{ "episodeId": "SLP660", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "michael_tanguma": { "name": "Michael Tanguma", "role": "guest", "tag": "MICHAEL" } }, "segments": [ { "speaker": "stephan", "time": "00:11", "start": 11.11, "text": "Hi everyone, and welcome back to Stephan Livera podcast, brought to you by Bold. American listeners, you can buy and sell Bitcoin over at getbold.io. Now, joining me on the show today is CEO and co-founder of Onramp, and Michael is also the founder and partner of Early Riders. Sorry, Michael, welcome to the show." }, { "speaker": "michael_tanguma", "time": "00:28", "start": 28.2, "text": "as we talked about before the, the pod. started. I've been a long time listener. I think we referenced dating back to two thousand eighteen when it was, I think maybe only you and, tftc as the Bitcoin only, maybe a few others, but I think those were the, the biggest ones. So appreciate you having me on." }, { "speaker": "stephan", "time": "00:42", "start": 41.69, "text": "Hey, well, yeah, thanks for joining me. And I know there's a lot of, lot of things going on in the industry. I know you guys are busy over there on the on ramp side as well as the early writers side. I guess let's just start with a bit" }, { "speaker": "stephan", "time": "01:00", "start": 60.02, "text": "Treasury companies and have they forgotten about, the self custody message? What do you think?" }, { "speaker": "michael_tanguma", "time": "01:04", "start": 64.22, "text": "Yeah, I think the big thing, and I kinda feel a little naive that I forgot about this, because I've been thinking deeply about the treasury company stuff and like what's happening there, and I think ultimately we forgot as Bitcoiners how hard it is for somebody to wrap their heads around not buying a little Bitcoin, it's easy to buy ten dollars worth or to buy, you know, a thousand bucks worth, but really putting material wealth and thinking about private keys, counterparty risk The notion of what's happened the past five years when we think about the FTX debacles and, and the like, and ultimately this is where the ETF saw a lot of success, and you have the CIO that was recently on a Blockworks pod referencing this, she knew that Bitcoin doesn't really require a wrapper around it, but the demand was there because at the institutional level and high net worth, they just didn't feel comfortable, they wanted like a, a stamp of approval. And then similarly, I think that's where the treasury demand also comes because when you think about- Most individuals, and I've never been in this camp, I've had to learn all this, but most individuals have a traditional sixty forty portfolio, and their mental models are wrapped around, you know, generally public equities, sometimes private investments, and it's a lot easier for them to wrap a thesis around a public equity that has some proxy exposure to BTC versus how do you actually secure this alien technology? And I felt a little weird 'cause, you know, we've just been looking at this stuff for a while, it's like it's not that hard, you can go buy it, you can go Custody, you can even use something like multi-institution custody, but at the end of the day, there's still a, a clunky process when it comes from moving assets out of a trusted bank account into a third party place. and the way I think about it is like gambling, right? Like, if anybody ever gambles, you go to like a Bovada or these like third party sites, and they're kind of like, you feel a little icky and weird because it's not a trusted source, and that still historically is what has existed in the space, not a" }, { "speaker": "stephan", "time": "03:00", "start": 180.04, "text": "Yeah, and I think the other component of it is it just takes time for people to be comfortable with these things, right? Like if they-- if people, if, you know, more fiat or no-coiner minded people are just thinking, \"Well, I know this bank 'cause it's been around for a hundred years or whatever,\" Bitcoin's only been around for sixteen years, and the large players in this space haven't been around that long comparatively, right? Even like a Coinbase, when did they start? Like, I don't know, twenty thirteen or fourteen was when they really started to become That's about when, and Coinbase is seen as like, okay, they just recently entered the S&P 500, so they're kind of one of the big players, but of course, there are so many other places to be buying Bitcoin, doing, or custodial Bitcoin, and learning about Bitcoin, all these things. So I think it is just a time thing as well, so, but at the same time, there are, I guess, kind of getting into the custody conversation I think if I sort of look back over the years, there was kind of, there was this demand of, \"Oh, it needs to be a qualified custodian, it needs X, Y, and Z.\" So how are you thinking about that, and how are you then marrying, you know, what you're providing on the on-ramp side to, you know, those end customers who, you know, they want, they wanna tick these boxes?" }, { "speaker": "michael_tanguma", "time": "04:17", "start": 257.05, "text": "Yeah, so I think going back, to what you referenced, I think there's a, there's a, a thing we conflate, and I don't know how to describe this. I got lucky that when I, we talk, we can talk about Onramp and how we came about, I was in the middle of the soup or the like proverbial soup where I thought like, not your keys, not your coins, no matter what, we're gonna go into, you know, the future, and that's the only thing that will ever exist. And so when we launched The course of being in one world and also having to migrate to another world, which is meeting the market where they're, it's at. the joke that I like to share is that, we as Bitcoiners wanna be right. there's two versions, you wanna be right or you wanna make money. And being right is that we're all gonna be self-sovereign and, you know, hold our keys with our guns and our citadels, but the reality is like, you know, it didn't work for gold, even though, even though gold and Bitcoin obviously are Need to work with like trusted intermediaries, you just wanna work in a trustless fashion. And so this bakes into just the key notion you mentioned earlier about, getting exposure. It's super easy for us to understand how to write twelve words down or twenty-four words. It's insanely hard for somebody to put material wealth in twelve or twenty-four words. That's the big gap that for some reason we can't like articulate well or feel like we know it's pretty easy to put a fast phrase, but try telling somebody that's a billionaire or just used to working all day long, you know, Education that took us to get there. The other side ties into the trust in custodians that Coinbase is like an anomaly. I think everyone listening here knows the existential threat or the threat that it faces, that it, it poses to Bitcoin in the sense of centralization of the asset. It's actually the reason why Onramp truly exists or was, was created. But at the end of the day, like the mental model I use when we talk with institutions or, or folks that are trusting of third parties is, at the end of the day, if you put on a, wall all the Put a blindfold on and throw a dart, you would hit a custodian that went belly up, like that, that's out of business. And so that's ultimately where self-custody has been this mantra and, and, and been the best, most sophisticated way, 'cause you needed to sever that internet connection. And so that's part of my background was, you know, again, following you and Marty and, and learning from back in the day that I needed to get my assets off of Gemini, and it led me to developing a relationship, 'cause I was a native Texan, Tex Unchain, I was one of the first clients as they were pivoting from the, lending product into the custody product, and then, joined their firm, I was probably number six or seven employee, so built that business from the ground up. And to your point, what I learned was after onboarding thousands of people and billions of dollars, it was actually less about what I've stumbled onto now with Onramp, it was more of like businesses just would wanna adopt, they'd get individuals like me or you imagine we work at companies, and we wanna position, we say self custody is Collaborative custody seeds, wallet config file, they were on board, but they went to their board, and their board laughed them out of the room. So we need to either never talk to them, or they come back with their tail stuck between their legs. And it was kind of just like a, an eye opening moment. And then when you take that up a notch, once you get to people managing external capital, so fiduciaries, whether it's, you know, corporate treasury at the public listed level, endowments, pensions, just any institutional capital cannot manage their hardware devices. You hear" }, { "speaker": "michael_tanguma", "time": "07:47", "start": 466.63, "text": "And it's not like structurally feasible when you think about the churn of an organization burning those keys and all the things associated, let alone the technical competence to manage that. And, and this notion of, well You do want decentralization of the custody, but if you can reduce the friction of onboarding and going through all that process, and that's where multi-institution effectively came about, I'll pause there because there's some other things to share on like where it really ties into the individual, but, wanna kind of give you some room." }, { "speaker": "stephan", "time": "08:16", "start": 495.5, "text": "Yeah, no, and I think, you make some interesting points. I think it's worthwhile people hearing those points because, of course, at the individual level, and of course, if you can self-custody, you know, I recommend The steel man would be, in some of these cases, particularly in the, let's say, public company case, or particularly in the, as you mentioned, fiduciary cases, or in cases where, you know, some people are holding for other people, then it's, it's a tough conversation to say C-level executives and maybe a board member should hold the keys, right? Because then it's sort of like, are they actually the owners of those coins? If they are holding them on behalf of, actually, the shareholders of that company, as an example." }, { "speaker": "michael_tanguma", "time": "08:59", "start": 539.41, "text": "Yeah, 'cause it's not, it's not their money, so it gets to be-- There's a lot of other factors that come into play. I think going back to where you were referencing so- Because I think this is important, like for listeners and, and just to discuss is, in twenty twenty-two, it was a big learning, eye-opening point for me personally because all the individuals that you thought knew what they were doing, who were the rainmakers, had, had no idea what they're doing. I think we all know this when you think about Celsius, FTX, but even the geminies of the world that put their clients in earn product or the grayscales, and it was eye-opening because while, you know, had questions about the business model of, you know, Charge for that? That's just a longer term question around just collaborative custody models. But I did see how we did everything right, meaning we never lost client assets, we took care of them, we were fiduciaries of that wealth, meaning we helped them educate about how do you lend against it, how do you think about conservative solutions. And so I knew we, we did the right thing, and, I looked at the market, and to your point Around centralized custody was like, wow, 'cause we have this slide and you can find it in our deck and, and can share it in the show notes if important, but it, it's ultimately looking at self custody and third party custody, and we would use to use like collaborative custody in the middle, and I was a little naive thinking this is the perfect middle ground, you still retain sovereign, have support. But as I like took a step back, I learned that that was more in the self custody camp, and the ultimate notion was that all this capital that's coming in today, back in twenty twenty-two, I think we all knew the trillions have to come in, it's like, holy crap, it's not gonna come into self custody, no matter if we want to or not. Tens and hundreds of trillions of dollars aren't gonna be held on hardware devices, and they're not gonna be held in self custody formats. And so the alternative is it's gonna be held with centralized institutions. And" }, { "speaker": "michael_tanguma", "time": "10:51", "start": 651.41, "text": "How did gold fail? It's centralized. And so I just looked at that, I was like, \"This is actually existential and independent of us at Onward being successful.