{ "episodeId": "SLP763", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "michael_tanguma": { "name": "Michael Tanguma", "role": "guest", "tag": "MICHAEL" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.0, "text": "Hi everyone, welcome back to Stephan Livera podcast. Rejoining me on the show today is Michael Tanguma. He is the CEO and, co-founder of Onramp. Welcome back to the show, Michael." }, { "speaker": "michael_tanguma", "time": "00:08", "start": 8.0, "text": "Glad to be back. I always get a trip down memory lane hearing your voice, Stephen, because, back in the day, you were one of the, the few podcasts that existed that were Bitcoin only and got a lot of learnings, specifically, technical learnings, so yeah, always good to be back." }, { "speaker": "stephan", "time": "00:21", "start": 21.0, "text": "Yeah, no worries, man. Of course For, you know, just many people, and, obviously that's caused a lot of discussions. I know you've been out there talking a lot about, obviously, what you're doing with multi-institution custody, and I guess the broader- Community, whatever we wanna call this, Bitcoin ecosystem, Bitcoin network, Bitcoin, you know, group of Bitcoin enthusiasts, whatever we are, are having conversations about self-custody. Now, the extreme views are kind of like, \"Oh, self-custody is dead,\" and on the other hand, it's more like, \"No, people just need to do multi-vendor, multi-sig, or whatever other thing, pick another hardware wallet.\" so give us your overview on that." }, { "speaker": "michael_tanguma", "time": "01:04", "start": 64.0, "text": "Yeah, I mean, I think the key principle that I, I believe you're here for, a mishappenings, any negative connotation you could put is around inflation, debasement of the individual's time and purchasing power. And Bitcoin was that first time I think, and honestly, like, Bitcoin opens up this whole aperture into like, will gold outperform most things over the past thirty years? And it's like, we need to return back to a, a hard asset from a economy when it comes to, value attribution, just everything that we see all the- A lot of the negative consequences. So if we go there, then the core idea for anything I'll talk about or what we build is how do we make it accessible? Because my background was traditionally in-- it was in traditional tech and then was building out collaborative custody solutions, and I just recognized there was a ceiling on the skill, the, the inherent limitations on that. And this is timely because I've heard, and you've probably-- maybe you've heard this, I know individuals listening have, at least three to five individuals I've heard that were prospective clients that said they were thinking about trimming. Or getting rid of their Bitcoin position, and I think that sounds crazy to us because a lot of individuals that I think listen to your show and where we kind of came up in this industry are like, \"We're going down with the ship, right? It's like, it, it doesn't work. What, what else do we got?\" But you have to remember, there's a lot of individuals that are like halfway through that metaphorical Bitcoin standard book and they're like, \"Like it, get it,\" but really when you look at flat price from '21 and then all the other, Oh my God, because everyone said this was the thing, they used it, right? And, like the people that were, were positioning that it was a solution. And where do I go from here? And I think that, that is the more, like, thing I would like to discuss, and I think just a broader conversation that needs to be had, is we've only had the room that's existed in, we have to self-custody this asset and take full ownership of it, or we have to leave it with a third party custodian. And when you think about it at its new way to manage it and hold it, and I always go back to the nineties and the internet, like when Time magazine or whatever article that used to review in paper like this, when it went online, it first looked exactly like this. There was nothing dynamic about it, it was just you're looking at the exact static, and then you can look," }, { "speaker": "stephan", "time": "03:30", "start": 210.0, "text": "yeah," }, { "speaker": "michael_tanguma", "time": "03:30", "start": 210.0, "text": "call it five, ten, fifteen years, really the iPhone was that ability to hold, something your f- on your person that had GPS, and that's where the consumer internet, in my view, thrived when you Etcetera. So anyway, the point being is I think that we're still so early in Bitcoin that we're sh- walking around in the dark, and what worked in twenty twelve is expected to work in twenty twenty six when the price is six figures and AI is proliferating, and it fundamentally doesn't, but nobody's having that conversation. They're still thinking it's ETF or a hardware device." }, { "speaker": "stephan", "time": "04:01", "start": 241.0, "text": "I, and I think you can relate to a lot of this, is many of us who've been around Bitcoin for a while We probably came from some sense of ideology, right? Whether that's libertarian or cypherpunk, like I'd say that those are probably the two most kind of aligned with Bitcoin ideologies, but I wonder y-y-you know, are we kind of tapping out on the numbers of who's gonna on board because they're a libertarian or a cypherpunk, and now it's more about pragmatism? Even if many of us hold ideas like that, we have to sort of- You know, come at it from a pragmatic perspective. I think obviously you're coming from something similar to that, but I guess the challenge would be, are in the drive to be a pragmatic, big tent, you know, ecumenical approach, whatever, are we losing some of the things that Bitcoin, you know, that makes Bitcoin special? I think that's probably the main challenge or counter to this, the pragmatist view. What do you think?" }, { "speaker": "michael_tanguma", "time": "04:55", "start": 295.0, "text": "Yeah, so I think like we have a deep fallacy that's been built into a lot of the Bitcoin culture Of, you know, when you think, when you look at any truth or any narrative, they generally start somewhere and then they kind of like lose its way. And I think a lot of individuals, and Alex Leishman has a, has this quote, he said a few years ago on a podcast, which was, if you have to explain somebody, somebody has to explain to you to self-custody asset, you probably shouldn't. Right? And you think about, the notion of how many people have these cold cards that couldn't, that never moved a transaction, never used it. Forget about like