{ "episodeId": "SLP673", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "becca_rubenfeld": { "name": "Becca Rubenfeld", "role": "guest", "tag": "BECCA" } }, "segments": [ { "speaker": "stephan", "time": "00:12", "start": 12.01, "text": "Hi everyone, welcome back to Stephan Livera podcast. This podcast is brought to you by Bolt, the Bitcoin banking platform where US listeners can buy Bitcoin for the industry's lowest fees and earn the highest Bitcoin back rewards with the Bolt debit card. Now joining me today is Becca Rubenfeld. Becca is the COO and co-founder of AnchorWatch. So people in the space, you might have heard of them, they're doing Bitcoin insurance, and you might have heard, you know, Rob, the CEO, on about Miniscript and so on. So we're gonna get into all that today, but first off, welcome to the show, Becca." }, { "speaker": "becca_rubenfeld", "time": "00:43", "start": 42.58, "text": "Thanks, Stefan. How are you? Good to see you. I'm doing well." }, { "speaker": "stephan", "time": "00:45", "start": 45.44, "text": "I am, I, I think there's just so many things going on, it's kind of just insane to try to keep up on all of these things. but I know the Anchor Watch story is an interesting one, and, you know, we're try-- we're seeing this, this evolution in a way of self-custody and custody and insurance and all these things, how does it all tie together? but, yeah, let's start with, you know, a bit of your story as well on the, What, what was it that drew you to Bitcoin?" }, { "speaker": "becca_rubenfeld", "time": "01:17", "start": 76.99, "text": "Yeah, well, so I mean, Bitcoin itself was more solving a problem that I was curious about as a kid. I-- when I was small in the, in the early nineties, the national debt had just hit three trillion, and I remember this as about a nine-year-old, and I asked my dad how we were gonna pay it back, 'cause I understood the concept of debt, and he didn't really have a good answer for me, and I spent my entire childhood, actually. thinking about how, how it was gonna work if the whole world and, and America was built on this debt that wasn't gonna be paid back, and just I understood that someday, just that wasn't going to work and everything was gonna break apart. And so my whole life, I majored in finance, everything, was kind of just curious about how that problem was gonna be solved. And when I learned about Bitcoin, I came to it in just twenty nineteen, and started learning about it, I, it confirmed Confirmed that there was in fact a problem, that my gut had been right there and then brought a, a solution to light. So that's how I, how I got sucked in initially, actually. Yeah. Well," }, { "speaker": "stephan", "time": "02:25", "start": 144.67, "text": "I think it's interesting just on this topic. Now, obviously, this is the, you know, obligatory Lynn Alden, nothing stops this train kind of thing, but as you were saying, you said about nine trillion and then, and you said in the early nineties, roughly. It, it was" }, { "speaker": "becca_rubenfeld", "time": "02:36", "start": 156.2, "text": "three trillion. I, I went back and looked. So it was like Yeah. And I mean, as I look" }, { "speaker": "stephan", "time": "02:45", "start": 165.18, "text": "now at the national debt clock, it's what thirty-seven trillion. Yeah. and I guess I, I'm, I'm curious to get your reaction on this too, because I think there was perhaps a perception of-- Now, I'm not an American, I'm an Australian looking at kind of what's going on in America, but my understanding is, you know, there was kind of this boom years, built the Bill Clinton years were like a big boom year, were kind of a set of boom years. Yeah. and so there Being an economic powerhouse, it's America in its kind of full power in the nineties, and, you know, maybe that was the perception, and then it just sort of nine eleven onwards and Iraq War, Afghanistan War, and everything just kind of really, you know, things just spiraled really badly. What was your perception of these, of, of, you know, of those decades?" }, { "speaker": "becca_rubenfeld", "time": "03:36", "start": 216.38, "text": "It, it was boom time. I, I was a kid, right? I was in middle and then high school, but yeah, the nineties were, were a great time in America. Yeah, I think, we felt, prosperous, and while there were wars going on, they didn't touch, young people in America, so they were a distant thing, and it just felt like a very prosperous and peaceful time where we were very much on top. I think, I think really my own perception of, of that memory is that I remember the shape of the, of the national debt, and it was going parabolic, so even at three trillion, that shape was emerging, and I was looking- Looking at it, and I just, I understood that it was an accelerating shape, and it wasn't, it wasn't something that could be, be paid back, ba- regardless of narrative. but I definitely think it, it felt amazing, and it, it was a great time to grow up. It made, it made you feel very powerful, invincible, like everything is almost kind of your right, that you have the right to prosperity. and yeah, it, it all started to fracture a little bit, two thousand one, two thousand three. and then into the two thousand eight recession is really where, you know, as a young adult, I felt, I felt the things changing." }, { "speaker": "stephan", "time": "04:52", "start": 291.75, "text": "I'm curious to get your reaction on, I guess, the political aspect of it as well, because it's, as, as an outsider looking in, it looks like, you know, there were people who maybe they made a few overtures of, of statements about trying to do something about this, but in recent years, probably the most recent that I can think of as an outsider looking in is probably like the Paul Ryan era when there was kind of some This kind of thing, whereas now it's kind of seen as like it's bipartisan, it's basically Democrats and Republicans, nobody's interested in actually making serious cuts. They'll talk about Doge, this kind of thing, but no one's actually gonna cut military and, you know, Medicare, Medicaid, Social Security, these things." }, { "speaker": "becca_rubenfeld", "time": "05:30", "start": 329.93, "text": "I think your perception is right. I think, you're right. I think, that era was probably the last time there was any serious effort and maybe the last time anybody believed it po- it possible. I think now it- It's not so much non-nonpartisan as in people are agreeing. I think it's, it's nonpartisan in that everybody kind of acknowledges that they throw up their hands and they just acknowledge that it can't be paid back. Like there isn't a fiscally responsible way out of this problem. and so I think it's, you know, it's a matter of managing or collapsing. And, you know, I, I want America to remain prosperous, so, You know, my, my hope is that we continue to manage it and remain, you know, the, the for-- economic force of the world for as long as possible. And then of course, you know, I obviously believe, that Bitcoin will play an incre-increasing role in that as there's a, a dislocation of reality." }, { "speaker": "stephan", "time": "06:33", "start": 392.78, "text": "Yeah. Okay. And look, let's, let's get now to the Bitcoin, custody, Bitcoin insurance aspect of this. So can you give us a bit of an overview from your perspective? How Bitcoin's custody story has evolved, and then give us where you see insurance playing into that." }, { "speaker": "becca_rubenfeld", "time": "06:51", "start": 410.89, "text": "Yeah. Well, I mean, an interesting thing just thinking about how custody has evolved as it relates to insurance is just that custody evolved because of a lack of insurance. So I think, I think there was a period that actually custody technology and custody practices actually benefited from the lack of insurance in a way, because insurance does function as a backstop, right? Right. So insurance reduces the risk of ruin or removes the risk of ruin, but that didn't exist for a long time. So self custody had to evolve to get safer and safer to meet additional threats, and take advantage of new technologies as they came on, all because really this was, you know, totally autonomous, you know, self responsibility. There is no insurance, so it has to be ultra safe. Now, you know, so we, we saw that change through the years. So, I mean, you know, seed phrases and single sig and multi sig and then additional, custody models, different technologies, all these things over the years just make custody safer and safer to the point that when AnchorWatch came on the scene, you know, we saw that there was a lack of insurance, we identified that as just an obvious problem. If you have self custody. whether it's single sig or multisig, and, you know, you're able to hold those keys responsibly, you are still self-insuring a significant amount of risk. The, you know, it can be lost or stolen, all the risks of loss, and you're holding onto that risk yourself, you should be able to buy insurance. So that was the premise for AnchorWatch, was just like, hey, you know, this is safe enough now, that you should be able to purchase insurance, and we saw that that was lacking, so we came- Came in and tried to fill that gap, and then obviously we've done our part, we'd like to think, to push custody forward itself, by