\" It's like, \"We need to get this model into the world, because it's kind of like zero to one when you think about...\" I'll argue that the difference between gold and Bitcoin is literally that you can insert technical governance into the underlying, because it can scale proportionally, whether it's three institutions, five, ten, and that's fundamentally different than what happened with gold, and that's where gold failed. And so that's where we launched was with the Onramp Bitcoin Trust. It wasn't even about a custody solution. It was literally how do we build? I looked at Grayscale, and I saw Grayscale had six hundred thousand Bitcoin, and they were printing ten thousand Bitcoin, a year. And so they objectively had product market fit, right? They were giving people exposure to the best performing asset of all time. They also objectively had a horrible product, right? They had three layers of counterparty risk with Coinbase, Grayscale, and then the- The intermediary issuer, they cut Bitcoin's kneecaps in half at the, you couldn't take delivery of the underline, and then they didn't focus on education and Bitcoin only specifics, which is very important, not even from an ideological perspective, from a business perspective, because most individuals, all the way to institutions, end up at exit liquidity when they come into the space. They don't have anybody telling them what they're buying, they're buying the meme, that's what the ETF is, it might as well be for a lot of people, they're buying the meme, and when the price inevitably gets Spirits we know are coming, well then nobody's there to tell them it wasn't Bitcoin that's retracing, it's not Bitcoin's fault, they should be doubling down and buying more. And so that's how Onramp launched, but then from OGs all the way to, net new holders in '22 when we launched Wanted Demand for the custody solution. And so rather than park it in the fund where the, where the fiduciary, we said, hey, like, let's hold on a second, let's actually go do this the right way where you're the And so that's really what has turned into what we'll talk about today, and, and how I'll make the case, and I'd love for you to push back, where I'll make the case almost all individuals use some form of multi-institution custody for some component of their assets, and the main reason why is because you can have the most bulletproof, battle-tested self-custody setup, but there's still one percent chance that it goes wrong, and that one percent should go into multi-institution for, god forbid, something happens, your family can still like recover it. And that's not That are coming at five hundred thousand dollar Bitcoin, but that's a topic for a different day. Of course. Yeah." }, { "speaker": "stephan", "time": "13:22", "start": 801.55, "text": "All right, so let me steal man for a second. Let's say, you know, look at the new manuscript stuff. You can do, you know, two of three multi-sig, and you can have like some kind of- Emergency key that's only valid one year from now, five years from now, ten years from now, this kind of thing, and you could sort of say, \"Okay, you're gonna do your two or three multisig or your three or five multisig as your main standard setup, and then you, you have this emergency key that's at the protocol level, and therefore we don't need...\" You know, let's say a direct custodian, you only need somebody who can be like that emergency key. What do you think about that?" }, { "speaker": "michael_tanguma", "time": "13:56", "start": 836.49, "text": "Yeah, so I think there's a component of going back to even just giving the credit, which I don't, I can argue against it, but let's say Miniscript is a better technology, the better technology doesn't win. Like, we can go to Tor browsers or other things, the most commercial technologies that are easy to understand. And so I do think Miniscript and Timelocks are gonna have a big function, but like, I've Clients, billions of dollars, like we're at the edges, edges when I think about multi-sig and multi-institution, the second you layer in complexity like this, and all Miniscript instances that I know of are all proprietary, which most people will use that as a positive, saying, \"Oh, we own our own tech,\" it's like that's actually a very much a negative when you think about the custody of somebody's wealth, because you can't audit it. Multi-sig, the beauty of that is it's interoperable, and here's the keyword, battle-tested. So multi-s" }, { "speaker": "michael_tanguma", "time": "14:50", "start": 890.11, "text": "So the mental model for listeners, and even for yourself, is thinking about how far it took collaborative custody and Casa to really pick up mainstream. Like those products came about in like sixteen, seventeen, and their inflection point, 'cause I've been in the middle of it, wasn't really until twenty twenty-one where we went from zero to, you know, hundreds of millions and then billions in AUM. So that's the idea with Miniscript. Now go tell somebody you're gonna time-lock your assets and do this, and if you mess up, good luck in getting your money back. It's" }, { "speaker": "michael_tanguma", "time": "15:20", "start": 919.97, "text": "And what a lot of people wanna hear, but it goes back to, this is where all the money's gonna be made in the future world, is bridging on-chain, like battle-tested, trustless ethos mixed with what will just the rest of the normies go accept? Nobody cares how the browser works, they just click the button and it works for them, and that's where all the money's made." }, { "speaker": "stephan", "time": "15:37", "start": 937.18, "text": "Interesting. And so I, I mean, and I don't wanna be like a hypocrite here, because at the same time, many people, even many listeners, they started with a custodial exchange. You know, it's not, you know, 'cause sometimes there's kind of this online sort of persona of like the perfect person who, you know, no KYC, everything peer to peer, everything full node from day one, multi-sig, and off, you know, air-gapped, and, you know, every, every little perfect thing. But the reality is, many people start cust And now many people are starting, not just custodial, but in some kind of derivative thing, whether that's Bitcoin treasury companies or ETFs. And then maybe they start thinking, \"Oh, wait, actually, I need to learn a bit about this self-custody thing.\" Okay, now, and then you're sort of-- now you're going down that, that journey. So don't wanna be a hypocrite, I understand people will onboard, how they onboard, and there'll be different trust models for different things, you know, as an example, there'll be some users who use" }, { "speaker": "stephan", "time": "16:37", "start": 996.78, "text": "I would wish everyone would use self custody, but we know that's, that's just not the reality today. so understanding that, it's about how do you kind of give people options and then sort of give them a pathway to be able to self custody if they choose. I think that's kind of where we're at, at least personally, I've sort of, while I encourage people to self custody, I'm also kind of resigned to the fact that at least Today, given current technology, we're not gonna get eight billion people and three hundred million companies self-custodying on chain, like it's just not-- You know, if you just look at the numbers, it's just not happening, right? So it necessitates some form of custodial thing, and then in the world of custodial things, what is, you know, a better trade-off?" }, { "speaker": "michael_tanguma", "time": "17:18", "start": 1038.25, "text": "Yeah, it's a hundred percent right. I think that there's so many factors that go into this. There's not a one like reasoning point or decision. I like to go and I had this discussion with, Bob Burnett from Barefoot. I think he's fantastic and deeply understands the technical components of like the scalability as you're referencing, but there's actually, in my opinion, more important, there's a socioeconomic perspective of, the aspect. Like even if we could, from a UTXO perspective, hold all our Bitcoin, that's not what people want to do. Like for For better or worse, not everyone wants to be their own bank, and this is where I think we have to go back in history and understand the reason why banks existed and depositories existed is because bigger people come up and show up, if you own all your money or you can control it all, and so there's a natural like friction you want to put in, in between. So like the way I'll anchor it is I've gone through Gemini, self custody, collaborative custody, and then ultimately realized the barbell approach is right for me and a lot of our clients where I have a nice- Stack, in as much as, you know, MVK kind of, you know, I think he gets, we, we joke and we talk, we say it's hardware devices, it's fun to play and call them plastic, plastic devices, 'cause that's really where people are securing. Today, it's one point four trillion dollars in capital. That's the thing nobody talks about, is seventy percent of all the assets sit offline, because that's what you needed to do to secure this digital bearer asset. But I love like Mike Q, and I have multiple hardware devices running in a backup, so to give a shout out to even Zach, because I have a passport setup clone with a passphrase and a seed that, you know, is ready to rock and roll if I need to get out of town. But that's not for all my wealth. It, it increasingly won't make sense for that to be all your wealth, because what happens if you get hit by a bus? What happens, you know, if your brain stops working right? You can have different steps in place, but you always have that, like Really why our clients come to us is to diversify that risk, and that's different for everyone. And I think that's the core component, was like, there's no perfect solution, there's just perfect trade-offs. And we've had so much time in the market to talk through and think about this