{ "episodeId": "SLP212", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "alex_daskalov": { "name": "Alex Daskalov", "role": "guest", "tag": "ALEX" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.17, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, for episode two hundred and twelve, my guest is Alex Daskalov, and we're talking about whether Bitcoin in custody can be insured. This show is brought to you by swanbitcoin dot com, the best place to auto stack your Bitcoin in the US with incredibly easy setup and low fees. Fees. I personally appreciate that Swan is Bitcoin only and dedicated to Bitcoin education. Go to swanbitcoin dot com slash livera to get ten dollars of free Bitcoin when you start stacking with Swan. And Swan has some news to share. They've had massive demand for daily buys since the day they launched the service. One of the big positives of regular, recurring buys is smoothing out price volatility, so buying daily will catch those dips even better than buying weekly. There are a limited number of spots in the Swan Daily Buys beta, so Head over to swanbitcoin dot com slash daily buys to get into the beta. That's swanbitcoin dot com slash daily buys. Knox is a Bitcoin custodian dedicated to ensuring their insurance protection covers the full value of their customers' assets, which we'll discuss in this episode. So for example, if a fiduciary wants to hold two hundred and fifty million dollars of Bitcoin with Knox, Knox will seek to obtain two hundred and fifty million dollars of insurance dedicated exclusively to that account and adjustable to volatility, no fractional coverage or narrow scope. Insurance for what it's worth, a tool to transfer risk. If you're a Bitcoin company, investment fund, trust, or family office, check out Knox for your insured custody, knoxcustody dot com. 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Now, just for clarity, Knox is a sponsor of the show, however, I invited Alex on because I thought it was worth a discussion for the listeners, to have that discussion on the show in its own right around Bitcoin. Bitcoin custody and insurance. So here's the interview. Alex, welcome to the show." }, { "speaker": "alex_daskalov", "time": "02:34", "start": 154.42, "text": "Hi, Stefan. Yeah, it's great, great to be here." }, { "speaker": "stephan", "time": "02:37", "start": 156.72, "text": "So Alex, I've, been following what you're doing with Knox, and obviously just recently, Knox has started as a sponsor of the show, so listeners be well aware. But I thought there was some interesting stuff here in terms of what Knox custody are doing and some of the messages that you guys are putting out there in terms of insurance and Bitcoin and how can these two things be combined? Can they, can they be? But A bit about yourself, what's your background?" }, { "speaker": "alex_daskalov", "time": "03:02", "start": 182.4, "text": "Yeah, sure. I think, I'll give you kind of a brief rundown of, of how I came into this space, kind of how I came to be involved with Bitcoin broadly, and then certainly, insurance, given, the focus that we have with insurance at Knox. so to really, backstep a little bit here, I moved to Montreal in two thousand and six, which is obviously a long time before, even Bitcoin came to be, but this ends up being pretty important as me, as a person and especially in the Bitcoin space, I came upon Bitcoin for the first time in the summer of twenty ten, and at the time I was practicing what I'll call kind of the three mentions rule, which is, I came to see too many new technologies, too many, kind of different things and was always distracted, and told myself if I see something mentioned at least three times, I have to check it out, and certainly if I see it mentioned more than that, then it's something that w-worth getting into, Well, call Summer 2010 kind of my zero to one moment. You know, there was a time at which I had no conception of Bitcoin, didn't not, hadn't ever heard of it, didn't understand anything about what it was about, it didn't, even register in my, in my mind. and I came to see this, and I should maybe paint myself, kind of the kind of person I was at the time. I was absolutely a software, kind of first person. I was a programmer, you know, I was being built and what kind of things it could do, so I can't claim to have understood Bitcoin at that moment, very well. In fact, I'm certain that I didn't understand it very well because had I understood it then as I do now, I would have obviously dropped everything to, fo-focus on Bitcoin and nothing else. for me at that moment, it was really just, you know, let me download this, let me download the source code for this thing, you know, build it from source, get a binary going, operate that I was, you know, kinda poke around at the source code, understand, understand briefly what it is, but I can't ex- I can't claim that I was getting especially deep at the time. but that, that was my first foray. that summer, I was developing some software that, give it the TLDR, was really just a way for people to build, kind of release some albums and have anyone pay whatever they wanted for those albums. and at the time, I started integrating with kind of Amazon Payments, seeing what it was like to actually get somebody to pay for something over the internet. to be frank, at that time, you know, I had obviously used payment rails, but I didn't understand, you know, what it meant to actually, you know, send money over the internet, and I came to appreciate just how horrendously complicated the traditional, kind of financial services rails were. and it's at the, at about that time that I came to remember, hey, what about that Bitcoin thing? You know, maybe that was something that is, is worth integrating to the site. and for better or worse, I looked at it and said, well, nobody really has Bitcoin, right? they don't. This isn't something I unfortunately can actually integrate because this isn't- Isn't actually something that people have, but it's at that moment I think that I came to realize there's something magical here because where in the traditional kind of financial services payment rails, I have to integrate all of this old legacy tech and I need to, get the permission from all of these different providers to actually have anything working, with Bitcoin I could actually just get it working, without any one's permission. And that was something that I definitely noticed as much as I kind of passed on it. Because I told myself, you know, folks aren't actually using it. So, that was a fairly long-winded point about twenty ten, but, a lot of things happened for me then that set the staging ground for everything that would come to learn later. to kind of run through the years that have passed since. Twenty eleven was my final year of school. about then I came to meet some libertarians, kind of get involved with some campus groups. It was my first real exposure then to kind of Austrian econom- Economics, a lot of these folks didn't know Bitcoin or point me to Bitcoin, but they kind of proved to me or sort of told me, I think for the first time, I came to realize, you know, US dollar is not forever, and I came to recognize fiat currencies for what they were, and I think it's hard to kind of back up historically and understand where you were. I don't think that these two things clicked together. I'm pretty sure at that time, you know, I was that programmer who had come acro- come across- Bitcoin and I understood it as a per- permissionless, you know, payment rails, but I don't think I made the connection between kind of the Austrian economics that I learned about in twenty eleven and, you know, Bitcoin as a technology. kind of fast-forwarding. So yeah, that, that was, that was, I think, and that, that's actually a point is it's really difficult to kind of back up and, you know, remember at what point these things clicked, and I think this is the case for everyone. it's, you know, Up over time, but for myself as a technologist, as a programmer, like when I came to understand Bitcoin as money is, is frankly an open question," }, { "speaker": "stephan", "time": "08:21", "start": 500.76, "text": "depending on what your vision for Bitcoin is and whether it makes sense for, you know, people right now who are mostly holding it and that story, I suppose that