getting, hacked or the assets being lost, like they just couldn't move the assets off because they never utilized it. And that's really where-- that's a small microcosm of the lost first principles, logical thinking of like, how do we get here? So now going back to the fallacy of, like, I've said this forever, I don't necessarily know if we talked about it on the last time, But it's this notion that it was always crazy to believe that everyone was gonna self-custody or that's how we explained it as the only way. Now, I counter that, and I'll sit, talk out of the other side of my mouth, is like in 2012, it was either Mt. Gox or hardware device, and that made complete sense because you couldn't trust a third party custodian. I still think no matter what we talk about here, you should always try to figure out how to manage those assets outside of single point of failure, because I would never tell somebody servers is manipulated, your assets are gone. So I would encourage either maybe not buying until you get comfortable with it or finding some other like, collaborative or some way to not have a single point of failure. But the main point in all of that is that, that acknowledgement of, not your keys, not your coins continued and the game and the stakes changed, because if you think about, so many things happen at a personal level from somebody that got into twenty twelve or twenty sixteen, from the age ten years, mortality becomes real, parents- You're probably getting older, passing away, you had kids, the asset is ten to a hundred x, and so you have to think like, \"Well, does that make sense?\" And also there's more awareness on this asset, so there's more, physical threats, that could potentially happen. And so I always go back to like, nobody in the world would ever tell somebody to take a full, all their gold or cash in a duffel bag and put it underneath their mattress, but we felt it was okay to do it in Bitcoin. And again, directionally, this is You can hold more Bitcoin in your met-- in your hand, right, in a device, but it's still a bearer asset, and if somebody gets a hold of you or it, it's theirs. And there's a reason why gold were in goldsmiths and banks. And so I think the last misnomer, and I-- it's something I wanna work on, is, it probably wouldn't take much with, with Claude, is effectively like, what is the directional estimation of gold? And I think we'd all be shocked at the level of centralization that sits, and Or a dumpy trade. Hold on, I, I would," }, { "speaker": "stephan", "time": "07:51", "start": 471.0, "text": "there's one area there that, like, many Bitcoiners would push back, and I'm sure you yourself would have pushed back, they would have said, \"Hey, gold got centralized, and that was how it got ca-captured, right?\" Yeah." }, { "speaker": "michael_tanguma", "time": "08:00", "start": 480.0, "text": "I love that. So that is, I was just on BPI's pod, and this is the big thing, like, there's different levels of a conversation around like reopening, what is Bitcoin, and what makes it special. And you just hit the, the Two million coins or nineteen million coins, I think we'd all directionally agree that it could still work, the, the number's arbitrary. And then the second thing is if there was inflation, I'm not saying I want inflation in Bitcoin, but if it had two percent, one percent, three percent, gold was still money for thousands of years and had some level of net new supply that came in annually, you could probably make the case it could still, via its monetary properties, still be money. The thing that makes Bitcoin different, and the reason why we don't look at it today like this, but we will in fifteen years, in fifteen years we will be shocked, that we held this amount of Bitcoin in ledgers, cold cards, and trezers on our person next to our family, in the same way we'd be shocked that we had, let Coinbase hold this much of it with one bad thing happening and it's gone, is the thing that will make Bitcoin different than gold, and the thing that'll allow it to persist in the future as a sovereign reserve asset, is the thing that asset layer, because gold failed, even though the fiat people will say gold didn't fail, it's twenty trillions, like, well, gold definitely failed because the amount of dollar claims compared to the gold is sig-insignifi-or is significantly less. The point being is the fact that you can insert governance at the asset layer has never occurred because Bitcoin is a technology, and when you do that, you can start to build a whole level of financial services, specific-specifically starting with custody, because custody is the base level for all financial services." }, { "speaker": "stephan", "time": "09:40", "start": 580.0, "text": "I see. So in simple terms, the fact that we can have multisig, right? Like, and even like miniscript and other, you know, fancy things that allow us to programmatically share the control of it across, you know, whether you're doing a DIY multisig or whether you're doing a multi-institution custody or even, I mean, could even a single custodian say, \"Hey, I'm st-storing shards or keys around the world in different jurisdictions.\"" }, { "speaker": "michael_tanguma", "time": "10:04", "start": 604.0, "text": "Exactly, because it changes the logic of violence. so to go out and then back in is like Just thinking about escrow, me and Parker and like people, we would talk about this in, in Unchained back in the day when it's always known, and I still think it's kind of like this. If you're buying miners, you generally have this black box in China where you're sending the Bitcoin to, and then you're just hoping that the miners show up. And it's like, well, there should be a better way. What if you had a two of three multisig and somebody's sitting that as an arbitrary in the middle escrow? But that's what it's Commodity. and so then just to tie it all back together, analogy I've been, I've been thinking about is, there's two sides of it. One is like really private keys and holding your own assets are similar to like firearms that I think everyone should, it's what keeps you in the United States and other countries free. But the reality is that it takes real responsibility and practice and utilization on a reoccurring basis, and people just don't do that. I have my own experience with Coldcard, I use the barbell approach where I hold the majority of my family's And then I have like that metaphorical bar of gold that I can always just leave with, with a passphrase and clone. I hadn't touched it in two