stuff that we kind of see, like, it's our job to see ahead of it. And the case I'll make is at one fifty and two fifty and five hundred K, all the things we're talking about here will make so much sense to be, to people. And it kind of has to" }, { "speaker": "michael_tanguma", "time": "19:38", "start": 1178.27, "text": "Majority, right? They still own the majority on the market share in the hardware wallet market, like seventy-five to eighty percent. So let's call it roughly a trillion dollars sits on that device and it's sat there since Bitcoin was like ten to fifty dollars, all the way to now to a hundred thousand, and nobody's talking about what happens after K. And again, Miniscript, sure, it's gonna make sense, but like five to ten years from now, nobody's locking up real capital in Miniscript. People will talk about it, it's the cool thing to do in the Bitcoin" }, { "speaker": "michael_tanguma", "time": "20:08", "start": 1208.29, "text": "Stored there at least today and, and probably for" }, { "speaker": "stephan", "time": "20:10", "start": 1210.03, "text": "the next couple of years. The lead sponsor of this show is Bold, the best place to buy, sell, and save Bitcoin. For listeners in the US, Bold lets you secure your financial future with complete peace of mind by integrating a low fee Bitcoin only brokerage with next gen multisig vaults. With Bold, you can smash buy Bitcoin or set a DCA plan for only zero point nine nine percent fees and seamlessly deposit the Bitcoin direct to your Bold Vault. The Bold Vault is a two or three collaborative multisig where you hold Two keys and bold holds one as a redundant backup, protecting against loss or theft. You can use Trezor, Ledger or cold card hardware wallets to spin up a bold vault in just a few minutes, and the bold vault is the only collaborative custody vault available with zero monthly fees. They're also offering zero fees on your first ten thousand dollars of Bitcoin buys and twenty five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin or more. Try bold today and upgrade your stacking experience over at getbold dot io. And now back to the show. Yeah, I, I don't have stats on this, you know, but just from what I've heard, I mean, I don't know, it, it could be that, if you talk to, I don't know, Kevin from Liana or, you know, some of the guys doing this Miniscript stuff, maybe they've got a few kind of whale or somewhat whale customers, but I don't know, I don't have the numbers, so I wouldn't be able to kind of push back on you there. But nevertheless, Miniscript may also be leveraged The other thing that I find interesting is stuff like, now again, this is maybe controversial, but things like OpVault or, let's say, kind of superseding that, is this idea of CCV, so that could enable this kind of reactive security model that's even better than what the multisig we have today. Maybe someday, hypothetically, again, it's a maybe, we don't know, that could happen, I don't know, five years from now, ten years from now, that could also change the game too. But to your point, it takes time to get comfortable, and multis That has, that's been the reality where, you know, serious money is stored. But actually, while we're on that, I wanna get your thoughts on this as well, because basically that's been a big, let's say, Bitcoin versus Shitcoin thing, where it's like a lot of the hardcore Bitcoiners they love multisig, and then kind of Shitcoin people and Shitcoin exchanges and Shitcoin custodians, they tend to often go for MPC, right? Because they wanna be able to use the same secret across many different assets, whereas, you know, because those How do you see that multisig versus the MPC side of it?" }, { "speaker": "michael_tanguma", "time": "22:42", "start": 1362.2, "text": "Yeah, hundred percent. I mean, this is all-- I appreciate bringing this up, because this is all we talk about, and we're talking with like multi-trillion dollar asset managers to hold keys in the multi-institution quorums, because that's ultimately where I see this all going from a pure game theory perspective of, you can imagine Coinbase, Fidelity, BNY Mellon hold a key, or let's take out Coinbase, Fidelity, BNY Mellon, and State Street, well, why would anybody keep their assets at Coinbase Right? but to your point, sophisticated individuals grok what you said, but most of the market doesn't, and this kind of ties into the opportunity on the investment side and what, like, we know, and for anybody listening that can build, is any sophisticated, truly sophisticated actor in Bitcoin that is dealing with alt-alts, coins, crypto, they segregate multi-sig native to the protocol for Bitcoin, and then they use MPC for their other assets. BitGo is a, is a perfect example for this. but- Then when you look at other platforms, they will conflate, and I like to joke, they throw the baby out with the bathwater, and so they just put everything in the bucket of MPC because it's easier and, to use MPC across all solutions. But the reality, as you know, is it all goes back to one key, and it's the-- Here, here's the other part. So it's a single key But just as importantly, it's all proprietary cryptography. It goes back to, the, miniscript stuff. It's not, it's not that they're apples to apples, but it's the notion that when things are proprietary and are closed source, you always are gonna be more careful on what it's used for. And so like, you know, I know your listeners will appreciate this, is like, if you go back to the, it's like the king, the godfather of MPC, it's the CEO of Fireblocks, he worked for like Israeli Defense, you know, That they sit within all these banking systems and so, and it's inherently fragile. So I'm glad you called that out, 'cause it's an important function that even if you play with crypto, like you should make sure you segregate the assets when you think about your custodial relationships and Bitcoin on-chain native multisig is auditable, and still a lot of these institutions have no idea what we're talking about. If you go talk to a state street, there's very few people that will have familiarity or understanding of the difference." }, { "speaker": "stephan", "time": "24:55", "start": 1494.88, "text": "Right, because in their mind, it's just kind of qualified custodian, SOC 2 compliance, tick, tick. You know, that's kind of-- Is that their mindset or how are they thinking?" }, { "speaker": "michael_tanguma", "time": "25:04", "start": 1503.57, "text": "It's, it's that, but it's also like, I don't have the slide readily available, but when you look, and like Matt's done this before, not to call him out, but like he did it publicly, so that's what I'm referencing, it's like, it's easy to conflate MPC and multi-sig because when you look at MPC, you're looking at" }, { "speaker": "michael_tanguma", "time": "25:25", "start": 1524.54, "text": "Up the cryptography, so those shards have to come together and it all con-reconstitutes to a single key. When you're thinking about multi-sig, multi-sig is multiple private keys and then derivation and xPubs tied to those private keys, and so you can shard the single key and that can tie into like how multi-institution works, is anybody that's doing institutional grade kind of custody is a different one-to-one factor. It's not like a hardware device and a seed phrase, they're basically having shards that comprise that single key, and so it's easy to conflate where you have Three keys in multisig and then three shards in MPC, and that's how what people look, and they're like, \"Isn't that all the same? \" And I talked to somebody super senior at Coinbase, I was fascinated by what we're doing, and they're like, \"Well, what's the difference between like, you know, MPC, and you have to get in the weeds? \" It's just, it's so early. And the reason why everyone's missing this, everything we're talking about here, especially like what you said early, is that nobody has material wealth in Bitcoin. Like" }, { "speaker": "michael_tanguma", "time": "26:25", "start": 1585.2, "text": "Playing around, like they're all short. Even these people on Twitter and that you go listen to that are all talking about corporate strategy, they all don't really have much Bitcoin. That's why they're gonna end up losing a lot of their Bitcoin in the corporate strategy, 'cause they don't really, it's like a trader trying to make, you know, more fiat with Bitcoin. They can't, they can't like actually model it out the correct way, versus us like on the hardcore side have gotten it deeply for a long time, we're like, well, why can't anybody else see it" }, { "speaker": "michael_tanguma", "time": "26:55", "start": 1614.52, "text": "No, it's custody implicitly. It's that they're underwriting, \"Oh, it ends up in a UK landfill or it ends up in North Korea if I get any material exposure, so it must all be a Ponzi.\" And that's why I feel, you know, so passionate about what we're building at Onramp in multi-institution custody, 'cause I think it's the right ground for people to start where they can get material size and not have to be super educated on what's happening, just know that it's resilient, redundant, and fault-tolerant. And then to your Hole in self custody miniscript and all those things, like that's perfect for them, but it shouldn't be a barrier where somebody has to spend six months or six years to get to the point that most of your listeners are too, to preserve their wealth. And that's the catch twenty two that everyone doesn't really grok. It's like by telling everyone to have fun staying poor, you have to use a hardware device and write down twelve words, you're effectively telling people either A, not to buy Bitcoin or go into the ETF, because again, do you wanna make money or do you wanna Are approaching things, especially when it comes to their material wealth." }, { "speaker": "stephan", "time": "27:59", "start": 1678.72, "text": "And I can, I can appreciate the meet people where they're at aspect of this. Of course, we can talk about what's ideal, right, multi-sig and maybe in the future, miniscript, and maybe someday in the future, some kind of advanced vault stuff that can handle all these things like the inheritance and all those aspects of it. But you have to meet people where they're at. So look, let's, let's get into a bit more of the detail around exactly multi-institution custody, exactly how it works." }, { "speaker": "stephan", "time": "28:25", "start": 1704.58, "text": "And as I understand, it's a quorum of quorums. You're using multiple custodians, but each of those custodians are in turn using sharded key storage. So can you just explain a bit of that? Give us a bit of an overview for listeners who wanna understand a little bit of the technical guts of this?" }, { "speaker": "michael_tanguma", "time": "28:42", "start": 1721.65, "text": "Yeah, for sure. It's something I'm, I'm insanely proud of in our team is because historically what took us two to eight weeks to onboard somebody, via collaborative custody, you gotta ship the devices, onboard them, educate about wallet config files And still a lot of people don't feel comfortable. While we saved a lot of assets, a lot of people never move from BlockFi because you, at the end of the day, have to wrap your head around multi-sig, but also if you're doing it right, which most