and so, you know, how, how on -ramp structures, our custody is, is using two of three multi -sig quorums, which again is native to the Bitcoin protocol, by introducing other parties, in our case, BitGo and CoinCover. And we recently added another partner in Tetra Trust by introducing these other party parties and having them participate. it shifts the incentives at play in the sense that none of those entities actually have unilateral control. And so they are incentivized to act in good faith because there are other parties involved and there are other parties auditing the blockchain and seeing, you know, looking at these vaults, these quorums that we create for clients. And so you're naturally incentivized to act in good faith because, you know, in order for Brian Cubellis (09:05.984) order for someone to go rogue effectively, they would need to convince another at least one other party to also go rogue. And so that's a that's a sort of magnitude more difficult than one firm convincing themselves to go rogue. And so that's that's sort of the the fundamental shift in incentives and game theory at play here that actually sort of enforces good faith actions. And so that's that's you know, if there's one or two things to really take away from this report, it's You know that Bitcoin is very unique again from a custodial perspective and due to that, know, custody is sort of the most important thing when it comes to having a thesis on this asset and allocating, you know, meaningful amounts of wealth to this asset. And sort of the second point is, you know, the space needs to evolve in the sense that we've seen the, again, the pitfalls of centralization, how things can go wrong. and linking it back to the unique properties of the asset, those centralization forces are even more important for this asset specifically relative to other assets in your portfolio. And so we think we're pioneering a strategy here which allows for greater ownership assurances into the future and really the sort of distribution of counterparty risk so that you can sort of minimize again those pitfalls of the centralized custody. So maybe I'll stop there, but that's sort of a very high level of what we tried to achieve with this report and just try to really sort of give people a sense for, you this is a very, you know, everyone always says we're still early. We're still early in figuring out the custody of this asset in our minds. And we think this is sort of the next step in that evolution is multi -institution custody. which will actually allow again these larger pools of capital to get comfortable with allocating in size to the asset. just maybe one other brief point is, you know, over a year ago when I joined OnRamp, you know, I think I heard Michael and Jesse on a podcast talking about this model of custody. And it really struck me as something that needed to exist because given my prior experience at Brian Cubellis (11:30.898) I was at Coinbase for a year prior to joining OnRamp. And prior to that, I was in the traditional finance space working at a large bank. And so I was dealing with those large pools of capital that I keep referencing. And there was a natural friction, even if a client or a prospect could get there on the Bitcoin thesis, they understood the appreciation potential of this asset and they wanted to get exposure. They couldn't get comfortable with the custody options. so those... Not everyone thought in the first principles way about this and some people are just fine getting exposure via a single third party entity. But for all the reasons we know there are many ways in which that can go wrong. And so if you have a long term thesis on this asset and you want to allocate in size, you really do need to think critically about the custody and how are you going to get exposure. again, those ownership assurances into the future are critically important. Yeah, it's a very great recap, Brian. think one overarching theme that we kind of bring to the table, everybody on this call and as a firm, is there's decades of experience in the Bitcoin world managing assets across Jesse and his fund that he was managing prior to OnRamp and me helping build Unchain Capital. And also across TradFi and understanding what is needed in the market. I think it's very much talked about that. In Bitcoin, we're going to recreate the wheel. And I think most people here would say we're not necessarily going to recreate it. We're just going to repurpose it and graft a lot of the things that worked to this asset and reduce the counterparty risk. And so if you take that lens to the asset, well, then it naturally has to evolve simply because it started basically worth zero. And so was okay to use a plastic device to store 100 Bitcoin. And as that grows, you naturally went into passphrases, multi -sig, collaborative custody. There's a lot of different layers and flavors to that. But ultimately I always anchor back to Jesse's chart that Sailor often uses, the full potential valuation chart of if you think about an asset starting to take more and more, yeah, this chart's great to illustrate. Like we all believe, anybody probably listening to this podcast viewing this believes that this asset is gonna grow and take. Brian Cubellis (13:45.202) everybody probably has varying degrees of how much of the monetary premium from these other assets, real estate, equities, bonds, money. Well, we have to extrapolate, well then that means there's a bunch of other things that need to occur, financial services, bad actors, and so we have to evolve that custody situation. I think multi -institution is a natural evolution in this step. I like to think about it as a six -figure product in the sense of like when it's 100k plus, everyone's gonna fully understand and grock the gravity of having plastic devices and... on their person and their home. And so, yeah, that was a great recap and just wanted to frame around where we're going and the importance of security. If we think we're going past 100K, there needs to be redundancy and fault tolerance. And you're also gonna wanna live in a world where there's financial services that exist and you don't have to like maybe go into a dark room or cave to get access and be tracked while you do it. Yeah, and to add on to that, I guess it's sort of a thought I've had more in the last six months. I think that Bitcoin's multi -institution, multi -SIG capability is part of how it ends up winning. It ends up becoming a preferred store of value. It ends up taking a larger slice of the global asset landscape because it has this ability to have a lower risk form of custody than anything else out there. Capital is going to gravitate towards that as capital is looking for a good store of value asset. You're looking for performance, but you're also looking for risk mitigation. You want to know that you can reliably expect that capital to exist in the future without hacker insolvencies or any funny business from a single custodian. And so I think multi -institution custody is part of how Bitcoin wins. And that is I think it's something that the Bitcoin landscape in general is not really thinking about yet at all. But multi -institution custody is this, Multisig unlocks this ability, this capability for Bitcoin that makes it grow into becoming the best store of value in the world. And this is one of the things that I think we're going to see as a major tailwind over the next decade for Brian Cubellis (16:06.84) for Bitcoin and for Bitcoin custody is multi -institution custody taking more and more risk out of holding Bitcoin and therefore more and more capital saying, you know what, Bitcoin looks like, not only is it outperforming everything, but it's now becoming less risky than the assets I'm currently holding from a custody perspective. So, you know, it's time to allocate more. And so I think this is not yet understood about how Bitcoin becomes central to how the mainstream stores value. Yeah, it's a really good point. And the other thing I would sort of emphasize, and this is something I mentioned a lot, that Bitcoin as an asset, as a network, is genuinely one of the more decentralized things we've ever seen, right, as a human species. And that's very core to its value proper, why you would even be interested in Bitcoin from an investment perspective is its decentralized distributed nature. And so if you think about what we've seen over the past 15 years, and even with the launch of these ETFs, it's like, does it really make sense to centralize the custody of a very decentralized asset? No, it doesn't because if you want to honor the ethos and the principles of that asset of that network, you should try to also distribute ownership of the custody. And like Jesse's saying, has this very unique ability to do exactly that. And so, Michael, of the things you always say, which I love, is you can't multi -sig gold. But if you could, that'd be pretty attractive. That would be a better way to hold gold if you didn't have to trust one single vault and just hope that the gold was still there. And that would remove the Achilles heel of gold. Right, which is that it ends up in a single vault and then you get funny business based on it Well, I look at it I look at it too like we talked a lot about the ETFs a lot and how Like I believe they're a subpar product compared to holding the actual Bitcoin But there are people that that's how they can only buy Bitcoin and that's okay But even if you had an ETF that was held in multi institutional custody, it would be a better ETF so it's not even that I would say like Brian Cubellis (18:26.582) an ETF wrapper is bad or is a bad investment. And we can get into the nuances of taking ownership of the Bitcoin one day. But like if you, if you knew it was like not held with a single entity and it was held in multi -institutional custody across multiple entities, well that'd be a good product. And that would be, that would be attractive to people. Because I think there is this notion of like, the ETFs are quote unquote easy. And they are like, you already have a brokerage account like that. That is easy. But if you just think through like, actually, how was that custodied on the backend? It's not great. It's fine. mean, it's not, you in some ways it's, you know, it reduces the attack service and you personally, but like there is a, a centralization of that asset that is, could be, could be much better with multi -institution custody. Bradley, can you, you know, we kind of, we did a quick intro, but maybe share a little bit of your background. One of the