years, I forgot how I generated 'cause I was using a password and a Q. I couldn't remember which I generated, I had the passphrase. but the point being is I also didn't even remember like how to move it, because I couldn't rem- like, you know, when you have to pass the PSBT, luckily the, the Q is nice with the, the QR and stuff. The point being is When somebody breaks in your house and you have a gun, if you haven't touched it in six to twelve months, it's not a great position to be in, and it's very similar with private keys and telling everyone to use them. And the angle that I look at, and we can talk more about, like that, I don't think it's right or wrong, it just is in how Bitcoin is going to proliferate and grow. Was not gonna be the utopic version of we all hold our keys and live in a citadel. That was always insane to me, because I kind of live in a citadel in the middle of Texas, and I always know that somebody will come bigger than me and come take it. There's a rule of law and there's trust that has to exist, if I'm holding all my Bitcoin, somebody eventually will just come for it. And I liken it to, a town with like law and a town without law. Right? They both have advantages and disadvantages, but I think most people in society would rather live in a town that has paramedics, legal, laws, and then police. But in that same respect, you still, if you're living there, you don't have pure anarchy, you have rules, but everyone is able to live, your kids can grow up. The point being is, as that flourishes, what you naturally do is you train yourself and you train your children to be able to manage firearms, because why would you want to rely just solely on the rule of law? Because bad people can, you know, bypass that. And so you naturally end up in this world where your house is protected, your community is protected, and then the, the town is also- protected because of the rule of law, and that's what private key ownership looks like. And the analogy is, I see that Bitcoin proliferating, if it's gonna be successful, is you're gonna wanna daisy chain effectively risk by having custodians sit across the world, sitting across key ownership, ETFs, banks, et cetera, et cetera. And then as it kind of proliferates, individuals will naturally take that version of taking a little bit. Mobile phone is like the equivalent to cash in your wallet on yourself. That's like, you know, whatever. But when you wanna Participate maybe in that coro, maybe you're holding different keys. Ideally, keys will grow and they're not one-to-one relationship. I think that's where a lot of the stuff gets lost is we can go down institutional key generation versus individuals, but you can see how it looks, not necessarily as distributed as everyone holding a UTXO wallet, doesn't look like ten custodians holding all the gold, how gold looks, it sits in this middle layer, and I think that's a big misnomer in just general fractals of societal evolutions as we think We're gonna just go to the utopian version, but we're just like s-slightly marginally decentralizing power structures, and that's, I think the was always gonna be the way Bitcoin was gonna work." }, { "speaker": "stephan", "time": "14:02", "start": 842.0, "text": "So yeah, so kind of a moderation, as Bitcoin matures, like it's not, we're not gonna get that kind of full, the full-blown cyberpunk vision, let's say, but, it'll be something in between. and it's true to say that, you know, sometimes a small number of people can come out with a technology that does genuinely Like Signal is used by how many, hundred million people or WhatsApp is used by how many billion people or whatever, right? So these are some examples. but then I guess, yeah, go on." }, { "speaker": "michael_tanguma", "time": "14:32", "start": 872.0, "text": "Well, one thing I wanted to share is like, I think that I, I personally feel like I sit in a privileged position only because I spent so long working with individuals formerly at Unchained and now at Onramp. Helping people onboard, to Bitcoin, whether they were buying their first purchases or moving off of single-sig into collaborative custody, that you get to just get a real visceral feel and taste for what people will tolerate and what they won't. And I'm sorry to, to share it, but it's like, not everyone A wants to be their own bank, but B, they, like, the biggest angle or like secret I believe I hold is the fact that the reason why people in Bitcoin isn't hundreds of thousands, if not millions of dollars, is because, the asset keeps getting lost, meaning custody hasn't been figured out. Because there's a negative space out there that whenever you talk to peers or folks in your network that aren't Bitcoiners, they'll generally tell you that this is, a speculative asset or it is Hey, it, it's crazy. Sorry, I have the audio. There's like, I think somebody mowing the grass." }, { "speaker": "stephan", "time": "15:29", "start": 929.0, "text": "Oh, right, yeah, yeah. Oh, okay. Well, yeah, I guess what you're getting at is that because the security story isn't kind of locked down for people, you're saying they don't feel as comfortable, right? Is that the main--" }, { "speaker": "michael_tanguma", "time": "15:39", "start": 939.0, "text": "Well, yeah, the main version is that they tell you it's speculative or it is a Ponzi because every couple months or years, the asset- Blows up, right? They see a hundred thirty million here, FTX, Celsius, BlockFi, it's" }, { "speaker": "stephan", "time": "15:51", "start": 951.0, "text": "BlockFi," }, { "speaker": "michael_tanguma", "time": "15:52", "start": 952.0, "text": "it's Mt. Gox or whatever. And so, and so, what they're telling you is that, okay, you're giving me a problem, not a solution, because you're telling me, \"Oh, you fix the money, I can have scarcity, I can store my wealth.