introducing and using, taking advantage of Miniscript. so that really came about again to enable insurance. So custody improved because of a lack of insurance. We saw the need for insurance, so we came in and tried to kind of meet custody where it was at that time. We had challenges getting sufficient cap- Capacity from the capital markets, from the insurance capital markets, they weren't quite confident enough in the ca-in the custody models to unlock the dollars for us. And so Miniscript came in as this higher level of security that we could demonstrate to Lloyd's of London and to the insurance underwriters that, hey, we've been able to distribute risk, distribute keys, across space and in fact, across time, right? Using time locks that we can distribute risk in such a provable way in such a dependable way, and in such a risk mitigated way that, hey, now this is safe enough that you should unlock the dollars. And so that was really the unlock for AnchorWatch was that, we in fact brought custody to the next level of security, which, which gave them the confidence to give us the, you know, hundreds of millions and billions of dollars of capacity." }, { "speaker": "stephan", "time": "09:59", "start": 598.94, "text": "A little historical context as I understand it, and I'm curious to get your reaction as well, if you have thoughts on it. In the early days, right, there weren't no hardware wallets, right? It was literally people did like, they had, this OG wallet called Armory, and you had like an offline Armory, I had like a separate computer that was my Armory offline computer and the online node, and that was how you would-- that was kind of like a, kind of, an early version of a hardware wallet before hardware wallets. Then, you know, Tre" }, { "speaker": "stephan", "time": "10:29", "start": 629.32, "text": "not just the security side of it, but the redundancy, like the backups aspect. So yeah. For example, the Trezor guys, they're big on Shamir's secret sharing as an example. Yeah. But that has trade-offs too, because when you do reconstitute those, those Shamir's shares, you're reconsti-reconstituting the entire private key, which means, and in that moment, you are vulnerable. And so that was also another thing of like, if you're dealing with like, you know, large amounts of coin, you don't wanna have At the different locations where, you know, maybe you've got your cold card in one place and another wallet somewhere else and so on. and so I, I think that's kind of how some of this stuff has evolved. And then at the professional level, we've seen, like pro level custodians do, okay, maybe BitGo were innovators on things like multi-sig and, and in terms of how you do it, and then we've seen kind of in the shitcoin land, they're kind of really big on MPC. That's like a big thing for To have one setup across all of the, the coins, all the shitcoins, whereas you know, yeah, it, it also," }, { "speaker": "becca_rubenfeld", "time": "11:35", "start": 695.0, "text": "this, the single setup for MPC also allows trading. So if the, if the use case of the custody is quick access and trading at any sort of frequency, then MPC tends to work better. But from an actuarial standpoint, MPC is always connected to the internet, so it's not true cold storage that brings in hacking risks when you're looking at insurance, hacking- And cyber, cyber is very expensive coverage, so we're always trying to match the coverage with the custody model to make sure that we can bring down the cost of insurance to reflect the actual risks. So kind of regardless of, of what specific technology we're talking about, that's, that's ultimately what we're doing with the underwriters, is we're looking at, you know, exactly how the keys are dispersed. We don't talk about our specific keys, for AnchorWatch and our ex-specific methodology, but But, you know, whether it's secret sharing or sharding or backups, you know, multisig, distributed, all those different things have different trade-offs, and you're analy-analyzing those with the actuaries, and, and assessing a risk level to them, and then trying to right-size the amount of insurance and the cost of insurance to that." }, { "speaker": "stephan", "time": "12:49", "start": 769.0, "text": "Got it. And on the insurance side, this is maybe something, in the earlier years, people maybe they were skeptical that you could have insurance, right? Because, you know, maybe coming from a, the people coming from the more strictly cypherpunk only stance, they saw this like- You know, the fiat insurance world will never, will never be interested in this, or maybe they wouldn't be able to cover this. Maybe that was their perspective, or maybe it's more like, because it's so volatile, you know, who wants to do this?" }, { "speaker": "becca_rubenfeld", "time": "13:17", "start": 796.72, "text": "What's your" }, { "speaker": "stephan", "time": "13:17", "start": 797.06, "text": "perception of that? And what changed over time? Was it just adoption? Was it just better technology? What was it?" }, { "speaker": "becca_rubenfeld", "time": "13:23", "start": 803.17, "text": "A lot of those things are just, I think, not having thought through it all the way. So for example, somebody who says that Bitcoin is a scarce, perfectly scarce asset, and therefore can't be insured because how could you insure the Bitcoin with other Bitcoin? And that just, it doesn't even make sense. Like, can you insure a fine art painting? It's pretty scarce. There's exactly one of them. Of course you can insure it, right? You insure the value of it in dollars, and it reduces your risk of ruin, right? So if you have a ten million dollar painting, there's only one of them, you insure it in dollars, and so the fact that it's scarce, has nothing to do with, with it being insurable. In It makes it a little more insurable. So on that side, I would just say, you know, it's not really-- that, that's not an accurate limitation of insurance and what's insurable. next thing that people think about is the volatility. And now, volatility has to do with the fact that insurance currently, our insurance, anyways, denominated in dollars. So when you open a policy with us currently, it would be a ten million- Or a one million dollar policy versus, say, a ten, ten bitcoin policy. So you're paying your premiums in dollars, you get a certain dollar limit of insurance coverage, and if you have a claim, then you would be paid out up to that dollar limit. So what-- now, this, this one is definitely a fair, a fair question for people to explore and to think about how insurance actually works. So if you do this, so you buy a million dollar policy, you, you pay your premium in dollars, you know exactly what You paid, because you, you paid at the beginning of the year, so you know what you have, say, lost in dollars for the cost of that policy. If the price of the Bitcoin goes up, you have still only purchased whatever dollar limit. So if you purchased the million dollar policy, even if the Bitcoin is worth two million dollars, if you didn't raise your insurance limit mid-year to keep up with the price, then what you have paid for is a million dollars. However, that is what you paid for, right? So it's not like- You are getting ripped off from the, the excess of the value of the asset going up. If you want to keep up with the asset, you just raise your, raise your limit. And so that would be the same as like a painting again. So if I bought a million dollar painting, I buy a million dollar insurance policy to go with it. If the art market is super hot this year, I don't wanna wait till my policy renews, I just call my insurance agent and I say, \"Hey, my painting has gone up in value, I need to raise my limit from a million to two He issues you endorsement and it's done, right? So then you have a two million dollar limit. And then on the downside, so let's say you've paid for your dou-- million dollar limit, there's a deductible on insurance policies, just like any other property insurance policy. So this is the haircut that you're gonna take if there's a claim, and on our policies, you can choose between ten and twenty-five percent as a deductible. Again, this is only in the case of a claim. We have put it in, just to try to provide a good value. That if the price of the Bitcoin drops at the time of a claim, we'll waive that deductible. So you would get paid out, let's say the Bitcoin at the time of a loss was worth eight hundred thousand dollars, we would waive the deductible, you get paid out the full eight hundred thousand dollars, and then if you choose to, you can take that eight hundred thousand to the exchange and very quickly repurchase your Bitcoin at market prices. And so there's a little bit of price volatility risk from the time of the claim until you time, the time you receive your payout, which should be- Usually be the period of a few weeks. So there's a little price volatility risk and, and that's real, but it's not, it's not excessive because the, the time duration is, is not long. And also remember, Lloyds of London has no-- There's no motivation to play games with time because they're not, they're not insuring the Bitcoin value, they're just insuring the dollar value, so they don't have any motivation to say, to string you along and delay a payment. They, if