also plays into why you wanted to do, custody business, right?" }, { "speaker": "alex_daskalov", "time": "08:33", "start": 513.23, "text": "Yeah, certainly, and it, it was a long time coming for me to get into, into custody. So, if I can kind of progress through this point, it At that time, I was a fairly staunch, you know, not your keys, not your coin, still something I believe in. I, I certainly believe that, you know, individual users of Bitcoin ought to maintain their own key storage. and it was a long time, coming before I came to realize why custody would ever be necessary, and what kinds of things would be necessary for it. so kind of, yeah, and certainly not in twenty eleven or twenty twelve when I've come to understand that. I was still at the time deep- Simply just a technologist. so I would say in twenty twelve then, I started seeing some of the first uses for Bitcoin, besides kind of the first uses that, that I saw where I had to discount it, historically I've been what you'll call a harm reductionist. So, I believed, for example, that, you know, psychoactives may, in the right hands, used correctly, be a useful tool for folks, and about that time I started seeing some of the first, you know, darknet markets and saying, You know, maybe there's something here where, you know, people can actually use this thing, to get somewhere. and then the technology side of me at this time was really interested in, distributed computing writ large. so I really, you know, I came to be fascinated by things like the CAP theorem, the idea that you can't get consistency, availability, and partition tolerance, in a distributed system at the same time, and really started seeing that while there were all these kind of distributed database That people had built in a centralized sense, Bitcoin was, solving really, a very interesting problem that, that none of them had actually, you know, proven out in any way. and then kind of moving through that, about twenty thirteen I would say that was the first time that I started seeing, you know, people getting really serious about this thing, saying things like, \"I'm going to invest all of my life savings, you know, into Bitcoin.\" I remember having these thoughts, it was about the fall of 2013, kind of reading these, these posts and thinking, \"You know, these people, they're probably right, but...\" They're also a little bit, a little bit, a little bit crazy. Like, this isn't something that, that I believe at this point, even though I remember the first tinglings of, you know, I think that if I look back in years' time, I'm gonna look back at this time and say, \"Actually, they're right.\" and so that's, yeah. That, that's about when I started getting more serious about this whole thing. it was just, and I think this is the case for a lot of folks in the space, is, you see this thing at first, certainly when I first saw it, I looked at it and said, \"This is a really neat thing. If it should ever work, it would be, incredible.\" And again, certainly I thought of it from a technology standpoint. but after seeing it evolve and not die for years and years and years on end, that's These years, and I can certainly jump into kind of what, what I was thinking about, in the years of kind of twenty sixteen, seventeen, eighteen, when I came to build, you know, came to build Knox." }, { "speaker": "stephan", "time": "11:49", "start": 708.55, "text": "Yeah, sure. So let's talk a little bit about what made you want to start up Knox Custody." }, { "speaker": "alex_daskalov", "time": "11:55", "start": 714.68, "text": "Sure. So, I guess backing up to the kind of not your keys, not your coin point, this is something, you know, I still believe and I think it's important for everyone to hold their own keys, but, I came to realize that I was being a little bit naive in the sense that there are many contexts in which, you know, somebody simply cannot hold their own keys, just because of the mechanics of, of some mechanism. So, you might have a situation, for example, in which, suppose somebody were doing something like a you know, a Bitcoin fund where they were deciding when to execute purchases, and sells. You know, somebody came to you and said, \"You know, I know how to, I know a way to actually grow your stash faster than just buying and holding.\" of course, that entity would have to maintain control of the coins, maintain control of the keys. I came to believe in the situations in which you aren't, you know, you ultimately own or you, you are supposed to get at the, you know, proceeds of some- activity, if somebody else is going to hold your keys, I came to recognize, well, if somebody else is holding your keys, they ought to be fully insured. and it's about that time that I started realizing, you know, none of these Safekeeping services are insured to the level that, that I would want to see insurance coverage, if I were actually utilizing them." }, { "speaker": "stephan", "time": "13:16", "start": 796.23, "text": "That's probably the main differentiator that I see, in terms of Knox custody. But I, I suppose, how do you sort of address that idea that someone listening might be thinking, \"Well, hold on, isn't custody against Bitcoin's ethos?\"" }, { "speaker": "alex_daskalov", "time": "13:30", "start": 809.96, "text": "Yeah, certainly, and, and, and that's definitely something that I came Begrudgingly to, to kind of, have to accept, which is it is against Bitcoin's ethos if we're talking about, you know, somebody maintaining, direct ownership of, of Bitcoin as an asset. So I still believe, and, and I'm still very, very staunchly supportive of, and, and the very, very strongly push, you know, folks to hold their own keys. If you would like to do the simple activity for Bitcoin of, you know, owning some Bitcoin, I still believe that People ought to own their own keys. however, if you would like to operate, for example, a fund wherein, you know, you are holding Bitcoin on behalf of others, then in that case, you not only- Should not, you know, you know, not only you can hold your own keys, but you, in that instance, should not hold your own keys, because those are the keys that, are being- Used for the assets of some, some other, some other party, if that makes sense. Kind of like a, in the case that you are maintaining control of somebody else's Bitcoin, for the most part, unless you're a specialized custodian, I came to believe that you shouldn't be holding those keys." }, { "speaker": "stephan", "time": "14:45", "start": 884.98, "text": "I see. So from your perspective then, it's more about the level of security that, say, a fund would be able to provide on their own versus a specialized custodian. Is that what you're getting at there or something else?" }, { "speaker": "alex_daskalov", "time": "14:57", "start": 896.89, "text": "Yeah, I think there's naturally kind Of labor point here, which is if you're, for example, a fund, it's very unlikely that you've spent the cycles that you need to, to get the kind of, you know, security that somebody who has a specialized custodian can attain, and then certainly from our standpoint, the ability to actually ensure, the, these holdings is something that, and I'm sure as we'll get into this conversation, is incredibly difficult to do. so I came to believe exactly that, which is in most cases Is if the me- the mechanisms allow it, you know, folks need to hold their own keys and hold their own coin, but if they're going to delegate ownership onto some other entity, that entity, unless they're a specialized custodian, ought not to be holding those keys." }, { "speaker": "stephan", "time": "15:45", "start": 945.08, "text": "Yeah, so I think I take the point about technical competence, specialization, requirements for a higher level of security, and in certain cases, the entity, the structure may not be able to self-custody. But that's it Could there be some kind of risk scenario where, let's say, Knox is successful and holds one percent of Bitcoin, would that be bad for the network? Would that be bad for the, for the overall health of the ecosystem? What's your view there?" }, { "speaker": "alex_daskalov", "time": "16:14", "start": 973.84, "text": "Yeah, it's definitely something that, you know, myself and everyone at Nox has been troubled by, which is what happens when, you know, these custodians are