\" But all I know is I have to figure out how do I secure this thing, and am I gonna go down that? And the, the hyperbolic directional version is, \" Then a hundred percent loss on her cold card." }, { "speaker": "stephan", "time": "16:15", "start": 975.0, "text": "Right. Yeah." }, { "speaker": "michael_tanguma", "time": "16:16", "start": 976.0, "text": "And so that's the reason why this asset hasn't been adopted and people look at it as speculative. So until we do that, and the analogy that I keep going back to is we're in the '70s and computer era, we all get on pods like this and we meet at the meetups and we argue about what's the best seed signer, cold card, et cetera. When in reality, the way you're gonna cross the chasm is people just built a PC, shipped it to them, it, they open" }, { "speaker": "stephan", "time": "16:39", "start": 999.0, "text": "Yeah, gotcha. Now, the obvious, kind of the thing that a lot of people are talking about now is kind of things like a bit key, right? Like where you literally-- the user-facing, you know, individual, the end user doesn't even see the twelve seed words, it's, you know, do-- dealt with by the app and the device and so on. So that's kind of something people are talking about, or even like a Casa-style approach where maybe you can have like a two of three, but you only have to deal with one key, like hardware Maybe the Bitkey is probably the easiest example. What, in your view, is the, a challenge or the problem with a Bitkey approach?" }, { "speaker": "michael_tanguma", "time": "17:17", "start": 1037.0, "text": "Yeah, so look, I love Miles, I love Jack, I love Square, I think they have the right, Vision, I don't think it's the right implementation long term, and specifically why is because what I shared before. I've seen the bands and limitations of scalability, meaning from adoption or just movement of the asset once people get uncomfortable. Because the problem is, and there's two anecdotes to share, one is I saw a lot of people lose assets on BlockFi and other firms because even though they built an Unchained or, and this isn't to talk about Unchained, it could be Casa, it could be anything, it's the notion of if somebody's gonna really do it right, they have Devices, seed phrases, wallet configuration files, they have to segregate them if they're doing it correctly. Everything, we don't have to go deep there, most people know. And most people on a one to two hour concierge call I can't wrap their heads around what I just did, so they're either blindly doing it, which a lot of people do, and you can make the case that's okay, or if they're rational, the thought is, \"Well, I'll just leave it in the status quo.\" That's what we're always competing with. We have a whole article called Schrodinger's Wallet, which is this whole idea, and I know everyone's felt this, including myself, which is, \"If I don't touch the wallet, it's there, but if I touch it, it might be gone,\" So the point being is that people left their assets on BlockFi and they lost them because they didn't feel comfortable. And then as the assets appreciate, you naturally end up in this spot where the assets appreciating and you're starting to get more and more uncomfortable because you have all these things that you're having to manage, I used to fly out to the GCC and I was using collaborative custody, and it's like, well, what if somebody's visiting my house? My wife had somebody do the cabinets, it's like, oh my god, I have cryptographic material there, like that's a problem. Do This is where I really kind of get a little bit, energized or upset, which is the first conversation, it's kind of tied into this, post Coldcard was we need more dice, more, more multi-vendor, multi, multi-jurisdictional, et cetera. It's like, that's not the solution simply because the game changed in '24 in my mind with AI and the price and bad actors. So you're just have a moving target on risk now. So you're effectively gonna always be moving with more vendors, more roll, dice rolls, because you just don't naturally know in the, the, the area of the price, as well as the tech is moving too fast, that from a consumer perspective, I liken it to like AI, is like a lot of people are just gonna use third party harnesses or another model, they're not gonna like house their own GPUs and, and build it, and people will do that, but that's not like, commercially scalable and viable to Oh, use AI, go and develop that, and that's equivalent what it's going to in self-custody, where the conversations has gone post Coldcard and will continue to go. Interesting." }, { "speaker": "stephan", "time": "19:55", "start": 1195.0, "text": "So you don't think that- Like you could set up a, whether it's a two of three multisig multi-vendor or a three of five, let's say you use a, a collaborative custody, you think that, that people can't feel comfortable with that as a longer term setup, that they have to really spend a lot of time in the maintenance and the worry, the quote-unquote worrying about it? Are you saying that is the main downside or what are you saying?" }, { "speaker": "michael_tanguma", "time": "20:19", "start": 1219.0, "text": "Well, I would say that it probably, like most things, is not black or white. I was playing around with Claude or Anthro, Custody, and then what if I have fifty million dollars? And it naturally went through this experiment. This was a separate window, wasn't anything related to what I work on, it was like multi-institution custody for eighty-five percent, and then ten percent was in a collaborative custody, and then five percent, was in some kind of like, I think single, single-sig kind of custody. Point being is that, like collaborative custody, I love, like, we can go down how many things aren't great for it. I think it was a perfect stopgap because multi-in Collaborative custody, you can go down the long tail of how are you supposed to verify, manage, and build all of it. How do you keep it and persist it into the future? Because we can talk about financial services from inheritance to dynasty trust, but then as you go further out There's two big things that nobody talks about. One is how do you access financial services, because this is money. So if you're always looking over your back and shoulder on who's tracking you and where it is it live, because if you do it right, it's not in your house. So that's a problem because you don't have access to your wealth. If you do it wrong and it's all in your house, well, that's another problem because if the house burns down, somebody knows where you live, they can come find it. But then if you take it even a step further, Access to financial services, and then how do you know, the, like, you have to be able to manage all of it outside of if the vendor goes away, and as the price appreciates, the market structure is the biggest thing that I think most people aren't, pricing or thinking about. And market structure means it is insane that we tolerate that people get hacked. And robbed and killed for their Bitcoin, and they get-- this happens everywhere, but from a numbers perspective, the ratio is much larger in Bitcoin than like somebody's equities or bond or gold, because there's market structure around time, friction, movement