a claim comes in, they just want to assess the claim determine if it, it should be paid, if it should be paid, they issue the payment, and it's done. And so interesting, just on that, yeah, yeah," }, { "speaker": "stephan", "time": "17:42", "start": 1061.76, "text": "just on the claim timing. Yeah. I mean, probably right now, there's probably listeners thinking, \"Well, hang on, what about like I heard Mount Gox claims took, whatever, however many years to pay out? Like, is there a chance that some of these claims can get caught, caught up in the, you know, in the court system and delayed, and by the time the amount you get paid out" }, { "speaker": "becca_rubenfeld", "time": "18:05", "start": 1084.84, "text": "Very, very separate things. So yes, there's this use of the word claim, but they're contextually two very different things. So the Mount Gox claim is a, a bankruptcy claim and, you know, you're an impaired, a creditor and you are waiting for the court system to play out. And so they're obviously in the case of Mount Gox and other similar bankruptcy or, solvency cases, there can be a long drawn out thing. With insurance, generally, so this is- This is totally separate, has nothing to do with the courts. So this is just Lloyd's of London claims adjusters coming in, assessing the circumstances of the case and determining, do we feel that this is an approved claim or a denied claim? Lloyd's has been around, they're the oldest insurer in the world, four hundred years, they've been around, and they pride themselves on fast and fair claims. And so again, they, they actually have no motivation. There's, there's nothing good for them in drying out a long process. If they- have reason to, think that the claim should be denied. So let's say a, a claim is filed and, they start looking into it, it becomes very evident that it's attempted insurance fraud. They would deny the claim. They wouldn't draw it out. They would deny the claim, and if you disagree with that, you know, you can take action with them." }, { "speaker": "stephan", "time": "19:27", "start": 1167.41, "text": "Right. And then it might become a court battle kind of thing. But that's a separate- Yeah," }, { "speaker": "becca_rubenfeld", "time": "19:31", "start": 1170.81, "text": "but like in general, they're, they're really just, they're assessing the circumstances of the claim, they're making a decision, and if they determine they're paying it, it literally gets transferred from the claim department to the paym-payment department the same day. So single digit number of weeks is absolutely expected as the norm just, you know, from start to finish of the process. And also to be clear, if, let's say it was a, theft, right? So it was a wrench attack or a theft, and the Bitcoin has been stolen, you assess the claim, you come in, you do the investigation, law enforcement is obviously part of it, but the insurance, the claim assessment team is literally just saying, \"Did this qualify as a claim or not?\" They're not trying to recover the assets, to determine And if you get paid back, they would just say, \"Yep, Stefan's Bitcoin was stolen, we're gonna pay him out.\" So they're gonna write you a check, they're gonna pay you, and then that stolen Bitcoin that hasn't yet been recovered, it's still on the Lam, that actually becomes the property of the insurance company. There's a, a principle called subrogation. It's the same with the paintings example. So if your painting was stolen, we do the investigation, we pay you for the painting, you're taken care of, you got your claim benefit, Like buy a new painting, you can go re-buy some Bitcoin. So you're done. That stolen painting becomes the property of the insurance company, which is why insurance companies hire private investigators to hunt down paintings, because if they can recover 'em, it helps offset the losses. Helps their bottom" }, { "speaker": "stephan", "time": "21:06", "start": 1265.88, "text": "line, obviously, yeah. Exactly. And then you" }, { "speaker": "becca_rubenfeld", "time": "21:08", "start": 1267.94, "text": "think about Bitfinex hack and like forced tattles and like, right? So, so those kind of stolen and parrot assets, actually, are very motivating for the insur-" }, { "speaker": "stephan", "time": "21:19", "start": 1279.3, "text": "So let's talk a little bit about what exactly is covered. Now, I know this is kind of a big question because, you know, as we said, we have different entity, entity types. You could be an OG whale or just an individual, or you could be a family office, you could be a private company, you could be a public company, you could be an exchange, you could yourself be a custodian, or you could be a treasury company, and, and I guess there's all kinds of different scenarios of what happens there. but I presume the main thing is about" }, { "speaker": "stephan", "time": "21:49", "start": 1309.1, "text": "Attacks like, what exactly is covered?" }, { "speaker": "becca_rubenfeld", "time": "21:51", "start": 1311.41, "text": "Yep. So on our core custody policy, think about kind of any physical causes of loss. So, any sort of physical event, weather event, fire, you know, combination of these events. Obviously, we're using multisig, so keys are spread around, so any sort of combination of events that would cause a loss of assets, any, any mode of theft, including wrench attacks. So that would be- The gun to the client's head, gun to AnchorWatch's head, gun, guns to any heads, you know, leading to a, you know, fraudulent send of Bitcoin. it also covers AnchorWatch, being a bad actor. So if AnchorWatch participates in collusion or fraud, that's specifically covered. And as a reminder, the policies are underwritten by Lloyds of London. So even if AnchorWatch, the entity, was a bad actor, the policy would still be covered by Lloyds of London. And so that's covered by our core custody policy, and then we also offer, brand new-- we offer a kidnap and ransom policy that's a little different in terms of the RENJECT coverage. So our RENJECT coverage covers the asset itself if it's stolen. So if your Bitcoin is forced to be sent, as part of a RENJECT, our policy covers that, the custody policy. A K&R policy or a kidnap and ransom policy covers an actual ransom payment. So call- Collect ten million dollars and send it to us, so collect the money from elsewhere. it also covers hostage negotiators, crisis response, things like that. that's obviously been a bigger issue as of recent. and then there's other kind of ancillary policies that we can support with as well. We can do mining operations, ensure the, the rigs and, kind of huts, for miners. We can do E and O, D and O, that kind of thing as well. and so all those last policies, those would be purely for com- Commercial, when you talked about the different customer types. So all those, we have the suite of insurance policies. So if you're in, in the Bitcoin business one way or the other, we can probably help you with policies. If you're an individual, then it would be our custody policy, which is embedded in the custody platform, so using our tech, for this miniscript enabled, cold storage with the time locks, and then as well as the kidnap and ransom policy, if you're a whale or if you're high profile, if Coin holdings are public, then you might wanna consider the KNR policy as well." }, { "speaker": "stephan", "time": "24:24", "start": 1463.95, "text": "This episode is brought to you by CoinKite, the makers of my favorite Bitcoin hardware wallet, the Coldcard Q. Now, some people think self-custody is too hard, but it's really about taking responsibility for your Bitcoin wealth and understanding that self-custody gives you a true feeling of liberty. The Coldcard Q has a full keyboard and big screen, it's got two secure elements and a true air gap, allowing you to go fully air-gapped using QR codes from seed generation to transaction signing. Batteries, so you don't even have to plug it into the wall for power. You can easily use it with Sparrow Wallet for PC or Nunchok on mobile, and you can dial it into the right level of security and complexity that you choose. If you want a simple setup, just use twelve words and single signature. If you want passphrase, it's easy. If you want to add multi-sig or co-signing features, you've got those too. So go to CoinKite dot com, use code Livera to get ten percent off on your cold card or other devices, and This episode is brought to you by Galloy, builders of banking software for the Bitcoin age. After years of risk and uncertainty, Bitcoin and banking are colliding. The regulatory environment is rapidly shifting in favor of Bitcoin and digital assets. Fintechs and crypto-native companies can become chartered banks, and traditional banks and credit unions will launch Bitcoin products. But the legacy core banking software that many financial institutions run on wasn't built for Bitcoin. The Galloy banking infrastructure stack delivers all the key elements of a modern core banking platform. With cloud native infrastructure, event based architecture, and robust APIs coming together to meet the security, scalability, and reliability needs of banks of the future. Whether you are launching a modern financial institution from the ground up or you are adding Bitcoin backed lending or payments to your product