successful, and what happens if actually a large percentage of, Bitcoin in the aggregate is held not by users who are holding their own keys, but by designated entities. I do think that if it came to be a very large percentage of the network, that would be a problem. The way NOX is structured to this day, for example, we say one percent, one percent of, you know, the total supply of Bitcoin, is a supply of Bitcoin in, you know, real dollar terms today that NOX isn't actually capable of holding. the way, and I'm sure we'll get into this when we talk about kind of capacity limits, one of the ways that you will be able to scale actually the insurance capacity that, that we maintain, is by having many different entities actually, you know, maintain the same infrastructure that we actually ourselves deploy. so that's certainly one point. I do push back a little bit on kind of the harm to the network in this regard, because while it might be the case that, you know, many different entities are holding onto some percentage of the aggregate Bitcoin, it is still the case that all of the individual holders, if you will, aren't harmed. So if you can picture this, you know, you and yourself, myself, we might be holding some amount of Bitcoin, we might be holding our own keys. The fact that some- Other subset of the aggregate, you know, supply is held by centralized venues, doesn't take away from our ability to access that, access the base layer. so, so that's, that's still a very neat property of Bitcoin, that it doesn't While I don't want to see a world in which a large percentage of Bitcoin is held by centralized entities, if that were to happen, you know, you and I and anyone else holding our own keys can still transact our Bitcoin just as we could previously." }, { "speaker": "stephan", "time": "18:13", "start": 1092.97, "text": "Yeah, I see. And, it, it is a consideration that, let's be fair, there are already existing custodians today, for example, you know, Coinbase custody or BitGo or Anchorage or some of these other providers who already do hold a significant proportion of- Of bitcoins on behalf of their customers, the, obviously the, the messaging is sort of getting out there, it seems that some of the, more of the coins are going out into, you know, individual, custody, but again, there are different entities out there, and some of those entities are just not capable of, cussing everything fully and doing everything fully themselves. so probably it's useful now to talk about who are those entities that aren't able to hold their own keys? and maybe if you just wanna comment a little bit on your view of that spectrum there, of, fully owning keys, doing everything yourself, over to the other end of like fully custodial, and who's, who's sort of, who are the kinds of people who it makes sense for?" }, { "speaker": "alex_daskalov", "time": "19:11", "start": 1151.38, "text": "Yeah, so I, I think maybe there's two kind of points here. one is looking at the kinds of categories of customers that, for example, Nok services, and the other is, and this is actually an interesting point and kind of we can tie this in" }, { "speaker": "alex_daskalov", "time": "19:29", "start": 1169.14, "text": "The spectrum of custody, if you will. so on the first point, I'll kind of cover some brief categories for Knox. on the one hand is very straightforwardly Bitcoin businesses. So as a side effect of these businesses' operations, they come to hold a large amount of Bitcoin, and we can look at kind of two typical examples of these, of these folks. One is, Bitcoin exchanges. A Bitcoin exchange, you know, say it buys and sells Bitcoin versus fiat. For better or worse, it turns out that a lot of the users of these exchanges themselves don't wish to hold their own keys, and I think that that's maybe a point I should have made on, on the, on the last point. and as a result, and we all know this is the case, centralized exchanges end up holding a large amount of Bitcoin. this for them is a cost center, it's not something that they wanna do. we know these people, it keeps them up at night, it's not, again, a specialized activity that, that they But because their own users don't actually want to withdraw onto their own wallets, they end up holding these things. So that's certainly one example. another example might be, a lender, you know, somebody who want-- wishes to take Bitcoin as collateral in order to, produce a loan, has to, by the mechanisms of, you know, Bitcoin lending, hold onto some amount of this collateral directly themselves. And again, this often, something that they don't want to do. so these are perhaps two examples of where, It isn't possible or it isn't desirable so far as the end user is concerned, for Bitcoin to be held by them, by kind of by the end user. as a second category and something that we've seen a lot of growth in, we're seeing a lot of The new entrants into Bitcoin, so say high net worth individuals, family offices, others of that sort, you know, they want exposure to The price appreciation of Bitcoin, they want to know that they have access to the physical Bitcoin in the sense that they want to be sure that they are actually owning underlying Bitcoin, as opposed to, you know, just some synthetic. and again, as a side effect of, of this, they need some custodian to hold onto their funds. and then as the last category, there are public funds, or kind of listed funds. you know, if you want to produce some fund that sits, in such a way where folks can kind of produce shares for this, kind of redeem those shares, and purchase those shares, then it would result in physical Bitcoin having to be stored by a third party. So these are a few key- Categories where, you know, Bitcoin does have to be stored by something resembling a custodian. the second point for this is, and this is something that we're investigating internally a lot, is what is kind of the spectrum of custody? So we can look at the case that should be for most users, which is, you know, they hold their own keys, they hold their own coin, they have the full signing quorum, all the way to the extreme end where there exists a custodian that maintains the full key set. you know, holds the ability to gain signing authority over, over some account and the ability to move those coins. In between that, there are, you know, some other models, such as, for example, collaborative custody, and something that we're spending a lot of time internally looking at, which is, you know, given the advantages of multisig, maybe it doesn't have to be the case that one hundred percent of the keys are held by the user or one hundred percent of the keys are held by a third party custodian, in a- An M of N scheme, you can kind of get arbitrary levels in between, and that's certainly something that, that is of interest to us, and I think one of the ways to battle against, you know, large percentages of the aggregate supply being held by centralized custodians, is to start imagining ways in which collaborative custody really, really takes hold in the world." }, { "speaker": "stephan", "time": "23:28", "start": 1408.25, "text": "As I can imagine, there might be, obviously there's some strong benefits there to the collaborative custody model, but I guess on the The downside there is essentially that company or that trust or that family office or whoever, they have to take certain, trade-offs, and one of those might be Needing to be more active in terms of how they use their own Bitcoin, there might be certain constraints about their own time and so on, whereas if you're sort of passing that off to a company to do certain automated policy rules, that's a bit of a trade-off there as well in terms of being able to use that as opposed to, like, it might be a bit more technologically or human capacity-wise, it might take a little bit more, right?" }, { "speaker": "alex_daskalov", "time": "24:12", "start": 1451.64, "text": "Yeah, for sure. And this is something, you know, we all have to admit to ourselves, these are early days, and That take hold, and certainly amongst, say, family offices, you know, looking at what the specific risk appetite is, looking at what, you know, there's always trade-offs between, security, sovereignty, and a number of other properties that you can look at in a custodial system. but it, it certainly is important