{ "episodeId": "SLP131", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "parker_lewis": { "name": "Parker Lewis", "role": "guest", "tag": "PARKER" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.45, "text": "Hi and welcome to the Stephan Livera podcast focused on Bitcoin and Austrian economics. Today, for episode one hundred and thirty-one, we've got Parker Lewis. But first, a word for the sponsors of the show. This podcast is brought to you by Kraken, one of the world's leading Bitcoin exchanges, a high quality platform offering high trading volume with low fees, no minimum or hidden fees. Kraken offer twenty-four 4/7 support. They have best-in-class accounting, reconciliation and reporting. There is also the new Kraken Pro mobile app. Kraken Pro delivering all the security and features you love about Kraken Exchange in a beautiful mobile-first design for advanced Bitcoin trading on the go. Don't forget there's a Kraken OTC desk for those seeking a more private, personalized service for large block trades, a hundred thousand USD or more. There is also Kraken Margin, up to five times long and short, and there is also Kraken Futures, up to fifty times leverage. Check out Kraken Exchange at kraken dot com. This episode is also brought to you by Unchained Capital. Unchained Capital are a Bitcoin financial services technology company empowering customers with unprecedented financial freedom and control. I really like working with them, they have a lot of products and services that are built on the foundation of multi-signature and they've got this approach to collaborative custody, giving users control over their private keys. You can set up a two of three vault, you can use Trezor or Ledger, they've got a web interface and if you- If you don't want to sell your Bitcoin but you still need liquidity, Unchained offer collateralized loans, so all the Bitcoin is stored on chain, dedicated multisig addresses, it's never rehypothecated, and you can share in the security of your Bitcoin by holding one of three keys. So they offer excellent services, they're releasing awesome content and open source tools, make sure you check them out, I think you'll enjoy partnering with them. Go to unchained-dashcapital dot com. Next, check out CipherSafe, they are producing the CipherWheel product, so you can keep Bitcoin bip thirty nine seed like Trezor, Ledger or Coldcard backed up in a way that's fireproof, waterproof, rustproof, petproof and tamper evident. Cipher wheel is a new product, it's compact, it comes in a wheel shape and it masks the words of your seed unless you actually open the tamper evidence seal. So make sure your seed is backed up and help to help in case your paper seed gets waterlogged or tampered or goes up in a fire and Cipher wheel can help you ensure that either you or your loved ones can have access to your bitcoins if an accident occurs. Pre-order go to ciphersafe dot io. Last but not least, GiveBitcoin dot io, the easiest and safest way to get your friends and family into Bitcoin. Take it from me, I've given Bitcoin to people before and they lost it. They didn't know what they were receiving. GiveBitcoin is different because you can time-lock that Bitcoin gift for one to five years. Imagine if we could skip people further forward to being a more dedicated hodler. Well, GiveBitcoin delivers a world-class curriculum with input from well-known Bitcoiners. I've also- I've got an equity stake in the company and I'm assisting with the curriculum also. You can also get Bitcoin as a present and you can also buy it yourself. So put Bitcoin on your wish list at givebitcoin.io. I think givebitcoin.io can have a positive impact on Bitcoin adoption and understanding, so I'm excited to have them as a sponsor. So I've got a really great episode for you today with Parker Lewis. He's head of business development at Unchained Capital. So I've known Parker for a little while now. He's got a lot of great perspectives coming from a global macro hedge Bitcoiner in the Austrian school tradition, if you will, and in this episode we talk a bit about what the Fed gets wrong, a Hayekian appreciation for Bitcoin, his blog series, gradually then suddenly, and how Bitcoin can first be very unintuitive and then becomes more intuitive, and finally we talk about Unchained Capital, Caravan, the open source multi-signature coordinator. Here's the interview. Parker, welcome to the show. I've been trying to get you on for a while, but we finally made it happen." }, { "speaker": "parker_lewis", "time": "03:59", "start": 239.46, "text": "Yeah, I think we, we tried to do it back in June at Bitcoin 2019 in San Francisco, didn't work, but glad that I finally got to come on." }, { "speaker": "stephan", "time": "04:06", "start": 246.37, "text": "Yeah, that's great. And obviously, look, I, I know you, I've known you for a while, but, just take a, you know, take a bit of, take a minute or two and just introduce yourself, for my" }, { "speaker": "parker_lewis", "time": "04:24", "start": 264.16, "text": "Back here a couple years ago and met, Joe and Drew, the two co-founders at Unchained, and they asked me to come on board and help build their business and have been at Unchained for just over a year, Got into, to Bitcoin actually through a friend of mine who, who told me about it originally, and, you know, very excited that, so that's Will Cole and he just, joined this week to be our Chief Product Officer at Unchain, so e-everything's really coming full circle. got the, the person who originally told me about Bitcoin, is coming on board to, to help us build out the financial services platform here at, here at Unchain, and, we're just extremely excited about the future." }, { "speaker": "stephan", "time": "05:02", "start": 301.68, "text": "Yeah, that's awesome. So how did-- well, I guess Will was the one who got you into Bitcoin. What was it that you first saw about Bitcoin? And, you know, most people were skeptical about Bitcoin the first time they hear about it. What was that like for you?" }, { "speaker": "parker_lewis", "time": "05:15", "start": 314.53, "text": "That was, you know, I'm sure we'll get to talk about this, but I was extremely skeptical for probably two years before I, before things started to click for me. So I was around the periphery and, and looking at it and trying to understand, and, you know, I, I A blank wall, and, you know, there being a canvas there, and it's just blank, you know, but then once you see Bitcoin, it becomes a masterpiece. And, and that, that was really me, I was staring at the problem, not understanding it, and then slowly as, kind of meeting more people that were involved with it and peeling back different mental blocks one by one, then it finally started to make sense to me, and that really, you know, became the foundation for, a lot of the pieces that I write, as" }, { "speaker": "parker_lewis", "time": "06:01", "start": 361.38, "text": "counting my own experiences and breaking down the logic as I then became, became to understand a lot of, things that were, that were formerly, very gray and, and, and, you know, seemingly, confusing to me that, that once I worked through, became very intuitive." }, { "speaker": "stephan", "time": "06:16", "start": 376.01, "text": "Right. And let's, let's set the scene a little bit. So what were you working and doing professionally before you saw the light with Bitcoin?" }, { "speaker": "parker_lewis", "time": "06:24", "start": 384.3, "text": "Yeah. And, and that's, you know, a big part of, of what made help understand Bitcoin. I, I was working for a Dallas, Texas, called Heyman Capital, run by a guy named Kyle Bass. And while I was there, I was, I was really pursuing two independent paths. I was, one, doing inde- independent research on Bitcoin because I was, I was interested in it, and at the same time, I was doing a lot of research on the Fed and the financial crisis and QE, really under my responsibilities at the hedge fund, which was a global macro hedge fund, and I was, doing research to, to, it was, it was around the time that the Fed had been In, in short order, unwinding the balance sheet. And as I was trying to form my own opinions as to what the transmis- what the transmission mechanisms would be and what, you know, how it would affect markets, I went full down the rabbit hole of ultimately, in order to understand what would happen when the Fed unwound QE, I thought I needed to understand what, what really happened during the financial crisis and the aftermath of the financial crisis. How was the Fed thinking about it then? and then how would that inform my view as to how they're likely to- to react or, or what the impact would be once the Fed actually started to unwind some of that activity and, and ultimately the, you know, two, two paths led to one. As I was becoming, more educated on Bitcoin and understanding why it existed and, and how it worked, I was also understanding these dynamics with QE that, that led me to the conclusion that, the mere instance of QE, all it does is cause the credit system to expand, which then dictates more QE is required, not less. and so that's, that's when things- Began to click for me, which was Bitcoin exists, you know, from a practical perspective because, because QE. it is an inflation-resistant form of currency that, that, has a fixed supply, and when you look at it versus all of the alternatives, all of the alt-alternatives are, are dictated to increase massively in, in supply because, because of the very nature of the credit systems that support them. the, the, the, you know, I often talk about, and this is one of the things that I, you know, the At the dynamics in the credit system, which ultimately led me to Bitcoin, I was just looking at the US credit system and seeing a, a system that has, you know, estimated by the Fed, seventy-two or seventy-three trillion worth of debt that's only supported by, approximately two trillion actual dollars, actual reserves in the banking system. And, and when you think about that leverage dynamic, that is, that is the dynamic that ensures that, that QE isn't just a, you know, a possibility, it's, it's an inevitability. and that's really what" }, { "speaker": "stephan", "time": "09:03", "start": 