offering, talk to the team at Galloy, visit galloy dot io, or reach out to the team at b i z at g a l o y dot io. Gotcha, okay. and then can you just touch on the, So you mentioned the custody, maybe now is a good time to actually talk a little bit about Trident and the Miniscript aspect of it. And yeah. So for, for most cases, is this a custodial product, or is it a self-custodial product, or is it like they hold one key, you hold another? Can you explain that?" }, { "speaker": "becca_rubenfeld", "time": "26:32", "start": 1591.86, "text": "Yeah, yeah. So the tech, the tech that we use is called Miniscript. So Miniscript was not invented by AnchorWatch, it was invented by the Blockstream team in twenty eighteen, twenty nineteen, and it's part It already has hardware wallet support, it's out there, all native L1 Bitcoin. What Miniscript lets you do is a few different functions that, make slightly more advanced smart contracting possible on Bitcoin. And so there are three, three main functions. There's hash locks, there's time locks, and there's, let's call them key hierarchies, or the ability to do multisig of multisigs. And we use two of the three currently on our custody pro-pro- product, time locks, and the multisig of multisig. So when you think of multisig of multisig, what I mean by that is instead of a basic multisig where the smart contract is more or less two of three, right? If two of three, then spend the Bitcoin. That's, that's the smart contract, if two of three. with Miniscript, you can really just str-start stringing these together and just think about an and statement mixed in with your if-then statement. So you could say, if one of one and And if one of two, then spend the Bitcoin. And what that really translates to is kind of the same thing as saying a two of three, but one of those three specifically must sign, right? That would be another way of, of kind of verbalizing, that smart contract. So you can start stringing together key quorums, of any combination, very customizable to match whatever security you're trying to do. So in theory, you could, for example, You could have a company hold a key, using that example where, the CEO, the CFO, and the CLO all hold keys, but you want the CFO to always be a signer, right? So you could, you could use Miniscript to do something like that. The other thing, that it does is time locks. So the way time locks work in Bitcoin, there's a misconception that a time lock means your Bitcoin is locked until X, right? You can use a time lock that way. You could, you could set a time lock to lock you away from your Bitcoin until a certain point of time. You don't have to use a time lock that way. All a time lock does in Bitcoin is it checks if a certain amount of time has passed since a vault was created or a transaction took place, depending on whether it's an absolute or a relative time lock. And so you can then string that in your smart contract, one more check. So you can say, let's just say a single sig, but you only want it to work after six months, right? So you could say, if one of one and if six months has passed. If both of those are true, then you can spend the Bitcoin. If you have your key but only four months has passed, then you haven't satisfied that spending condition and it won't work yet. And the way then that you do that so you're not locked out but you still have extra protection is you just start layering spending conditions. So you can have, for example, you could have a single- Single sig that's available on day one. So if one of one, spend the Bitcoin, that's available, cool. But if you lose that single sig, you can also have, for example, a backup single sig, a different key, totally different key, and that one is only available after a year. So then you have layer one that's if one of one, available now, and then you have a second layer that says if one of one, different key, and if a year has passed, then spend the Bitcoin. So now you have two spending conditions. They're both valid, but one of 'em doesn't unlock until a year has passed. And so by doing this, by being very thoughtful about how you construct both the key distribution and the, the keys over time, you can put together very, very robust storage solutions that mitigate not just kind of the single point of failure, but actually mitigate many, many risks all at the same time. And the, and the great thing about it is, despite that, despite how complex- comprehensive of, protection you can put. It's very simple. The technology is extremely simple. It's if, it's just if-then statements, right? Gotcha. And, and Miniscript makes it human verifiable." }, { "speaker": "stephan", "time": "30:58", "start": 1857.92, "text": "So then where does AnchorWatch come in as a signer on this? So is it-- The typical story would be, okay, maybe to put this into an example, let's just think about an individual user's use case. It-- And he's got some coins, he wants to come to you for insurance. And he wants to, you know, can you talk us through what would like a typical spending conditions setup be for that guy?" }, { "speaker": "becca_rubenfeld", "time": "31:23", "start": 1882.66, "text": "Sounds good. So think of it as kind of three, three layers. So day in, day out, let's, let's just use yourself. So you're gonna come sign up with us. You will have your own multisig Right, so you have your own two of three, they're your private keys. We don't have backups, they are truly your private keys, and AnchorWatch has a multisig. So on layer one, available from the first day, you're a required signer, and AnchorWatch is a required signer. So it's your two of three and our two of three, they're both required to spend the Bitcoin. And so is this self custody or is it- Custodial is it collaborative? It's, it's a new word because we're both required signers. We call it insen-- enhanced self custody or, or supported self custody because of the time locks. The-- I'm skipping the second one on purpose, the middle one. I'm gonna skip to the end. At the end, if you're no longer a customer, so while, while you are insured, we're a required signer, as I just described. At the end of the policy, if you don't wanna renew and re-- and remain our customer for any reason, Reason. You don't have to ask for your Bitcoin back. The vaults using time locks just becomes true self custody using your own private keys. That's one of the reasons we never have a backup of your keys either, because after one year It can be controlled by your keys alone, so just Stefan's keys, and so it's true self custody. So while you're insured, both required signers, after you're insured, true self custody, with one layer in the middle there, while you're still insured, one month before your insurance policy ends, we have what's called a recovery layer. The recovery layer is actually a multi institutional custody layer right before the policy ends, and it's one where AnchorWatch can sign as well as a recovery partner. Our recovery partner that we chose is a company called Coin Corner, regulated exchange out of the Isle of Man, out of the UK. we chose multi-jurisdictional, they're a regulated exchange, been holding, Bitcoiner, funds for more than ten years, never had a problem. So they have their own keys, again, not a backup of ours or yours, but this layer is there, this recovery layer of multi-institutional to say if something happens. So if your keys are stolen, Stefan. Or if you get hit by a bus, right? And, you know, your, your wife or your family, your estate doesn't have your access tier keys, then when that recovery layer becomes available one month before your policy ends, we can come in and save the day effectively. We can move your Bitcoin out of your impaired, your stranded vault, right? So then it's you" }, { "speaker": "stephan", "time": "34:08", "start": 2048.29, "text": "plus CoinCorner in that scenario come together to sign to, let's say, help my wife get the coins or something like that. To recover, yep. And" }, { "speaker": "becca_rubenfeld", "time": "34:15", "start": 2055.15, "text": "that's how we- We can do foolproof inheritance without her actually needing to know where your signing device is, under, understand Bitcoin, know your PIN phrase. She doesn't need to know anything. We're just gonna be able to use that recovery layer. Now, Bitcoiners often ask then, like, \"Oh, see, it's custodial, see? Like, that's a risk.