people aren't, they just have everything put underneath their desk drawer in collaborative custody or in some single point of failure. They don't know how to reconstitute the wallet, which is a big deal, because, God forbid, that's the reason why you're using it if the third party goes down, how do you rebuild the wallet? And I'd make the case you need to be able to rebuild it multiple places, because if Sparrow doesn't work for one day, or they change the way that they construct the derivation paths, the xpubs, you're kind of like SOL. So to your point on the technicals, it's kind of a technical feat, it's almost like magic to be honest, when you work through it. Because when you onboard, it takes what took two to eight minutes, two to eight weeks, like two to eight minutes, because it's really just the onboarding process. You are going through a unified experience on our website. I would encourage anybody that's interested to go through, 'cause there is a self onboarding now, but you're effectively filling out legal governance, because that's what ties into the technical governance. So you get the best of both Your terms of service and your relationship with Honor and how their keys use, in the same way you onboard with BitGo, who has over a hundred billion dollars in assets, you know, co-founder, CEO, invented multisig, the first implementation, Mike Belushi, and then Coincover is baked in as a recovery partner today. Now, this is easily modular, we have like another qualified custodian in Canada where you don't even have to have Honor and holding a key if you don't want to. But what's happening here now is that there are xPubs being spun up that are creating that wallet You complete that, because the keys are already constructed offline, sharded, and we can talk about that if you'd like. But now when you onboard, you go to a slick, easy user interface, you can deposit Bitcoin, it looks like almost any other dashboard or financial service platform. But the real, like, magic sauce is when you, a, can set up your inheritance, so no more like having to worry about any, it's a termination on death certificate, you can add different people. So God forbid, some, you get hit by a bus, it's similar to your house or your bank" }, { "speaker": "michael_tanguma", "time": "30:59", "start": 1859.32, "text": "Of our clients, because as the wealth appreciates, none of our spouses really want anything to do with this thing. It's like, \"Have fun with your bitcoins, I hope it works out, \" you know? And so that's a big component, but then, where I mentioned the magic, and I truly mean it, is when I first started doing this for my own wealth and testing it out, is you go through video verification, and we can obviously talk about other processes and 3FA around AI, 'cause I know that always comes up, and we're prepared for that, but you go" }, { "speaker": "michael_tanguma", "time": "31:29", "start": 1889.36, "text": "You. One thing I'll call out ahead of time locks is like just legal time locks, where some of our clients, specifically in Europe and Latin America, just ask for seven day holds before the second signature because of the threat of violence. So that's where it ties into like humans and machines are gonna talk to each other a lot longer than people expect, and you kinda want that. You wanna live in a world where you still have trusted parties and, and partners. But then the real magic is you go now to an independent party, which is BitGo, and you're booking that video verification, and there's another person in a different location, an independent third party, and this is where the game theory kicks in, because they have a hundred billion dollars in assets. If they screw up once, the market knows, and they lose money, people leave, the reputation's at stake, and that's where I think this is so transformative and people don't grok, is you're mixing the game theory along, that makes Bitcoin also work from a de-decentralized perspective. And so whether it's three of five, five of sevens, this is where I see the market going, and even if somebody rugs, they're rugging themselves, they're not rugging you, and that's what keeps the system honest. In so many ways, they sign their key, and" }, { "speaker": "stephan", "time": "32:35", "start": 1955.27, "text": "Walking through my understanding correctly there, in this example, let's say the customer onboards with Onramp, they are either buying the coins through you or they're depositing some coins into an Onramp vault, multi-institution custody. Actually, what's going on in the background is, let's say it's a two of three multisig, BitGo and Coincover and Onramp can be two of three in that multisig quorum or the, what's the, I guess the technical term is threshold multisig for two of three, and then actually- Underlying each of those keyholders is their own sharded system and their own set of processes that the end customer has to go to and go through in terms of video verification and, et cetera, verific-verifying that they truly want to do that transfer. But at the same time, you also have other policies that you can le-leverage on top of that, so only send out Whatever, ten percent of the coins per day or whatever, after a large threshold, you've got a, you've got a, you've got like a one week timeout before you can do the second signature, that kind of thing." }, { "speaker": "michael_tanguma", "time": "33:35", "start": 2015.12, "text": "Yeah, I'm so glad you brought that up because that's a big thing that I think us, like our major clients today are coming from collaborative custody because they get already the two of three model, and the problem with it, it's a great thing, but the problem with it is we've historically associated private key generation with a hardware device, which is a one to one hardware device develops a twelve word seed phrase, and so you have one or the other, and they're both central points of failure. If somebody captures one, you're kind of out of the game. Where in institutional grade key generation, it's never like a one to one relationship. So you're creating a private key in an offline, air-gapped environment, and then when you take off pieces of it, you're taking off shards. It can be a three of five, five of seven, those are secured with independent individuals in independent vaults with independent security systems, and there's controls between that In between, just similar to financial controls, and so that was a big gap early on, people thought me and Mike Belushi could just call each other and like move money, and it just doesn't work like that because you can't go to Brian Armstrong and take the seven hundred billion or whatever in crypto assets, there's natural policies. And then the other part you mentioned is, we have growing branch network in the US, and then we'll have it globally, in the sense where you'll be able to just go into physical branches and then authenticate yourself when it comes to moving large amounts of In an era, where all of our money's online, physical presence and interaction's gonna matter even more than it exists today. And so you, you can imagine you're gonna, if you're gonna move all your money, you should probably be able to meet somebody and know that you don't have a gun pointed in the back of your head. So yeah, those are some of the other aspects from a security perspective." }, { "speaker": "stephan", "time": "35:13", "start": 2112.71, "text": "Interesting. I'm curious if you see this as- You know, I'm sure you've seen some of these videos of people who are, I mean, this is kind of topical 'cause I saw some of this stuff come up again today, where, you know, people go into the bank and the bank is saying, \"Hey, show me your source of wealth. if you're-- before you withdraw this money, tell me where you got it, show me your bank accounts, show me your invoices, show me whatever, show me your first few Bitcoin transactions, this kind of thing.\" Does this system kind of risk that same kind of outcome where the user thinks he's got control of his money, but now again he has to go kind of pass all these, you know, AML questions?" }, { "speaker": "michael_tanguma", "time": "35:49", "start": 2148.82, "text": "Yeah, it's a, it's a great question. So at the end of the day, what makes the system really nice is, the client, at least as the way it's constructed today, and will be in the future, because it all goes back to like, what's the best product? What's the game-- best game theory to protect ourselves? Again, I come from the hardcore camp, like I've gone through all the self-custody, so I had to think about this for myself, and I use it, and each keyholder is an agent of the individual. So think" }, { "speaker": "michael_tanguma", "time": "36:19", "start": 2178.76, "text": "Is securing your key in an institutionally graded and chartered way and works at your direction. And so at the second they do not do what you ask them to do, and the market finds out, unless there's a logical reason to do that, that it, it kind of benefits everyone else or is in tune with what they ask, then you naturally are going to lose your clientele. And so that ties into like we have keys being set up globally, and that really ties into, you know, what happens if the government It says US government says you owe taxes, right? And Onramp, you're a US based company, don't sign their transaction. We, we would have to adhere to that. I don't wanna end up in, I have kids, I don't wanna end up in jail. But the reality is each other independent would have to honor that notion in the different jurisdictions. But also, this is what's kicker is these are all separately managed on chain wallets. So it's not like coordinated governments can, you know, you start to pull it together and we can talk through it, but it's like you're only going after one wallet. It's how we were able to get a hundred million dollar Lloyd's of London policy wrapped around this at no incremental cost to our clients because they've already underwritten all the institutions, 'cause they already, you know, are their insurance. Providers for Tetra Coin cover BICO, they had to work through honor ex custody. But the point being is now you get the best of both worlds, 'cause it's not a omnibus wallet where everyone knows, you know, if Coinbase goes down, nobody's being made whole here. If there's an incident, it's at the segregated wallet level, and so it keeps some of the system honest. But I do hear you in the sense that if you're a regulated entity and you have to adhere to certain, you know, permissions and you onboard and you go deposit a billion dollars, and somebody has It's gonna be a problem, but that's kind of the beauty, the other key holders would work on your behalf to move the assets, depending on where they're at, depending on if they've gotten, you know, notification from the government." }, { "speaker": "stephan", "time": "38:10", "start": 2290.15, "text": "Back to the show in a moment. This show brought to you by CoinKite dot com, the creators of the best Bitcoin hardware security devices, such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private keys offline. Now, the way these work is you can do that On your twelve or twenty-four words on the, the seed word cards and keep that secure. Now you can use this device to interact