to note, and it's interesting for Bitcoin in particular that we get this interesting continuum, this kind of spectrum of custody. It's certainly not something that we can get to see in gold, right? say, when it comes Gold, you know, somebody is either holding onto that gold or, somebody else is. we don't get to see this kind of interesting spectrum of, you know, different models by which we can custody" }, { "speaker": "stephan", "time": "24:58", "start": 1498.33, "text": "coins. Sure. And, so let's talk a little bit about insurance as well. So this is something it has been often requested within the space, and yet there are difficulties around actually achieving insurance for custody. So let's just start by talking a little bit about the factors that might make Bitcoin Hard to ensure. So what does, what makes Bitcoin so hard to ensure today?" }, { "speaker": "alex_daskalov", "time": "25:24", "start": 1523.91, "text": "Yeah, so that's a great question. I think I can back up a little bit. I got interested in insurance systems as a software person about six or seven years ago. and that's when I first started kind of getting into insurance, I came to recognize some facets of the insurance industry, that would make it difficult to insure Bitcoin, but, we can even generalize from there to understand why, insurance of software broadly is difficult. so insurance, if I can really simplify matters, is just the act of looking at a set of events. so long as there exists some events, and there are some events that are bad and some events that are neutral and some events that are okay, so long as I can understand the bad events and understand the extent to which they correlate, you know, based on some input parameters, I can likely produce a model, that I can use to actually price that risk. So as a very crude example, you know, suppose I wanted to ensure against the physical destruction of ships, and I had some ships that were sitting in the Atlantic Ocean, the Pacific Ocean, the Indian Ocean, and elsewhere. One of the properties of the world that makes insuring traditional risks relatively straightforward is that most of the bad events that we care about, have to do with physical destruction, and they typically have to do with physical destruction as it occurs in the real world, and the real world affords us a wonderful property, which is that when items are physically distant, they are unlikely to correlate in their destruction. so for example, a storm in the Indian Ocean that might take down some of your ships isn't going to take down your ships in the, Atlantic Ocean or the Pacific Ocean. What happens in software systems is that a lot of this, convenience breaks down. suddenly all of the events that could occur May correlate in ways that you didn't previously understand. so this is kind of a point about what, why it's so difficult to ensure software systems at large. and Bitcoin really starts to have a lot of these kinds of properties, which is the kinds of events that can occur in Bitcoin, start looking very much like information risks. So, you won't see necessarily, physical evidence for some of the risks that we care about. So for example, if agents who are generating keys, that will be used in a multisig quorum come to behind the scenes, you know, copy some of these keys and then use these keys, in a long-range attack in order to steal Bitcoin, that is not going to result in kind of physical evidence for that loss, and so that is one of the major points that makes ensuring against Bitcoin theft and loss so difficult, is that it represents the kinds of risks Risks, it kind of represents the kind of properties that makes software risks so difficult to ensure, which is that there's not always going to be physical evidence for their occurrence. so that is, you know, broadly speaking, what makes ensuring software difficult and certainly what makes ensuring, Bitcoin theft and loss difficult. I can run through, I think maybe a useful exercise here is to say, what were we thinking about at Knox when we first came upon this as a risk category? Kind of what events did we want to ensure, and why were each of those so difficult to ensure? So, the properties that we, we looked at really were to say, and I'll use these to comment certainly on- On insurance policies as they currently exist or, or certainly existed at the time. one of the things we really believed important is to ensure up to a hundred percent of the value of the funds that we held ought to be insured and ought to be insured in a dedicated fashion, which was certainly not something that was happening at the time. So, kind of the run-of-the-mill for insurance policies here is you will purchase some insurance policy. So, say you're holding, you know, call it half a billion dollars worth of Bitcoin, you might purchase an insurance policy For, fifty million dollars worth of Bitcoin, and then you might turn to each of your customers and say, \"You know, your account is insured up to fifty million dollars.\" Now, the problem there is if you're holding the full sum, that statement, while, you know, technically true, it's, it's a little bit dubious, right? You don't actually have the ability to ensure everyone's account up to fifty million dollars if your aggregate holdings Significantly exceed that. So, this is fractional insurance, so far as we're con-concerned, effectively you're double spending your insurance policy, and that's something that, to, yeah, it's, it's a great way for, for Bitcoiners certainly to understand it is to just effectively look at it as double spending an insurance policy. So far as we're concerned, that's not appropriate, and so we really strongly believe that when we say one to one insurance coverage, we mean that for every dollar of Bitcoin that we hold, we are purchasing A dollar of insurance coverage, and that is going to that customer and that customer alone, and nobody else." }, { "speaker": "stephan", "time": "30:31", "start": 1831.41, "text": "And how about the volatility as well? So it could be the case that-- and this can happen in both directions, right? So imagine, you know, it's twenty seventeen, and you've bought some insurance, and, and the price of Bitcoin is whatever, four thousand dollars, and then it runs to twenty thousand dollars. Now, in terms of US dollar, well, in US dollar terms, you might not have enough coverage now. And then, kind of the flip side as well, if there So I guess the volatility aspects of it are also a challenge in terms of getting the right level of coverage. How do you deal with that?" }, { "speaker": "alex_daskalov", "time": "31:03", "start": 1862.97, "text": "Yeah, so volatility is, yeah, and it's a great point as we run through the kind of the properties of insurance that we think is important. So when I say one to one, you know, obviously it needs to also be able to scale up and down with the volatility of Bitcoin. Now, it is the case that there were assets, you know, before Bitcoin, for example, any kind of commodities, insurance that you might wanna provide. Where there was a daily difference in the, you know, US dollar denominated, risk that was being originated. so it's not as if Bitcoin is completely novel in this regard? But the kinds of violent price swings that we see with Bitcoin, you know, didn't occur for other insurance products. it is something that we have managed to deal with. Now, we deal with it in terms of kind of bands of insurance, if you will. What we do is, one, we backtest these things and, and say, we wanna tell our customers, you know, given historic price volatility, is it the case that if you bought, or if you kinda came into our custody, our fully insured custody, that we wouldn't have been able to deal with some historic volatility? I'm proud to say that to this point, there's no historic volatility such that we wouldn't have, you know, managed to actually, take that price swing. but we're also extremely transparent and we like to be as open as possible With what our insurance coverage is, and I will note that, yes, there absolutely exist price swings so violent, that they can push the insurance coverage into a window where, some holdings might, might no longer be insured, but you would be surprised at kind of how, how wide of a price swing we can actually take." }, { "speaker": "stephan", "time": "32:42", "start": 