\" And, and I'll, I'll totally transparently, it is a multi-institutional recovery layer. So there is this opportunity for Anchor Watch and Coin Corner to control the Bitcoin. One, having a second institution And actuarially massively reduces the risk of internal bad behavior. Two, we specifically made sure that it's covered by the insurance policy. So if we were ever to misuse that layer, that recovery layer that is specifically covered, that would be a covered loss, and it would be, you know, us at fault, but Lloyd's of London making good on the policy. and so that, that's pretty much how it works. So it's, it's you plus us while you're insured with this recovery layer option, and then it finishes is with pure self custody. And then just one more thing about the time locks and how they work, because the way they actually work is it's just checking the time. What it means is that once they're available, they're always available. So let's say you got hit by the, the proverbial bus, like on the last day of your policy, right? And so very, very shortly, within a few days, it's gonna become true self custody. And let's say that happened, your wife is busy with arrangements and family matters and not focused on, the Bitcoin for a few weeks, while she deals with, her priorities, and then she comes to us, even though the vault is already in self custody, that recovery layer is still available. Right, it's still valid. Because, she" }, { "speaker": "stephan", "time": "36:03", "start": 2162.66, "text": "rolled the timeline. Yeah, gotcha, I'm, I'm following you. Exactly. So just let me explain that just to make sure everyone kind of follows along. So the idea is when you-- The spending conditions are set up when we set up the wallet, in this And valid. And so basically, you had that first spending condition, which is, let's say, my keys plus AnchorWatch. The second condition at the, what's it, the 11 months onwards case, that's still valid Right? And so that's, that's important for people to understand that that spending condition is still valid. And then I guess maybe you can explain the recycling or refreshing the time lock. Like, let's say I'm refresh-- I, I come back to you saying, \"Yeah, I wanna refresh my thing,\" and then at that point, we've got to recycle the coins, right?" }, { "speaker": "becca_rubenfeld", "time": "36:44", "start": 2204.09, "text": "Yeah. And all that is actually is technically a self-spent. For, for ease of communicating, we'll sometimes say we're gonna restart the clocks, but we're not actually able to restart the clocks on the Vault, because we set the rules, it's Bitcoin, you can't change the rules on a vault once it's created. So what we're actually doing is once a year, we're getting together, in the last month or so of the policy, we're gonna sign a transaction together and do a self send into a brand new vault. So we'll recreate the vault with brand new time locks, make sure everything is looking good, and then we're just gonna roll it into a new address, so same dashboard, everything, and we will use that, meeting as our Health check, and you don't have to reset up your keys, so it's your same private keys the next year. You can continue using your same hardware wallets and your same keys, but it's a new output descriptor, for the next year. And so then that would go onto your policy documents too, your actual output descriptor, we're saying, hey, we're insuring this Bitcoin at this UTXO or this collection of UTXOs, and then that would just get printed on the policy documents." }, { "speaker": "stephan", "time": "37:56", "start": 2275.54, "text": "I see, yeah. And can you give an idea what are the costs, that the hodler is paying for this insurance?" }, { "speaker": "becca_rubenfeld", "time": "38:02", "start": 2282.4, "text": "Yep. So our custody fee itself, so we, our pricing is bifurcated by just cost to maintain the platform and then cost of the insurance. So custody is, point o two per month, so two bips per month is the custody fee. You can buy as much insurance as you want, up to one to one, and that starts at about four thousand dollars per million dollars of coverage. and most customers, your exact quotes on the insurance cost is specific to some security options you get to choose, you have some, some optionality, but most customers are getting quoted pretty close to the bottom of our range, so they're in the, you know, four to five thousand per million, and I would say about ninety percent of our customers, something like that, opt for full insurance. So let's say they have ten Bitcoin, you know, they're, they're buying a million dollar policy or, you know, now a million one, policy, and then some people, will just Just choose a lower amount, like if they have a five million dollar vault, maybe they'll buy a one point five million dollar insurance policy, and that's fine too." }, { "speaker": "stephan", "time": "39:11", "start": 2351.21, "text": "I see, okay. And so that's at the individual level. Yeah. Now, how, how do things change when we go to like an entity, a company, you know, these kinds of things? Like, yeah. What changes there?" }, { "speaker": "becca_rubenfeld", "time": "39:25", "start": 2365.37, "text": "So it, it depends on the, the size and type of company. if what we're talking about is, say, a small to mid-sized business, they hold Bitcoin on the balance sheet, as an entity, and they just, they wanna have really safe custody. you know, the keys work very well for company hierarchies, the way our vaults work, it's good if, a company leader passes away, we can rotate keys in. that, that price- Pricing would be very similar. So at above, around probably fifteen million, we can work with Lloyd's on doing custom pricing and bringing that pricing down. Now, if we're talking like a very large, company, then we'll get into custom policies. So if we're talking north of a hundred million, things like that, then probably we'll work with them to understand their needs, potentially separate out kidnapping ransom into a separate policy. Policy to help manage costs for them, and try to separate some coverage and do things in a little more commercial way, but we'll work with, with entities of any size to try to get the best cost we can, whether that's through our standard pricing or working with Lloyd's on something custom." }, { "speaker": "stephan", "time": "40:42", "start": 2442.24, "text": "Okay. And then, like, not just on the cost side, but ac-- like in practicality, what changes? Like, you mentioned the three layers for an individual, is it still the same three layers if it's a company or or no? So actually," }, { "speaker": "becca_rubenfeld", "time": "40:55", "start": 2454.55, "text": "actually, yeah The, well, I'll say yes, and then there's still more options. So, yes, our, our standard vault configuration, we're very proud of it. We game theoried that thing for more than two years, and really, it is incredibly resilient to attacks that would be more likely to hit a retail individual as well as a company. And so we're happy to go through that game theory where people are like, \"Well, what if this happened at the same time as...\" This happened, right? And we can go through and explain how with this vault configuration, it would protect you either through the tech or through the insurance, and we can talk through any of those circumstances. and so that would be, you know, kind of the, the straightforward answer. However, as a Lloyd's of London cover holder, we also do a lot of custom policies as well. And so we are, you know, for example, Lending platforms. So lending platforms, they're starting to get their, collateral, insured for their loans, and, we're working with a couple of different ones looking at custom vault configurations. So what, what should be the custody, who has, of the stakeholders, lender, borrower, facilitator, anchor watch, with these stakeholders who should have keys and, how does the vault behave in the case of liquidation, things like that. So we are very happy To do custom insurance policies, we are happy to do custom vault configurations, and everything about what I was describing earlier about Miniscript is fully customizable. So you can string together, kind of those if-then statements, both across space, meaning distributing keys, and across time with the time locks, in really an infinite, infinite number of ways to match what the customer needs, and we can do that for, for customers of size. We don't do custom vaults For individual retail, but if we're talking a, a large company that's trying to do something interesting and build a vault that fits their product, and they, they want that, then we could help them with that as well." }, { "speaker": "stephan", "time": "43:02", "start": 2581.59, "text": "Gotcha. And then just so people understand the day-to-day aspect of it, right? So let's say they are an individual or a company who wants to sign up in the first layer, the general spending and receiving case. What is the policy or what is the procedure to get AnchorWatch to verify, you know, so bringing back to that individual example, let's say I'm using a two of three or a three of five in my personal multisig, Then do I need to do a video call with you or like how, how do you verify that, yes, Stephan truly does wanna move these coins?" }, { "speaker": "becca_rubenfeld", "time": "43:36", "start": 2615.9, "text": "Yeah, generally yes. So, I mean, first of all, it's a personal relationship business, so we know our customers, your agents, you know, you will have an onboarding call, we, just like with a private banking relationship, we actually develop a, a bit of a rapport with our customers, we understand their mannerisms, how they talk, things like that, that actually makes a difference. For video verification versus, you know, some random call center that's just verifying that you're a human, that's much more susceptible to AI. And everyone's" }, { "speaker": "stephan", "time": "44:06", "start": 2646.42, "text": "talking now about AI deepfakes and PO3 and all of that. Yeah, yeah, and they" }, { "speaker": "becca_rubenfeld", "time": "44:10", "start": 2650.03, "text": "should, and they should, right? So for the time being, the human, the human relationship