543.22, "text": "Yeah, excellent articulation there. And I'd love if you could just touch on, from the point of view of a more mainstream finance or economics person, you were discussing there around transmission mechanism, can you just spell out what are people in the normal financial and economics world thinking of when they think of that?" }, { "speaker": "parker_lewis", "time": "09:22", "start": 561.59, "text": "You know, you know, when I, when I think about it, it is, you know, thinking about the for-- first order, second order, third order, like what are the actual mechanics by which- Which the Fed either expands its balance sheet or shrinks its balance sheet, and really thinking through, you know, not, not necessarily the, the end result in terms of, you know, what happens at the end of the line, but really just from a mechanical perspective, you know, when, when the Fed goes and purchases treasuries in the market, you know, and this is one of those instances where, just in September, after the Fed, you know, basically had interest rates at zero from two thousand and nine to 2017, or they, they started raising short term rates in 2015, but they didn't actually unw- begin to unwind their balance sheet until the, the end of 2017. So effectively, you had eight years of easy money policy and then After only approximately twelve months of, of tightening and, and, and removing liquidity from the system, they, they suddenly had to reverse course, and, and a lot of that reversal began happening, late last year, beginning of this year, and ultimately it ended up with, repo market spiking in September and the Fed having to re-enter with QE, and, you know, initially in the, in the form of overnight repo and then term repo and all of it is- Essentially QE, but then when I think about the transmission mechanism, it is what, what are they actually doing, in the context of when the, the Fed is going out and, and purchasing? Treasuries or purchasing mortgages, actually going into the open market and buying it, what is it doing? It, it's taking those financial assets off the market and replacing them with dollars, and then, On, on the other side, when the Fed was withdrawing liquidity from the system, effectively what was happening was, rather than the Fed reinvest proceeds to, to repurchase, assets that were maturing, so as, as the Treasury was having to repay debt, for a long time, the Fed would take those repayments and then just go buy Treasuries. Well, what, what did they do when they were, shrinking the size of their balance sheet? And what was the transmission mechanism? Once the Treasury would repay dollars to the, that w- that were associated with Tre" }, { "speaker": "parker_lewis", "time": "11:36", "start": 695.83, "text": "Go into a black hole and disappear from the market, and that had a, you know, when, when you think about the, the magnitude in which they were shrinking the balance sheet, it was just insane, you know, equally as it was when they were, when, when they were actually expanding the balance sheet, they were withdrawing fifty billion dollars a month of liquidity, and then kind of the next order effect of that is, okay, well, where does that liquidity come from? And so when I talk about transmission mechanisms, it's really thinking about first order, second order, third order impacts to but, but, you know, ultimately at the end of the day, it comes back to that idea of, just, you know, 'cause this, this is one of the ideas that, that's often is misunderstood, that it, that the problem of, of the, the active management of the money supply which Bitcoin fixes, is both on the expansion of the monetary system and then the contraction, because both, both of those activities send false signals. So just as it was, destructive for the Fed to add eighty-five billion dollars in- The system per month, back in the, you know, the period from two thousand nine to two thousand fourteen, you know, it was equally as bad to then withdraw fifty billion a month. It, it essentially creates a shock to the system where, where, where signals are manipulated merely as a fact, as a function of the money supply rather than the underlying supply and demand structures, of real, real economic markets." }, { "speaker": "stephan", "time": "12:58", "start": 778.3, "text": "Yeah, right. And also what we see is it becomes a very-- It's like a political football. So the Fed starts, manipulating Calculating in one direction and then the results, maybe they're not liked by the powers of the time, and then they've got to now try and walk it back. And there's not really a, not neces-- I mean, they, they sort of claim that there's a bit of a science and a reason behind it, but it's when we apply that Austrian economics lens to it, and we understand that really that, that expansion of the reserves is what enables the commercial banks who then go off and lend out, and that's what- Where this additional money creation comes in. So, h-h-how was your journey like in terms of learning about Austrian economics then, and how that applies to the Fed and the existence of a central bank and the last res-lender of last resort?" }, { "speaker": "parker_lewis", "time": "13:50", "start": 829.94, "text": "Yeah. So one thing that I think that you just brought up there, and I'll, I'll kind of lead in with this, and then, and then get, talk a little bit about my discovery of Austrian economics and the principles. but, you know, one of the things, as you point out, the, the Fed likes specific, thought behind or some modeling behind the, the amount of dollars that they either withdraw from the system and/or on the other side that they add to the system, and that's just a complete fraud. when you, you know, one of the exercises that I did when I was trying to understand, how QE worked and understanding how the, how the Fed thought about QE, you know, one of the things that becomes apparent is that, you know, in a, in a really undebatable way, the Fed is just chronically wrong. And despite that fact, a lot of people within the markets turn to the Fed and they say, \"Well, the Fed wouldn't be doing this unless, you know, the Fed wouldn't be draining liquidity out of the system if they didn't know what they were doing, if they weren't particularly confident.\" And then all of a sudden, the repo market breaks, and in the last three months, three hundred billion of liquidity has been added to the market. It was six months of the prior withdrawal that happened in three months. And when you go back and read the transcripts from the Fed, you" }, { "speaker": "parker_lewis", "time": "15:06", "start": 905.55, "text": "know to, to point out for people is that in the middle of QE2, almost to a person, fifteen out of sixteen people thought, you know, over the summer of two thousand eleven, the time period in which they would be unwinding QE, would be, early two thousand twelve, six months later. They, they will never unwind QE2. and I think the, the, the recent dynamics that have had, happened in the market to, to require a massive amount of liquidity to be injected into it, which will only require more, is, is, you know, one Where, the Fed may claim out, outward when they're, you know, in their, you know, hearings or in the press conferences with, with Congress that, that ultimately they don't know. They don't know because they can't know, and that's one of the foundational principles I think of Austrian economics. And, you know, one of the, Authors that I, that I, you know, read a lot of, and I'm still catching up on all of my Austrian economics is Hayek, but the, the idea behind, the pretense of knowledge and that the idea that, you know, essentially markets, unmanipulated markets will always, and, and unmanipulated price signals will always possess more information than an, any individual can possibly, possess. And, and that isn't, you know, no matter how much data or how much modeling you look at, and no matter how many- metrics you may have at your, you know, in terms of the Fed, they have access to all this banking information, and they, no matter how much information they have, their knowledge is inherently limited, and that, that's a core idea, behind Austrian economics is that, you know, particularly as relates to, to price signals and, and markets that, when left to their own devices, a-and this is why Bitcoin, you know, you know, I think in, in my opinion, will be so transformative, is that will ultimately be the most unmanipul-man Price signal that has ever existed in the world, and when you have that, the end result will be a communication of not necessarily perfect knowledge, but far more perfect knowledge that, that current market signals and, and, and price signals that the dollar, the euro, the yen could ever possibly communicate because they're actively manipulated." }, { "speaker": "stephan", "time": "17:13", "start": 1033.45, "text": "Love the point you're making there, Parker, and particularly the point around the Hayekian notion, and obviously the most well-known essay is his, classic, \"The Use of Knowledge in Society,\" and that's one of the history's most cited economic papers. And it's interesting you say that, because also during Greenspan's tenure with the Fed, he was known for really trying to go deeper and trying to understand more information. So he, as I understood, he would actually- They try to make businesses and banks actually report more information to the Fed, and for all of the-- that additional data, what was the result that we got out of it? Right? It's not like they managed the economy any better, if anything, they might have done worse. What's your view?" }, { "speaker": "parker_lewis", "time": "17:58", "start": 1078.46, "text": "Yeah, it's, it's almost like it's the Fed's stupid. you know, when you, when you think about, you know, and, and there's also a famous, quote from Greenspan before Congress when he, when he said, \"My model was wrong.