with the Bitcoin network using software such as Sparrow Wallet, Electrum, or Specter Desktop or Nunchuk as a few examples. Now you have a range of security features that you can use with these devices such as passphrases, you can use Seed X or, or my favorite is multi-signature. Now if you're starting in a basic way, just start with the device and the- USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices are great at helping secure your coins, especially as you start to migrate up into multi-signature security. But don't be disheartened or don't be, scared away, they are accessible, and I think you actually do learn about Bitcoin in the process. So to get yours, go to coinkite dot com, use code Livera to get a discount on your cold card. This episode brought to you by Galloy, they are building banking software for the coin age. So if you are with a bank, a fintech, or a startup looking to offer some kind of Bitcoin product, whether that is a Bitcoin collateralized loan, deposit accounts, or payments, Galloy can help you. Their latest product is called LANA. It is a loans management platform, and you can use this to come to market quickly and offer a loans or Bitcoin collateralized lending product for your customers. Now, Galloy have a lot of experience in the space. They started with Blink Wallet in twenty twenty, and they've since grown this to be- Become a community favorite over time, and so they have a lot of experience making things work in a secure, reliable, and scalable way. So if you need assistance coming to market quickly with a Bitcoin banking product, such as lending or deposits or payments, talk to the team at Galloy. You can email them, the email is biz at galloy dot io, or go to the website galloy dot io. And now, back to the show. Of course, depending on the situation. And, yeah, okay. but yeah, as we said, there's, there's this spectrum And everyone, every listener has to decide for themselves how hardcore, you know, self-custody maxie are you gonna go? And even then, you might have like a fractional approach. You might say, \"Look, I'm gonna keep most of my stack in my personal multisig, but I'm keep a small amount in this kind of thing, that kind of setup. it could make sense for an inheritance or some kind of just, you know, in case you screw up kind of amount. can I share, oh, yeah, can I share one," }, { "speaker": "michael_tanguma", "time": "40:56", "start": 2456.29, "text": "one thing on that? Because I think you'll appreciate this is, this really in my mind is helps the market structure security and is error cover for everyone else. So when you think about single sig custody and then multi sig came about and now we can claim we have multi sig even if we was single sig. When we see all these kidnappings and bad actors happening, the way I look at that is it's a sign of broken market structure, meaning that we haven't actually figured out custody, because if you take a step back and look at, nobody kidnaps Jeff Bezos or billionaires or multimillionaires. For their equity portfolio. Think about the amount of controls to liquidate the position in the, the publicly traded setup, go through the financial system and put it in a duffel bag, you're caught by then. But in Bitcoin, people know that we have pretty relatively quick access. So by the notion of putting in controls for a certain amount of wealth or this existing, others can basically lean on that and say it, so it doesn't have to even be something that's used, but it has to be regarded within as the market grows and more bad actors know, credible that this exists, so then it Rob you, you-- my Bitcoin doesn't sit in my house, don't take my kid, I can't do it, I have to go to the, the government or the, the police. And so it just changes the dynamic, which it's gonna take a while for, but nobody's prepared for the amount of bad actors in the physical world once they find out that people are holding this digital bearer asset on their person. We're seeing glimpses of it now, but Bitcoin's only a hundred K, just think about two hundred and fifty thousand dollars. People rob people's houses for a Rolex watch," }, { "speaker": "michael_tanguma", "time": "42:27", "start": 2547.43, "text": "Like educate as a big component of our business." }, { "speaker": "stephan", "time": "42:30", "start": 2550.29, "text": "Right, and I see that as, you know, just in general security needs to keep improving and, as you said, having some of these, let's say, policies or ways of restricting large flow of money instantly is gonna be important overall to kind of help defend people's, you know, or at least reduce the amount of theft and kidnappings and these kinds of things. Also, just out of curiosity, and I'm sure listeners will wanna know, can you give an overview, like what- What are the rough costs for people to custody with you on the multi-institution custody staff? And also, is there a threshold, like, is it only worthwhile if you're above, you know, a certain amount of BTC or, yeah, if you could just outline what are the costs and what are the thresholds here?" }, { "speaker": "michael_tanguma", "time": "43:13", "start": 2592.89, "text": "Yeah, one thing you mentioned about security is it's, it's kind of non-trivial. We won't do it for everyone, but as our clientele grows and the amount of capital, you can imagine where you have a three or four and the client has to sign with the first key or they have some shared potential to come together, and then the policy from a legal perspective is the other keyholders can't Sign until the first key sign. There's a lot of interesting ways you can start to map this for larger pools. we're not for everyone to start. Like the idea, I look at Henry Ford and I, and his model, and you know, you've seen this with Tesla as well, where you have to like start at a market that will pay for the product. It was a key learning, and if we're gonna talk about early riders, we can talk about, it was, it was the notion that we had to figure out how to make money, because at my previous firm, we Institutions are some of the best in the world, I would say the best in the world, and they don't get out of bed for free, so we have to be able to capitalize and then pay for them to, you know, adhere to what they do. and so we, our minimum starts at one hundred and fifty dollars a month. So we, we've driven that price as close as we can to make it economical for either somebody that has anywhere between a hundred to two hundred and fifty K or, or looking to, Effectively invest in themselves, because they know they're gonna buy more, well, like, they're gonna increase their position, so they want a trusted place, so they don't have to play hot potato. So that's where our custody starts, and then it kinda works up for, let's call it, up to two million dollars, it's roughly five thousand dollars a year, up to five million dollars, it gets to about ten thousand dollars a year. Now, what I will share, though, and this is part of what we just launched last week, is we have Onramp Trade Hot potato and want best in class access to, you know, trade lowest cost fees there, access to what we're building, and then can easily migrate over into something like Multi-Institution, that's a viable solution where there's not like really a custody, like a, a cost that we're associating here, it's still some cost, but I see that as a huge opportunity because as you're familiar with in this space, most people have played hot potato for the past ten years, you go from X to Y to Z to self custody to collaborative, and you're always, you never have Buy peace of mind from the start all the way to like your family receiving it, and so that's kind of how we think about what we're building." }, { "speaker": "stephan", "time": "45:36", "start": 2735.85, "text": "Gotcha. Okay. alright, yeah. So I think we've, we've kinda, yeah, covered the, the custody aspects. I wanna cover some of the other elements here as well. So on the early writers' side As I understand, you are-- This is like a Bitcoin fund where you are raising in Bitcoin, deploying in Bitcoin, and ideally gonna make a profit in Bitcoin terms. So can you give us a bit of an overview there? And I guess the initial reaction most people will have is, \"Hang on, you plan to outperform Bitcoin? What's the-- Isn't that, isn't that hard mode?\"" }, { "speaker": "michael_tanguma", "time": "46:07", "start": 2767.17, "text": "Yeah. Yeah, I mean, to be a little spicy, I would say like most people can't think about how they could outperform Bitcoin because Bitcoin would be the best idea that they come across, so they just look at it. And that's kind of what we see in the public traded, you know, the treasury market space. It's like, I think that the world forgot about how to deliver value to individuals, so there it's the last bastions of rent seeking. So you fi- you put a wrapper around Bitcoin and you s- you get some fees versus actually delivering value, where a lot of these I don't think anybody listening to this would be like, \"Well, this is insane,\" but it is different, it's definitely heretical, a little different. Everything we talk about, the custody or Bitcoin-denominated, is that, my previous background was in the traditional tech world, for better or worse. So I was at the Googles of the world, and then I was actually with Adam Newman at WeWork in two thousand and seventeen, lighting money on fire with him unknowingly and then knowingly while I was reading Safe's book in the Bitcoin standard. So it was a very formative" }, { "speaker": "michael_tanguma", "time": "47:04", "start": 2824.46, "text": "exist on the planet are there, it's where everyone goes. And when I came into the Bitcoin space, I didn't see it. I didn't see it across building Bitcoin businesses. I helped set up some of the larger Bitcoin venture firms and didn't see it at that level. And so when I took a step back in twenty twenty-two, it wasn't like a vision to go start a venture fund, even though I always knew I, I wanted to be in that space. But when we built Onramp, I had just seen how liquidity killed all soundness in business unit economics and just the sound They're kind of joking saying most Bitcoin companies are fiat companies with a Bitcoin theme because they're still playing the VC game of how do I get the multiples and how do I grow at all costs, which now they're starting to recognize is a recipe for disaster because Bitcoin cycles are like accelerated business cycles. So everyone got told, even though they'll, they'll whitewash and say they didn't, they hired a bunch of people in '21 and laid 'em all off, everyone, in '22 because they told the V-VCs told them go, go run at all costs and go, And so to your point, a, like, venture in general, if you go and I was just a student of it for a long time, is you go back to the sixties and seventies and where it stemmed from was, it was meant to be artisanal and very much craft based. It wasn't, it like, not meant to be, what it is become today. Fiat has basically driven that. As more capitals come in, it's put more academics in allocation and also just more capital out, and it effectively kind of, again, kills the businesses. And we all know the U" }, { "speaker": "michael_tanguma", "time": "48:31", "start": 2910.56, "text": "Zero interest rate policy. And so you tie