1961.87, "text": "I see. And when you're talking about, historically, are you, are you talking about As, as in a backtesting sense, like you went and looked back at the volatility of Bitcoin like that?" }, { "speaker": "alex_daskalov", "time": "32:51", "start": 1971.07, "text": "Yeah, yeah. In, in the sense of saying, you know, we can't make future promises in the sense that, you know, if Bitcoin popped by, you know, fifteen X in three, in, in three days, perhaps we can't take that. but the question is, is there any situation in which our customers would have seen less than one-to-one coverage? I'm proud to say that historically that isn't the case, but I also That, you know, it is absolutely possible for price swings to be extreme enough to pull people out of the bands that, that we target." }, { "speaker": "stephan", "time": "33:24", "start": 2004.43, "text": "Well, maybe if, you know, we see that, crazy, crazy volatility in the years to come, some crazy hyperbitcoinization event, but, until then, I think that's the other point as well around lack of historical data, and Bitcoin is still relatively young, right? It only started in January two thousand and nine, and here we are in September twenty twenty. So was that also- So a difficulty and how, how did you sort of get across that line in terms of having insurers, you know, essentially come around on that factor?" }, { "speaker": "alex_daskalov", "time": "33:55", "start": 2035.05, "text": "Yeah, and I, I think this gets back to kind of, I often like to think about Bitcoin insurance," }, { "speaker": "alex_daskalov", "time": "34:03", "start": 2043.46, "text": "In the context of what it means to ensure software broadly, one of the other interesting things that happens with software systems is that the time from which a kind of risk originates to when, you know, people are really dying to get this thing insured, that time is reducing, it is reducing for every single risk category. So think of it this way, when the Wright brothers first flew a plane, there was no need for, you know, insurance for aircraft of any kind. And by the time that insurance for aircraft was kind of made necessary, the insurance industry had a lot of time to stretch itself to understand that risk in order to pro-provide that kind of coverage. From the time that Bitcoin first appeared, as you can imagine, in two thousand nine, you know, nobody was looking for Bitcoin insurance. Now, two thousand twenty, tons of people really badly need that, need this risk insured. That time span is in the history of insurance very small. and this is something that we're seeing for risk categories across the board, which is the insurance industry, besides the fact that it has a very difficult time insuring against non-physical, kind of events, has a- It's a very difficult time insuring against events that it didn't even know existed less than a decade ago." }, { "speaker": "stephan", "time": "35:23", "start": 2122.74, "text": "Yeah, very difficult times and very rapidly changing times. one other point I was interested to chat about is which threats specifically are being insured. So a couple examples here, we could think of, you know, key loss, maybe, theft, or we could talk about, internal collusion. How, how do you think about that and how do you sort of name? And specifically address those." }, { "speaker": "alex_daskalov", "time": "35:47", "start": 2147.2, "text": "Yeah, sure. So I think we can continue then on kind of, kind of the point I started with, which is looking at the different properties that we, at Knox thought were important to ensure. so we really looked at this from the very beginning and said, if we were to entrust a third party custodian with our Bitcoin, and that third, third party custodian were to claim to be, you know, quote unquote insured, what properties would we seek? What properties would we demand of it, before we deem It properly insured. so one I've already covered, which is a hundred percent of the funds ought to be covered, as in a hundred percent of the value ought to be covered one to one. you made a great point about if you're going to claim one to one coverage, it a-also ought to scale up and down with volatility. the final properties though that we looked at were that it ought to be insured against the destruction of key material, which is to say, this is the classic, you know, I lost my mnemonic or, you know, it's been destroyed or just even though the Bitcoin is still there, the UTXOs are correctly encumbered, I can no longer move them due to the fact that I have lost signing authority over my account. That's certainly something that, of course, we, we, we thought needs to be insured. it needs to be insured against ex- External theft, which is to say, you know, some o-- some agent reaching into our system, you know, whether by way of directly reaching into the archival layers or anywhere else, gaining signing authority over an account and then stealing Bitcoin, that needs to be covered. both of these, first, kind of the events, this event and the one I just spoke of, are-- I don't want to trivialize it, they're relatively straightforward to cover. Many people had covered them before. It's still a difficult thing to attain but it's not a kind of monumental challenge compared to the next two. and the next two are that we really believed that theft and loss needs to be insured even against internal collusion. so if you look at the history of financial services and certainly even the history of kind of Bitcoin thefts and losses, you know, people stealing From the inside is one, the most common, and two, the most difficult to deal with, threat. so we looked at it and said, if I'm going to entrust my Bitcoin with some third party And that third party is composed of what? Just a bunch of humans and some processes and some machinery? Then I had better have an insurance policy against they, them stealing from me, even if they steal and disappear completely. So that, that was a critical point for us, and it's something that we really hold ourselves to, which is, it must be insured against internal, internal theft and collusion. And if that property isn't attained, then the insurance isn't, you know- You shouldn't even call it insurance, frankly, just because that is, that is the key, activity that you want to be safeguarded against." }, { "speaker": "stephan", "time": "38:44", "start": 2324.33, "text": "Yeah. So I think that's, certainly an in-interesting, factor and an important factor, as you mentioned. Also, one of the facts of our current world is that a lot of insurers rely on a re-insurer, which is like, an insurer for insurers, and it might be also fair to say that a lot of, at least in the US, A lot of US-based reinsurers, to some level, they might be able to place some level of reliance or some level of comfort gained from having the FDIC to be able to print money or the, the US government could technically, you know, be that lender of last resort, some way to kind of bail out, that system, whereas obviously in a Bitcoin world, you know, that doesn't exist. So I, I guess someone, you know, a skeptic might think, \"Well,\" Hang on, how are you dealing with that problem?" }, { "speaker": "alex_daskalov", "time": "39:39", "start": 2378.73, "text": "Yeah, that, that's certainly an interesting point. I think in the present moment where, you know, Bitcoin is at the moment, you know, not yet a Proper full world reserve currency, and insurance for Bitcoin is, denominated in US dollars, and, you know, a lot of the insurers are, and this is certainly something I think we should get into, which is, kind of, what are the regulations around insurers and, and how do they actually come to insure against Bitcoin? but to your point, there exist- Shock losses, which are losses in insurance systems so large that they could render the insurance system or at least some set of carriers completely insolvent. in the traditional world, kind of forget Bitcoin for a second, but in the traditional world, it would be obviously a horrendous event if a large number of insurers were made completely insolvent, such that they couldn't cover, the claims that they needed to cover. and in that, those cases, there Does exist a lender of last resort in the US insurance system, of course, that is, the US government is capable of actually backstopping