Why Bitcoin Self-Custody Fails the 99%: Lost Keys, Wrench Attacks & Your Next Step | Obi Nwosu

Is the Be Your Own Bank dream a nightmare for most people? While the Bitcoin community has preached self custody as the only path to freedom, many are terrified of losing savings to a single technical error. Obi Nwosu (@obi) argues we have hit a wall with traditional sovereignty. Unless we make Bitcoin as easy as a group chat, we will never see the mass adoption required to topple the legacy financial system.

We are entering a dark economic era where holding Bitcoin is a physical risk. Obi breaks down why privacy is the ultimate superpower to protect families from a wrench attack. When wealth is transparent on a public ledger, you become a target. By utilizing e-cash protocols, users regain the anonymity of physical cash while maintaining digital hardness. It is the shift from public target to private sovereign.

The true innovation is happening within the circular economies of the Global South. From Bitcoin Beach to Nigeria, people use the lightning network to bypass failing banks. Obi explains these communities lack financial privilege. They need tools that work today, even with intermittent internet, proving utility is highest where the old world is broken.

Fedimint miniaturizes exchange security for local communities. This model uses e-cash so guardians cannot see your balance or spending. It bridges the gap between the friction of self custody and the danger of centralized exchanges.

Fedi integrates money and identity through open standards like NOSTR. This removes technical barriers, allowing the lightning network to act as global glue. Sovereignty becomes a byproduct of design rather than a chore.

—Bitcoin Beach Team

Connect and Learn more about Obi Nwosu:

X: https://x.com/obi
LinkedIn: https://www.linkedin.com/in/obinwosu
Web: https://www.fedi.xyz/
Web: https://fedimint.org/

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Browse through this quick guide to learn more about the episode:

00:00 Intro
01:25 What can the West learn from Bitcoin circular economies?
09:02 Why is the Global South front-running Western Bitcoin adoption?
13:17 Why do major exchanges still lack Proof of Reserves?
19:01 How to identify Bitcoin-only exchanges with ethical listing standards?
37:24 Is Bitcoin self-custody too difficult for mass adoption?
46:34 How to set up community-led Bitcoin custody with Fedimint?
48:53 How does Chaumian e-cash provide total Bitcoin anonymity?
1:12:38 How to execute peer-to-peer Bitcoin payments without internet?
1:25:33 How to prevent wrench attacks using advanced Bitcoin OpSec?

Live From Bitcoin Beach

Transcript

Obi Nwosu: 0:00

Privacy is a superpower. We're heading into a time where we're going to be not so proudly putting the word Bitcoin on our T shirts or the number plates of our cars and so on, because as I said, we're heading into a dark Economic Times worldwide, and in those times, people are going to get desperate. And so it's really important now to start thinking about your privacy and and if of the two having to be on the run or not be on the run, but look over my shoulder, because I might be attacked or range attacked for the rest of my life, and or just be completely private so I can rock along, walk along the beach in El Salvador, free as a bird, I would, and I would suggest for most people to choose that approach, But that requires you to act now and have privacy.

Mike Peterson: 1:25

A OBI, we got you back here in El Salvador. I'm back. It was, we were last together in Mauritius, yeah, month ago. It was, it was just over a month ago, yes, yeah, amazing. Not, just the African Bitcoin Conference, but the summit that we were able to do there with the circular economies and and you were one of the the featured speakers for that. So I'm excited to have you here this week for the summit here i, if possible, I think I'm more excited than you that that event really blew my mind, and it was a real testament to

Obi Nwosu: 2:01

what you guys have been working on. I mean, I loved the I went to the B trust event, because I'm on the board of B trust for at least for a few months more. And I then went to Africa Bitcoin Conference, which was also amazing. But we had the opportunity to go to the Africa Bitcoin circular economies. And I really, I don't want to say which one of my the darlings I like the most, but I found it because it was so unexpected, I found it the most profound for me, and that's what made me say that I have to come to see what you're doing here, the Bitcoin circuit economies event in El Salvador, where it

Mike Peterson: 2:37

No, we're excited to have you here and excited all began. that you're going to be speaking. And I think, you know, I think when we were in Mauritius, you could just tell how invaluable it was for the different circular economies to be able to ask you questions, but I think also for you to be able to share things that they needed to see and the tools that you're creating.