that all the way through, what broke a lot of the soundness in these businesses is everyone's chasing the wrong underlying unit, as we know. So from the LP perspective, they have too many dollars, they're trying to, you know, chase-- everyone knows you're a sucker if you're holding dollars, so you're figuring out, you don't have the most discernment in who is your GP or your allocator. The GP is always trying to either raise a larger fund or they're sitting on dollars 'cause they know they're a sucker. Including like if you're a Bitcoin VC, it's like you, what are you doing? You're sitting on the, the, the dollars, like your mandate's to invest. So you have a hammer and everything needs to look like a nail. So all you're doing all day long is looking at deals to invest in. And then on the builder side, the builder is the ultimate allocator, right? At the end of the day, like they're the ones that are having to deploy dollars to have a greater return. And so now they're getting told by everyone to run as fast as they can," }, { "speaker": "michael_tanguma", "time": "49:29", "start": 2968.92, "text": "go Whether it's us knowing our cost of capital, the return on Bitcoin, the GP being able to sit on an asset that's increasing in purchasing power, so not only they're more discerning, they're increasing the amount of equity they can own in business by its nature of Bitcoin's purchasing, and then the ultimate allocator, which is the entrepreneur, is sitting on the hardest asset we all know, demand, and now looks at every decision point as Well, this is my cost of capital, and it's not to say you don't spend the money, it's just that you have to be very discerning in the, in, in the realization of what you're doing and how do you affect your reality or your vision of your company. And so all this might sound theoretical, but the reason why we launched this is because this is how we built Onramp. So previously, I've seen all this liquidity has scared the living crap out of me, that I, I knew we had a big idea and a big opportunity in the market, and I was worried, to death about letting it being ruined or corrupted by bringing in lots of capital. So I spent my own money on founding the business, my own Bitcoin, and what I stumbled on through that was like, holy crap, like this is the most efficient way. When you think about That was like, \"Oh my God, this is the future, \"because at the end of the day, every ra-rational actor is only going to invest if they believe they're gonna get more Bitcoin, so that's one. But then the other side of that is every business is gonna outcompete every other business, not because they have Bitcoin on their treasury, that's like second order, it's because they have baked into the ethos and philosophy of the business as building the most productive business, 'cause they're trying to chase more BTC via their own pocketbooks. So we go back to dividend structures" }, { "speaker": "michael_tanguma", "time": "51:05", "start": 3065.04, "text": "Here and then we can talk about any of the holes, because people always have questions and it's easy to kind of work through them on how it works or how we got there." }, { "speaker": "stephan", "time": "51:12", "start": 3072.47, "text": "I see. And so, I guess in summary, the basic idea is if you denominate in Bitcoin and you deploy in Bitcoin and the premise, let's say, the founder, the person raising and so on, understands that premise, operates from that premise, that he needs to be Bitcoin profitable. That changes the dynamic. That's kind of the broad idea I'm getting from you there, and also this idea of having a Bitcoin treasury as opposed to being too much, too highly allocated to fiat. Would you say that's a fair summary, or what, what are the key pieces?" }, { "speaker": "michael_tanguma", "time": "51:47", "start": 3106.54, "text": "Yeah, I think the two big components is it all comes down to people. So if you give the wrong person the Bitcoin and the right person the dollars, the right person's still gonna outperform the other individual even if they have the wrong unit, 'cause this comes down to the individual and the discernment. And then the thing that- In my previous venture life, I got tired of sitting all day long in rooms with people that we shouldn't give our money to. Everyone claims they have access, nobody has access, 'cause they're all looking at the same deals, and then talking to all the allocators trying to convince them what Bitcoin was. So it's like half your day is just literally wasted, and I was like, \"Well, that doesn't make any sense.\" And so the alternative to what we do is that we're not looking at, like, investing in everything, we're busy building a business. But when you're busy That actually exists in the market, because you're literally in the middle of the market, and so that's really where we come up with some very fascinating things we're looking at, is because it's just stuff rooted in not true venture, nine out of ten failing, 'cause that doesn't make sense in a Bitcoin venture fund, but more in the things that- Have a natural market fit because the market's asking for it, and now there's execution risk in everything, including investing, but it's a little bit of a different model than you would think of, like what's lightning in payments and what's, how are we gonna get there, and we're gonna, you know, deploy twenty-five Bitcoin and then have it go up in smoke." }, { "speaker": "stephan", "time": "53:05", "start": 3184.57, "text": "I see, yeah. And so I guess the other difference I'm, I'm sort of getting as well, as I was kind of looking through the deck as an example, is maybe there's slightly more of a focus on, I guess, what's called the EIR, Entrepreneur in Residence, or kind of putting your own people in, kind of parachuting your own guys in, because maybe they are already more knowledgeable about the Bitcoin aspect of it with maybe, as you said, the right person, the right mindset." }, { "speaker": "michael_tanguma", "time": "53:31", "start": 3210.71, "text": "It's a hundred percent right. It's one of the big learnings when I referenced earlier is historically in Bitcoin, and this isn't a fault on anyone, it's just innovation cycles, the people that are building or had been historically building in Bitcoin were the early adopters. And the early adopters, we all kind of know them, like they may have a little couple things in their wires crossed in like what got them to get Bitcoin at ten dollars. They may not be the best person to understand a, how to meet the market where they are, how to commercialize a product. The best example I Is like somebody that likes to cook doesn't necessarily mean they can go franchise out a big restaurant. And so the idea with Onramp and also the things we invest in is we take people with like ten plus years of professional experience that also deeply grok Bitcoin, so they can have this conversation, but they also are domain experts in their own space. Because what we found is we're not gonna recreate the wheel, for better or worse, we're just gonna repurpose it. We're just gonna slightly-- and you can start to squint and see this with the BitBonds idea and even multi-institution trusted parties, we're not gonna, you know, just go off into, you know, the, the future with not having anybody. How are we gonna coordinate economic activity? But so that's a core component, and then we have this guild network, which is a blend between Onramp private clients and then early riders, where we loop everyone into this application that is advisors, partners, founders, EIRs, and our network, because I'm sure as you know, there's no shortage of business professionals that deeply get what we're saying here and are kind of like dying inside 'cause they're making They're fiat lining and they have no way to express their view in the world, and they know they wanna make the leap into it, but they're just not ready because there's only so many Bitcoin companies, and definitely only a small fraction of them that they feel have a long, like longevity they'll wanna be a part of. And so that's a big thing we see as our big moat is the guild network and people getting involved through that, because that goes across disciplines, right? Like Bitcoin's gonna touch everything, not just, you know, money and financial services. And it's the as I was talking to advisor yesterday, and he was referencing early writers came about because we had enough conversations with institutions that had no idea why we would wanna do multi-institution custody. Is it kinda how you know we're either really crazy or onto something, is because the hardcore bitcoiners think we're nuts and then the, the tradfi people think we're nuts. and so you're either really dumb, you're either really dumb or you're actually onto something massive because our mental model is kinda breaks both of them. And so realizing that about Bitcoin and AI, it was this notion of, The incumbents aren't gonna win this space, like when it comes to tra- like when it comes to financial services, it's gonna be the early riders, it's gonna be the people that grok all this or the first. And I was talking to, an advisor to Onramp yesterday, and, he referenced like, \"Oh, the early riders is also like a symbolic from the, the religious text of like Joshua and Caleb going out and being the first ones out there to go like scout, to be the, to pave the way for everyone else.\" And that's how I" }, { "speaker": "michael_tanguma", "time": "56:30", "start": 3389.57, "text": "If we win or we're able to execute, I think we will be, but it's really that this notion that this is a new way for capital to form and will be a standard in the future was the important thing to get out because I see this as the base level for as we go and like grow the economy." }, { "speaker": "stephan", "time": "56:43", "start": 3403.47, "text": "Another big topic now is the whole-- and I, and I'm sure you'll have insight on this, is the whole treasury company thing, right? Because obviously this is a big topic now, people are kind of- People are sort of saying, you know, twenty seventeen was kind of the shitcoin ICOs, twenty twenty one was DeFi, NFT, maybe this cycle is gonna be the cycle of Bitcoin treasury companies and, you know, M Nav and these conversations. I know in your business and businesses, maybe some of them are involved in servicing some of these Bitcoin treasury companies. I'm curious your view. Do you think, you know, a-and I, I guess I had a conversation recently with Vijay Boyapati and we were talking about that and he was kind of saying, \"Look, maybe M- Nav is the new GPTC premium, you know, like is that the new thing this cycle? I am curious to get your view there. Is it a sustainable thing? Is it not? What do you think?" }, { "speaker": "michael_tanguma", "time": "57:33", "start": 3452.62, "text": "I don't, I definitely don't think it's sustainable. I keep, I try not to talk about this, but I keep finding myself and I don't have a, I don't have a filter, so like it gets a little spicy in the sense that I will caveat and say that everything is good for Bitcoin, everything, including this. I don't think this is good for individuals, I don't think it's good for where we're headed, but I-- but at the same time, it's good for Bitcoin because number go up is