of any asset, right? I think I talked, used the analogy before, it's like nobody g-- goes and robs Jeff Bezos for a hundred million dollars in equities, 'cause he has to go sell it, hit the market, get the dollars wired to his bank, go get the duffel bag, the person's already captured. But in Bitcoin, this notion that a large percentage, right now it's like close to fifty percent, hold in self custody, and that just on this call right now, we can probably find, a HubSpot leak from Ledger or whoever, we can run it through Claude, we can tie it into Apollo or any enrichment tool to find whose, name, where they live, you can probably get a chain analysis tool, that's how I think the Coldcard deal initially started, to find out, their UTXOs, their balance, et cetera, and then you can just you know, across the world, do I go physically? Do I get their phone number? I've talked to clients that old or old, and they said, \"Hey, I'm down the street, I'm coming to your house, unless you send me the Bitcoin.\" They're like eighty years old. You see where I'm going with this? It's like nothing like this happens in any other asset, and we just tolerate it because it's like, \"Well, not your keys, not your coins, or I gotta go to ETF.\" When in reality, if you change that market structure and Like you just change the dynamic on violence, on what does it look like. so anyway, these are just some of the concepts that will naturally grow, and then I do think there's gonna be hybrid where you can imagine in the future, it's just not right now for a number of reasons. But imagine there's a three of four where you hold the key and legally you have to sign first before the other two, s-sign, and then if something happens to you, hardware device fails, there's a lock for thirty days. Like this stuff will proliferate, but we're so early Somebody onboards in a couple minutes, they get access to multisig vault, three different, custodians participating there, the assets are there, segregated, loads of money, and insured, and they just go back to their life, kind of like that MacBook analogy." }, { "speaker": "stephan", "time": "24:08", "start": 1448.0, "text": "Yeah, I see. Now, probably the other big one is the social engineering challenge, right? Which I'm sure you're dealing with, almost everyone, almost every company is now dealing with this kind of idea of, scammers who are either social engineering, you know, people who are vulnerable, maybe they on mind or whatever, or just, you know, hackers trying to get in and impersonate your actual customer, and the whole deepfake thing. How do you address that, that side of it? I guess this is, this is not just you, but in general, right?" }, { "speaker": "michael_tanguma", "time": "24:40", "start": 1480.0, "text": "It's a great question. Hopefully it's not too much information from our compliance and operations side, but funny enough- I don't think we got one from multi-institution withdrawal, or bad actor trying to get into that product for about three years. We recently, about three months ago, launched Onramp Finance, which was like a lower tier because I think one of our things with our branding was intentional. We try to go higher into the market, to start and then go down to serve more and more individuals. And so we launched a free tier, which isn't multi-institution custody, it is insured, it's with BitGo, but then we have like zero cost DCA, IRAs, everything you would want, and even earning on cash. But the point being is, when we launched that, that's when we got an influx of, to your point, bad actors. Pig butchering's the big one. It's a crazy concept because it's hard to like actually pinpoint if it's fraud or not because it's somebody that's, effectively manipulating an older person to pretend they're But the point is that I think natural when you, and this is how I think about sixty-one o two as well, is when you change the logic of violence and the ROI of a honeypot, it changes the dynamic of how much bad actors you have to deal with. If you're a centralized custodian, it changes versus if you have something like multi-institution, you have multiple, video verifications, two FA, even on-site having to verify, there's different aspects that would require, so like on the video verification, we use liveliness checks, so we have require that AI is looking at AI to make sure that that isn't, you know, that's an actual human. There's multiple independent entities involved, but then you could even take it a step further, which is like you can provide some kind of like UTXO movement of, BTC. We have this, we don't use it a lot, it's called Guardian, where somebody has to move from an address that's predetermined into another address via private key they have. It's really technical, but we have people that have thousands of Bitcoin with us, and that's what they want to see, A lot of this going in Australia, you, you, New York, think about all the bank branches that exist. The way I think of Bitcoin scaling is there will be different implementations built on multi-institution custody by different types of banks, and we will go back to more localized, relationship-driven financial services from lending or also the authentication, because if you have a digital bearer asset and you're moving over ten percent, it's just logical you'd wanna physically, identify yourself." }, { "speaker": "stephan", "time": "27:00", "start": 1620.0, "text": "Yeah, I see. now, I-- to be fair, also, as, as you've been pointing out, it's not necessarily all or nothing, right? Like, you can choose to have some of your stuff in single signature or in multi-se- like maybe multi-sig but with your own kind of DIY or collaborative setup, and then some of it in a multi-institution custody setup. And I think it probably some of these questions start to become more relevant as the number rises, right? Like, as you start to have more and more, this is kind of a thing I've even Just like kind of colloquially, I'm not gonna dox individuals, but kind of colloquially, there are some high net worth people who do that, like they have some in self-custody and some with a institute with a custodian or some with a bank or some with whatever, because they might have loans or whatever on some component of it and the other stuff is in self-custody, right? So it's kind of, it's a mix." }, { "speaker": "michael_tanguma", "time": "27:48", "start": 1668.0, "text": "It's exactly right. It's, only rational that there'd be a mix because you have different use cases. the angle, rest in peace, Coldcard and whatever it goes on there, but MFK said this and it was true, doesn't make it less true that you wanna ten x your security, like the Bitcoin price is ten x 'cause it eventually will be, and that's the craziness and why this conversation's so important and where we go from here is because the price of Bitcoin is gonna be six hundred and fifty thousand dollars before we know it, and then I don't Nobody would objectively say like, \"That's gonna be a crazy world for a lot of these things we're talking about,\" but nobody's presented an answer. And the other thing that I think is a really big fallacy, that's not deeply understood when we talk to tradfri and Wall Street, is we bring up the question, and I'll bring it up, of like, \"Oh, do you know where most of the Bitcoin sits or who holds it?