thing, favorite parts about our conversations internally that we have is, if you would call yourself a student, but I feel like you've studied the internet wave and adoption and how what's happening here in Bitcoin is very similar. There has similarities. Because I think that's helpful in understanding this lens of what we're talking about. And what I'm driving towards is effectively like. Multi -institution, it's one thing, and I think individuals will be like, that kind of makes sense. But I think for it to really make sense is to go back to the anchor point that I think that has kept most bitcoins safe, which is going to take this relearning that we are going to go into bitcoins monetization with everybody holding these keys offline on their person and their home. Because I think that is a very novel thing that is still not picked up. And it makes sense because historically, if you're telling somebody something that's not offline cold storage, it meant that you were getting scammed or there was a central point of failure and that's radically different in this setup and this is why it takes time because if everybody was telling you they have a better solution they would be taking your Bitcoin but I think Bradley's understanding that very early was helpful and even me just realizing how right we were he had this notion and said I like honor it because I want to I'm gonna butcher it but it was about believing in a positive version of the future or like I don't know Bradley you could probably give it share it better than I can yeah so the the back story on the Brian Cubellis (20:41.014) quote and I'll run through my history in just a second was I want to live in a world we still trust institutions and I really see multi -institution custody as a great option for holding massive amounts of Bitcoin in a secure way. I really believe in a world, you all probably have used the technology plaid where you can like securely log into your bank with a different firm and that's really cool technology. I want to see that for like long term for like you can Pick your key holder. So maybe you have like a local bank. I come a big believer in local banks. Maybe you have a local bank and you want that to be one of your key holders for your custody and you will only you can only initiate transactions in person. Like I think that would be awesome. And so like I I don't want to get in a world where we like don't have it. We don't have any trust because even if you say hold all of your Bitcoin in self custody there is still trust in your world. You're still trusting your butcher. you're still trusting the water company. there, can't get to a place where like you think it's going to be like Mad Max style. You're walking around with machetes because if that is the case, then like we just have a whole other set of problems. And so, but just, just to back up and talk through my history, I, have been a big believer in the internet since long as I really can remember. Like I was on prodigy back in the day. I'm going to age myself. I remember I was paying for AOL, but parents were paying for AOL when it wasn't unlimited. So I've really grown up with technology my entire life. My first job while I was in college was working at an ISP doing tech support. And I always tell people, that's a very humbling experience is doing ISP work and doing tech support. you really understand how regular people grasp technology. People in this call, we're all probably more the tech savvy people in our families. We are the exception. The average person, they don't want to worry about how they get to the end result. They just want the solution. They want to buy something. And so I really come at Bitcoin from that mindset of looking at it as a technology evolution and technology adoption, much as in the same way the internet happened. at first, so just to back up and talk about my Bitcoin journey, first, I should have gotten it in 2010. I should have gotten it early on. I was always on the cutting edge of technology. Brian Cubellis (22:56.398) in fact, I'm guess I guess I can probably say this now because it's been long enough. Like my side hustle in high school was burning mixed CDs for people that I download from Napster. It was a great business. this was like in the late nineties, it was two, I charged $2 a CD and a dollar a song. And so like I've always kind of been on this bleeding edge of, of technology. and I, but I should have gotten it going earlier. I didn't, I don't know why, I just didn't. I, but where it finally clicked for me was in, late 2020, I was listening to a podcast called, business casual. So on the morning, Breed Network, it's a great newsletter. And, the Winklevoss twins were on there that, you know, that found a Gemini. And that was like the first time that I actually ever heard somebody explain Bitcoin and it immediately clicked. I, I can, I remember I was ironing, some clothes and my master bedroom at the time I was listening to podcasts. I've always loved, I've been listening to podcasts. It's 2003. Yes, 2003. and it just immediately clicked for me. like, well, this changes everything. Like it was, it was such an eyeopening. It just immediately clicked cause they explained it in a way with the. limited supply. And so I should have gotten much earlier because I was always a big believer in that the government was spending way too much money. I voted for Ron Paul in multiple primaries. I understood all that was happening in our country. So I should have gotten earlier, but it didn't. And it's the old adage, you get it the price you deserve. And I got it at the price I deserve. But I think what helped me is coming to Bitcoin in 2020, 2021, because I'm afraid had I come in in 2014, I would have been a trader. And I would have said, well, I bought it here. It's not here. You know, I have tried to kind of quote unquote, make money and not understand that Bitcoin was the money and that the goal was to accumulate more Bitcoin, not necessarily just accumulate more dollars. So I came at it at the right time. And one of the things that really helped me on my journey was understanding Bitcoin as a protocol for money. And again, so back up again, I've worked in technology my entire career, 20 plus years. And I, my career has been built on the backs of protocols, SMTP protocol for sending communication around the world at the speed of light, essentially for free over email. I think SMTP is one of the most incredible technologies in the world. I could send a message from here to Australia. You know, over multiple email providers, different applications, but because we're all talking to the same protocol, works. You know, TCP IP, HTTP, like these are all technologies we use every day. Brian Cubellis (25:21.89) and these are protocols for technology. Bitcoin is a protocol for money. And so what that means is like there will be different ways to use Bitcoin, there will be different ways to custody Bitcoin, there will be different ways to adopt Bitcoin, and they're all fine. And there's no right or wrong answer. Just as like there's no right or wrong email client. Like you can just pick whatever client that you want and you can use it with your email provider and you can talk to anybody around the world. Bitcoin, I think, will operate much the same way. Where you will have different flavors of custody for maybe different amounts of Bitcoin and different things. know, since some people want to hold it this way, some people want hold it that way. And it's all great. And it's all, we all grow together just as in the same way, like our apps have changed over the years. The way we interact with technology is different in 2014 than it is in 2024. Like all these things have changed. And a good, I talked to somebody the last week and we were talking about like, well, Bitcoin is never going to do X because of some limitation today. I said, you forget, like, I don't know if you guys on the pod, like remember, had the first iPhone, like the first iPhone couldn't even send picture messages. Like you only worked on a singular here in the U S and again, I'm going to date myself. Like it only worked on singular. It literally couldn't send picture messages. Something that is like core today to the like mobile experience of sending messages over, over text messages and whatever chat app couldn't do it the way you, so you got to, you got a link front and you didn't, had to go and you couldn't copy and paste and you couldn't click on it. So you actually had just like manually retype the URL into Safari and view the view the picture message. And so you people think, well, Bitcoin, whatever this is like, guys, we were not that long ago. Like you couldn't even send picture messages on the iPhone today. So like, don't, don't underestimate like what we can build in the short term, because I remember when like loading a three meg audio file on AOL took hours. Now you can view that, you know, half a second on your phone. Like we really, really overestimate what we can do in maybe a few months, but we are vastly underestimating what we can do technology wise over the next, you know, 12 years. Brian Cubellis (27:19.807) Yeah, there's this fascinating perspectives and you know, I think to your point, like we're 15 years into Bitcoin and a lot of times we'd like to think that we have it all figured out, right? Like we have the solutions that we want to point people toward. And, you know, we, we pretty much think that we've solved a lot of problems that already exist, but the reality is we're kind of in the internet for in the 1990s, right? Like, as you pointed out, there were a lot of things that we kind of took for granted even in the 2000s as it relates to the iPhone, some of the things that I, I didn't even know personally. So like, how do you kind of think about now? How do you think about where we are today with Bitcoin, right? And the technologies that exist. Maybe you could also walk through people like over the past four years. What are the different technologies you've interacted with from, you know, signing devices and running nodes and, you know, exchange experiences? Like, what are the different technologies you've interacted with on Bitcoin and how would you kind of equate where we are today in Bitcoin to where we would be in the Internet adoption? I really believe in probably like 1992, there were probably people like us. sitting around a restaurant somewhere talking about the internet and what it was going to be and they all sounded crazy and they were all crazy but they were all right and I think