probably the best barometer from awareness, and so this will drive prices higher. Now, at the same time, there's multiple levels to look at this from a-- I don't even know if it's metaphysical, but like at the core idea, a lot of people were growing up that if it's too good to be true, it's too good to be true, money doesn't grow on trees. And so the way I think about it, luckily I had this conversation yesterday, so I'm a little bit better prepared to articulate it, is there's a notion that's happening today that if you accumulate a bunch of Bitcoin, you are going to be a rainmaker, a king Strategies. There's different reasons why they're doing it. The thing that's missing is, again, if these individuals running these only have two to five percent of their personal net worth, if not less than that, in Bitcoin, well, they're gonna lose all the Bitcoin in the same way that somebody that gets, wins a lottery ticket, like they didn't earn the capital, there was no proof of work there. So, again, can't tell you how it'll, you know, deleverage and what will happen, but it's just naturally inorganic to take a decentralized asset and then start to Or the on-ramp in multi-institution custody comes about. So there's a lot of just different things that, again, to your point, where there's smoke, there's fire, and again, goes back to like ICOs, people can wrap their heads around speculative bets. So there's like a confluence of different things happening with the corporate treasury. Some are, \"Can I get my next hundred bagger? \" Others are taking advantage of the naivete that people don't know how to get spot exposure to the underlying, again, which is why I think multi-institution's so important, And always take delivery of it. That's, I think we'd agree better than getting some proxy exposure to an equity that's inside money, by the way. That's the thing that like everyone's gonna get rubbed on is where we're going for better or worse is outside money wins. Like gold and Bitcoin are gonna be labeled and understood by the market as money and everything else is credit, and everyone else between now and then is gonna have to learn the hard way of the counterparty risk and the associated. You talk about getting cut off from your multi-institution, imagine getting cut off from your brokerage account because Yeah, I kind of, I really don't like it, but it is what it is, and the market's gonna do it, so." }, { "speaker": "stephan", "time": "01:00:05", "start": 3605.35, "text": "Yeah, I mean, I'm, I have mixed feelings on it too. I personally do believe I, I'm curious, so here's how I see it, and I'm, I'm curious to get your reaction. My, my impression of this is Bitcoin, you know, just like Jesse or Chrisus talks about, you know, there's this one thousand trillion, you know, market out there if you add up equity and bonds and property and, you know, currency and all these things, and Bitcoin is only two trillion of that. So, you know, clearly we're early. So I think there is some sense in which an MNAV can make sense for a conservative, well, you know, prudently run Bitcoin treasury companies, but will there be irresponsible ones who, you know, get delevered and get wrecked in the-- at the top of the next cycle, at the bottom of the next cycle, the bottom of the bear or whatever, that's certainly possible too. But the way I'm seeing it is, I believe the responsibly run ones can sustain an MNAV greater than one. For a few reasons, I think it's, there's a fiat arbitrage going on here, right? Because they can access the public debt and equity markets that we as individuals can't. So I think there will just be kind of a bit of a sustainable medium term advantage, but maybe that advantage kind of comes back down towards like an MNAV of one as we approach hyperbitcoinization, right? Because maybe that, that fiat regulatory arbitrage closes down, and maybe by then they'll morph into banks or insurance companies or something like that. But that's kind of my High level view, I'm curious, do you agree or disagree or how do you see it?" }, { "speaker": "michael_tanguma", "time": "01:01:36", "start": 3696.17, "text": "Yeah, I mean, so I kinda disagree in the sense that most of these people, if we talked about like custody and what we're talking about today, don't get Bitcoin. So it's giving 'em a lot of credit to say that they're gonna get this asset and be able to steward it in an appropriate way. And ultimately, Marty had a good tweet yesterday and it ties into, I, I see productive businesses is what's interesting when they start accreting Bitcoin. The funny part is they're Weird paradox. It's kind of the more speculative companies incentivized to do this versus the zombie" }, { "speaker": "stephan", "time": "01:02:06", "start": 3726.98, "text": "ones who, who came in. Yeah." }, { "speaker": "michael_tanguma", "time": "01:02:08", "start": 3728.84, "text": "Versus Nvidia or Microsoft that would raise flags because it's like, \"Well, what's why you're doing this strategy versus doing X, Y or Z?\" But that paradox plays into, why would MNAV be above one? And then what's the financial engineering around it? And then ultimately, what, how far do people have to go on the risk curve? How long is that sustainable? And then when that delever's, well, because that's another big aspect of this is like, the volatility that we understand with Bitcoin, we can weather it because we have deep conviction in this asset. Well, it's objectively gonna be more volatile than Bitcoin, and nobody has that objective, nobody has that conviction and confidence. And the sad part is, again, it go-- I think this is why I hate it, is it, it Proliferates are like attaches to the naivete of the individual that the sixty forty exists, right? So it's a lot easier to take twenty percent of your equities into one of these products versus putting it into Bitcoin, because Bitcoin, most people don't know how to bucket. And so the last thing I'll share is, I think it's a lot of BS that people will say these, all these capital pools don't know how to get Bitcoin. Like anyone on the planet Earth can figure out how to get Bitcoin. And the easy example of this, in the same way when an individual buys You figure out where to buy, but you figure out how to custody it, make sure you hold it. In the same way, when these institutions hear, \"I can buy,\" they're paying an arbitrage or getting small exposure, but they're eventually gonna do the work and wonder why Bitcoin is appreciating or this asset is appreciating on proxy with Bitcoin. Well, it's the only logical thing to do to go take the underlying asset, because you have to worry about the counterparty risk or the execution and the management team and the underlying. It's just all like the whole thing that we're trying to" }, { "speaker": "michael_tanguma", "time": "01:03:50", "start": 3830.07, "text": "Our bags, and that's why you get-- if this was anything else, if this was altcoins, and we just said, \"You're gonna put an altcoin wrapped around this and trade it,\" everyone would be up in arms, but because it's public equities, which are effectively altcoins, 'cause they're just traded on vibes, right, at this point. So anyway." }, { "speaker": "stephan", "time": "01:04:03", "start": 3843.12, "text": "Yeah, interesting. I think, I think for me, it's more like there is a regulatory window here, right? Because there's indexes, and there's just passive flow going into those. I think it's" }, { "speaker": "stephan", "time": "01:04:20", "start": 3860.03, "text": "Of course, who want our everything in our cold card or our multi-sig, but there'll be all these people who, you know, they want a ticker to buy on their stock app, stock broking app or whatever. and I think that is gonna be where a lot of people kind of get a first exposure to things, and then hopefully they come down the rabbit hole and that's where they learn about, okay, you know, self-custody and all these things. But I think we're just fundamentally early in this journey, and so that's why it's gonna look kinda crazy. You know, there'll be bull and bear, I think there'll be cycles to come, but I think, I, I think the well managed ones will actually survive, just like MicroStrategy survived through that recent bear, I think it'll be a similar thing." }, { "speaker": "michael_tanguma", "time": "01:05:02", "start": 3902.68, "text": "But the caveat to that is you can make the same case about FTX and BlockFi, like not only did their bankruptcy help print a lot of Bitcoiners, but the market price that they juiced it up, but it didn't make it good for the individual. So that's what I talked in the very beginning, it's everything You can, I think you can make the case you just shared on the ETF side, because it's just not the best exposure, but it's buying Bitcoin versus people are inherently, we know gambling apps are at all time highs and all the amount of capital via the nihilistic view of the world, is they're going out and chasing these like tickers by proxy Bitcoin insurance, like some people are gonna learn about Bitcoin, but- Yes, it's good for Bitcoin, but B, do we have to like participate, do it? And that's where like the other side of it is like launching them, because you see these talks and they kind of like go up and they just completely crash and TBD like where they end up as like exit liquidity. So it's like, it's the most beautiful version in my mind of the affinity scam on Bitcoin, because everyone is like somehow okay with it, in the same way everyone's okay, like the, the case you made a second ago was the same you can make about EOS and those tokens that" }, { "speaker": "michael_tanguma", "time": "01:06:09", "start": 3969.85, "text": "The same case can be made that it helps people get into Bitcoin, but is it good for the, the vast majority of individuals versus other proxy exposures that are just like more direct, just Bitcoin, it's not a ticker, that like has, you know, underlying?" }, { "speaker": "stephan", "time": "01:06:24", "start": 3984.02, "text": "Interesting. I, I think of it a slightly differently though, because I think the case of EOS and other things, they support a competing network effect, whereas if you're buying Bitcoin treasure companies, you're supporting the Bitcoin network effect. So in that way, it's a bit different. But I certainly, I grant to you, absolutely, there will be people who, you know, just like in Bitcoin cycles, there'll be people who buy at the top and panic sell at the bottom, just like in Bitcoin, and I think it will be sort of like a, you know, earlier, like, it It is. I think Czech, James Czech made that, analogy where he was saying it's kind of like if you buy MSTR now, it's kind of like buying Bitcoin in twenty thirteen. You're gonna have that kind of volatility experience because it is levered Bitcoin. and so I think of it as, well, that, that's gonna be the way. I'm I guess I, I still am structurally positive on these things, but I accept that, yeah, for sure, there'll be people who buy the top and so on." }, { "speaker": "michael_tanguma", "time": "01:07:21", "start": 4041.02, "text": "Oh, sure. One other thing that I think we're not, we're discounting is more than likely in twelve months there's gonna be xRP Solana, not only ETFs, but I think there already is one." }, { "speaker": "stephan", "time": "01:07:33", "start": 4053.04, "text": "I think there already is one, yeah." }, { "speaker": "michael_tanguma", "time": "01:07:34", "start": 4054.84, "text": "Yeah," }, { "speaker": "stephan", "time": "01:07:35", "start": 4055.18, "text": "so there's gonna be more and many more, yeah, yeah." }, { "speaker": "michael_tanguma", "time": "01:07:36", "start": 4056.99, "text": "There's gonna be many more that people play this, and then what you're shar-sharing today won't be looked at in a vacuum, 'cause it won't be just Bitcoin now, the rest of the market is gonna look at what's the next treasury that has crypto in their corporate treasury, 'cause I think one just went public with Trump Coin, they're raising like three hundred million that's gonna Other side of this is when the market delever, 'cause I think we'd all agree that the liquidity's gonna come in like crazy this cycle, when the market delever, they're probably gonna blame Bitcoin again, in the same way they blamed Bitcoin in FTX, and everyone's gonna be like, \"Oh, maybe these people shouldn't do it.