\"" }, { "speaker": "parker_lewis", "time": "18:13", "start": 1093.09, "text": "It's that no matter how much information you have and no matter the f-s-sophistication of, of your model, and the forecast, that, that, that it's ultimately imprecise and, and that at the end of the day, and this is something that else that, there's, there was a two thousand and four speech that, that Bernanke gave, and I think, I believe this is before he was Fed chairman, where, he actually talked about the, you know, there was this period in the lead up to the financial crisis that, Circles is referred to as the Great Moderation. And Bernanke, in, in a speech in, I believe it was two thousand four, maybe it was two thousand three, he talks about how, he doesn't, he didn't think that monetary policy and active management of, of, of money supply got enough credit for, a combination of both low price volatility in terms of inflation, as well as low output volatility in terms of kind of the trajectory of the economy. And then you- Fast forward to two thousand eight, and then there's a massive amount of volatility, and, you know, the financial crisis was on the verge of, you know, ver- truly on the verge of collapse, and virtually every bank or every investment bank or every major bank was, you know, practically in all, for all intent and purposes, insolvent. And, you know, nobody comes back, or at least in those circles, nobody comes back and asks those hard questions about not whether or not the Fed is, is part of the, the solution, but whether it is the problem. And I think that Or a question that, that people, as they come to learn about Bitcoin, will continually ask themselves, because historically it had been, really a philosophical debate and an economic debate as to whether or not the active management of the money supply is a positive, and it, and it really has become a default within virtually any university, at least that I know of, that, Austrian economics just isn't taught. And, and, and, you know, we can, sit around and, and, you know, kind of, talk till the, till the cows come home Home about it, but now with Bitcoin, what we ultimately have is a market, and, and that the market will ultimately decide. It's not just an economic debate. There are two systems, and they're competing with each other. And as more people adopt Bitcoin, it, it's a signal that, you know, just, you know, left to their own devices on a simple A-B test, you know, whether somebody understands Austrian economics or Keynesian economics, they look at, you know, A and B, which one's better, and when they understand That, you know, A, in the case of, of the dollar, is, is designed to lose value and by its very function will continually be manipulated by a central bank, and then they look at B, and, you know, the monetary policy of, of Bitcoin is perfectly executed and fixed without, you know, any, any central authority, the average individual will pick B. and, and so, you know, one of the, the dynamics around Bitcoin that I particularly like the most is that it's voluntary and it's a market test rather than, an, an intellectual- Or philosophical debate." }, { "speaker": "stephan", "time": "21:15", "start": 1275.21, "text": "Yeah, that's, yeah, brilliantly, articulated there. I, I like how, it, it, we could argue really that Bitcoin is just so much more predictable than any other money supply, and it also brings to mind this idea of having a certain amount of humility, right? Because these central bankers, they think they're the masters of the universe, they've, they've worked it all out. We don't need to worry, they'll fix it all the economy for us. But then in reality, look at all these things that have happened. And You, I've seen you echo this as well in the past as well, is this idea that we have to have an appreciation for things that are the result of human action but not of human design, and I think that's a very Hayekian idea. can you, elaborate a little bit on your thoughts around that and how that applies?" }, { "speaker": "parker_lewis", "time": "21:59", "start": 1319.2, "text": "Yeah, and I think that that is, it's one of those things that I think people that, that frustrates people the most about Bitcoin, not necessarily people that have, have-- I don't wanna say bought in, bought in's probably the long term, but that understand kind of the, the how and why Bitcoin works or at least, you know, I, I don't know if there's truly an un- you know, how- Possible to, to, to understand it to a full extent, but that when you kind of take a step back, a lot of people look at Bitcoin and they look at the design architecture of it, and they, they immediately wanna copy it. And there's this, you know, it's something I haven't written about expressly, but there's this idea that, that Bitcoin is MySpace, and it will be, it will be replaced by some newer, better version. And, and ultimately, the way that I think about that is, you know, people can look at- You know, the design of Bitcoin, and they can copy the code tomorrow. what they can't, what they can't copy, and what can never be copied, is the organic nature by which Bitcoin was spawned, and the, and the randomness that was inherent, you know, I wasn't involved in, you know, quote, in the early days, I think that ultimately, we're still very much in the early days of the, you know, of a global monetization event, but that when you, when you think about the, the reason why Bitcoin is functional and the Because this, despite the fact that there is an engineering design behind the code base, that ultimately in terms of everything that happens within the Bitcoin ecosystem is, is not coordinated by conscious control. the decisions that I make individually as to the work that I do at Unchain, you know, people who join Unchain to, to work here, other people who work on Lightning, everybody, you know, in a completely, you know, uncoordinated way are looking at, at this space and, and figuring out what it is they're interested in and- Figuring out how they wanna contribute, and the net effect of that is a system that works, but it's also one that, that has a high degree of randomness behind it. And, you know, the other idea is that, you know, once-- now that Bitcoin exists and once the network effects have started to, to reinforce each other, I think Trace Smear oft- often talks about the seven network effects of Bitcoin, that, that it's im- impossible to overcome that if you're merely looking at the design and thinking, \"Ah, I can, I can switch this little bell or whistle and I'll have a better Bitcoin, and it completely misses the point. And one of the things that, that Hayek also talks about, 'cause this is an idea that, you know, I didn't certainly come up with, but, it's an idea that, that, that I've leveraged or I've helped, you know? Craft my own thinking around as it relates to some of the, the writings that, that Hayek, you know, put out were that, it's this idea that, people, you know, and I, I don't wanna just, you know, frame central bankers on it, but that, people that are, that believe inherently that you can centrally plan an economy, they, they don't realize that, that the whole point of, a pricing mechanism, money, a market economy is to abstract away from conscious control. control and that ultimately the greatest things, you know, that are designed by humans are, are designed as a function that, that are devoid of conscious control. And I think that's a, a great epitome of what Bitcoin actually is." }, { "speaker": "stephan", "time": "25:14", "start": 1513.51, "text": "Yeah, that's excellent. a-and some of this discussion reminds me of, Gwern's classic article. It's called, \"Bitcoin is worse is better.\" And there's a particular part there, and, and the, the crazy thing is, this was written in two thousand and eleven, believe it or not. So, Greatest virtues is that Bitcoin can wait for its opportunity. So it's, I can't remember the exact quote, but it's something like, \"If you sit by the river long enough, you can watch the bodies of your enemies float by.\"" }, { "speaker": "parker_lewis", "time": "25:44", "start": 1544.23, "text": "Yeah, and I think, I think that an application of that is that some of the, some of the, the greatest lessons are, are learned the hardest, and for all the people that, that come and try to, change Bitcoin and/or, or create their own better version of Bitcoin, ultimately will come to learn Why Bitcoin works, and it will be a function part of, you know, in part because of their own failure." }, { "speaker": "stephan", "time": "26:06", "start": 1566.25, "text": "Yeah. And, and, look, I, I'm, I'm a big fan of your recent series, so your blog series, which is called Gradually Then Suddenly. So, I, I think, it's a really phenomenally written series. The articles have all been, you know, ex-excellent, they've all been stellar. Tell us a little bit about how you got the idea to do this series." }, { "speaker": "parker_lewis", "time": "26:26", "start": 1586.22, "text": "You know, so there were a lot of, But there were, you know, I, I was somebody who stared at Bitcoin for a long time and, and was not able to create a mental model around it. And there were a lot of people who, contributed to, to unlocking certain mental blocks that, that helped me come to, to an understanding. And, you know, one of the things that, you know, one of the ways I frame it is that Bitcoin's extremely not intuitive, until it becomes intuitive, and then it, then it becomes hyper-intuitive over time. but the only way to, to really- For it to become intuitive is to, to experience it, to have Bitcoin, to understand how it works, to, to understand time after time, every ten minutes, that, that the network continues to function despite no central coordination. And, you know, along my path, not only did I rely on other people to help me peel back one by one various different mental blocks, but s-someone who, who's a, who's a good friend of mine and who I value incredibly is, Safiyya Mousa. And And I, you know, as I was thinking about writing, that was one of the inspirations, but it wasn't just because I wanted to give back, it was in part because one of the things I recognized with, with a book like The Bitcoin Standard was, I don't have enough time in the day to explain Bitcoin to, to all the people that ask me about Bitcoin. And what I started to do was leverage The Bitcoin Standard. I, you know, me and, me and my friend Gideon Powell bought two hundred and fifty copies, and anytime anybody would ask me about Bitcoin, I'd just The Bitcoin Standard, and I said, \"Hey, read this, and then if, you know, if you can devote three hundred pages worth of your own time, then I'll answer any of the questions that you have about it, but start here.