there is an aspect of like We often feel like when we go like talk to people that like don't understand Bitcoin, we sound crazy and we are crazy. We are, we are implementing a new, you know, world deserve currency slowly, but surely. And so it does sound crazy, but everything about the internet sounded crazy then. mean, the good example is like, we were always told two things, you know, growing up, don't meet, don't, meet people from the internet. Don't get into a stranger's car. Brian Cubellis (29:00.28) Well, that is the business model for Uber and Lyft. like things change, can change over time. And it is, it is still the early nineties for adoption. Again, what we were doing with the internet in the early nineties and the mid nineties was amazing. Like, you know, I remember one of the other things I did to as a side hustle, like I built websites for people. These websites were awful in compared to today's standards. And people were arguing then about like the best way to build websites, just like they are today. But like the technology is just gradually, like, you know, gradually, you know, came about, again, taking credit cards on the internet in 1995 was really complicated. Today, it's super easy. Like it's turnkey solution, you can use Striper, you can use any other square. So there is this mantra of we kind of get frustrated in the moment of like, why do not more people get this? Like, do you not think people, there were probably people like watching Amazon in like 1996, 1997 IPO saying, guys, this company is gonna take over everything. And... And again, like they did and they were right and they were up and down and the number of times their stock has drawn down over time. Like, yeah, they did, but they had this like long -term thesis, their long -term investors like understood, well, the internet is going to change everything and then mobility changed everything and then cloud changed everything once again. So like, if you just have this, like, you know where the end result is, the journey along the way can be a little bit bumpy, but you know, like we will figure these solutions out. So like, you know, when I hear people say, lightning doesn't do X, like, okay, we'll build that. or this doesn't do this, okay, we'll build that too. And it's like being mad in like 2011 that like multi -institutional custody doesn't exist. Like it didn't need to exist in 2011. Just like things that we, you we don't need today. Like Bitcoin is not going to take over, you know, all credit card processing tomorrow. So like we don't have to have the technology to do that today. We will build it as that comes and like problems for this present themselves and solution, we will build solutions. And like we've done that with technology over the years. And it's like, Everything with technology is not solved today, but like when new problems crop up, free market figures it out and like, okay, how can we offer a solution? How can we offer this? know, and I think too, you have to, with Bitcoin too, until you really understand the problem that Bitcoin solves and you feel that problem, I don't think people are interested in the solution outside of like, maybe this is a specular asset that might go up in terms of dollar values. Brian Cubellis (31:16.162) I think the critical thing for people with understanding of Bitcoin is they have to actually understand the problem that we have today. again, right now, everybody's feeling inflation, so they're starting to understand that more. But it's also like putting a lobster in a bowling pan. You don't fill it right at once as it gets hotter. And I think that's kind of where the world is, particularly here in the US, is that water is just getting hotter and hotter and hotter. And we've come around in the past four years and you look at the price of groceries, you're like, this doesn't feel right. This is frustrating. Like what actually is the solution? and some people want to get mad and they want to, you know, blame politicians. They want to blame this on higher. They don't like somebody else. And like, we're all here saying like, we're just going to invent some better money and we're going to over here and this is, this is a better solution for us. And I think it's actually freeing too, when you really understand it, like again, the, what, what is Bitcoin going to do in USD prices today, tomorrow? I don't, I don't know, but do I think 10 years from now it's dramatically higher? I do. And the only way, you know, people say, what is the risk of Bitcoin is like government stops spending money. I don't see that happening. There's no talk of governments like actually stops, you know, spending. So if that's the case, I'm just going to save in Bitcoin. And it's really, it's like freeing and simple, but it, you get to the almost like zen like moment where you're like, I can be mad about all the things that are wrong in the world, or I can just go out and seek out a solution to my problems. Brian Cubellis (32:36.142) But going back to custody, I've tried all different flavors of custody. And again, going back to the protocol, I think they're all fine. I think there are reasons to have a little bit of on exchange. There's reasons to have a little bit of in an iPhone app. There's reasons to have a little bit in collaborative custody. But I really kind of came to multi -institutional custody from this mindset of like, what works 30 years from now? because I look at Bitcoin as like a generational asset that I want to have in my family forever. And I love, I have hardware devices that I tinker with. I love tinkering with stuff. But when I think through like actually what scales Bitcoin to the rest of the world, I look at it as in some ways like how email grew. I mean, again, in the nineties, like there wasn't like Gmail in the nineties, cause I remember when Gmail launched, like, you you people were selling invites on eBay. really the first mass market email service was Hotmail. And it was so popular, Microsoft bought it. Because prior to that, these mass market, you had to run your own email server. that was fine that that existed, and it was a reason some businesses ran it. That's how they did it. And some people still do that, and that's great. But email is a protocol, so people can use their own email server. But what helped email really grow dramatically were companies offering solutions to interoperate with that protocol. So again, you had Juno, I'm really aging my stuff now. You had Mindspring, you had Hotmail, then Gmail came along. Apple, iCloud, had Yahoo obviously in there. And again, then solutions came out where it's like, you can run a, we're gonna run a squirrel mail, we're gonna host it for you. It's another open source platform and you can choose your own domain. There are a thousand different ways to interact with email, but what do we all know about email? If I had your email address, I don't have to think about what email provider you're using. I just send you a message, the apps handle it, the protocol handles it. That's the, to me, I look at Bitcoin like that. So that's going to be how Bitcoin scales is there's going to be different ways to interact with it. And they're all right. And they're all positives and negatives, all of them. And I think too, like when you get dogmatic about different, you get opinions and say, well, this is the only way to do X like, well, maybe that's the only way for you to do X, but like another person has different hopes and strengths and weaknesses. And like, they don't want to do that. And I think that's what, to me, what I love about multi -institution custody is it's a way. Brian Cubellis (34:56.354) to hold large amounts of Bitcoin in a way that is easy, scalable, and secure. And again, I love the inheritance piece to solve with it. I don't have to worry about keeping plastic devices and plugging them up. And again, do I still hold a very, very small amount of Bitcoin in self custody? I do. But over time, as I migrated to OnRamp, I started out with a little bit. And over time, I realized like... more and more and more and more and more of this needs to be in multi -institution custody because this is the future. This is the most secure way. This is the most scalable way. And this is a way you could tell your neighbor, the person that delivers your mail, the person at the coffee shop, like multi -institution custody is scalable for everybody, regardless of their technical level. Can I view my Bitcoin on my own node in my house? I can, but does like, you know, as... Family member that doesn't even care about technology, do they want to do that? No, they don't want to, but it's important they can, but they don't have to. And that's why I'm such a big believer in on -ramps technology is because it is a way to onboard billions of people to Bitcoin in a way that a lot of people are just never going to hold their own keys and physically hold them. They can legally control them with institutions spread out across multiple jurisdictions, but they actually don't have to have USB keys where if something happened those, if they did that wrong, that they've lost their wealth. You know, again, it's important that people can do that from the protocol state, but the vast majority of people are not going to hold their own keys fiscally. And I that may be controversial, but I've watched technology adoption long enough to know just like most people are not going to run their own email server. They wanted a solution and Gmail, iCloud, Yahoo gave them a solution. They need a solution to securely and legally hold Bitcoin in a way that's easy. Yeah, it's it's you paint such a good picture there, Bradley, of like. You said multi -institution custody wasn't needed in 2011. I think that's an important part of this too. Brian Cubellis (36:51.886) as the evolution of custody, Bitcoin custody has progressed. It's based on need, right? Like who held Bitcoin in 2011, the cypher punks and related parties. And it was a speculative thing that you knew you were like way out there and you weren't like, you weren't really betting the farm on it and you weren't relying on it, right? And then now move forward in time as that the value of Bitcoin has grown, people have started to base their financial world around Bitcoin. Some people, right, some people who have been comfortable enough with the technical demands of self custody in particular and multi -sig custody in particular over the last few years. But that requires a lot of technical know -how in the same way that the email story has, you painted a great picture