aspect helps with that. But your actual question, how that would start, you would start like a very normal Bitcoin transaction, Trident, which is what we call our software. Trident is just a full-featured, best-in-class Bitcoin We'll have an app, soon, but you would log in, authenticate, and now you're in your wallet. you would start the transaction like any other Bitcoin transaction. You would say that you wanna send, you would put in the address, how much Bitcoin you wanna send. It would invite you to sign with your keys. It would remind you, you know, that you have your three. You could choose any two of those three. you would sign on your side, and that would then come to AnchorWatch. We'd be notified That you had kicked off a transaction, and then at that point, we're gonna do our compliance. So we're doing just, checks on the backend, making sure, what you're trying to spend is within the thresholds that you set, so that-- those are systematic checks. And then, yes, we'll do human verification as well. We'll ask you to get on a call, and occasionally, some, some customers have opted to ask us to do additional security, and I won't go into details, but, you know, additional kind of verifications that we do with those customers, and when everything looks good, then we will sign our transactions. And generally, we're signing within one business day, we reserve the right to slow it down if we're ever concerned. So if we ever are suspect that you're under duress, that we can slow down the process, and maybe, you know, say that we, we need to do another call tomorrow, and, you know, get back to on to do one additional check, and that gives us always the opportunity as well to call in law enforcement, if we think, you know, if it's like a kidnapping ransom case or something like this, yeah. Right. And, and we took a lot, we took a lot of cues from private banking, so, how they manage fraud management within the private banking situation. So customers that have at least ten million dollars in a fiat bank, how they view, circumstances when somebody calls in and tries to make, a transaction and How they, they mitigate that?" }, { "speaker": "stephan", "time": "46:32", "start": 2792.24, "text": "Yeah, gotcha. now on the kind of technical aspects of it, what hardware is supported? Like, is it just all of the miniscript supporting hardware like Coldcard and so on, or are there, you have, it's only certain specific hardware wallets that are supported here?" }, { "speaker": "becca_rubenfeld", "time": "46:47", "start": 2806.79, "text": "Yep. So currently, what's in market today is we, we provide customers with Ledger, so we don't use Ledger Recovery or anything like that. Ledger is the first wallet, that supported miniscript. Right. As in the physical" }, { "speaker": "stephan", "time": "46:59", "start": 2818.76, "text": "device, yeah." }, { "speaker": "becca_rubenfeld", "time": "47:00", "start": 2819.5, "text": "Yeah. Yeah, and it's the, well, it's the first one that did many script as well." }, { "speaker": "stephan", "time": "47:03", "start": 2822.52, "text": "Right." }, { "speaker": "becca_rubenfeld", "time": "47:03", "start": 2823.44, "text": "so they actually ledger is kind of what unlocked many script to be able to actually be used in a functional way. And they're great devices, so that's currently what is available today on AnchorWatch policies, but very, very soon we'll be adding cold card support as well. and then the other wallets that support many script but aren't currently on platform are BitBox 02, J-" }, { "speaker": "becca_rubenfeld", "time": "47:32", "start": 2852.08, "text": "And there might be one more that I'm not, I'm not thinking of, but yeah, maybe like a" }, { "speaker": "stephan", "time": "47:38", "start": 2857.53, "text": "Specter wallet or some, some of these other ones." }, { "speaker": "becca_rubenfeld", "time": "47:40", "start": 2859.53, "text": "Oh, DIY, Specter DIY maybe, I'm not sure. Yeah, yeah, I think it is. They might," }, { "speaker": "stephan", "time": "47:43", "start": 2863.45, "text": "they might have Miniscript, but yeah. No, I think you're right." }, { "speaker": "becca_rubenfeld", "time": "47:46", "start": 2865.71, "text": "I think that's it." }, { "speaker": "stephan", "time": "47:47", "start": 2867.01, "text": "The lead sponsor of this show is Bold, the banking platform designed for Bitcoiners. With the Bold virtual Visa debit card, you earn Bitcoin back on every purchase. The more Bitcoin you buy with Bold" }, { "speaker": "stephan", "time": "47:59", "start": 2879.34, "text": "loss of Bitcoin and earn three percent Sats back. Keep stacking with Bold to earn up to ten percent Sats back. Bold offers the industry's lowest fees on Bitcoin buys and sells with zero added spreads. When starting out, you can use Bold Wallet, which is managed by the team, but Bold is also supporting self custody with Bold Vault, a two of three collaborative custody multisig for zero monthly fees. With Bold, you get your own FDIC-insured checking account to store and send fiat, pay bills, direct deposit your paycheck, and replace your legacy fiat. Bart Bank. Sign up today and get 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. Go to getbold dot io. And then, in terms of, I guess, recovery outside of Trident Vault, 'cause that's probably gonna be another common question, right?" }, { "speaker": "becca_rubenfeld", "time": "48:49", "start": 2929.09, "text": "Yeah." }, { "speaker": "stephan", "time": "48:50", "start": 2929.69, "text": "Can't, basically, as I'm understanding, when the person signs up with you or the company signs up with you, they're getting an output descriptor, and that's like the, that third layer we're talking about. If everything blows up, whatever, after a year's time, they can take that output descriptor and put it into Sparrow Wallet and spend just like they normally would. Is that right?" }, { "speaker": "becca_rubenfeld", "time": "49:10", "start": 2949.9, "text": "Not, not Sparrow today because of Miniscript, today, today, Bitcoin Core. So yes, when you sign up, we create your vault, right? So before you, we've put Bitcoin in it. You do your onboarding call, we set up your signing devices, by we, I mean you, you set up your signing devices, and you have your private keys. We create the vault, we register your keys to the vault, and now we have an empty vault, but it is your vault, your UTXO. So that vault has an output descriptor, and the output descriptor, think of it as like the treasure map that it explains to the wallet how to unlock the miniscript effectively. And so for any non-standard vault configuration, so not just single sig or multisig, you would need the output descriptor. And so when you sign up for it with us, we email you a copy during the onboarding call, we have you upload one to the cloud, it's always available in your dashboard and We encourage you to also even print it out. and so you will have your output descriptor, you will have your private keys. So if you signed in one day and AnchorWatch was gone, right? The website was gone, there's just no sign of us, you're not locked out of your Bitcoin forever. All you would have to do is wait for the self custody layer, that final layer, to be available. So if, let's say, your self custody, the final layer opened on December fifteenth. Then on December fifteenth, you could go to Bitcoin Core, take your output descriptor, paste it in, and then you could control your Bitcoin using a Bitcoin Core wallet, without any AnchorWatch support, without any AnchorWatch software at all. we are currently, by the end, probably by Q4, we're having, a kind of a recovery wallet, an open-source recovery wallet that'll sit out there on GitHub. Just to make it a bit easier for people, so a simpler UX than having to go to Bitcoin Core itself. So think of that like Unchained's caravan. So Unchained has the caravan wallet, so the exact same thing. Because the thing is, Core" }, { "speaker": "stephan", "time": "51:20", "start": 3080.3, "text": "might be okay, but then you'd also have to think about Core supporting those hardware wallets that have MiniScript, and then that's kind of-- that could be, how would you-- Does Core have native support for those, or how would you actually do that?" }, { "speaker": "becca_rubenfeld", "time": "51:36", "start": 3095.69, "text": "no, I don't think that would be a, a problem. I mean, you would, you would still be able to use your existing hardware wallet. So, and remember there, you know, there are seed phrases too. So, even if the device- Yeah, I'm" }, { "speaker": "stephan", "time": "51:48", "start": 3108.5, "text": "sure you could, but it's more just around like usability or easiness for a non- savvy person. Yeah, well, that's, that's part of" }, { "speaker": "becca_rubenfeld", "time": "51:55", "start": 3114.84, "text": "why we're doing the, the extra wallet to make it easier for people, in general. But yeah, it shouldn't, The, the big message ultimately is that it is recoverable without anchor watch, so you don't actually need us, our software, our keys, to access" }, { "speaker": "stephan", "time": "52:11", "start": 3131.23, "text": "your" }, { "speaker": "becca_rubenfeld", "time": "52:11", "start": 3131.37, "text": "assets. Oh yeah, I'm, I'm agreed on" }, { "speaker": "stephan", "time": "52:13", "start": 