\" And, you know, that got me to thinking about just leveraging my own time, and I'd leverage the Bitcoin Standard, and then there were a number of things that, you know, through my journey, I had questions about, and I thought about, and then, you know, once I- Became involved in, in Bitcoin in the sense of, in working here, I found myself going and talking to, to, you know, prospective clients or people that were interested in Bitcoin, and they would always, often come up with the same exact questions because there are many of the same questions that we all have, you know, on our own journeys. And so, you know, in part, it was a way to distill my own thoughts on, on topics that I previously had issues with, but that I also knew, peop-- new people coming to, to Bitcoin would- Have on, on their journey to Bitcoin. And so, you know, combination of leveraging my own time, I, I, I do spend quite a bit of time, you know, the first time I put pen to paper on one of those, I don't know, you know, how the end product actually turns out, but I can promise you that the first time I, you know, dump my thoughts on paper, it's a bunch of, you know, garbage, and that I edit them and it helps distill my own thoughts. So when I'm talking to people" }, { "speaker": "parker_lewis", "time": "29:26", "start": 1766.01, "text": "Individual articles to them so that they can help unblock their own, mental blocks along the way." }, { "speaker": "stephan", "time": "29:32", "start": 1771.92, "text": "Right. And each of these articles, these essays, they range-- some of them can be slightly longer reads, but they're very comprehensive and addressing a specific point, and they're often addressing common objections or common sticking points in people's understanding. I love this one where you wrote, \"Uh, Bitcoin isn't too volatile,\" because I think that's one of the most common objections for people. How do you think about that? And how do you try to explain that to people?" }, { "speaker": "parker_lewis", "time": "29:59", "start": 1798.71, "text": "Yeah, I think one, one concept that I explain to people is that, you know, volatility doesn't equal store of value, and, and that really, that really goes either way. it's, it's that volatile assets, can be great stores of value, and, and Bitcoin is a great example of that, you know, ju-just, you know, taking it as a, as an example and, and looking at the historical context, yes, it's extremely valuable, but if you take a step back and zoom out Time, Bitcoin rises in value over time, a-and really that's a function of its fixed supply. But then on, on the reverse side, non-volatile assets can be very bad stores of value, and, and the dollar is a great example of that. And, and for people that, you know, to, to steal, Vijay Boyapati's term, people who deride Bitcoin because it's volatile often point to the dollar and, and point to Bitcoin's volatility to explain why Bitcoin can never be money. And, and, and then if you- If you look at a long term chart of the dollar and the dollar's purchasing power over time, it becomes evident that, that it's a disaster, and, and really that's a-- that's because the dollar is designed to lose value. the, the Fed, the Fed targets two percent inflation, and it has been, you know, to this point in time, very effective in slowly and marginally devalu- devaluing the dollar. I think ultimately at some point, you know, it, that, that is one of those gradually and suddenly type things." }, { "speaker": "parker_lewis", "time": "31:26", "start": 1885.69, "text": "and, Bitcoin, you know, they, they look on very short term basis and, and they-- it's almost like they're imbuing on Bitcoin like it's, like it exists in a vacuum. And obviously in the real world, nothing exists in a vacuum, and, and certainly not Bitcoin. And, and people have to recognize that, you know, I won't say, you know, no one in the world, but, but practically no one in the world, has a hundred percent exposure to Bitcoin. And, you know, when, when people look at Bitcoin and they say Because it's volatile, they, they, they ignore how all volatility is ever managed by anybody. it's, it's through diversification, and diversification in the case of Bitcoin doesn't mean, you know, buy Ethereum or buy some altcoin. It, it means that you own other assets and that you plan around Bitcoin's volatility, not just by, the mere fact that, that it is volatile, but as it relates to your own tolerance for that volatility. And so, you know, to me, I look at, at Bitcoin today And I'm not sure, you know, what it's-- I, I like to think of b- Bitcoin in, in total in terms of its purchasing power, but somewhere around seven or a hundred and fifty billion or a hundred and sixty billion of purchasing power. And if you look at the, you know, as reported by the Fed, the, the, the net, the net worth, the net dollar net worth of, of households in the United States, and it's a hundred trillion. And you have to recognize that, despite the fact that Bitcoin has risen dramatically in value asset class, and or not, that's not fair to say it's not an asset class, it's a form of money, and I believe it's already a better form of money despite its volatility. And, and when you think about the dynamics around Bitcoin adoption, and that often Bitcoin, you know, generally around the, the Bitcoin havens, Bitcoin is adopted in waves, and when, when you recognize that Bitcoin has a perfectly inelastic supply schedule, and then you think about that in the context of- Of adoption increasing by orders of magnitude, what do you expect to happen? Yes, like by, by its mere nature, it will be volatile, and, you know, this was a comment that, Michael Goldstein, you know, mentioned to me, which is stability is an emergent property in Bitcoin, and it, it will only be, stable when, say, a billion people own it, and if only-- I don't know what, you know, no one knows the number of people that, that own Bitcoin today, but if it's, Sixty million or seventy million people, you know, and, and, and ownership doesn't mean, you know, when, when people generally start buying Bitcoin, it represents a very small percentage of, of their assets, that over time, look, Bitcoin will, will acquire sufficient liquidity that, that in the future, it won't be volatile, but it won't only not be volatile until adoption relative to the embedded base represents a very small percentage rather than, what it exists today in, in terms of each, each coming adoption wave, which is generally orders of magnitude." }, { "speaker": "stephan", "time": "34:24", "start": 2064.13, "text": "So essentially, the main point then is, the main point then is that you manage the volatility through your position size, right? So that means if you're not so comfortable with that level of volatility, well, then you just have a smaller position in Bitcoin, as a percentage of your net worth, et cetera. and I think the other point is that many longer time or longer term Bitcoiners really, they know that they simply have to zoom out, right? They know that over, where the typical establishment economist is saying, \"Oh, why would I use Bitcoin to buy this loaf of bread? The typical Bitcoiner is thinking on a much longer time horizon, aren't they?" }, { "speaker": "parker_lewis", "time": "35:02", "start": 2101.87, "text": "Yeah, absolutely. And, and that's, you know, also on the reverse side of that, that, that's the opposite of the dollar. Oftentimes when people think of the dollar as, as not volatile or as, as a good store of value, it's, it's generally on a very short term basis. It's, it's thinking about today versus tomorrow rather than today versus ten years and twenty years. And when you look at the contrast that, that, that Bitcoin provides, i-it's, it's the contrast next to the things that it's immediately competing with, principally the dollar, the euro, the yen, and when you extrapolate the, you know, two percent inflation target, ignoring any potential future hyperinflationary event, you, you, you quickly recognize that two percent over a year, which many people have been lulled to sleep over, you know, over ten years is twenty percent, and over, you know, two decades is forty percent, and, and ultimately what, you know, what that People to be essentially running on a treadmill to, to recreate over the course of a decade or over the course of two decades, twenty to forty percent of their wealth, and, and the, the ultimate, you know, endpoint of that is, an incredible amount of malinvestment. And that when you, when you look at Bitcoin and you look at managing Bitcoin's volatility, it's really on some continuum between your knowledge of Bitcoin and your comfort and your, your, your view of the future, relative to, the amount of assets that you have. And the, the longer that- the more convicted or the more conviction that you have in, in Bitcoin and its viability and confidence in it, the, the, the greater you're willing to, to tolerate increasing volatility and, and allowing it to represent a larger portion of, of your total assets." }, { "speaker": "stephan", "time": "36:39", "start": 2199.12, "text": "Fantastic. And the thing we've seen is just constantly shifting narrative of skeptics, right? So at the start, it's, \"Oh, Bitcoin isn't backed by anything,\" and then later we get into this idea of, \"Oh, well, fine, even, even then, Bitcoin's just gonna get banned, isn't it And then, now you've got an article called Bitcoin cannot be banned, and you talk about some of the mental gymnastics that some Bitcoin skeptics put out there. So what's the better way to think about this instead of Bitcoin, being banned?" }, { "speaker": "parker_lewis", "time": "37:08", "start": 2227.9, "text": "Yeah, and there, there's, there's really two fault lines that, that I think about the idea that, that, the Bitcoin, you know, if it's, if Bitcoin is extremely successful and if it threatens the dollar, or the euro or the yen, then the, the, the Fed or the The Treasury or the ECB or the Bank of J-Japan will step