\" And they kind of like look, and it's like they think of like BlackRock and institutions, but in reality, this is a And the reason why they do that isn't ideologically driven, it all has to do with game theory and self-preservation, because you need to, you know, sever the internet connection. So when I talk about where this goes, to your point, like I don't, I have no question that if Bitcoin's successful, ETFs will do this, exchanges will do it, because from a game theoretical perspective, once somebody has real exposure to this asset, you can't get knocked out of the game by having a single point of failure, and all of these things are single points of failure. And so in Bitcoin, terms, the game theory around adoption is the same thing around game theory around adoption with multi-institution, 'cause people are competing with Coinbase, and Coinbase and Fidelity and ETFs are the Exposure. Nobody's going into an ETF with ten to fifty percent of their net worth, like they know better. Nobody's going into ten to fifty percent of their net worth into Coinbase. It's institutions that don't wanna get fired for allocating to Bitcoin, you go to Coinbase. But it's just rational that once you get to that gut punch level, that's probably ten percent or above, you know you need to either diversify custodians, segregate in different levels like you described, or if another firm is offering something like we're offering, the right National thing to do is just to go to the place where three's better than one. It's not really rocket science, it's just like Bitcoin. Bitcoin's not, you know, an IQ test, it's a common sense test. Very similar with multi-sig institutions, like what I want a portion of my assets that can sit in a place where nobody's a single point of failure, the firm that's offering it, including myself, or would I want to leave it there and then we can go into- Again, just financial services, like I've had no shortage of folks that you would be surprised at leverage our platform, and, they're specifically because we have certain products we're rolling out related to, like, home mortgages as an example. It's like, how can you get a mortgage or a loan if you're self-custodying the asset? And it's like, do you want to give it to Coinbase and hope to God for thirty years they're gonna be there? Or Dynasty Trust or another big one? There're probably different naming conventions across the world, but in the US, very Targeted all the way to, privacy, and then, tax avoidance, because you, there's certain gift taxes that you can allow per, like a state is, I believe, fifteen million dollars for a couple, so you can take those assets out of your state, gift them into this trust, so you bypass some of the tax obligations, and then everything that grows in that trust, when you pass on, when you pass away, you don't have death taxes, the death tax usually hit forty percent. So we have a whole analysis that we've run where you're basically saving Like call it a hundred million that you were giving at your death, forty million would go to Uncle Sam if you just held it in a traditional way, but you can't do that on your own, right? Like, an IRA account is another example. You need a construct that lives within a legal system we still operate in and, ability where you don't have unilateral control to move it and then you kind of lose all those tax benefits. Like that has to grow for people to have wealth." }, { "speaker": "stephan", "time": "31:40", "start": 1900.0, "text": "Yeah. But I mean, to me, it just comes back to something I was mentioning earlier, Steve, there is a threshold. Like, in the extreme case, like if everything got centralized into a few custodians, would that represent a challenge to Bitcoin? Right? Like, is there a, is there a threshold above which it gets too centralized into, in the custodian sense?" }, { "speaker": "michael_tanguma", "time": "32:02", "start": 1922.0, "text": "I, I definitely believe that. I believe that because we saw that with gold. I believe that because there's two paradoxical things that happen when you centralize a decentralized asset, right? Like, a, it's like water in my mind that if you put too much of Bitcoin, this is really kind of like the thing that doesn't even get talked about with MSJR, but Coinbase is the easier example to pick on, is at what level does the honeypot make so much sense for somebody to go and attack, and then where's the existential, existential- Risk come from. The other side is just the claims. When you think about manipulation of the market and if we're gonna go, I don't see how the dollar persists, how crazy it is for the next ten plus years. And so whatever world where you can see Tether's the closest to doing this, where they're effectively backing dollars, the credibility, I think a lot of people would agree we go to more of a free banking style era where the reputation of the note issuer is backed by the credibility of the firm, coupled with their balance sheet, right? So Tether's doing this with gold, Over a long enough time horizon, treasuries might be looked at as funny money. You're gonna want gold or Bitcoin in there. And so the point being is, well, what if you only have three custodians that have the BTC and then they have all these paper notes? And so logically, you would want that distributed sufficiently enough so then, like, in free banking, there was a bank run, and then you just cleared, the market cleared the price of, like, it's liquidated, people take their licks, and you move on. I definitely think that if you have" }, { "speaker": "stephan", "time": "33:32", "start": 2012.0, "text": "What we want to see is many, many high quality custodians all around the world, different jurisdictions, to try to diversify that risk. And then, does that mean you would then, as part of your setup, be looking at, \"Oh, okay, like we're gonna start rotating, maybe we're too heavy in North America, we're gonna have someone in, whatever, Middle East or in Asia or in Europe or this kind of thing.