Obi Nwosu: 3:00

I feel like one of the big insights for Fedi right from the beginning, was that if we want to get to mass adoption, if we want to see Bitcoin achieve its final form, if you know your Dragon Ball, Z, history or legend, you you need to not just build the software. You have to be on the ground listening to actual users being humble, and stay humble and listen to users, or stack knowledge, as opposed to stack SATs. And you only get that from being on the ground. And that was one of our big insights. I think that's what a lot of the people who invested in us and believed in us early in our and our current team and any future members really finds compelling. And I think you guys understand this as well. And so whenever you have an opportunity to be on the ground and listen directly from people who are actually passionate about what they're doing and giving you feedback, honest feedback. It's invaluable. A lot of people don't like to hear criticism. It's a natural instinct to shy away from it, but if you're an entrepreneur, you need to run towards criticism, because in that criticism, you get the learnings, and it's one to 10, 100 of those, and eventually you'll have a product that actually solves a real problem. And so when I was in this room, I mean, it was all gray, and we were talking about our product, but the best bit for me was the part where all of the circular economies had an opportunity to ask us, I got a problem with this. I've got a problem with that. How are you going to do this? I would have liked that bit to be like two hours by itself, just being grilled for two hours. It'd be amazing. Yeah, it is. It's pretty eye opening to see the difference between what you know, engineers and coders think a wallet, you know, or tools should have when you.

Mike Peterson: 5:00

They're in a first world environment and something usually kind of sterile and everything works, versus users that are often in places, you know, where power is intermittent, internet's intermittent. They can't see the, you know, certain things on their phone in the sunlight, the cameras, you know, on their phones are too weak to actually, you know, work, right? And so I think it's like you're saying it's so crucial to have people on the ground. I've got so many. So a lot of our team is from around the world. It's we're an international business by by just from the start.

Obi Nwosu: 5:34

So we have developers who've come from various parts of the world. But one funny story as an example of this was there was a BT, a Bitcoin, plus, plus, who did these conferences around the world? In fact, they're going to do one in Africa, their first one in Africa soon this year. But they had one on E cash. Was it last year or the year before? I can't remember which one I think was the year before. And they had all these prizes for different things. And one prize was someone was asked to make a mobile phone app which could use E cash but, but could allow 1e cash account across multiple phones. So if you had multiple phones, you can log into one with your E cash account and see your balance, and if you go to another one, you can log into one and see your account, which is easy to do with centralized systems, but with E cash, it's harder because the money is actually on the phone. So how do I make sure you can't double spend? Now, got an exceptional team, and one of the members of my team, who's from India, built in in this hackathon, the solution to this, it worked really well. Demonstrated it, and they and they won. And lots of these people came lots of other people came up from around the world, mainly from the West, saying, that's so cool. We've been looking for this for ages, the ability to have your E cash on multiple phones. And he goes, so how are you going to use it? He goes, I'm not going to use this. I'm just doing it because I would win the prize. And he goes, and they're asking a bit more. He goes, Look where I from. The problem is the other way around. You need multiple people on one phone. No, not one person with multiple phones. So the point is just, it's just such a different context. But you know, if you if he's able to do it, and he's gonna win money, he'll do it, but it's just an answer that sometimes Alex Gladstein talks about, so check your financial privilege. And great book, great point. But I think there's two other things we have to be careful of. We have to check our technical acumen privilege, just without realizing it, even if you think that I'm going to reduce the complexity of this by 90% that can still be way above many people's ability, and it's hard to really conceive that. And also to check your risk management privilege. You know, if you've got, most people in the West, whether they realize it or not, have some level of safety net, yeah, so they the it's hard to conceive of a life where, if you make a mistake, you and your family massively suffer. It's not just you. You don't get to go out that week or so on, or you have to cut, cut, cut some of your expenses, or maybe sell a car or sell a house and go to renting you literally may, you know, not be able to survive the not your members may be able to survive. And so in that sort of environment, your ability to your risk tolerances is lower. And so again, those are the three things I think are really, really hard for people in the West to understand, financially, technically and from a risk. Just so much risk is managed for you if you live in the West. And so it's incredibly interesting for me.

Mike Peterson: 9:02

So before we get into the details of Fetty, and I think, you know, a lot of viewers will be familiar with what E cash is, but a lot of them won't, so I'll have you give some definitions. But before that, I know you have been in the Bitcoin space long before you were thinking about this direction and had, I believe you owned an exchange at one time, so would love to get a little bit of your history, and then specifically your thoughts on self custody, because that is something that we've wrestled with a lot with within our project, because getting people to take self custody, you know, initially sometimes, is a step too far, and keeps people from even being willing to entertain using Bitcoin, but obviously longer term, we want people to have self custody, to be able to control their own coins, and so would love to hear what your thoughts are on that and how it's a lot more complicated than people think.