in and regulate Bitcoin out of existence. And really when you think about that, that's, de-devoid of Devoid of reasoning and, you know, becomes more of a hope strategy, and it becomes a hope strategy for those who, who, you know, didn't, didn't buy Bitcoin when they should have. And, you know, when, when I think about it, it is that ultimately what that scenario would mean is that Bitcoin went from nothing to a, essentially, a good and a monetary good that is threatening the global reserve currency, the dollar. Or even, even if you believe that it hasn't gotten to that extent, when, when some power that b steps in to try to stop it, it is certainly that it is orders of magnitude higher than- It is today. and so, you know, on one fault line it is, okay, so this thing, Bitcoin, rose from nothing to a, a, a position where it's working so well, and it's working so well as money that is potentially threatening the dollar, the euro, the yen, and then somehow that thing that is, that spawned from nothing is gonna be put back in the box, and that can somehow be regulated out of, out of existence by Bitcoin, but- What is the logic and how does that actually happen? And then when you start to think about, yes, any individual country, whether it's the United States or, or any country in Europe or Japan or China or India, can ultimately and probably will, not across the board, will attempt to, to put in a ban and make the ownership of, of Bitcoin illegal. But, but how does that actually function? And, and really, when you think about Bitcoin, it's, it's designed to evolve and, and to, to route around and to immunize threats. And so the, you know, I, I don't spend a lot of energy, you know, worrying about it because, you know, on the other side of the fences, what position would you, you know, just from a logical standpoint, what, what position would you rather be in? Would you rather own the asset that has risen in value orders of magnitude at the, you know, at the fear that when that happens, you know, the Fed or the ECB or the BOJ tries to, to, to prevent it from growing further or be in the position of not owning that asset? And really the asymmetry alone, if you, if you come to understand, like whether or not you understand anything about how Bitcoin works or why it works, if you understand that what it's really designed to be is a better form of money, and that, you know, at least in my opinion, it's a very binary outcome, either it works and it will become a global reserve cur-currency, or it fails. And what, what that means is there's an inherent amount of asymmetry. The downside's a hundred percent, but the upside is many orders of magnitude. and then- And as you begin to learn more about how and why Bitcoin functions, then the, you know, your view of probabilities or possibilities begin to change and your, tolerance to, to, you know, expose yourself to even greater asymmetry only extends from there. So, you know, on, on the one hand, it's that it's practically not possible, but on the other hand, which position would you rather be in, owning that asset or not?" }, { "speaker": "stephan", "time": "40:45", "start": 2444.65, "text": "Yeah, and it's interesting as well to point out that even politicians and regulators and bureaucrats are also going to face that dilemma on a personal level, because they can either, as Michael Goldstein said, \"Well, do you personally believe number go up? Well, then you're gonna try and own it yourself, and then once you or your family members own it, are you then gonna go and ban it? Well, it's a bit, it's a bit of a difficult, mental gymnastics to try and execute.\"" }, { "speaker": "parker_lewis", "time": "41:10", "start": 2469.71, "text": "Yeah, I agree. And then when, when you think about the" }, { "speaker": "parker_lewis", "time": "41:14", "start": 2474.11, "text": "Coins global and, and not necessarily the game, you know, theory view of any member of Congress or central bank or, or treasury, but, but just of, of the dynamic that the, the countries that are, you know, Bitcoin, you know, from a practical perspective represents the most mobile capital that has ever existed, and that the countries that create the most, bo-- you know, a combination of the greatest amount of regulatory certainty and are the friendliest as it relates to Bitcoin, capital Will flow to those, to those places and those jurisdictions, and every jurisdiction that, that takes the opposite view is competing with those other jurisdictions that, that take a more open and a more friendly view. And to think, you know, it doesn't necessarily happen overnight, and of course, if the US government came out tomorrow and said Bitcoin is illegal, what happens tomorrow? The, you know- Does the price likely drop and could it potentially, you know, impair the, the near term growth of Bitcoin? Yeah, likely so. But in terms of over the long term, and, and does that kill Bitcoin? No. and, and does it accrue to the benefit of some, some other jurisdiction that is friendlier for it? And, you know, where people will move to over time? Yes. And I think that the US is a, is a perfect example of that. Human capital, physical capital, monetary capital flows here because people, you know, property rights are the The rule of law, and so whether it's in the United States or Ireland or some other country in Western Europe, someone will see the benefit of that, and, and that, that mere competitive threat will hopefully, you know, prevent, somebody who may otherwise make a bad decision from cutting off their nose despite their face." }, { "speaker": "stephan", "time": "42:54", "start": 2574.46, "text": "Fantastic. and I, I love this other article you wrote. It's, Bitcoin isn't for criminals, right? So right now, it's very common that you'll see the exposure that typical news- Websites will try to get clickbait and say, \"Oh, look at this big illegal thing, Bitcoin being used for nefarious purposes.\" How do you, try to explain that point?" }, { "speaker": "parker_lewis", "time": "43:18", "start": 2598.02, "text": "Yeah, so, so that's the most recent article that I just published, last week, and this idea that, that Bitcoin, you know, isn't for criminals or Bitcoin is for criminals, in many ways, it's an extension of the, of a theme in, you know, the idea that Bitcoin can't be banned, in that both of those Those ideas, they are admissions that Bitcoin works and, and is functional in some context. you know, whether it's the case of, oh, we need to ban Bitcoin 'cause it's threatening the dollar, it, you know, if you peel back the layer of that onion, it is, well, embedded in there is your admission that Bitcoin works, and i-if it didn't, we wouldn't have nothing to ban. And then on the, in the context of, you know, claiming that, that Bitcoin is, you know, just for criminals or the only practical reason that somebody would use facilitate some illicit purpose. Again, it's-- there's an ambition embedded in there that is Bitcoin is functional. you know, one of the ideas that I talk about in, in Bitcoin is Not for Criminals is, you know, this idea that, you know, and, and all, you know, the idea stems not just from the Silk Road, but it was certainly popularized around there, and there've been any number of widely publicized events where someone either used Bitcoin to, to launder money or to facilitate some other type of illegal activity. And, you know, what, what the default assumption about from the skeptics is, the only reason that people use Bitcoin was 'cause it, it allowed them in some, you know, form or fashion to evade law enforcement. And, you know, from a practical perspective, you know, none of those people-- you know, anyone facilitating criminal activity, they're not in the, in the money losing business, and they're not just using Bitcoin to, to evade governments' physical cash Cash, physical dollars are used, you know, are, are, are the preferred funding currency of illegal activity, and I can promise you, despite the fact Bitcoin has existed for the last ten years, that those dollars, those physical dollars that are used to evade law enforcement, have and continue to be laundered back into the banking system. And so kind of when you think about it, first from the perspective that, you know, one, you know, anyone who's using it for illicit purposes isn't merely doing it to evade law enforcement, and b, they couldn't be doing it unless functional, and then see that recognizing that the dollar is still the, the preferred funding currency of, of criminals everywhere, that, that when you start to ex-- you know, extrapolate those ideas, it is that if Bitcoin is functional for any activity, whether it be for some illicit purposes, it's an admission that Bitcoin works, and if it does, then it works for everybody. And one of the ideas that I talk about is that this idea that, you know, Bitcoin is just for, you know, facilitating illicit purposes, and as a result, we need to ban it, you know, Or, you know, impractical that possible scenario is that, that it could be banned. That, that illicit activity ultimately forms a litmus test for the rest of the network. And, I kind of used the-- this last article to, to talk about the idea of censorship resistance, and that's, that's one of the things I try to do in most of my articles. It's not, it's not just to, you know, explain, you know, why s-- a certain idea is wrong or right, but then it's to actually educate somebody on how Bitcoin One of those, the points that I talk about i-in this last article, is censorship resistance. And when you think about, you know, illicit activity or criminal activity as a litmus test, i-it's this concept that, you know, the, the, the type of activity that is most susceptible to censorship, is illicit activity. and one of the, the, you know, something that recently came out, I believe it was in August, that, you know, OFAC sanctioned a few, Chinese nationals and they- They actually listed, probably ha-- you know, a dozen Bitcoin addresses that were associated with three individuals, and that, you know, one of the, one of the critical tests for Bitcoin is whether or not some outside influence or some central party or, you know, a, a group of centralized parties could influence Bitcoin