the entire market and saying, you know, we will prevent these insurance companies from falling, by way of actually administering these claims, and this is something that there have been a few events in history where we nearly saw, saw that situation transpire. certainly actually twenty twenty is an interesting point, and there's a lot of debate at the moment as to, you know, whether insurers are to be on the, on the hook for, you know, business interruption, for example, or sort of a lot of the other, events that have occurred as a result of the reactions to, con-the current situation," }, { "speaker": "alex_daskalov", "time": "41:28", "start": 2488.31, "text": "It is as complicated a problem for the future Bitcoin-denominated world as it is for the present, which is, for better or worse, there do exist shock losses so extreme that the entire industry can rupture. it is anybody's guess as to what that looks like in, in the current system, but it's certainly something worth exploring as we get into a, an increasingly Bitcoin-denominated world." }, { "speaker": "stephan", "time": "41:53", "start": 2512.53, "text": "It essentially, it just kind of really drives home that whole point, as my friend- My friend Michael Flaxman says there are no bailouts in Bitcoin, so, but, I think for people who are, I suppose, you, you think you wanna ensure against a certain risk, and you, you, you're, I guess, you're more conf- you are not as concerned about that kind of extreme, extreme level of risk, well then this is something to think about." }, { "speaker": "alex_daskalov", "time": "42:16", "start": 2535.98, "text": "On the last point, I would have to actually model that out, but, this is one example, for example, why you wouldn't actually want-- you don't want a hundred Held by centralized entities, even if they are insured, because it isn't so far as I can, kind of contemplate mathematically possible for you to do that, in a Bitcoin-denominated world and have the entire system be fully sound. So you have to have some large amount of heterogeneity in terms of the method by which Bitcoin is held. but, but this is, yeah, this is, it's a topic that I'm sure we'll kind of get through, as we start seeing increasing sums held by, by it. Centralized custodians, but it is important that they not be held by the same entity or at least not by the same systems." }, { "speaker": "stephan", "time": "43:03", "start": 2583.19, "text": "I see. And just in terms of limits, are you able to share anything there in terms of what kind of limits, like if somebody's got a lot of coin, or if, if they're a large entity, is it possible that they wouldn't be able to work with you because, let's say, the amount they hold is above the limit that you could insure for?" }, { "speaker": "alex_daskalov", "time": "43:21", "start": 2601.47, "text": "Certainly not, not something that we've come to see. Appreciate a challenge. again, if we want to talk about kind of scaling insurance capacity into, the kind of scale that it needs to get to if we anticipate Bitcoin getting into, the kind of realms that we expect in the next five to ten years, there's a lot of, a lot of work that we at Knox need to do. and certainly the industry at large, it isn't possible for the current Knox setup to, you know, ensure, for example, five, ten, fifty-plus billion dollars worth of, Bitcoin as it stands. I do think, and yeah, I do think it is possible In a theoretical sense and I d- in, in a practical sense as well, for that to be done, but there's a huge amount of work to, to be done for that. we have constantly been challenged by customers coming to us, you know, wanting to ensure larger and larger sums. so far we have not broken, but it is definitely a very interesting kind of technical challenge as to how we can actually scale insurance capacity for, for Bitcoin." }, { "speaker": "stephan", "time": "44:26", "start": 2666.32, "text": "I guess without getting like too toxic about, you know, attacking competitors or whatever, but if you could just A bit of a outline in terms of how you're viewing your product and your service as compared to some of the competitors such as, you know, Coinbase Custody, Zapo, BitGo, etcetera." }, { "speaker": "alex_daskalov", "time": "44:42", "start": 2682.27, "text": "Yeah, certainly. I mean, certainly a big one is that we're focused on Bitcoin, we're focused on the Bitcoin base layer, and we're focused on increasingly in our roadmap kind of looking at, the layers that exist above it. we believe internally that a focus on Bitcoin is going to be, a huge- boon for us. I think a lot of folks, we all know that key to building great systems, from an engineering standpoint is focus. and the fact that we don't have to deal with, for example, thousands of different digital assets, as is the case for most, custodians, is gonna be a huge, you know, something really in our favor. besides that, certainly the insurance focus, it's something, you know, insurance is never done. Any more than a software system or hard, hardware system is complete, as great as our, we believe our insurance is at the moment, it is something that we are constantly developing, it is something that we strongly believe in that, you know, institutions and other folks who are not holding their own keys or are holding, you know, Bitcoin on behalf of others will need this kind of insurance. we really- Mostly differentiate ourselves on, on those two facets, which is really a hardcore focus on Bitcoin specifically, and on the ability to ensure against thefts and losses that can occur in our systems." }, { "speaker": "stephan", "time": "46:05", "start": 2765.46, "text": "Excellent. And, let's talk a little bit about the security setup as well. Now, obviously, I understand there'll be some components that you can't disclose as you shouldn't, but, can you just, give us a bit of an overview around what you're using in terms of things like multi-signature, multi-jurisdiction, any of those aspects you'd" }, { "speaker": "alex_daskalov", "time": "46:24", "start": 2784.11, "text": "I think so. This is going to be difficult to do by voice, but let me give it the, the best shot, and certainly I encourage anyone who would like to learn more to reach out to us, and we can always, you know, deep dive with some, some graphical presentations. what Knox implements today is a three or four multi-signature, setup. We generate keys in four distinct cities around the world. We do so in absolute sequence, which is to say, kind of no key is generated at the same time as any other key is generated. Each keyset is, completely independent from any other. so when we say three or four multisig, we don't mean it's a three or four multisig omnibus where, you know, we take some path down a BIP thirty-two tree in order to afford, some set of customers' unique addresses. It is the case that at the entropy layer, the accounts are completely segregated and distinct. The accounts for each of the four cities are, vaulted ultimately in four distinct vaults per city, so this results in kind of sixteen distinct vaults per customer account spread across, four cities. Two continents, three countries. and then one of the unique things that we do is, and this was really critical for us to be able to attain the kind of collusion resistance that we needed in order to be, insured against the collusion events that we, that we aren't insured against, which is we generate We have some proprietary HSMs that in each of these sites we effectively flash with, raw customer material, and it is the case that when we sign transactions on behalf of our customers, we do so in such a way in facilities that are Concentrated in some small, small city in such a way that the agents that are resident to those facilities, don't have a way to collude amongst themselves in order to cause losses. so all of that to say that there is a fairly complicated logistical network, that comp- that, you know, Knox implements, and it results at the end of the day in the ability for us to make the kinds of guarantees for our customers that let them, you know, rest knowing that The signatures that we attain for them are only attainable if they explicitly ask for them." }, { "speaker": "stephan", "time": "48:52", "start": 2931.56, "text": "And, also, I presume there's also some kind of, use of Shamir's secret