of how that tracked over time. We think about how the progress of technology involves the simplification of UI and UX. But I think it underneath that surface there's a whole lot of technical simplification or I guess removal of the user from the technical requirements involved in connecting to the internet, getting your own email, setting up an iPhone back in the day was a lot harder than it is now, anything. making UI UX easier or better, also, as a big part of that, making the tech requirements simplified and shifting the burden from the user to... to companies who are helping the user is a big part of how technology goes from the bleeding edge innovators through the early adopters and into the mainstream. And that's the story playing out again with Bitcoin, the evolution of Bitcoin custody here, where Brian Cubellis (38:57.62) as people are starting to center their financial world around Bitcoin, we needed a better solution to remove some of the technical burden from the individual. Because if you set up a multi -sig, if you set up a collaborative custody multi -sig, that's kind of the best in class before multi -institution custody, in my opinion. And in that scenario, you still are responsible, ultimately, for the majority of the keys and how that material is held. you could screw it up. And that is comfortable enough for some people and pretty uncomfortable, think, for realistically the majority of people. Most of those people haven't adopted Bitcoin yet, in part because of this, in general, they're less technical. And so, know, cometh the hour, cometh the man sort of idea here of like out of necessity and what's possible with Bitcoin, you develop the next step in the evolution of Bitcoin custody to reach the next group of people who by making it better UI UX and removing a big chunk of the technical burden from the experience overall. And that is that next stepping stone is multi -institution custody and I think it's really more than a stepping stone. think it is ultimately the format that is the end state of where this goes. Of course, there will be a ton of innovation with multi -institution custody and what it ends up looking like. But from a conceptual format point of view, you've now risk mitigated about as much as you can. No solution is absolutely 100 % perfect, but. with multi -institution custody, you're an order of magnitude better than any custody format in the traditional world. So I that's about as much as you can hope for. I think it's really well put. There's a couple of themes that have come up here. Jesse referenced as we center more of our lives, our net worths around the asset. Now you have to start thinking about it from a first principles perspective of risk and how do you secure it. And Bradley referenced how he should have got Bitcoin. He didn't. There's a lot of people that should. Brian Cubellis (41:12.068) There's a subconscious notion and these are obviously on the different sides of the spectrums But if you ask or pull, know the grandmother or parent, what do you know about Bitcoin? It'll end up in these two spectrums of you know, it's kind of cool But North Korean hackers will end up with it or it'll end up in a hard drive in the UK or wherever the hard drive the famous the infamous hard drive ended up and so it naturally everybody knows these growing problems of inflation the the story value having to pay, multiple There's all the things associated, but they can't really look at the asset even though they believe it's the best performing asset Even if they know it simply because it's like well even if I get it What do I do now? I have a bigger problem because I have to reframe my mind and also figure out what to do with this asset and so now you start to naturally for the past 15 years I joke and think like we're so early to Bitcoin We haven't figured out how to actually custody it that everyone has taken these same trade -offs and just to put it nicely It's like I can guarantee you everybody that holds their own Bitcoin has a level of from one to ten uneasiness with it, it's just how far, right? You're using collaborative custody. Well, if you leave the country, are you traveling with keys? Well, that's a problem. Are you not traveling with keys? That's a problem as well. And we've gone in through the inner workings of this onboarding billions of dollars. It was the best that existed. It's not to take away from it. It Bitcoin off of BlockFi, kept Bitcoin off of Celsius, but people also kept Bitcoin on BlockFi and Celsius because they were too afraid to get set up with collaborative custody. You got hardware devices, you got multiple seed phrases, you got wallet config files, you got to make sure they're all right. You got to make sure they're not all sitting underneath your desk, which guess what, most people have them set up and out of their desk. so that's this notion of, Bradley's point, there's no one size fits all. It's how you keep the system honest, is you have self custody ability to take delivery. But then ultimately where we're going is you want to trust third parties. You want to be able to live in a world where you can access financial services. Somebody can pick up the phone, answer an email if somebody passes away and there's death certificates and the right precautions that are provided along with a bunch of other things. So everything we get really passionate about this is because you just look at this space for so long and when you see what we see it's like wow this is effectively what Jesse's kind of aligning the future and now you get to start building all the products and services on top and the market gets to you know kind of catch up because at the end of the day game theory plays in here where clients come to us and then clients of large institutions come to us saying hey I want to move my assets over will you participate and if they say no it's like well you're losing all the assets versus participating in one Brian Cubellis (43:41.528) of the keys. So it's a really exciting time and really exciting for the evolution of Bitcoin as we think about it going into six figures. It's one of those things where multi -sig and collaborative custody had to exist as a prerequisite to this because I don't think most people would understand a two of three model. They'd be like, wait, what's happening here? But now that existed, so that's enough in the like mind share. And so it just kind of now evolves into this next evolution. It's a protocol too. And I think that's the beauty here. Just to add a little bit onto Michael's thing, to make that actionable. For a lot of people, so far we've been painting a picture of like this has been the evolution of Bitcoin custody and into the future it's gonna shift more towards multi -institution custody. But for the individual, to make it actionable, that can be you now. You can take the step from self -custody or third -party custody if you still have coins on Coinbase and you've been afraid to set up. your own self custody, well, here's the solution for you. And that allows you to reap the benefits psychologically and also the risk mitigation benefits of multi institution custody that we've been enumerating. And what that ultimately allows you to do, and we've heard this from our clients, is that it allows you to feel like you're more secure with your Bitcoin and that you can start to shift your mindset about your Bitcoin position from, it's this thing that I think is going to work out, but I can't rely on it because I could screw it up or I need to have other things to trust, other pillars that are the majority of my portfolio, for example. to shift from that model to a mental state of, know what, this is actually the most secure thing in my portfolio. I can rely on this position and you can start to transition your mental model of what Bitcoin means in your portfolio accordingly. And I think that's like a hidden and rather powerful transformation that we see with our clients of Bitcoin goes from this speculative, hopefully, Brian Cubellis (46:00.816) it works out to, you know what, I now live in a Bitcoin standard world for my personal finances. And that is the heart and core of how I've organized my financial world. And I can rely on it because I am using this model of custody that is better risk mitigation than anything else out there. And that's, that was my journey to moving nearly all of my Bitcoin to multi -institution custody is we had some international travel and I, and again, I keys separated by many, many, many miles. But I just look at these keys. I don't, I had one, I don't, I don't know what to do with this. So do I, do I, what do I store this one? Do I take it with me? And that, that was one of those like mental journeys I took was like, okay, over time it made more and more sense to rely on multi -institution custody. And, again, I'm sure somebody's listening to this and be like Bradley's wrong for like all these reasons. And that's fine. I can be wrong for you and right for me. And the, is because again, again, I frame everything through technology. We can have different opinions. on like the best way to build a website. Cause there are web standards. know, some, somebody wants to use Squarespace cause they just like don't want to deal with managing a server. That's awesome. Go build square. Like you can build a billion dollar business using Squarespace. So you're like, I'm going to put it by hand and run it on a server in my own data center. That's awesome too. Like you can go do that. There's nobody stopping you to do that because we all agree on the rules of web standards. Everybody can come at it with their own opinions and offer varying solutions to the market. They can all be right. And it's just, people's different level of experience and know how and desire to tinker into like all those things are right. Just as if you said, Hey Bradley, I'm, I want to, so like, actually have all of my Bitcoin on a single SIG that I memorized in my head. Okay. Like that's, if you want to do that, that's fine too. Like that worked because we all agree on the rules of the protocol. You can do that. I wouldn't do that, but like somebody else can do that. If you said, Hey Bradley, I'm going to use, collaborative custody. That's awesome. That's great too. We can all use the same. We can all. Brian Cubellis (47:56.588) you can send me Bitcoin, can send you Bitcoin back and somebody can send it from Coinbase to me. because this is a protocol, and again, this is where I think for a lot of technology people, it maybe hasn't clicked yet. Like if you