3133.46, "text": "that. It's more just I haven't used, Bitcoin Core's wallet function for a while, so I'm not familiar on, Actually using hardware wallets directly with Core, because I'm used to using, you know, Core in the background with like Sparrow or something like that. No, I mean, it's, it's for sure, it's" }, { "speaker": "becca_rubenfeld", "time": "52:26", "start": 3146.39, "text": "a hundred percent doable. If, if we wanted to go into how, then we gotta pull in Rob." }, { "speaker": "stephan", "time": "52:32", "start": 3151.85, "text": "Yeah, sure, sure. Yeah. Okay. So, a couple other things. So obviously we've been spoke- speaking a bit about insurance, as, as you said, in fiat terms. I know, for example, meanwhile, is there life insurance? They're doing it in Bitcoin terms. So," }, { "speaker": "becca_rubenfeld", "time": "52:47", "start": 3167.25, "text": "correct." }, { "speaker": "stephan", "time": "52:48", "start": 3167.85, "text": "Is it just a matter of time before you guys are able to offer it like in Bitcoin terms?" }, { "speaker": "becca_rubenfeld", "time": "52:52", "start": 3171.97, "text": "Kind of, kind of. So What, what holds back doing insurance in Bitcoin terms? it, it, it really was a choice that Anchor Watch made. So on the pro- Fiat side, so the decisions that AnchorWatch made. One, insurance capital, so the reserve collateral, currently isn't able to be denominated in Bitcoin in the United States. So the insurance commissioners, haven't made Bitcoin an admitted asset, which means if an insurance company wants to use Bitcoin to underwrite insurance risk, that they're not getting credit for it on their balance sheet. So for every dollars worth of Bitcoin you put in the reserve pool, you have to double it up and also put a dollars worth of dollars, into the reserve pool, which halves their profit. Yeah. Which means they're not gonna dedicate dollars to underwrite crypto insurance until that changes, right? Because it just makes the, the insurance programs very unprofitable for the insurers. So that, that is kind of the biggest thing on the regulatory side, to be able to sell. And if you- Don't sell out of the United States, it means you can't really advertise, you can't solicit in the United States. There's, there's things about going to market. The other thing is that by staying in dollars and using Lloyds, we're able to have the A-rated carrier. So Lloyds is an A-plus rated, super reputable, and we wanted to go to market giving people trust that you're not trusting a small startup to be good for Your insurance payout, you're trusting Lloyd's of London, the most trusted name in insurance, and, and that's again, until the regulators change the admitted assets, all the A-rated carriers aren't going to be participating in Bitcoin. So the alternative, and what, meanwhile, then, the alternative is there's one domicile in the world where Bitcoin-denominated policies, and that's Bermuda. So AnchorWatch actually already has a, a Bermuda entity. So we- We have been planning for some time to, be able to make this flip, and at some point we will, whether that's tomorrow in Bermuda or, day after tomorrow here in America, if we've, made traction on the regulatory front, we definitely intend to do so. So downside there is again soliciting, there's some challenges there, additional costs of being offshore, un-rated carrier, so just no- rating at all or rating by, maybe not the, the highest level rating agency. and that actually matters to a lot of people, a lot of commercial buyers of insurance are, you know, a lot of risk managers will only buy A-rated insurance. Now What's good about it? There's, there's lots that's good about it. So if you're gonna do Bitcoin-denominated insurance, so meanwhile this life insurance, so something very different from us, but the, the concept is, is similar. If you're doing Bitcoin-denominated insurance, it means that you're paying your premiums in Bitcoin, so your, your limit is in Bitcoin and your claim payments are in Bitcoin. So instead of the million dollar policy, you're buying a ten Bitcoin policy and then paying it in Sats. Now On the pro side, on the benefit side, your claim benefit is gonna keep up with the value of your-- It's gonna" }, { "speaker": "stephan", "time": "56:34", "start": 3393.58, "text": "match always. Yeah. It's gonna" }, { "speaker": "becca_rubenfeld", "time": "56:35", "start": 3394.66, "text": "match. So you, you've gotten rid of this price volatility, it's abstracted away, it's not even part of the calculation anymore. That has obvious benefits in terms of how much coverage you actually have, especially if you are personally living on, you know, a Bitcoin standard of sorts. Now On the opposite side, the other side of that same coin is just keep in mind that while your expenses are predictable in Satoshi's, they're not predictable in dollars. So if you're a commercial buyer of insurance and you have on your, on your OpEx, on your, on your docs that you were expecting a, let's say, a fifty-five thousand dollar insurance bill for the year, as a large company, and that's kind of what Like what you had tracked is your ex-insurance expense. If it's denominated in Bitcoin, and Bitcoin has a ten x year, and sure you haven't paid more satoshis, but you did spend the equivalent of five hundred and fifty thousand dollars on insurance. And so whether you want predictability in payout or predictability in expenses, will determine kind of which one of those is more appealing to you. More useful than" }, { "speaker": "stephan", "time": "57:48", "start": 3467.96, "text": "that. Interesting. And I, there's" }, { "speaker": "becca_rubenfeld", "time": "57:49", "start": 3469.22, "text": "actually not a wrong answer here. I think a lot of- Bitcoiners come to this with very strong opinions, like it must be Bitcoin denominated or it's a bad product. No, both products, you get the amount of insurance you paid for, full stop. If you pay in dollars, you, you know the amount of dollars you're, you're buying, and that is what you're getting. If you're paying in Bitcoin, you are getting the amount of satoshis, and you're having a, a flex fiat expense. So We will run both in parallel because there are customers who need one or the other, when we do it. The cool thing about, about doing the Bitcoin denominated, and I think why there's a lot of chatter in the industry, is what it can mean for the ecosystem and for the flywheel, and there's very, very exciting things and that are very much part of AnchorWatch's larger vision about how Bitcoin can be used as insurance capital or reinsurance capital, which- Then kind of unlocks, you know, more security, more safety, good things for the industry. But then by doing that, you're actually starting to generate yield, predictable, safe yield in Bitcoin For using that Bitcoin as insurance capital." }, { "speaker": "stephan", "time": "59:09", "start": 3548.94, "text": "Interesting. Okay. w-one other area, we touched on this a little bit around corporate adoption and what we're seeing now is this age- LBEs, the whole Bitcoin Treasury Company phenomenon has really taken off. and so you guys as AnchorWatch, you guys are interfacing, I'm sure, with a range of people all the way from individuals all the way up to large companies. Correct. Yeah. So what are you seeing? It, you know, what are, what are you seeing there in terms of like challenges, opportunities there interfacing with those larger entities, you know, institutional customers?" }, { "speaker": "becca_rubenfeld", "time": "59:44", "start": 3584.32, "text": "Yeah, I mean, yep. So there's definitely a lot of activity right now. Now, we're very busy talking to a lot of treasury companies that are coming on. so first of all, a lot of them are kind of making plans ahead, so their Bitcoin is either not in house yet or it's in escrow, and so they're making their custody plans for after their deals close or their insurance plans for after their deals close. but we're definitely seeing kind of a flurry of activity from these companies, as customers. And then there's also a lot of activity Of Bitcoin treasury companies, you know, all of whom have slightly different strategies or they're still kind of building out their strategies of how they're gonna execute, and increase their Bitcoin yield. And so then a lot of them have interest in, Bitcoin as reinsurance as well and thinking of it from this yield generation aspect and trying to figure out how to get involved that way. And I think that's a very interesting-- there's an interesting dynamic with that right now because- I mean, this concept, this idea of, of turning on the insurance flywheel, creating insurance products, selling insurance products, improving the security of Bitcoin by doing so, but when there's sufficient volume to turn on Bitcoin-denominated, raise Bitcoin, right? So take in bit-- Bitcoin from investors. Have it sit here in the reserve pool, underwriting the insurance risk, so it's not risk-free yield at all. You are literally underwriting insurance risk, but it is safe risk. It's predictable, it's driven by actuaries. You know, our existing product will have already been in market, so there's kind of proven loss history and proven, performance that investors can expect. And then we would be paying out yield denominated in Bitcoin to those investors that provided that- That pool of Bitcoin. So all these Bitcoin treasury companies right now are amassing significant sums of Bitcoin, and they're all in an arms race to figure out how they're going to deploy that, put it to use, to generate yield. and so there's- I mean, there's definitely a lot of interest, there's some misunderstanding, so I think there's, a perception that whoever has the most Bitcoin wins, in relation to, to being reinsurance. And I would say having a ton of Bitcoin I mean, you win in a lot of ways, right? But it doesn't automatically make you a re-insurer. you know, the re-insurance concept or having the opportunity to put your Bitcoin to use this way comes down to kind of really the, the customer, and the customer can be, in this case, two. One, it, it can be in a way us, AnchorWatch. So if AnchorWatch is providing the insurance, but we're accepting Bitcoin from investors and- And calling that the reinsurance, we, we actually choose who we want to take that reinsurance from, right? So if there's ten companies and they're all saying, \"Hey, we have thousands of Bitcoin, we want yield on our, our Bitcoin, take our Bitcoin and use it as capital,\" I can be like, \"Okay, at what terms?