sharing as well as like a backup sort of sharding scheme there?" }, { "speaker": "alex_daskalov", "time": "49:01", "start": 2940.84, "text": "Yeah. So when we do the archives, I mean, there's four vaults per, per, you know, per city per Per n, if you will, in the m of n where n equals four, scheme, we implement a two of four Shamir secret sharing scheme for each of those cities. so that results in a very large amount of redundancy, in the kind of key generation layer. and one of the nice things is that we actually require our- We require explicit permission by other parties, before we can ever access any of those layers. so effectively what we do is, while we maintain ultimate signing authority over the accounts that we generate, we do so in a way where, in the usual mode of operation, basically if you look at the-- if you look at the private key life cycle, most of the time that a key spends in its life is spent in, c-call it the signing cycle, in that Zone, if you will, our agents don't have access to the ability to actually obtain signatures without the explicit permission of a customer, whereas we do have the ability to, you know, for example, do things like reconstitute an account if the customer should lose the ability to actually authenticate those transactions." }, { "speaker": "stephan", "time": "50:17", "start": 3016.64, "text": "With all this COVID or, you know, et cetera, travel restrictions going on, has that presented a difficulty for you there in terms of access to the different keys that are located in different countries or continents?" }, { "speaker": "alex_daskalov", "time": "50:29", "start": 3028.91, "text": "No, so one, one of the neat things is that because of the way the system is constructed, most of our signing can occur in a single city, even though the accounts are ultimately distributed across the world. it is only in the very rare events that we need to reconstitute an account, that we need to fly out personnel, and this is, this is a fairly serious operation, it results in, no less than eight flights, that occur for The, the active reconstituent account, in the-- call it the restrictions around, you know, the current context, the worst that we would have to do is that our agents would have to, because we reside in Canada, our agents would have to, if we're following the laws, our agents would have to quarantine for fourteen days, but, we're still capable of engaging, all of those, those areas." }, { "speaker": "stephan", "time": "51:23", "start": 3082.62, "text": "Right. And just for clarity as well, I mean, Knox is based in Canada, but, presumably- You have customers around the world, right?" }, { "speaker": "alex_daskalov", "time": "51:30", "start": 3089.51, "text": "Yeah, Nux is based in Canada, we really focus on Canada, the United States, and the EU at the moment, although we are looking at some other jurisdictions. from our standpoint, you know, obviously we, we spend a lot of time looking at regulatory concerns, but it is, you know, we do, we do service, you know, folks around the world. It isn't, this isn't a Canadian" }, { "speaker": "stephan", "time": "51:52", "start": 3112.2, "text": "only story. and in terms of how the customer interacts, I see there Knox Terminal, and I presume then the customer can set up things like their own internal policies and spending rules on how, you know, how many people need to sign or how many people need to approve for a spend, things like, things of that nature, right?" }, { "speaker": "alex_daskalov", "time": "52:12", "start": 3132.09, "text": "Yeah. So one of the things that, we were, you know, we received requests for early on was the ability to provide, you know, multi-city support. so, you know, people noted, okay, of course, you have your multi-signature setup, you know, it takes many different facilities Geographically distributed to sign, but, you know, we, the customer, happen to be spread across one, two, three, four cities. you know, how can we set up custom governance structures such that we can actually engage your, engage your service, and be sure that, you know, we can get that kind of custom governance? one of the things we do uniquely is, at the moment, the method by which you access our service is with what we call a Knox terminal. this is effect- A hardened, purpose-built computer that is a window into your Knox account, and allows you to grant us authorization to move, move funds. one of the things we can do though is make Make it so that you can do things like, you know, require two out of four or two out of three or two out of however many terminals you have around the world, to, actually authenticate some movement. so that, that is something that, that we have, already deployed. So you might be in New York and London and Paris, and say something like, you know, I wish to produce a wallet where I need both of, you know, New York and Paris or both of New York and London to sign off before For a transaction is" }, { "speaker": "stephan", "time": "53:44", "start": 3224.06, "text": "allowed to move. And in terms of if the custodian, like, so if Knox were to go under or go rogue, what kind of recourse is there for the customer? What kind of ability is there for the customer to basically get their money back?" }, { "speaker": "alex_daskalov", "time": "53:59", "start": 3239.31, "text": "Yeah, so it's something we spent a lot of time thinking about, The case law for, you know, Bitcoin ownership is still getting built up. one of the unique things that we're capable of doing is because the, because every account for a customer is ultimately made physically manifest, and because they're completely segregated right at the entropy source. One of the things we can actually do for customers is to, and we do this, we stipulate this in the contract, is to say that the customer owns the physical aspects of their own account, which renders Knox a kind of safe-keep, kind of a warehousing service more than anything else. and what that means is that we can actually ride on existing case law to make it so that even in the case of something like insolvency, a customer would have ultimate right to- The physical artifacts that rend, you know, render their account whole, and then that mixed with a basic amount of information that we provide them, would allow them to actually manually themselves reconstitute that account. Certainly, it's not a situation we expect to ever get ourselves into, but one of the fears that we've had from the start is to say, you know, what happens if the courts rule against us? what happens if even though we agree with the end customers that, of course, they own this? Underlying Bitcoin, if somehow there's some, due to some strange, kind of ruling that happens between our founding and this event, what happens if somehow the customers put- isn't allowed to access their funds, and that's something that we never want to get to. so that's why it was so important for us from the beginning to say that, you know, customers ultimately own that which, constitutes their account." }, { "speaker": "stephan", "time": "55:47", "start": 3347.2, "text": "very interesting. So they, in some sense, are able to recover it? Physically, and reconstitute all those, you know, pieces of the multi-signature, shards, if you will, and, basically, recover the funds in that way." }, { "speaker": "alex_daskalov", "time": "56:03", "start": 3363.17, "text": "Yeah, that, that, that's right. And re-really, this just comes down to, there's, you don't want to exist in, you wanna make sure to understand case law as it exists, and you want to make sure that what you've constructed can allow the customer to get at their funds based on Kind of historic case law, not on presumptions as to how courts will rule." }, { "speaker": "stephan", "time": "56:26", "start": 3385.61, "text": "How have your conversations with, say, regulators or other, related parties been around? Have you had to have any around getting them over the line in terms of your setup?" }, { "speaker": "alex_daskalov", "time": "56:37", "start": 3397.28, "text": "Yeah, so I mean, each of the jurisdictions that we look at, we're, we're certainly curious to see, how everyone is moving. ultimately, one great thing, and this is another great thing about focusing on Bitcoin, is- Bitcoin isn't a security. Because Bitcoin isn't a security, a lot of