built your business on the backs of TCP IP and SMTP and HTTP, like this is protocol for money. You can do things with this and doesn't matter what country you're in, what services you're in. You can just send it back and forth and not worry about that. And so that's where like, you I, you find the custody model that scales for you with your own level of comfort. And you have to think through like, do I want to be managing this Bitcoin in 10 years from now? If it's, if it's a hundred extra value, do I still want keys in my desk? You may be okay with that today, but like be thinking like, okay, if Bitcoin suddenly went to a million dollars tomorrow and it's probably not, it'd be great if it did be interesting. Like, would you feel comfortable with your current custody model? And I suspect most people wouldn't. And maybe, maybe as you know, an except for a lot of people, if they are very tech savvy today is like, Hey, I I have this amount of Bitcoin, I'm going to shift 30 % of it to multi -institution custody. And every time the price goes up more and more, I'm going to move more and more and more over here because I don't want to have that level of risk in my possession, in my house. I personally do not want to be able to sign transactions, just full stop. that may be, some people may think you don't understand Bitcoin. I think I understand it enough to know I don't want that risk that I can, you know, if someone sees me out and hits me with a wrench, I don't want to be able to sign that transaction. That's my mental model. I could be, people could say you're wrong and that's okay, but that's the beauty of Bitcoin is we can have differing opinions and what scales for you and how you want to use the protocol is different than how I use the protocol. Just in the same way as I'm not wrong to use Squarespace to build my website or Wix and you're not wrong to code it yourself. And that's a helpful way for me to frame it. This is a protocol for money with a known supply that we can send anywhere in the world and we will all use it in different ways. And as new problems arise, there will be new companies that solve new solutions. And so again, going back to like, are there things about lightning that can be better today? Sure. We'll fix it though. Like we'll make it better. Companies will come along because again, we're operating as a protocol here. We can, as an industry drive it forward just as in the same way, like the way the internet worked in the late nineties, like it was, I don't know if y 'all have ever seen the video, like on the Today Show in like 94, they're like, what is this app symbol? Like this is 1994. And then in like, know, 2007, the iPhone launched, a lot of work happened between Brian Cubellis (50:17.838) 1994, 2007 to get there to where we put a pocket computer in everybody's hand and it go anywhere in the world. Like that's, you know, if you don't remember how the internet was adopted, you probably, you know, are shocked at more people to understand it, but like people just didn't get the internet. mean, again, even after like the dot -com bust in the two thousands, the internet's a fad, that, and the other. A few years later, you know, we have the app store that's changing everything. You know, the, the, the, and two, it is very hard when you're outside of the industry to like, to see it too. it's people's like, well, how did every retailer not understand e -commerce? Like, y don't know y 'all knew this, like Toys R Us outsourced e -commerce to Amazon. Did y 'all know that? Like they just completely out, like Toys R Us did not have a website early on. They outsourced every bit of their e -commerce to Amazon. Well, in hindsight, that sounds not smart because you could see what would happen. But at the time, it just didn't make sense. Toys R Us was like, we don't understand this. So we're just going to let this other company do it. That's just what happened. And again, obviously like in hindsight, that was a bad decision, but It's hard in the moment to know where the future is going to go, especially if you just aren't forward thinking. Yeah, think there's a lot there when you just look at the trajectory of the internet in the sense of most people don't have to understand a lot of this where we focus heavily on education. is because there's a certain segment of the entrenched minority that has to understand this stuff and then the rest will pick up the standard that ends up winning. I think we're still in that phase. I think one of the things that we've seen just like inside baseball at OnRent is that we focus on education and a lot of this stuff because ultimately you can't get to multi -institution until you even understand why Bitcoin. And you can't even get to like why Bitcoin until you understand that it's risk off, not risk on, which most institutional investors are still thinking about as a speculative asset similar to crypto. And so there's just still a lot baked into a lot of this. I want to share one thing but before that just like from an actionable perspective that Jesse and Bradley shared is you know, if anybody's interested in this stuff's so reach out sign up There's this notion. I don't want to call it magic, but I'll use it as like that term Any sufficient technology is indistinguishable from magic There's something very incredible about setting up an account and having to video verify with multiple institutions and know that people with armed guards and security are Brian Cubellis (52:37.008) in different entities in different locations signing transactions on your behalf like that's never existed a bunch of people are working on this stuff We're excited for other people to have multi -institution in the space There's a lot of operational. There's a lot of things that go into it And the keys are yours. It's never misunderstood, but these keys are offline bit goes trust company the only time they've ever taken a key offline that houses ETFs on ramp now tetra and then coin cover So I would encourage anybody to try that out. The keys are yours you direct control you have legal relationships but the thing that I think is outside of on -ramp just a market structure thing I want to share because nobody talks about this and this is just like important if anybody cares about the asset is Ultimately, you know, we said that people aren't comfortable with their their self custody. There's this like grander notion that's even just as kind of like wild of a statement. I believe to be true is that both sides of custody that exists that house majority of the Bitcoin take insane tradeoffs and nobody ever talks about how Bitcoin can monetize and we all believe it to be worth tens of trillions of dollars and nobody ever brings up that both models here are not feasible. It is there's no way it can happen. There's no way institutions are going to be able from a fiduciary perspective hold their own keys. That's why on -ramp exists. We saw it time and time again where there was high net worth individuals to businesses, institutions. They cannot just get around the fact that somebody can move with hardware devices outside of the platform or wallet config file. And then third party custody, I mean, this is ultimately why gold failed. You cannot have a centralization of an asset that competes with money and have the ability with somebody with firearms and government agencies to take the asset. So nobody was talking. about this and we saw in 22 this notion of the smartest people in the room you know weren't the smartest people whether it was grayscale whether it was the exchanges that blew up and ultimately nothing else came from that other than a few people got slaps on the wrist but everybody's still leveraging the same third -party custody Coinbase is even bigger now so I think that's just a more important thing outside of onramp is really doing a hard look of like how does this asset really scale to be the asset everybody wanted to be if there's the two options that exist is third -party custody or sell Brian Cubellis (54:50.17) I don't think that gets talked about enough because it's a little bit less of like a show in the solution and more of just like there's an actual fundamental problem that if it doesn't get fixed I don't know how Bitcoin can actually win. and speaking of trade -offs to Michael and all the different personas that we've discussed today One thing that's often overlooked is inheritance, right? Because Michael even the persona you describe where it's a technical user Maybe on that scale of one to ten in terms of the amount of pain or discomfort they experience managing their own keys, maybe they're a one, a two, or a three. They have a very low amount of discomfort managing their own keys, but often what we find in conversations with clients, one of the main things that concerns them is they all view Bitcoin as a multi -generational pursuit, as the four of us do as well. And to take a trade -off and have a gap in your financial plan where if something happens to me or something happens to client and there's not a seamless way for their family to access that wealth. is a massive trade off. That's essentially accepting that all of the work that you've done to understand Bitcoin, which is often hundreds or thousands of hours for an individual, and then all of the capital and choice they've made to use Bitcoin as their preferred savings vehicle, could all be lost in a transition of that wealth. that's really, in my opinion, a very unacceptable and irresponsible trade off to make. So unless someone feels like really bulletproof that their spouse or their children will actually be able to access that wealth. And they've also addressed the legal title issue, which a lot of people haven't done with self custody. Then they're really taking a ton of risk there, could, unfortunately, like people don't like to talk about it, but it could really put someone's family in a terrible situation financially. It's it's a great call out because again, thousands of conversations have come into the, these products and how we think about them. And there's these two overarching themes that think the audience a lot will resonate is generally it's a male that's the allocator the one holding BTC and generally what I'm finding is they say it to me I never heard it out loud was just like my wife wants is fine with the allocation but it's not fine with once nothing to do with the asset so it's like it's on you and it's a difficult spot to be in because again if you go back to that last image that showed third -party custody or self custody you