Obi Nwosu: 10:00

Oh, so there's two, the history first. So the history. So even going back before Bitcoin, I I was a geek. I studied computer science and cognitive science in university in London. So that was an old way of saying, AI. So I was working on neural networks in university. This is back in the 90s, though, so we didn't have the processing power to make it do something useful, but it was incredibly interesting, and I could already see that there was something powerful there. But I while I was in university, the.com era happened, and I, very early on, started working for a number of what went on to be quite successful.com, companies, internet companies, and that continued for 15 years as CTO or chief application architect and all these technical roles, until various things happened in my life that made me realize part of it, one of them was the passing of my older brother suddenly, And it made me realize that, you know, you only live once, and you need to do what you really were passionate about, which for me, was entrepreneurship. So I started, I ended my very lucrative CTO career, and went on to my initially not very lucrative entrepreneur career, and had to relearn everything. Make a lot of mistakes. And you know, I always say, You, you, you make, you sort of, you stumble your way to success. That's how you learn. And that happened for approaching 10 years, until 2011 Well, actually, 2011 I first became aware of Bitcoin. A number of friends sort of told me about it around within a month or two of each other, because it was like, this is right up over the streets. It's sort of tech, and it's also got this sort of meritocracy element to it. He's always banging on about meritocracy, and he's a geek. He'd love this thing. And so I thought it was incredibly interesting. I was a little bit concerned, not as a lot, concerned that it wouldn't have staying power with something this important and powerful would be just squashed by governments. I bought a little bit, forgot about it. Two years later, nearing the end of a startup I'd been working on, a friend came and said, Look, why we create a bitcoin exchange, and this is in UK, and I and I, and I thought, Okay, this Bitcoin stuff still around a couple of years later, and Bitcoin is worth a lot more. So the Bitcoin I had was significantly more in value. And I thought, okay, it's not only an amazing idea, it's really cool technology. The philosophy behind it's really strong. It has staying power. Let's do this. And we had this crazy idea at the time. It may not seem so now that we made, let's just make a UK Bitcoin exchange that doesn't suck, that that was it, and that was that was a very high bar at that time. Every exchange that time they were they were dropping like flies. They would have breaches of hacks all the time, and often they would do insider dealing, or there'll be suspicions of that. And we just thought, well, we're technologists, let's just build a reliable exchange. This was 13,

Mike Peterson: 13:17

okay

Obi Nwosu: 13:17

and

Mike Peterson: 13:18

but there were exchanges in the UK already at that time,

Obi Nwosu: 13:21

at that point in time, they weren't. There was one before it called Brit coin, where the the found the founders. I mean, there's these stories similar to what happened in in the US, like bit instance, it was a similar sort of thing where, I think the CTO is very, I mean, you might know him, this guy called Amir techie. He was known, very known in the space. He had this view that all codes should be open and free, which is, makes sense, but without sort of discussing it with the rest of the team, he just decided to open source it, which is, you can take your view. But the problem was that when people looked through the code, they noticed that the actual private keys to the holdings were in the code and all the money was stolen. So yeah, you probably don't want to make your private keys public, even if you make your source code public and the money was stolen. And yeah, that was the end of Bitcoin. Within a few months of that, we we started up coin floor. Other than that, at the time, there was, I'm sorry, what was the name of the company, coin floor, coin flow, as in bitcoin trading floor. Okay, so it's trading floor for Bitcoin coin floor and, yeah, other than us at that time, there was a few very small brokers there. Actually, there weren't any. They all. They all started up after us, because then we provide the liquidity. The only other major player, which you wouldn't call an exchange, was local Bitcoins. So we're. We started local bitcoins was the only major thing in the UK. Within six months, we were equaling them, and within a year or so, we became the top exchange in the UK which rich we retained for like five years. Six Coinbase came in, and they had a lot of us money and so on. We fought the good fight, but by the time I sold it after about 10 years, I think we were second or third. Okay, we were sort of around the same volume as Kraken, and Coinbase was number one. We were still a very profitable business, but we were slowly losing market share more to the point it's it became disheartening for me, because, I mean, one, there was this whole I had to go through the Bitcoin, bitcoin cash was and again, we bucked the trend there. A lot of people wanted to support this alternative for for Bitcoin, we decided to say, look, let's just let our users decide, and we'll support both and they use the market forces will allow. And that was quite a big point at the time. Another key thing was we were the only exchange to state that we would do proof of reserves and do them. A number of the other exchanges at the time, they've deleted those records when they've stated it, but they all promised, Coinbase, Blockchain dot info now, blockchain.com, Bitstamp, Kraken, all promised in a joint letter that after mount Gox, that they would do proof of reserves. We separately said we would do it and just did it for the entire 10 years. I think Kraken did one or two, and then then stopped the others, didn't even do one.