the relatively complicated securities law oftentimes doesn't come into, into the picture at all, and we get to ride on kind of Then this goes back to the last point, which is how much of the system can we produce such that it can ride on existing case law, ride on existing jurisdictional assumptions? how can we, how can we make it so that we're, we're sure that we're not going to overstep some boundary, and that at the worst, you know, customers can get at their funds? So it's been, it was certainly a worry going into this, but I think we've been pleased to see that One, many jurisdictions are acting rationally. two, you know, Bitcoin clearly not being a security is something greatly in our favor, and that Where we need to spend a lot of time kind of dealing with regulators, they are, at least to this point, they have been behaving, they've been behaving well." }, { "speaker": "stephan", "time": "57:55", "start": 3475.33, "text": "So what kind of prices can customers expect to pay for Knox custody, if you could just, break that down a little bit?" }, { "speaker": "alex_daskalov", "time": "58:03", "start": 3482.66, "text": "Yeah, sure. So our, our basic, breakdown is, as follows. the fee that most people focus on is, the fully insured custody fee. so we charge a hundred basis points points for based on the amount of AUM that you're holding with us, in order to get that one-to-one insured coverage. what's nice about this is that that fee is less than the premium that you would be expected to pay if you built your own custodial system and attempted to hit insurance markets directly, so that, that's, it's a natural point of, you know, specialization of labor, which is, you know, we charge less than you would be charged if you attempted this thing yourself. otherwise, we charge typically a- A, twenty thousand dollars setup fee and then kind of five thousand dollars per additional, site for each terminal, and then typically a twenty-five hundred dollar per month, you know, minimum AUM fee, which more or less for the hundred basis points, fully insured coverage, means that you should be holding about two and a half million dollars, to make this economical." }, { "speaker": "stephan", "time": "59:07", "start": 3546.72, "text": "Excellent. And so also, could you break down a little bit the difference there in hot wallet versus cold wallet? As I understand that That's also a service you provide." }, { "speaker": "alex_daskalov", "time": "59:17", "start": 3556.59, "text": "Yeah, so, and I suppose here we can talk a little bit about the roadmap. One of the things that we developed early on in order to get the kind of collision coverage that we got from the insurance markets is the kind of collision resistant tech, which makes it so that our own agents, even with physical access to the premises that they, inhabit, cannot cause a loss. a neat thing about that is that if that is true, and it certainly is true, then if you mount the, if you're kind of producing network connected, version of that custody system, then An intruder, a network intruder, even if they have access to the network with the highest privileges possible, ought not to be able to cause a loss to be, to be induced. and so that's kind of, we, we basically parlayed a lot of the R&D That we've developed for cold custody into hot custody. It's something that we're testing with some of our cur-current customers and something we intend to deploy, kind of into Q4 2020. the other point, and this, this is still early days for this, is, and it kind of comes into one of the questions that you had posed earlier, we're really Keen to see how, you know, Bip 174 P S B T is going to lead to a world of different custodial setups, and certainly ones that span the spectrum from Fully hold all of your own coins in a full quorum to these kinds of centralized custody systems as we've seen deployed. and it's something that we're, we're really keen to-- It's something that we'll see developed and deployed soon. and we really wanna see what it means for either businesses, family offices, but then even in the, in the, in the medium term, individuals, what it means for, for them to actually custody with something that's somewhere, something like a hybrid- Between kind of fully centralized, and fully hold your own keys, custody." }, { "speaker": "stephan", "time": "01:01:19", "start": 3679.34, "text": "So, I guess summing things up a little bit for, person who's got a, a large amount of Bitcoin They're probably thinking, \"Well, okay, a hundred basis points, I mean, that could seem like it's a, it's an expensive cost given, you know, what it is.\" But I suppose it also could be seen that given how early we are in Bitcoin, that that's relatively cheap compared to the upside, potential of Bitcoin. So I guess there, there are probably a few thoughts people might have in terms of, overall, considerations at this point in time, What's your view on that, and maybe where do you see that evolving over, let's say, the next five years in terms of the cost for insured Bitcoin custody?" }, { "speaker": "alex_daskalov", "time": "01:02:06", "start": 3726.66, "text": "Yeah, so, you can imagine we are quite committed to greatly reducing the cost of fully insured Bitcoin custody. I will note also that for thirty basis points, you know, customers are capable of holding Bitcoin with us, such that they can use the exact same accounts that are otherwise insured one to one, without us buying necessarily insurance coverage. So that's definitely already a far more economical means by which, you know, folks can actually use our service. but we are greatly committed over the next few years to, you know, reducing the premiums that we pay. and when we get to reduce the premiums that we pay, we can, you know, produce corresponding savings for, for folks, who wish to use our service. we do, we do strongly believe though that one to one insured is something that for a lot of instances is necessary, and so far as we've seen You know, people definitely agree with us, but I agree with you that the rates are higher than, you know, than they will be in a few years, and it's something that we're actively working to, to reduce." }, { "speaker": "stephan", "time": "01:03:08", "start": 3788.47, "text": "Excellent. so who else is part of the team with Knox Custody?" }, { "speaker": "alex_daskalov", "time": "01:03:11", "start": 3791.79, "text": "That's a good question. So I think, certainly it is the case that the team is Nearly universally, engineers, just, you know, software, hardware across the board, the kind of things that we needed to do, the kinds of things that we needed to build in order for this thing to, to really take hold, were almost entirely in the technical realm. we have, between myself and others, kind of a very strong interest, of course, in insurance, and spending a lot of time, within that, on A lot of the team, I think a lot of us are quite technical and oftentimes fairly introverted and not exactly out there, for those who are more out there, I would say, you know, myself and certainly Tebo, who, through yourself and other listeners of the scene, Tebo, have You know, it's really us two who are more vocal than anyone else. but yeah, the, the team is, is, is quite deeply technical, and something that I'd expect to continue seeing in, in this company. at the end of the day, when you are in these kinds of nascent industries, just, an ability to just build next generation software and hardware is, is critical." }, { "speaker": "stephan", "time": "01:04:24", "start": 3864.16, "text": "Alex, where can listeners find you and follow you online?" }, { "speaker": "alex_daskalov", "time": "01:04:28", "start": 3868.16, "text": "Sure. So yeah, so, myself, I'm, I'm on Twitter at, D You can find us, Knox at, Knox Custody, I suppose these will be in the, in, in, in the, in the notes on, on this episode. But yeah, it's, was really great speaking to you, Stephan, and, definitely if anyone needs in fully insured custody, you know where to find us." }, { "speaker": "stephan", "time": "01:04:50", "start": 3890.9, "text": "Excellent. Well, yeah, looks, it sounds to me like you're doing, some really interesting work, and, I'm excited to see where things go with this. Thanks for" }, { "speaker": "alex_daskalov", "time": "01:04:58", "start": 3898.6, "text": "joining" } ] }