\" Like, is that, that's-- I presume that's what you're looking at as well, like longer term?" }, { "speaker": "michael_tanguma", "time": "33:56", "start": 2036.0, "text": "Yeah, I mean, I think Holisti top-down level is like multi-institution is effectively just a, a new application layer for custody or financial services. Anybody can plug in, it's open source, interoperable, that's the beauty of it. Like we have it with a, another qualified custodian, Tetra. So like if it's on a Tetra and Coincover, you can effectively take that wallet configuration file, load it into Sparrow or Caravan in audit and view, and you never need on, if you wanted to go outside of it to move those assets. So that's what makes it really robust, And so the core idea is that right now in digital assets, in Bitcoin, because it's so limited, you have this like, if you're a fintech or a bank, you really only have two options, you can buy or build. Right? And then you can like give it up as sub custody, but nobody really wants to do that rationally or logically because you're just giving the client, experience to the third party like Coinbase. So what if there's another way? And the other way is if, and so going back to the application layer, when we launched this business, we launched a fund separately to this, and it was very eerie, I didn't know this at the time, but when Apple's App Store rolled out, the Kleiner Perkins actually started a hundred and fifty million dollar fund to invest in companies that wanted to build in that and that helped jumpstart that, product. And so we have, a licensed entity in the GCC getting licensed by a central bank. We have, Tetra American firm we've invested in that's starting to, to, we'll hold a key in El Salvador, Mexico, TBD. But the point being is we don't need, you don't have to just invest in a firm like we're talking with other firms to plug in. But the way that this will go, and I think a lot of people miss it, is that Bitcoin is money, money requires financial services, financial services at their core are relationship-based. Well, where are relationships? They're local. So it's rational if you're in El Salvador, the GCC, or Asia Pacific, you're gonna want custodians that are locally based there. Why would you wanna send it all to San Francisco? And so firms will be able to, either if you're a fintech or a bank, you can plug a key in, you can leverage a coreum that will be, you know, native to there. So think about like Asia Pacific firms, whether it's SBI or whoever it is that's in that region that people are familiar with. that's how I see this going, and then there's the whack-a-mole because you don't necessarily know what core and what configuration is the one to target because it's effectively distributed sufficiently across that, and then you'll spawn off even more where you can imagine a client can now start to participate, like a holy grail in my mind of where we're not there, but we'll go eventually is client with a thousand, ten thousand Bitcoin, and it'll go down, we'll go down market, you always start at the top to, to, to support and make sure you can monet The thought that you have multi-institution for X percentage, and X percentage is your risk profile, and then you oscillate into maybe a two of three where you always know you have unilateral control, and if anything gets weird, 'cause this comes up a lot on sixteen one o two, it's just logical the smoke is gonna be around centralized custodians, because you only get really one bullet if you're gonna pull draconian measures. How are you gonna go and try to like say, okay, now I gotta get multiple ent-entities all of that, and then you can move those assets off Let's try one place you can easily pull it out, and so that's where the key thing to wrap on that is just like, I think we kind of got, went down this fallacy of we're gonna recreate the wheel and we're just repurposing it." }, { "speaker": "stephan", "time": "37:18", "start": 2238.0, "text": "I see. Yeah. the other obvious one, the cost. We should talk a little bit about that right now. As we said, no one-size-fits-all, and it's not even all or nothing, right? But just hypothetically, let's say you were gonna do comparing against DIY multisig using, you know, three hardware wallets, what's that, couple hundred dollars, maybe a vault, whatever, like we're talking like maybe a thousand bucks a year-ish carrying cost-ish, let's say you go to, you know, Unchained or Casa, something Premium where three or five. How does that compare with Onramp in terms of the ongoing cost that you pay?" }, { "speaker": "michael_tanguma", "time": "37:56", "start": 2276.0, "text": "Yeah, it's a great question. I think one of the other big, Just lost things here, and this comes from fiat, is that custody fee should be zero. And this comes from like the Robin Hoodification, Schwabification of like when you go trade in an equity brokerage, there's all these crazy things they're monetizing in the background so they can charge you nothing, and that ported over to exchanges and crypto, right? Because if you go trade anywhere, there's no fees for custody, somebody has to pay for all the architecture, you're paying for it in risk coupled with monetizing those other fees. And so we actually have an article coming out tomorrow related to The difference between what somebody will pay and what they want is like night and day, and then you can take that even further, the difference between what a what a bitcoiner wants versus what they'll pay for, they're fundamentally different" }, { "speaker": "stephan", "time": "38:37", "start": 2317.0, "text": "revealed preference, yeah." }, { "speaker": "michael_tanguma", "time": "38:39", "start": 2319.0, "text": "Yeah, because when you talk to a bitcoiner, they want it multiple jurisdictions, UAE, GCC, they wanna participate, they want it one to one backed insurance, et cetera, et cetera, but then like you say, pay for it, because you can build all of that, they'll be like, \"Uh, not my stack So where we started was on a higher part of the market because ultimately the way I looked at this, and this is something that people deeply still don't believe to be true, and this is why like Schwab is an example, 'cause we have intimate knowledge of like kind of some