Mike Peterson: 16:52

And why do you think that was,

Obi Nwosu: 16:56

I'll leave you to make those conclusions. I think that was, we didn't ever comment on other people's Well, what we did say is, we've heard comments that it was complicated to do because, well, we weren't as big as you, and we managed it so, so and, and I think it was probably hard to argue it was complicated to do when a medium sized exchange, I wouldn't say we're small, but we were a medium sized exchange was capable to do it without fail for nearly a decade. I think Nick Carter, when he was more popular the Bitcoin community pointed out that coin floor managed to keep it up without fail, and we kept the records and so on. And it's not perfect. It's not perfect. It has its flaws as a process. But what we realize, and it's sort of hard if you're not looking from the outside, is that from the outside is that it's very hard to maintain something like that. If you are actually insolvent, you could probably get away with one or two, but for one year, two years, it will start to become clear that something's weird. You'll see flows of money coming in just before and leave just afterwards, and and so even though it's smaller, a lot of the professional traders and so on likes to use us also, because we weren't traders, we were technologists, so we just didn't know how to think in these sort of, in these sort of underhanded, sort of, I'm going to try and get a we just wanted to make sure our system was reliable and safe and and before that will be good enough. And then the third thing we did was, in terms of bucking the trend, was resisting the earth should become a multi crypto exchange. There was this huge swathe of ICOs and so on. We had people literally throwing money at us.

Mike Peterson: 18:50

I remember at that time, just for any of the shit coins to get listed somewhere there, their value would, you know, go up tenfold just if one exchange listed them. So they were just throwing everybody, just

Obi Nwosu: 19:01

bribing everyone. And we, we, we resisted. There are people offering us, I mean, a lot of money.

Mike Peterson: 19:13

I'm sure there was a lot of money.

Obi Nwosu: 19:14

We did well as a company. I'm very thankful for the opportunity and the learnings not so thankful for the loss of my hair from all the stress, but, but I'm thankful for the learnings and the experience and the contacts, but I would say we would have made somewhere between 20 and 100 times as much money If we accepted that. Yeah, and I'm very and I'm very happy that we didn't, but that gives you an idea of the level of pressure to accept these. So I understand why people did accept that those as well, but by not accepting it, it part of it was going to first principles, understanding what these different things are, remembering. Why we were doing this, which was to provide a service to our customers, to to provide to increase the level of meritocracy in the world, and just make the world a better place. And so we decided to have, in the end, because there's a lot of pressure for investors to why don't we accept all this stuff? So we had to come up with,

Mike Peterson: 20:22

were you guys a public company?