can't leave we all know you can't leave it on a third -party custodian you'll more than likely outlive the third -party custodian historically Brian Cubellis (57:19.76) But then the alternative is what Jackson's referring to as you're effectively leaving a treasure map and hoping your family can find the asset, which I guess made sense because it was the first 15 years, but there's other there needed to be market structure that developed. The other thing that's worth referencing, and it's just it reminds me of trust, revocable and irrevocable trust and how we put them off in the same way that we think we put off inheritance is mortality becomes real as we get older. People get sicker. And I remember this from clients previously and here were somebody I was just on the phone with somebody whose father passed away this morning didn't pass away this morning when I was talking with the gentleman this father passed away and you know he was down but also understood he needed to get set up because it's like he stored all his value this is significant wealth and he's like I can't be in a position when you go through that so much mortality starts to become increasingly real and it's just like well what am I doing here and so yeah those are two good call -out checks and and that's that speaks to making Bitcoin a more reliable, a more robust part of your financial planning and financial reality. Because in 2011, it was the cypherpunks and anarchists who were young single males who had some Bitcoin allocation. Fast forward, Bitcoin now was held by family men. you know, and millennials who are starting families. I've gone through this journey recently, Michael has recently, and what you need to have in your Bitcoin custody set up shifts, I think, as part of that. You need to know that your family is going to be protected. protected against fiat debasement, yes, but also protected in the event that you get hit by a bus because a treasure map set up is pretty uncomfortable. You can get it to a place where you're pretty sure it'll work, but you never know. And that one, two, five percent chance is pretty awful. And so I think that is also part of this story of Bitcoin. Brian Cubellis (59:41.896) the of the evolves into being a part of society and the fabric of society is reliable financial trust and financial planning. And that's where Bitcoin has to emerge from the wilderness and become a part of that fabric of society and allow for family planning really and family confidence and multi -institution. Custody does that in a way that no prior form of custody has been able to do, especially when it comes to you know, the wrench attack possibilities of taking all that responsibility and putting it on yourself and storing it in your house, you know, in various places that now you're just opening yourself up to a form of barbarism that we haven't had to deal with as a society in hundreds of years. And so let's quickly get to a place where we no longer have that risk. reintroduced. It's looking at too, people want solutions, they don't want to buy pieces together. So it's kind of like somebody in the 90s when they wanted a computer, they would go out and they would build their computer and they'd buy pieces off the shelf and they'd go and they'd put it all together, say, we're gonna make this work. If we still had to use computers that way today, a lot fewer people would have computers. So people just like, I want to go to the, I'm going to best buy or I to go to the Apple store. just want to buy the computer and it work and I want to tinker with it. All the same pieces are in there, but they've somebody else has sold them a solution. So we, we have, you we built the technology over the last 15 years. Now the solutions are being built and multi -institution custody is a solution that scales Bitcoin custody to the masses. is safe and secure. And I would argue. It has the, mean, again, no, there is no perfect way to do anything in technology. There are always trade -offs. I would argue that multi -institution custody has the, the, the best, you if you're looking at pros and cons lists, it has the most in the process of any, of any custody model. and I think it's the one that scales from, you know, somebody that's, that's 80 and it just knows they need some Bitcoin, but don't they don't want to deal with it or someone that's 20 and they travel around a lot. Like I don't want to these keys. Brian Cubellis (01:01:55.892) It scales for everybody just as the same way like the iPhone was a great smartphone for everybody, regardless of your tech savviness. Bitcoin and multi -institutional custody is the way that scales the same way. It really is to me the iPhone of Bitcoin custody. Yeah, maybe one thing we could do now is... I kind of want to zoom out for a second outside of just multi -institution and talk about risks, right? Because Jesse, one thing that you mentioned and really the entire topic of this conversation is evolution of custody, Custody is a solution that evolves as the market and risk structure evolves, right? So I'm curious to hear the group's thoughts on thinking through 2024, this next cycle and a cycle from now, right? Like let's think about the next five years for Bitcoin custody. What are some risks that maybe are increasing in your opinion or decreasing, right? Because risk is always going to be a vector. These risks are never static. Things change on a daily basis, monthly basis or yearly basis. So I'm curious to hear the group's thoughts, whether it's just in conversations, building the business or maybe paying attention to other developments within the industry. What do you guys see as risks that maybe people are under appreciating versus over appreciating in the market? And how do people think about mitigating some of these risks as they develop? I mean, the first thing that comes to mind is, and I'll throw it back after sharing the statement to you, Jackson, because you have a lot of these conversations, is more institutions don't catch up on this cycle. And we have orders of magnitude of liquidity issues, right? Because at the end of the day, Brian Cubellis (01:03:39.63) Bitcoin is volatile asset and it's the most volatile asset we've probably ever seen, specifically if you're coming from TradFi. And so if you get caught off sides, it's unfriendly and people end up insolvent, know, people with custodial losses, exits, scams, there's all these things that happen. And it's been very positive to see folks from Schwab join the firm, pensions that we're working with in the UK. So it's good to see institutional investors grok this because we've seen carnage the past 15 years, but it's still very, we're still very early. fear the risk is that more capital is going to come in orders of magnitude more capital this next cycle and that there's just going to be losses again it's going to be another you know I don't know exact time frame obviously but curiously Jackson on your side because you have a lot of these conversations where do you you agree with that or where do you see risks outside of that? Yeah one area that is probably not a surprise to any of you and won't be a surprise to the audience because of thinking about it in many cases is I think people tend to over index against hypothetical future kind of tail risk events. One example of that being a 61 02 right? Everyone likes to think about what happened 100 years ago as related to the US government's actions and confiscation of gold from private citizens within the country right? And There's a couple things to call out there. First and foremost, think only about 25 % of private ownership of gold was actually successfully confiscated. So now you kind of think about that and extrapolate to a digital bearer asset that doesn't, it's kind of weird, right? It lives somewhere and nowhere at the same time. And what I think people... Oftentimes fall into is they over index to these things that don't really they don't exist today It's good to be aware of them and I wouldn't discount it personally, but You're you're in many cases over indexing to something that could happen But it doesn't happen right now, but what could happen today? And things that we face Bradley an example you pointed out is traveling right people travel very frequently Personally for business. How do you manage keys if you're leaving for a Brian Cubellis (01:05:55.136) for a vacation or you're leaving for two weeks for a business trip, right? Do you bring the keys with you? Are they secured within your home? Are they secured in another location? How do you perform any sort of key checks while you're away? Another thing we already talked about is inheritance. This is if you're using Bitcoin as your primary store of value and it's a very much a bedrock of your financial plan. You need to absolutely have a way to pass those assets down. And that is, in my opinion, much more important than thinking about what could happen if the U .S. government or some people even go as far as to say governments globally will coordinate attack on Bitcoin, which we could unpack that. think it's a very, very low risk and it would be extremely hard to pull off. But there's of course ways to mitigate that. Right. right? Like multi... jurisdiction, multi institution custody is a form of third party custody that mitigates these risks. So a you're not trusting yourself with all of your Bitcoin and opening up trade offs as it relates to human error and traveling and inheritance. But you're also not trusting one institution that if the government did, you know, on a dime change their entire position, which would be unlikely, there would probably be a lot of messaging and you'd kind of be able to anticipate something like that happening. But if it did happen on a dime, you would be in a pretty tough spot if you had all of your Bitcoin and one Omnibus account at, you know, a U .S. regulated exchange. But if your Bitcoin is held and not controlled by one independent institution, but it's. But there's governance and decentralization baked into how the keys are managed and they're in multiple jurisdictions and no institution can turn keys over to the government, then you've effectively removed or really mitigated that risk. So. Brian Cubellis (01:07:42.946) Hopefully that helps as context. think these are typically the conversations that I'm having with folks is how do you actually approach this personally at an individual level or if you're a business, how do you think about this as well? And I try to anchor back to what are actually the circumstances today and what