\" And so that's just another part of the like byproduct around how I feel about it." }, { "speaker": "stephan", "time": "01:08:15", "start": 4095.83, "text": "I mean, I'm totally with you that we're gonna, you know, this isn't the final cycle, and so we're gonna have, you know View on that. Let's talk a little bit about Bitcoin in MENA. I live here in Dubai in UAE, so obviously, you know, wanna hear your thoughts on, what you're doing in the Middle East, region." }, { "speaker": "michael_tanguma", "time": "01:08:41", "start": 4121.16, "text": "Yeah, appreciate you bringing that up. So I personally love the region, I think it's just it's prime for Bitcoin adoption, and sadly is like a couple steps behind from a crypto, and you're, you're in the middle of it, so I'd love to hear you share your thoughts. But it's like the way that this all started was Laura, and she's funny, she just, she pinged me here, who you know from Bitcoin Oasis, had reached out via multiple networks and was like, \"Hey, we'd love for you to come out. They were trying to put on a I've actually never been out there, and they were referencing, it was funny 'cause she was like, \"Well, when you come out here, you gotta shake people's hands, and you gotta look them in the eye, and all this stuff.\" And I was just like, I told her like, \"This sounds a lot like Texas, 'cause we had built our previous business in Texas similar to this one.\" And it's like, it sounds like Texas, except for they just wear different hats, you know? Like, that's just how you do business, you shake people's hand, you know" }, { "speaker": "michael_tanguma", "time": "01:09:41", "start": 4181.66, "text": "And so we went out there and just absolutely loved it, but the thing that I took away from it was, holy crap, like these are the most sophisticated crypto people on the planet Earth. The level of things that they're doing there, it's like I don't even know how to wrap my head around. And so they're leading on all this kind of bridge and the integrations with banks, and you, I mean, you know, you've seen it, there's Token twenty forty nine, but it's also the most unsophisticated place in the world on, on Bitcoin. It Exchanges and custody, and we left there and I was like, \"Oh my God! \" And we know that like multi-institution has a place in the world, and in our view, it has a big place, and as a byproduct of all the learnings, it's like, \"Well, what if we can help the GTC, like bypass a lot of this? \" And we heard the stories about, again, geeks holding twenty to a hundred thousand BTC on these little ledgers sitting in, you know, safety deposit box in central banks. And so that's Originally from Lebanon, and we're super excited we're getting licensed by one of the central banks in the region, in the process of that, which is exciting. And the core idea is just to build a Bitcoin only firm and really build that education for all these different institutions, family offices, and individuals that have all this crypto noise, being thrown at them." }, { "speaker": "stephan", "time": "01:11:00", "start": 4260.32, "text": "Awesome. And so yeah, as you said, I think there's definitely a lot of opportunities in the region. It's one theme that I notice is in the GCC, the Gulf Cooperation Council, there is a lot of focus on diversifying from oil. Now, the UAE has been relatively good on that, but maybe some of the other parties or some of the other states in the GCC, like Saudi and other, other countries. They're, you know, they're also thinking about this, but not as advanced on the journey. And obviously, Bitcoin is, you know, a perfect fit there, so I think that's a big thing. And certainly, yeah, there's a lot of role for education, for people to understand, you know, Bitcoin versus crypto and things like this. Of course, you know, there are events out here, right? Bitcoin Oasis, run by Lara and the team, as well as Bitcoin Mina, which was organized by the Bitcoin Magazine, you know, the, the Bitcoin Conference" }, { "speaker": "stephan", "time": "01:11:51", "start": 4311.42, "text": "But there's also a lot of crypto events, and there's also a lot of crypto people in general, so that's kind of one thing you have to just grapple with when you're in this region. But, overall, I think it's definitely a lot of potential here. You know, generally a business friendly environment, low taxes, this kind of thing, but obviously has its own nuances that you have to appreciate when you're here." }, { "speaker": "michael_tanguma", "time": "01:12:12", "start": 4332.73, "text": "Yeah, I think the thing you keyed in on is, it's a commodity based culture, like they understand, you know, the amount of, And so what I saw in Texas is you naturally have a quicker path into like very similar to us on the, the Bitcoin side know-how, like athletes and the proof of work actors in the economy get Bitcoin 'cause they feel their labor kind of being stolen from them, in the same way that the commodity rich countries and, and areas of the world naturally get Bitcoin because their first version is, \"Well, what's the cost to actually produce a Bitcoin? I can sever, I can sell that for fiat.\" But then as the price goes up, it's just like an easy gap to be like, \"Well And we're actually gonna have Matthew Pines, on a pod in thirty minutes for Onramp, and it's something I wanna talk to him about because he's a big proponent of this intersection of like the geopolitical function of energy, AI, and also Bitcoin and how they're all kind of like starting to converge. And yesterday was the big meeting in, in Saudi, and so I see these things just accelerating, right? And like an example is the off-grid mining. We all know Bitcoin's like this canary in the coal mine, where I think of off-grid mining as the canary Or off-grid miners that went and found, low-cost energy, and then now we're seeing the AI compute companies starting to go buy them, so they're like almost like the, the scouts out in the market, and so that's kind of like where the mining has started, but now you have these AI data centers that are becoming very valuable. And so there's just a lot of confluence that I think the, the Middle East is going to intersect with Bitcoin, and then there's obviously, you know, it's the money of the religion when you think about the soundness of, they don't participate in usury, and there's two point one billion Muslims on the planet Earth that haven't really had a good form of money. I don't know if you had Harris on before, but he's a fantastic proponent. Oh, nice. Yeah, he's a fantastic proponent, advisor to Honorable Mina, and, Understanding Bitcoin, and then also the, the powers that be in that world aren't really incentivized to explain why Bitcoin is valuable versus the real compliant is just like regular tradfi with a, like, nice, you know, marketing spin on it." }, { "speaker": "stephan", "time": "01:14:23", "start": 4463.58, "text": "Yeah, and I think it's, to be fair, even at the recent, Bitcoin Oasis, both, Harris, Orphan, and Muayat Taka were kind of explaining as well, kind of, you know, that kind of aspect of Bitcoin as anti-ruble money, but again, it comes to how you-- it's the Would be, let's say, they would probably be against, let's say, these Bitcoin treasury companies again, because they would see that as-- they could see elements of that that are, you know, based on leverage, based on kind of making money from money as opposed to like an equity form of investment into a company and share-- risk sharing. I think that's probably the, the concept that they would-- that I've heard them speak about. Of course, I'm not a-- I'm not an expert in this, but just from what I've heard of how they explain it. So yeah, We've kind of covered a bunch of different things, but, any, any kind of closing thought or anything you want listeners to take away before we let you go?" }, { "speaker": "michael_tanguma", "time": "01:15:18", "start": 4518.82, "text": "No, I think this was a great discussion. Appreciate you kind of weaving through it and, you know, challenging or talking about some of the topics that are a little hairier in the space that don't get talked about. if anybody wants to learn more or talk with us, I think the big thing, I was hesitant like- Pre-2020, March, I didn't really talk heavily about Bitcoin specifically with friends and family, and then it was COVID and the amount of printing that it's like, \"Hey, what are we doing here if we silence ourselves?\" And so then for four years, you know, we've been building, in building Onramp, naturally coming from the camp that we sit in and building self-custody products, we've been hesitant to really be too loud about the risk for our friends and family, including ourselves, because It's just like, it's gonna be looked at as like, \"Oh, it's just self-serving talk in his book.\" But this is increasing, and now I kinda feel, responsibility to break down that as society starts to get a little rougher, as we go through a rough patch, with the crumbling of, you know, kind of like the base money, bad actors are gonna increasingly know that we hold this asset, and all the data's out there. When you think about, you know, it came out Coinbase users were selling cl- employees were selling the client's data, But honestly, how much a lot of people you wouldn't expect Bitcoin they hold directionally. And so when bad actors start to realize that in the physical world, we're just gonna all start to now be a little bit more apprehensive, or whether it's sell positions or families, there's a lot of things coming that I don't think we're prepared for. And so I would just encourage everyone to think about that and be prepared for it, because, two hundred and fifty thousand dollar Bitcoin will be here sooner than we know it, and then with that comes an insane amount of responsibility that I don" }, { "speaker": "stephan", "time": "01:16:59", "start": 4619.25, "text": "Yeah, I think it's a fair warning. A lot of people have to think about the security aspects and maybe the privacy element of it also. So, yeah, listeners, check it out. And, Michael, thank you for joining me. Yeah, thanks, Stefan." }, { "speaker": "michael_tanguma", "time": "01:17:11", "start": 4631.94, "text": "Appreciate it." } ] }