from the outside in. And that ultimately, if, you know, Bitcoin would be at risk of failure if, you know, someone who is known to be a, you know- You know, some-- an illicit actor sent Bitcoin, and not that, you know, a company such as PayPal or, Visa or Bank of America would prevent, you know, a transaction, it's that whether or not the Bitcoin network at a protocol layer would actually confirm a transaction that was otherwise valid based on the network's consensus rules, and that if that was brought to bear and if that was at risk, if that was made possible, then, then, then the network would, would simply be shown to be censorable. And if a single transaction, or, or, or a series of transactions associated with any individuals or any, any enterprises or, or potentially even nation states, were shown to be censorable, then it also demonstrates that the network as a whole is censorable. And if the network as a whole is censorable, then, then the very basic functioning of Bitcoin is at risk, and, and specifically the, the twenty-one million fixed supply, which, you know, in my view, is the fundamental value proposition. And so- When we think about the idea that the Bitcoin is just for criminals, it's no, you know, one, it's an omission of, of, you know, it is functional, and that if it is functional, that then it's functional for everybody, but really then when you turn that on its head, it's that it has to be functional for, you know, the, the most, you know, quote-in-quote-out unwanted activity to ensure or to serve as a litmus test, that it, that it is viable in all use cases." }, { "speaker": "stephan", "time": "48:59", "start": 2938.97, "text": "Yeah. A-and, is global and there's a, people who produce the most value will accumulate more Bitcoin, right? And you also point out here that it, it, the actual percentage of people who are doing illicit activities is going to be much smaller than the, you know, legitimate economy. And so it's, it's basically like throwing the baby out with the bathwater to say it's only being used by criminals." }, { "speaker": "parker_lewis", "time": "49:27", "start": 2967.07, "text": "Yeah, and One, one idea here is that if you recognize what Bitcoin is, and, and if you recognize to, to whatever extent or, or kind of to the extent that you understand it, that the Bitcoin does have a fixed supply and it's designed to be a better form of money, and that, you know, the, the fact that it has a fixed supply will make it, a more functional over time medium of exchange with a more clear price signal and a, and a more perfect information, that to, to recognize those facts and to believe Believe that, you know, even if you kind of have blinders on, that in that world, when, when you have the worlds of Apples and Microsofts and, Airbus and AT&T and GM and, all the E&P companies, ex-- you know, ExxonMobil, Shell, and then when you think about all the individuals, doctors, lawyers, teachers, all of those people are competing for, for, from a, for a finitely scarce resource. who amongst- Those people are going to create the most relative value, and whoever does in aggregate is going to have the most Bitcoin. And, you know, to think, you know, through some extension that, you know, the-- that illicit activity in a future Bitcoin economy will re-represent more than it does in the existing dollar economy, is not really an application of any, any logic at all." }, { "speaker": "stephan", "time": "50:52", "start": 3052.14, "text": "Yeah. That's right. And, it's, it's a, it's a phenomenal series. what's the feedback been so far? And, what are some ideas you've got on where you're gonna take it next?" }, { "speaker": "parker_lewis", "time": "51:03", "start": 3062.63, "text": "So the, the feedback's generally been positive. you know, there, there's always some people that, that, you know, disagree with certain points, and, and that's ultimately the reason why I put the, put the information out there. It's not that it's, you know, by any means, a central source of truth, but it's putting my ideas out there and help-helping to articulate, you know, my thought process, for people who, you know Asking a lot of the same questions that I asked over a period of time. And so, the feedback's been very positive, and I continue to, Drew, who's one of the co-founders here at Unchain, you know, he kind of, he-- sometimes he'll ask me laughing, he's like, \"How, how long are you gonna keep doing this? \" And I just tell him how, however long it takes. And so, I, I don't have an immediate plan. initially I was doing it every week, and now, now You know, in, in just yesterday I put out, you know, a request for, for suggestions, and there were about, twenty great suggestions, so I, I think I've got all of my mati-, you know, future material set for all of twenty twenty, but we'll see." }, { "speaker": "stephan", "time": "52:13", "start": 3133.1, "text": "Very nice. and, while we're here, we've also got to talk about Caravan. So this new multi-signature stateless coordinator. Now, I've had a chance to just play with the tool. can you just give an overview for the listeners who might" }, { "speaker": "parker_lewis", "time": "52:28", "start": 3148.49, "text": "So Caravan is a tool that we've been working on for, probably the last six to nine months, and, you know, one of the things that, and one of the reasons for it, i-in part of it, you know, a large portion of it is driven by the nature of our hosted application. So we offer, a two or three multisig for individuals in two different applications. one where an individual or a business holds two keys and, and we hold one, and that's actually holding the physical- Multiple keys, you know, in, in a manner in which we never have the, the private key manner that, that is the client's, and then another application where we have one key, a client has one key, and then a third party independent institution has a third key. And, you know Virtually everything that we build here at Unchain is on the foundation of multisig, and, and we, and we think about the world of Bitcoin, with the idea that, Security, security of your Bitcoin is, is ultimately greatest when, individuals and clients hold their own keys, and that we, we can add into that security element by creating redundancy, giving people ac-access to multisig, and, and when we look at the problem set, we, we as individuals believe that, that multisig provides a greater level of security than, than single sig, and that when you look at the, the general and natural progression of people that enter Bitcoin, it is generally that the, the longer- The more likely that someone is in Bitcoin, the more likely they are to self-custody, but those people that self-custody generally rely on, on, on single key setups. And so the foundation being, you know, a collaborative custody approach where clients continue to hold their own keys, but they get access not only to our technology to be able to coordinate keys and, and to, to achieve multisig quorums, but then they have the benefit of us as an organization not only securing a key, but then also being there on a daily basis, to countersign, whether it's Loses a key and they need to do a key sweep, or if they simply want to, to have two keys, one of them in deep cold storage, sign a key and then have us countersign. One of the, the key missing elements, and this is where Caravan comes in, is that their, you know, our clients, even though they hold their own keys, are in most respects, unless they're a highly technical, client They are dependent on our hosted application, and one of the most often questions that would come up is, \"Well, what happens if Unchain goes away? Or what happens if, our, our website is down for an extended period of time when someone, needs to access their Bitcoin?\" And, in that respect, Caravan represents a really important security column for our clients, but then it has a number of other applications outside of that as well. And, you know, the- Security column that it provides for our clients or, or really anyone who is, interacting with, with any company like ourselves that, that's deploying multisig in the way that we, we are, it provides individuals a way to interact with a third party, to control the majority of their keys, but know that they have an easy path to spend their Bitcoin and to access their Bitcoin completely external to Unchain or, or external to the third party. so, so that, that, you know, in- In terms of the inception of the idea behind developing Caravan, w-was really where it began. But then ultimately, the other reason is that it also provides a tool for individuals that don't want to, to rely on a third party or interact with a third party to be able to access multisig in, in a manner that, that lowers the bar for them. For, for the, you know, an individual who's comfortable holding a single key and knows how to set up a hardware device, you know, they, they may value their anonymity Intuitivity and not value the, the, the additional security that, that our key can provide and that, that we can provide as a financial partner, we, we want those people to access multisig as well. And so we think that more and more individuals will- adopt multisig, whether they're working with a third party or not. And so today Caravan presents values both for our clients as well as individuals that, that want to access multisig but may not have the tech-technical capability. And then the third, the third idea behind, Caravan is that it is our hope that we'll get, community involvement and other, other contributors, and that Caravan won't singularly do this, but that we can help contribute to the development of multisig standards, because while we believe that multisig and, and the way that we deploy it, provides greater security, we're also recognizing that there's certain limitations. of, of a multi-sig setup today, and, and, you know, just as an example, one of those is that, you know, the end, the end state of where we hope to be with multi-sig is that, that individuals can, verify, receive addresses on their actual devices, and, you know, it is our hope that in working with various different hardware providers, that we can drive towards standards to make that