\" And how about you, at what terms? And how about you, at what terms? And how pleasant are you to work with? And, and, you know, what's the duration? And what's the lockup? And so- So it's actually on one side, it's, it's whome-- whomever is creating and selling the insurance products, we get to choose who actually the, the capital comes from, and then the other is actually other reinsurers, because the other way to deploy capital as reinsurance, Bitcoin capital, would be to go in and participate in fiat risk towers in the traditional insurance world. And so where you have, say, a large commercial risk and different insurers, you know- You know, one insurer is putting, I'll put in three hundred million, another insurer says, \"I'll put in two hundred million,\" and you assemble, let's, it's called a risk tower, let's say you assemble a billion dollar risk tower, you could come in with a pool of Bitcoin and say, \"Hey, we have some Bitcoin, we'd like to also participate in the risk tower, but denominated in Bitcoin.\" The other insurers actually, it's kind of a group negotiation, and they'll decide if they want to sit in a risk tower with Bitcoin. So meaning they might be okay with Bitcoin paying as an excess policy, so only if the policy is bigger than a certain amount, but they probably currently, in today's, environment, wouldn't feel comfortable sitting on top of Bitcoin, right? Because there's price volatility, and so they would feel that they have a risk of getting wiped out because of of, of that. So ultimately, who gets to actually deploy Bitcoin as reinsurance is gonna come down to who's creating and distributing it, that's us, as well as other reinsurers if they want to accept it in, traditional risk towers. And those are the two ways to deploy, Bitcoin into the insurance market, but it's gonna be huge. It's, there's, there's only so many ways currently to generate yield on Bitcoin. Many of them, you know, are, are relatively high risk re-hypo-re-hypothecation trading strategies. Even if you look at, you know, the, the life insurance Bitcoin-denominated, you put in a certain amount of Bitcoin, you pass away, you get out more Bitcoin than you put in. Therefore, the only way to get there is by, you know, doing yield-generating strategies, right? So doing trading strategies to make sure, that they're able to generate that return. Turn. so it, it, it is absolutely going to be a big important part of the Bitcoin ecosystem, and I think it's, it's a win-win too, because it's, it really is a flywheel. The insurance actually does improve people's physical safety, it includes-- it, increases their financial safety, it's, increases, adoption from TradFi, it lowers the cost of lending. So insurance does a lot of really, really powerful things for Bitcoin. Bitcoin for Bitcoin adoption, and then as that, that becomes more, common and accepted and the volume increases, then that turns on the flywheel for the yield generation machine, and it's all just very, you know, simbi-symbiotic and, and good for Bitcoin in, in the end." }, { "speaker": "stephan", "time": "01:06:28", "start": 3988.59, "text": "So Yeah, I mean, that sounds really cool. I think, for, cer-certainly from a, let's say, free market libertarian perspective, insurance is a big thing, in terms of like, you know, if you believe in anti-state or, let's say, non-state mechanisms for society, insurance is actually a big, big part of that. So certainly, I think the libertarians out there, certainly should be interested in that as a kind of a, at least the theoretical idea of it. of course, in the more real world, We have to think about our Bitcoin and what are we doing about keeping that safe." }, { "speaker": "becca_rubenfeld", "time": "01:07:02", "start": 4022.45, "text": "Yeah." }, { "speaker": "stephan", "time": "01:07:03", "start": 4023.49, "text": "I think the main objections I can think of would just be the mainly kind of the, let's say, the cypherpunk self custody maxie. but I'm curious to hear from your perspective, like, who-- like, let's, let's put this as the final question, who should use AnchorWatch and who shouldn't? Who, who is it for and who isn't it for?" }, { "speaker": "becca_rubenfeld", "time": "01:07:20", "start": 4040.68, "text": "look, al-- it's for almost anyone. Like, we, we tried to" }, { "speaker": "becca_rubenfeld", "time": "01:07:29", "start": 4049.01, "text": "As much as we could without removing the benefits. So for example, we understand that, some cypherpunks are gonna hate that multi-institutional recovery layer, right? that because, yes, they understand the ben-benefits, but at the end of the day, it still allows the companies to access the Bitcoin, and they don't like that. We tried to address that by making sure it's insured. that said, I would say as a result, it's really for anybody we have We do have minimum policy sizes of two hundred fifty thousand dollars, but it's quite affordable and we'd say economically it makes sense to consider if you're a whole coiner at this point. that's probably around thirteen hundred dollars a year, all the way up to the largest Bitcoin treasury company. So we're working on multiple billion dollar policies, assembling those risk towers now, so we can do the entire gamut and really the, you know, on our- Current vault, when we go through the game theory and we say like what we can protect you against, there, there is one thing that for just transparently to those cipher punks, we don't claim to be able to protect against government seizure for two reasons. One, the insurance contract specifically excludes it, as do all insurance contracts. So your homeowners, your car policies, they all also exclude government seizure. and then the vault itself that Recovery layer. In theory, the government could force AnchorWatch to sign our keys. We chose a multi-uh, jurisdictional, partner on purpose. Right. Coin Corner is in Isle of Man. Yeah. Exactly. So it's like the government would have to coordinate with another government, and that government, who's semi-autonomous and likes to be that way, would also have to agree and then force Coin Corner, and if they got the timing right, in theory, they could use that to confiscate funds. So That's the thing, if that is high on your personal bingo card, it, it transparently is probably not the vault configuration for you, maybe a future vault configuration, that is set up a little bit different. but what we have are a lot of customers that segment too. So they'll have their, maybe their non-KYC, their government resistant, their, their secret stack, that I know nothing about, and then they're-- they have their inheritance stack, like, and that's their anchor watch stack, like. This is what my family cannot lose, it's our backstop if anything went wrong, and that's what we put with AnchorWatch with the extra security and the insurance, and then maybe they have a third stack. And so we've seen customers kind of, addressed that through segmentation, but really we're, we're happy to help anyone currently in the United States and very soon in the UK, with global expansion by the end of the year." }, { "speaker": "stephan", "time": "01:10:25", "start": 4225.82, "text": "Fantastic. Oh, yeah, I didn't realize it was, US and UK only. So," }, { "speaker": "becca_rubenfeld", "time": "01:10:29", "start": 4229.56, "text": "On the insurance, it is, yeah. Yeah. on the custody side, we can do custom, uninsured custody for large entities. happy to talk to those customers now. And the insurance itself, we're expanding, rapidly around the world." }, { "speaker": "stephan", "time": "01:10:44", "start": 4244.01, "text": "Excellent. Well, yeah, I think it's interesting, and people can check it out. put the, the links will be in the show notes as always, but it's anchorwatch dot com, and you can follow Becca at Becca Amy Lee. I'll put, as I said, links will be in the show notes. Becca, thank you for joining me today." }, { "speaker": "becca_rubenfeld", "time": "01:10:59", "start": 4259.04, "text": "Thanks for having me. Great to see you." } ] }