are the higher probability risks and what are increasing versus what might be decreasing in the market. Yeah, I think about I think there's the potential for personal tragedy that I think is probably an acute risk for the individual. I don't think Bitcoin has a ton of risk in terms of its continued success and growth. But the individual can screw up along the way. I think there are discrete risks. for the individual and how they custody, whether they choose self custody or third party custody, that are higher than people generally think. I think a great example of this is right now there's some network, probably several networks of hackers who are really social engineering hackers who... through a variety of methods are gaining people's cell phone numbers because you're on some ledger hardware contact info leak from three years ago or other personal information leaks. And people are getting contacted by these hackers who are making themselves sound like customer service tech support for various crypto platforms. Maybe it's Coinbase, maybe it's Ledger. And these guys are really good. There's a Brian Cubellis (01:09:46.87) interview that Junseth did, an impromptu interview he got with one of these hackers who called him and then he managed to get this guy to talk about everything they do. the first five, ten minutes of that call was this guy thinking he was making headway on effectively social engineering Junseth while Junseth was playing along. But it was really good. It sounded right. It sounded like the real deal. And who knows how many individuals will fall for that or already fallen for that and could going forward accidentally hand over their Coinbase login credentials and have those hackers sweep the account. That happens every day and we don't think about it because Coinbase isn't hacked and I think that's why we don't think about that as a risk because Coinbase's security has never been hacked, at least that I'm aware of. And it's, you know, from a, from a pure security point of view, it is sound. However, you can, you can be social engineered to give up your credentials and then your account gets swept and Coinbase didn't do anything wrong. You screwed up. So I think that's the risk to the individual. And of course there's also the wrench attack risk. And we're starting to see more sophisticated criminal networks targeting people who have wealth. And it's you know, there are some who are doing this with with crypto I think I you know, you can only imagine how the price of Bitcoin 510 X is there's gonna be a lot more of that targeting wrench attacks targeting the individual who are who's keeping their keys at home and then I think that the big hidden risk for individuals and institutions is that people are keeping themselves from a larger Bitcoin allocation because they're uncomfortable with their options of self custody or third -party custody. And so that's a big risk that you are you are keeping yourself out of the game even though you know where this is going. Brian Cubellis (01:12:01.87) Because it's uncomfortable because you don't want to lose the farm because it's just psychologically untenable to take that risk on of self custody or third -party custody and so in doing that you're running this risk of missing out you are you have put yourself on the sideline at least partly maybe you have a 5 % allocation but you would have a 20 % if you if you felt more comfortable about custody well you're missing out on a 15 % allocation right there and so I that's an epidemic of fear out there about Bitcoin that is probably the single biggest risk that people run with regard to custody. Nobody feels really comfortable and so they're counting themselves out of the game. Working backwards really quick, you hit on two really important things I think for listeners and as we share this. I always thought about on -ramp as the price appreciates is less for the hardcore Bitcoiner. It's for their family member that has, I always think like somebody that has. Whatever their percentages, unless they've gone very deep and figured out how to make it as close to bulletproof as possible, they want 10x the version. So if they have 1%, they want 10%. If they got all the way to double digit percentage of their net worth, they really want 100%, but they haven't figured out to Jesse's point how to make it bulletproof. And that's where those numbers you hear about 200 million people home Bitcoin. It's reality. It's like 0 .01 % of that. It's just people have $5 on Coinbase or $1 ,000 in the ETF on their IRA or whatever. So I think sharing this always want to work with. them. The other one is honestly I think the biggest blind spot in this whole setup from the smartest most educated people in the space of the the notion that we're all gonna hold our keys in the same way that like there's a reason why we don't hold gold underneath our mattress and for thousands of years institutions that have existed and we had to build trust circles around them and it's not to say it has to look exactly the same but there's these two things that are happening currently that everybody I think would agree on. you have Brian Cubellis (01:14:07.288) the right side which is the digital sphere and everybody that's sophisticated online is trying to get your Bitcoin. Jesse called out Coinbase, there's all the different you know North Korean hackers, there's all these groups that are all day online like to the point we don't even use our phones anymore and then and there's always a connection between your phone and your exchange server so I think ideally most folks that are listening to this would know to keep their Bitcoin off of an exchange. The other side that I think gets discounted and not brought up enough is, I can't imagine any city that anybody's living in where crime has gone down. Just full stop. Maybe across the world, there's probably like top five, 10 cities, everything else is up into the right. We're in a bull market for whatever's happening from a defunding, from a societal situation. But those are generally been pretty segregated, right? So you have the digital folks online trying to get your Bitcoin. You have physical people, know, mugging, doing, breaking into houses. Those haven't merged together. And what Jesse called out was that as the price goes to two, five, 10 X, those things will naturally converge. We're gonna have physical people that are physical harm that's generally done, maps to the digital world and understanding people hold Bitcoin. Because there's not many places you can hold your private keys other than your home. You leave it in a bank while they're not open, you know, after five o 'clock and on weekends. So good luck with that. Like multiple houses, maybe. So this notion of like all of our data is out there, whether it's all the CRM leaks from every exchange collaborative custody providers been hacked. It'll be hacked You know, god forbid ours were probably one day. It's just this is what happens with data It doesn't want to be centralized so it ends up somewhere You map that with all the AI tools that are out there You can pretty much discern how much Bitcoin almost everybody owns. So now what happens when the price is a hundred K 150 K 350 K and now you can figure out that somebody's holding four point five million dollars in BTC 35 .7 million dollars of bitcoin and now you have kids at home and you go to work and you go on vacation like what is the the end game what is the plan and then you need to access the bitcoin because you got to pay for the doctor or are going to like show because the logic of violence changes in that scenario because now people are watching where you go right now it doesn't matter because it's 350 000 in multi -sig clavicle custody but what happens when it's 3 .5 million like it all changes and so it just doesn't get talked about because i don't think people have had to go through that and it's just like anchored to not your keys not your coin don't try Brian Cubellis (01:16:28.736) anyone well I mean that only works until kind of you hit that inflection point and I think this is kind of what we're talking about here. I think the risk of the individual I would echo what both of you all said specifically around inheritance security and inheritance are to me the two biggest ones and that to me is where multi -institution custody really solves that. I think that the risk of the industry is something that I've not heard anybody talk about is that we get frustrated that people want solutions instead of buying parts. and just as like, it's kind of like the, the Jeff Bezos quote, you're like your margin is my opportunity. There is a lot of opportunity in selling solutions here. And that's why I think on ramp is, is, is really set up very well, in the coming years because it's selling a solution and it's okay. If people don't want to physically hold keys and it's okay. If people don't care about bladers, rollups, and it's okay. If they actually don't care about Bitcoin at all, they just want their money to stop. being worse. And like, I think, you know, it'll be, there are people out there that like, if they went to their bank and their bank was the only place that like, you know, again, let's say their bank had a multi -institution custody and then, they just like went to the local bank and it's like, Hey, we've converted your dollars to Bitcoin and we have this, this custody agreements like, okay, like the people don't care. And like that, and I think we have often forget about that. Like generally people just don't care about this. Like if you're, you know, a plumber, you just like want to go do your job, help your customers and make money and you want your money to work for you. That's who the industry needs to be focusing building on is the people that actually don't care about Bitcoin. Just as in same ways, like people can like not care about, you know, SSL and HTTPS and like the latest enhancements in like security. They just want their phone and their apps to work. They just, they just want it to go about their lives. And so as an industry, like we need to keep building solutions for people that absolutely do not care about Bitcoin because those are the people when they come to Bitcoin, because it's just like what everybody's doing just in the same way. Everybody came to smartphones. Everybody came to the internet. Like we need solutions that are turnkey for them. And that's to me why I'm so passionate about multi -institutional custody. Yeah, it's funny we forgot like there's a reason why the division of labor