of their thought process of coming in, was they didn't know where to come in because you have ETFs that effectively created this like monkey's paw of fifteen bits or twenty bits come in, but they're like it's a loss leader for them for a number of reasons, and so people are still pricing against the hardware But in rational thought is like, what's the delta between holding your Bitcoin and not holding it in the future? It's how, how you custody, right? It's a harder case to be made today because we're sitting at like five years of kind of flat pricing, but the point still stands if you want exposure to the best performing asset in material size Well, you either have to be a custody expert and then you still have risk, and you have risk anywhere, or you can come and pay it for a certain product and then you can, basically get peace of mind. That's what we effectively offer. And then, so where we came at it was driving down costs. For anybody that's read the Henry Ford book, if a huge proponent, it's like the scientific method of building a business is you continue to add value to what you offer and reduce the price. Well, how do you do that? Well, it's because if you live in a technological world with deflation, you can effectively get better efficiencies as you scale and you get better purchasing power from distribution, from, manufacturers, et cetera. And in our world, we got better purchasing power as we scaled, we can go Because we're doing all the legwork. So to answer your question around about way people can get signed up now for a hundred dollars a month, you get access to multi-institution custody, IRAs, buy, sell, earning up to five percent cash rewards on dollars, inheritance built in, like basically anything you would want in a money platform, even gold we're gonna, introduce via our partner Argo, is that, you shouldn't have cost as a barrier, but you need to cost something for people to like validate that, oh, this is something that I'm willing to So we have individuals for anybody that needs them for moving assets, et cetera. So there has to be some kind of level of fee. Gotcha." }, { "speaker": "stephan", "time": "40:54", "start": 2454.0, "text": "So a hundred bucks a month? I mean, yeah, I mean, I'm not saying, obviously everyone's gotta, people gotta get paid, right? If you gotta provide a, a service and expertise isn't free. so but just to, just so people can get an idea of like the, the, the structure and the ranges, so that hundred dollar a month, solution you have, is that for the medium" }, { "speaker": "michael_tanguma", "time": "41:19", "start": 2479.0, "text": "Yeah, so it definitely scales. The hundred dollars like introductory if you have less than five Bitcoin, and then it scales up. If you want more of a flat structure, but it still scales with the amount of Bitcoin, that's kind of our core offering, and then we have like private, that's a percentage based. But you just hit the key point that the market fully doesn't appreciate is it's kind of short-sighted when you want the flat price. Like, I know it makes complete sense, and a lot of bitcoiners want it, and I talk to folks working on payments, and Custody specifically. Imagine if your partner was holding ten Bitcoin for twenty-five hundred dollars a month, and the price went to a million dollars, and the price was flat. So now you have, let's say, you go from a billion to ten billion or hundred billion, you're still making the same amount. Well, you have client services, you have all these other things, but really you have a security that you need to like upkeep and add value there. And so I think just like any market efficiency, you know, it'll be competitive and you'll have better custodians that warrant higher dollar To pay for that. but yeah, it's a sliding scale, so we call it twenty-five hundred dollars a month for less than ten Bitcoin, twenty-five to five thousand if you have like ten to twenty-five Bitcoin, and it goes up, but it's, it's in a dollar terms because that's one of the big pieces of feedback a lot of Bitcoiners coming from the cost of Unchained of the world naturally want at least, an estimation of what they're gonna pay versus just percentage of the Bitcoin price, so we like offer that now." }, { "speaker": "stephan", "time": "42:45", "start": 2565.0, "text": "I see. Yeah. Okay. Leave it there, but any closing thought for listeners?" }, { "speaker": "michael_tanguma", "time": "42:51", "start": 2571.0, "text": "No, I mean, I think the biggest thing is really the discussion. I think like we g-genuinely think the question is, is price of Bitcoin ten x'd or the people knew that I held Bitcoin, would I feel comfortable in my current setup? And I think that then the next question is, if not And my solution is hardware devices, and I don't wanna go to Coinbase, like, well, where do we go from the longevity? And just having that conversation, discussion, I think is the main thing because everyone's feeling this of like, if the hardest core Bitcoiners can get effectively rugged for five years of stuff sat out there, well, how would they know that don't look at this day to day? And that comes into question everything else downstream of that, and it's like, well, I can go do this, but how am I certain? And that's where I, I didn't read It's like from a quote unquote community or longevity of this asset class, we have to start figuring this out because people aren't just not gonna come in, or even worse, they're gonna come into ETFs, and I'm just afraid that we're gonna see ten to a hundred X losses in ETFs, as bad as Coldcard is, centralized custody has delivered more losses. We've seen this with FTX, Celsius, BlockFi, and when the price runs away from us again and people get outside their skis and don't understand Bitcoin and they try to offer margin, like what are the losses We're gonna be told like, \"Well, don't hold self custody, go in here, because it's the nice safety valve.\" In reality, that's just kind of a trap." }, { "speaker": "stephan", "time": "44:16", "start": 2656.0, "text": "Yeah. Hard question for everyone, but at the same time, you know, there's no really one size fits all, right? As we've said. So really, I want people to use Bitcoin however they can. Of course, I encourage self custody, but hey, it's, I'm not opposed to people using, different solutions, because, you know, there's no Coin dot com. Michael, thank you for joining me today." }, { "speaker": "michael_tanguma", "time": "44:40", "start": 2680.0, "text": "Yeah, thanks for having me on, Stephen." } ] }