easy, and, and we're, we, we hope that Caravan can be a tool that, that not in all respects, but that" }, { "speaker": "stephan", "time": "57:42", "start": 3462.25, "text": "point you make there, because multi-signature is one of those things where obviously there's a lot of good arguments in favor of using it. It is obviously splitting up your keys. It, it makes it, it, in some ways, it makes it more difficult. Obviously, it's not, it's not a silver bullet, there aren't no silver bullets, but there are difficulties as well with doing multi-sig correctly, and it's quite easy for people to shoot themselves in the foot if they don't have the right setup. And that's where obviously, you know, having a Such as Unchained can help you with that, and there is still some need for building of standards and ways for people to use it in a more secure way. So for example, with ledger devices, it's a little bit more difficult to verify the address, that you're receiving to in these multi-signature setups. So maybe it'd be good to also talk through what it looks like. So right now, there is a There's like a version hosted on the Unchained Capital, this GitHub site, the Caravan site, although you are able to self-host it as well and run your own version of it, obviously, connect with your own full node and so on. Can you just talk through what that process looks like in terms of the creation and the interact part?" }, { "speaker": "parker_lewis", "time": "58:58", "start": 3537.52, "text": "Yeah, so, and, and I can just lay out some of the, some of the basics of the way that, the Caravan works. So, so one, yes, it is open source. There, there is a way to access it on, on GitHub that, that's, that's hosted by Unchain, but you can, you know, fork the code and, and run, run it locally. but in terms of the capabilities, so one, it currently supports, Trezors and ledgers. It, it supports an open source," }, { "speaker": "parker_lewis", "time": "59:27", "start": 3567.14, "text": "Also take at, text. So i-if you had a, you know, if you created a signature offline and wanted to paste the signature in, you could do that as well. i-it's designed to, to host, or, or to, to enable any number of m of n, type of multisig transactions. So in our application, that's two of three, but within Caravan, you could create a two of two or a two of three or a three of five. Up to, up to seven keys. And so, you know, one of, you know, one of the things that if, if you interact and you go out and test Caravan, what you'll see is, you know, one, if you already have a multisig, a se-multisig setup and you have access to the redeem script, you can go to the Caravan website, paste in the redeem script and then, export your keys to verify that you have the right key and then use your hardware devices, whether it's Trezor or Ledger, or if Protocol, then you can create signatures and then broadcast, and, and that, it is also designed as a default to, to use Blockstream dot info as, as consensus, but you can also connect it to your own full node. And so one thing to note about Caravan, one thing to be cognizant of if you're testing Caravan, and we've, we've got certain how-to videos on our YouTube page, and maybe we can link to them in the show notes, but, it is a, it is a stateless, it is a stateless, Coordinator. And so if you, if you were to upload multiple keys on a create, on the create tab as an example, and were to generate a multi-sig address, and then if you were to send any amount of Bitcoin there, and then refresh the page without saving, your redeem script and saving the, the derivation paths for your keys, you wouldn't be able to, to spend those Bitcoin. And so that's a really important, dynamic of, of Caravan and, and limitation today to be cognizant of, is that when you are using it, if you're using it, you know, for testing purposes or if you're a long-term holder and you wanna actually use that to store any material amount of Bitcoin, to be sure, and there is a way to download the ownership information, to download the redeem script that also includes the, the BIP thirty-two paths, you need to store that information in order to then be able to spend from that address in the future. So there are limitations today, but there are- There's also a planned roadmap that, we're planning to, to build out to, to allow it to be m-more functional, you know, today it's a, it's a, it's a stateless coordinator, but we also want to, to build more, traditional functiona-wallet functionality into it." }, { "speaker": "stephan", "time": "01:02:10", "start": 3730.24, "text": "Excellent. Yeah, and I, I've had an opportunity to play around with it as well. I sent, like, I, I got, three treasurers and I just made a little, you know, just to play around Create step, and then basically you, for each public key, you import the public key, and then it will take you through to like a sort of a Trezor interface site, and then you would, click a-allow, and then that pulls in the public key from that device, and then it creates, a-and then you do that obviously three times or however many keys you put in, and then you've got, it'll show you, it'll have like the extended public key, and then it'll have the derivation path, you can think of that," }, { "speaker": "stephan", "time": "01:02:54", "start": 3774.57, "text": "The structure, like you knowing like your private keys live on the device, but then without knowing that derivation path, it's like it doesn't know where to look, right? And so that's kind of like that part. And then you save the redeem script, as you mentioned, and then later when you wanna actually spend out of that, you go to the interact tab and then you can paste in the redeem script and then say, okay, spend that balance to this new address. So do you have any other tips for listeners on how they can- Can use the tool or-" }, { "speaker": "parker_lewis", "time": "01:03:26", "start": 3806.37, "text": "I mean, realistically, I think that the, the first step, i-in, in for, for many people, our expectation is that, that Caravan may be their first, their first exposure to multisig. So, you know, from, from a practical perspective You know, users should really use it to familiarize themselves with, with how multisig works and to, to, to simply go and experience it for themselves to, to be able to understand kind of how, when, when you're actually signing transactions and creating transactions, kind of all of the inputs that are involved in that. You know, it is our hope that over time, that, you know, we'll build out the functionality of Caravan to support, more wallets. one of, you know, one of the things that we, we certainly wanted to expand on Caravan To add cold card support, but, but from a practical perspective, what, what Caravan would allow is any individual who wants to have the benefit of eliminating, at least the key as a single point of failure to, to start to experience multisig for themselves, and that if you're a company and you wanna build a company like Unchained or an application like Unchained, there are also libraries included that, that are there that people can review and, and, and, Be able to do a code review of the open source code, so, you know, it can also be leveraged by, by companies that are looking to provide similar services as Unchained." }, { "speaker": "stephan", "time": "01:04:45", "start": 3885.73, "text": "Excellent. And I think a good point you were touching on there as well is that it can actually be quite educational just to play around with the tool, because when you go in and you actually set up some keys and then you start fiddling around with the different address types and then you see what that does to the other information, it might change the, you know, obviously it will change the address, it might With instead of, so if you go with a P2SH, that will start with a three, and then there are other, there are two other types. There's the P2SH-P2Wsh, or pay to witness script hash, and then there's the most advanced one, which is pay to witness script hash. And then, there's also the difference there in terms of compatibility as well. So you, we-- and again, it gets, it gets complex, right? So it's, it's not for the faint of heart yet, but it's for people who are curious and would" }, { "speaker": "parker_lewis", "time": "01:05:36", "start": 3936.38, "text": "Another thing that I would just note is, and that, you know, in, in we released this just a few weeks ago, but it's also, you know, as I was alluding to at the beginning of my explanation of it, it is a, a very effective tool to potentially recover funds from, from another multisig wallet. And, and as a, a some, you know, whether or not somebody's new to multisig or they have an existing multisig provider, you know, particular, you know, if you use the example of Unchained, and this is how we've seen Relying on, on Caravan is, is, is simply when they're getting set up with an Unchained Vault to test an external spend, to, to, to, and, and that's one of the other important things that, that Caravan teaches people is that when you're operating with a company like Unchained, that, and they think about Multi-sig and two of threes, there's oftentimes a default that, you know, okay, if I have my two keys out of three, then whatever happens, I'm good. And, and part of what Caravan educates people on is that there's actually additional information. And so in, in many ways, while there are still limitations of multi-sig, multi-sig does provide greater security, despite those limitations, and it, it educates people in some ways about the fact that, and Treasure actually released a, a good article about this, is that The idea of, you know, what the Trezor device actually is, and that when you think about it as, as a key store rather than your actual Bitcoin, it helps people also understand what's happening, when keys are combined, and then ultimately, kind of detaching the idea that the Bitcoin are actually on the Trezor. the Bitcoin are just protected by the, the keys, or the keys are the lock, to, to, to the castle. And so, kind of- When you, you know, if you're using, you know, my recommendation to people would just be that if, if you're trying it out, it's your first time with multisig, make