exists. And it's like it anchors to the one that's like, it's not hard to hold 12. Brian Cubellis (01:18:42.254) words or self custody. like, it's not hard to do $10. Try doing 50 % of your net worth and let's see how easy it is. It's just like, it's just notion of it's not the same thing. And it's just treated as the same. Yeah. And I remember years ago, listening to podcasts about collaborative custody, about multi -sig in general. And the talk then was, you know, eventually you'll have like your accountant hold a key in his office and maybe your lawyer will hold a in their office and then you'll have one at home and then you've got some geographic distribution there and that'll be how people do this. But that doesn't really make sense because they're not experts. and they don't quite have the right incentives. Really what you want to do is you want to hire a key holder whose business is doing this, who's best in class at holding a key, keeping it safe, and signing when the appropriate conditions are met. And that's what multi -institution custody actually is. so it's funny, there was this sort of half -baked notion of how you'd eventually have some distribution of who's holding the key and geographic separation of the keys. But it was always half -baked. And here is the baked version of it, where you have a a marketplace for key holders. When you come to OnRamp, you're hiring the best in the world at holding keys on your behalf because we've partnered with the best in the world to hold keys in a multi -state quorum and sign when the appropriate conditions are met on your behalf. And so it's a natural evolution of this entire journey of Bitcoin at custody over the last 15 years. And it's really the dawn of a new era. Brian Cubellis (01:20:38.188) of a format of custody that's simply not possible with traditional assets. You can't do this with stocks, bonds, real estate. And it's going to open up a... a lot of new capital to Bitcoin because it's going to lower the risks inherent in holding Bitcoin. And it's going to secure a lot of families, financial worlds, and enable them to have the kind of freedom that Bitcoin has always promised. And the security side of custody has always been that nagging requirement that that weighs heavily on the individual and on the person, usually the guy in the family who thinks that this is a great asset to hold, but it comes with some nerves holding it at home or wherever you do. And so this is, I guess to bring it full circle, this is that next step in the... technological progression of bitcoin custody where we go from highly technical less user -friendly forms of custody to more user -friendly, less technical, more professionalized forms of Bitcoin custody. Yeah, and that's a really key point, professionalized, because these concepts, they don't get talked about enough. It's less about because the incentives aren't there. It's just because most people haven't had the background and experiences because there's two sides. It's one, understanding Bitcoin deeply, but even more than that, it's understanding the world and commercialization of technology and how it's going to be introduced. Brian Cubellis (01:22:27.132) And so coming to OnRoot, there's a technology component, but then there's a professional experience with, historically, like going back to Bradley's point, people want solutions. And historically, people have only had problems when they allocate to Bitcoin because you played hot potato with the asset. You're basically just going from exchange to this next one's trust company just got hacked. And now I don't know if they're going to let me take my Bitcoin or my IRA. Like it's just hot potato. Now my collaborative custody doesn't work. It's called OnRoot for a lot of reasons. And one of them is you start with this. but as we grow, whether it's multi -jurisdictional, if you want to hold a percentage potentially in the future with the keys so you can always have control, there's a lot of things we're talking about. There is a world though that in multi -institution custody, you can open up a whole new like dawn of financial products that reduce counterparty risk but allow you to still have this notion that one single entity doesn't hold, you know, out of control. Insurance is just an easy example, right? Because you can't historically insure all of Coinbase's assets and you also can't insure your assets. if you're holding them by yourself. There's no shortage of other things that we have planned in the market. We're working, again, we mentioned the pensions in the UK. We think that in a future state, publicly traded funds, know, ETS will be held in this format. They've called it bulletproof. It makes complete sense why you would not want tens of thousands, if not hundreds of thousands of Bitcoin sitting with a single custodian that can lose it all. So I think that's the second part. It's technology mixed with humans are really where we're driving this kind of forward when it of financial services built on it. Yeah and on the technology piece too maybe just one final thought before we get to wrapping here is for the folks that are a little bit more technical and more savvy and want additional assurances you may want to know that while you are providing while you are allowing third parties to manage keys on your behalf Again, it is multi -institution, none of them control it, and they only sign in your direction. And the kicker here is that when you log in to your client dashboard, you can take your address and you can plug it into a public block explorer node and you can verify this on chain, right? So, to Bradley's point earlier in the episode, we want to live in a world where you still trust institutions, but in that same vein, this is still a trust minimized solution because you're not trusting one institution and you can always verify it yourself as well. Brian Cubellis (01:24:54.512) think that's something that I often overlooked in the past and now I really do make it a point to share with folks in conversation because it is important. It's not going to be important to the net new buyer of Bitcoin, but it will be important to someone who's owned it since 2017 and has a sizable portion and wants that additional transparency and visibility into how the assets are held. So with that, any final thoughts here before we close it down? You know, I think for me, if anybody's listening to this and say, well, I don't have enough Bitcoin to, to, need a solution like this book of consultation, chat, chat with the on -ramp team. I promise you, you'll be blown away by it. And even if it's not the right solution for you today. you want to learn about it because to me, again, this is the model that scales up. Jackson, you're talking about trust. There is trust everywhere. Even if you manage your own keys yourself, you're still trusting Apple, you're still trusting Dell, you're still trusting your internet provider, you're still trusting the maker of the USB cord, you're still trusting all these things. And one of the things that I would kind of leave you to think about is, again, the inheritance was huge for me. And we've seen, I've seen so many Connectors and things and protocols come my life for communication, know Imagine if you just put if you have your Bitcoin hardware sign device and put it in a drawer and it sits in there for 30 years You know, do you think that you know, how are you going to connect that? that particular device to your computer 30 years from now. It's probably going to have the same cord. And those are the things you have to think about when you take and physically hold keys. You're having a technical burden that you're going to have to think through over the years as technology evolves. You're going to have to think through that. When you come to on -ramp and multi -institution custody, you don't have to think about that. You're getting to enjoy the benefits of Bitcoin's adoption without having to hang on on the bumpy ride along the way as that technology evolves. As Bitcoin evolves, Brian Cubellis (01:26:54.776) the protocol on ramp and its key providers will be right there along with it. you know, always having the best in class security, always having the best in class way to interact with the protocol. and again, to me, it was very, you know, when I came to honor, if it was very big to me that I could, I run my own node, I can view my wallet on my own node trust, but verify. and again, I, even if you start slowly with your multi -institution custody of all, I promise you as Bitcoin's price rises, you will find yourself more and more feeling less confident. technically and physically, you know, managing your own keys. and you'll want to, you'll want to, partner with on ramp and it's key providers. promise you that. Thanks, Bradley. Mike, you any thoughts? with multiple custodians and they move at the direction of you and we provide financial services, client services around it. I think it's just important to call out because ultimately when we say this scales and helps Bitcoin's adoption, some folks may not fully grok that this technology is interoperable and allows for different levels from different places all over around the world to participate where other technologies don't that generally use crypto assets and that's why you don't see this approach very often but as Bitcoin's price arises and I think we were recently at $60 Brian Cubellis (01:28:36.221) dominance in the crypto sphere more and more people will wake up to Bitcoin significance and why you want to custody in a different way. Yeah well said. Well, Bradley, thanks for joining us this week. Really appreciate your generosity with your time. Michael and Jesse, good conversation as always. And Brian had to jump early, but Brian did a great job with the reporting, sharing some thoughts earlier. So for folks that want to find the report, just check out our website on ramp Bitcoin .com. You'll see it right there on the homepage. You'll be able to download the report, read it through it yourself and share with any friends, family, colleagues. We'll also be hosting the webinar on the evolution of Bitcoin. That will be on September 10th. We'll include the information in the show notes to find more details there and register. And we look forward to speaking with you. If you want to reach out and discuss any of the things that we talked about today, we're always welcoming new conversations, opportunities to jump on a call. So just go to our website and you can schedule a consultation right there and connect with any of us. Awesome.