sure you're doing it with small amounts, make sure that you store the, the information on the redeem script, and that also if you're using third parties, whether it's Unchained or, or others, that when, that, that you do go through that, process of even if you don't intend to use it as a, as an active component of your security, it is there to" }, { "speaker": "stephan", "time": "01:07:52", "start": 4072.96, "text": "Yeah, I think that's a good point around the, building comfort for the customer as well, that they can feel confident that they would be able to spend it on their own, even if Unchained were to, you know, hypothetically if Unchained were to disappear overnight, well, okay, I could still spend, I could still use this open-source tool, to spend it into another set that I would now control, et cetera. And obviously as well, you mentioned there, you can, obviously you can do on mainnet just with small amounts, or Also something for people to use. Correct. One other point, so in terms of Unchain Capital and the way the approach is with multisig, it, it looks like the main idea is to use one address, right? It's, but then there, there can be some trade-off there between security and privacy there, because from a privacy point of view, address reuse, if somebody were to keep, say, spending, they will, you know, say, someone stacking Sats, right? Now they, they keep stacking into that address, it's, that part is probably not ideal. But at the same time, that's a bit of a difficult, thing to navigate. How do you think about that?" }, { "speaker": "parker_lewis", "time": "01:08:59", "start": 4139.07, "text": "Yeah, so one of the ways that, that we think about that is, is understanding the, kind of complexity around key management and coordination of keys, and in the pri- the privacy components and then the ultimate security components. And when you think about, you know, kind of the aggregate and the trade-offs involved with that, the one thing to note is That, you know, when a transaction's actually been spent or, you know, there have been funds spent from a, a particular address and there have been, signatures and redeem scripts broadcast to the network that, the funds, if you were to, to re-spent them to an old address that's previously been spent from Your, actual security has been reduced, and that, you know, when we think about the coordination function on our side where we're managing multiple keys and we're deriving, You know, follow on addresses from each individual xPub that, that is used to, to comprise a multisig address that, in its current state, the way that our application works Is that anytime, you know, basically a vault address remains the same, and that anytime you spend the, the remaining funds or the, the change are swept to a new address to ensure that you aren't, depositing back into an address that, that has previously been spent from. There is a priv-privacy limitation if you keep a vault address and have multiple deposits there. That is something that we actively talk about in terms of updating it to, a-and, and making the, the, solving the key coordination page to allow for Multiple, for you to spend to a, a new address every single time, and that's something that I expect to be implemented. But right now, we're, we're making the trade-off that, in terms of the, the complexity of, of managing keys relative to, to privacy of, of spending to a single address multiple times, you know, that's dictated the current approach, but over time, we'll likely improve that functionality to, to make it more, like a, like a treasure where every time you're spending, you're spending to a new unique address." }, { "speaker": "stephan", "time": "01:11:03", "start": 4263.43, "text": "Yeah, and I think that makes a lot of sense, as, as this, tool is relatively new, people need to be more careful about it, and that's why probably security is more important than privacy at this point. So I, I think that's a good decision. So look, I guess going forward, what are you thinking people might use Caravan for? I guess we're spoken about today, but how might this change in the future and kind of future roadmap ideas?" }, { "speaker": "parker_lewis", "time": "01:11:27", "start": 4287.86, "text": "Yeah, and so, Will Cole, who, who just this week came on to, Product officer, you know, he will really control the roadmap, so if people are, are interested in contributing, he's definitely an individual here in addition to Drew, to, to coordinate with. I think over time and most immediately, it will, it will simply be improving the functionality of Caravan to be able to, a, as an example, today it can only handle a single address and, and, and when you spend, it, it essentially requires that all of that The Bitcoin related to that address be spent, I think that that's a natural thing that will improve in terms of, greater flexibility there and the ability to manage change. I think, a component to be able-- you know, I think this will always be separate, but the ability to layer on a, a state into that will also likely come, and then the, the addition of, of additional wallets that, that natively support, or, or that are compatible with Caravan. So I think that those are the type of things that are most immediately on the horizon, but again And, you know, we, we designed Caravan, for, for many reasons, one of those being to, to drive toward industry standards or at least make our own contributions, and that first and foremost comes from, our, from, from our own side of incorporating standards into Caravan, but, but we do hope that additional people will, will come to contribute to Caravan where, you know, we work with Christopher Allen actively, and we're working on ways that we can, collaborate with him in the blockchain commons more, and so there's ideas that we're talking about Help, get more involvement, and more involvement outside of Unchained and, and how that project is actually managed, and how that looks over time. So we've, you know, there, there's, there's a lot of future plans, but I think in the most immediate terms, it's, it's improving base functionality, but the ultimate goal is to, to drive towards standards and to have, more and more devices compatible with Caravan." }, { "speaker": "stephan", "time": "01:13:22", "start": 4402.58, "text": "Yeah, that's excellent. and I guess from, Industry perspective, is there anything that you would like to see, perhaps even from the hardware wallet or from any, any other parties in the, in the Bitcoin world? What would you like to see?" }, { "speaker": "parker_lewis", "time": "01:13:37", "start": 4417.27, "text": "my only wish for Christmas is to have the ability, and I know that Coldcard is, i-is advancing down this path and, and is likely the leader of the pack, but in terms of, you know, across the board, improved ability to validate addresses within multisig. said quorums on the actual hardware devices, because that is a core limitation and, and there's a number of things that, that individuals can use a-and implement to, to ensure that, you know, addresses that they're getting aren't potentially being spoofed, but ultimately at the end of the day, the, the solution to that problem is validating addresses on devices. If, if anybody's ever used, a Trezor, you know, when they, you know, click to receive a, a, a receive address An address appears within their browser, but then the address ultimately appears on the device, and the device is the authority. And, and so when they're spending in a sing-- and, and that is a, a primary, you know, if, if there is a distinction between the, the limitation between where multisig is today and single key storage is that, it's that ability to, to validate addresses on, on device. And so, you know, as it relates to the hardware providers, it would be developing around multisig to make that easier, you know, whether it's an individual co Coinating with Unchained or whether it's individual on their own to, to be able to have the functionality with hardware devices and, and, and ideally across different manufacturers to have, you know, say a treasurer and a ledger within the same multisig quorum and being able to, to validate receive addresses on both of those devices." }, { "speaker": "stephan", "time": "01:15:14", "start": 4514.05, "text": "Yeah, that's, the holy grail, hey? That's what we're hoping to get towards. but look, I think that's, probably gonna do it for today. But Parker, make sure you let the listeners know where they can" }, { "speaker": "stephan", "time": "01:15:25", "start": 4525.66, "text": "But just, shout it out now as well." }, { "speaker": "parker_lewis", "time": "01:15:27", "start": 4527.9, "text": "Yeah, so one place on Twitter is, at parker a lewis, and then another place is on our Unchained Capital blog where I release, you know, I oftentimes put, you know, I'll always post the, the Gradually and Suddenly pieces on Twitter as well, but, we've got a lot of other quality, content on our Unchained Capital blog. you can include the li- if you could include the link in the show notes, it's unchained-capital dot com And then you can easily, easily find the blog. So we, you know, it's not just me who's contributing to content on our side, but Drew releases a lot of good content, Phil does as well, I expect Will to over time. And then, you know, one of the big pieces, and, and this is a project that we're working on currently, is beginning to release pieces on how, how multisig technically works, for people that as they, you know, as we approach the next halving and as we expect more people to be adopting multisig, And part of, you know, the what we view as our responsibility is to educate people on how, how multisig technically works to create that mental framework for people." }, { "speaker": "stephan", "time": "01:16:33", "start": 4593.75, "text": "That sounds really great. I'm looking forward to seeing some of that. but, look, that's gonna do it for today. Thank you very much for joining me today, Parker. All right, thanks for having me on. I hope you enjoyed listening. I really love working with Unchained. Make sure you check out Caravan and go have a look at their vaults and loans products. Lastly, subscribe to the" } ] }