Obi Nwosu: 20:25

We weren't public, but there was one point we were going to list and be public, but we weren't public. But I still we had a lot of pressure for investors, and it was actually very interesting. One reason they were trying to pressure us to do this. So So 111, point, they asked us, okay, look, there are all these different markets, and you're focusing on this Bitcoin one and not these others. Can you go off and do this deep dive analysis now, in with chat, GPT and deep research and and so on, and AI, you could probably do this in 10 minutes, but this took a long time research all the different potential business models that people were talking about blockchain at that time, and and real world assets they all discussed then, and store of value and all these other use cases. And can you work out the size of each one of those markets? And so, because we don't know how much you're leaving on the table, and goes, Okay, we'll do this. And they thought it was going to say, this is worth a billion. It's worth a billion. It's worth a billion and so on. This potential markets, obviously, you might only get a tiny percentage, but how big all these markets were? And actually it backfired, because what we realized is that all these are sort of great, 1 billion, 5 billion, 10 billion, but the store of value market, the one that Bitcoin is preeminent in, is like trillions of dollars. And so when you show it on a diagram, it's like the use cases that Bitcoin solves, which is medium exchange and store of value. Everything else is a rounding error to that. And so it actually strengthen our argument that, yes, there's a lot of noise here, and it seems interesting. But if you focus on focus is key part of success in business, and you focus on this, and Bitcoin succeeds. This was very early on when people weren't sure, then it's going to be worth to the world far more than everything else. So that quietened enough for a few years, and then it came back again. There was more pressure and and then they, they said, Okay, we noticed that Coinbase has got these criteria, a list of criteria for whether they list the token or not. Can you come up with an objective list of criteria? So we did again, and we came up with a list of criteria. And it has to be technically reliable enough. It has to be a money because all these things are cryptocurrencies. So if it's not trying to be a money and so on, it needs to have a needs to be decentralized enough, and so on. And we came up with these four criteria, and we went through and after about 20 or 30 stocks, because only Bitcoin fits the criteria, and then the question was, well, what's the criteria that Coinbase has to be able to list all these tokens? And it turns out that they say they have a criteria, but they never publish their criteria, because there's no objective criteria you can have that ends up, if anything, that would not be unreasonable if you said it publicly, you'd either look either look unreasonable or it's only Bitcoin. And because you and so, and the only one that came close was for a short period of time, at the time of the fork, was bitcoin cash. But then, after a year when bitcoin cash was worth like 91 100 for Bitcoin, it clearly doesn't retain its value as money, so it failed on the moneyness test, just being purely objective, not emotional about it. And Ethereum was the other one. But then Vitalik came out, which was great for us, and basically said that Ethereum was never going to make it as approach going they had to replace it with Ethereum two. Now it's just called Ethereum, but our current Ethereum was actually originally called Ethereum two and and so our argument is, well, if the if the creators of Ethereum, say that the current Ethereum is not good enough, then objectively, it's technically not good enough. So we don't need to list it, you know, and then Ethereum two and said, If Ethereum two comes out, and then it runs for a while and it's reliable, we'll review it. But that allowed, that gave us again another few years of grace, and by the time Ethereum was starting to finally launch, it didn't take a year, which was the original idea, took about four years. We'd sold the company anyway, so we didn't have to do it. So we were able to stay Bitcoin only. But it was a it was a lot of pressure. If I would not, I would not forget, I would not be a lot of people sometimes talk about exchanges and say, You guys shit coin, as you just listed. But it's really hard to understand the pressure that those people were under. I mean, some of them, you know. They might be morally, they were comfortable with it, and they just went for the money. But even if they, I know, there were some exchanges who wanted to resist, but in the end, you know, there was risks of hostile takeover, or or being ousted, or, and they just made these, these calls. I mean, we had those same challenges in in coin floor, there was, there was a ton of drama happening behind the scenes,

Mike Peterson: 25:23

and what about the regulatory environment during that time? Was that, was it kind of just a gray area, or was it like, Were you worried you're gonna, you know, the police were gonna show up and throw you in jail for what? What was that sense?

Obi Nwosu: 25:37

So it was very interesting at the beginning. It was actually not a gray area. It was very clear that what we were doing was outside of regulation, and the regulators weren't interested. We'd actually, before we launched, we thought, you know, young company, let's go to talk to the regulators, tell them exactly what we're doing. And and we wanted to be regulated because we thought regulation was a good idea. I've since learned, but that's, that's the naive view, and a lot of people, when they start think that. And so we did, and we applied to get some sort of money transmitted license and so on from the FSA. Now it's the FCA, at a time when we first play was the FSA. And they reviewed our documents, which are probably like very basic compared to what they're normally used to, and they came back and said, Look, in our view, we understand what you're doing, thank you for the application, but we believe that Bitcoin is not money, and therefore is outside of the scope of our regulation. You can do what you want to do, but it's not relevant to us. I guess the subtext is similar to selling bananas. It's like, just not relevant to us, although bananas, then that would be the Food and Drug Administration agency. But you know what I mean, something like

Mike Peterson: 27:12

baseball cards

Obi Nwosu: 27:13

or Facebook, yeah, something random like that. And they even said, and you can rely on this document in any future dealings with the FSA. So done. So we launched, and we were able to and and the experience of using Bitcoin in that at that time, and price at that time was was really interesting. Buying Bitcoin and selling was very difficult, because it basically meant peer to peer. You had to meet people in person. It was so that the friction to buy and sell and the liquidity to get in and out was difficult, but the use of it was really easy. You just go and people would, I would hold some, but I'd also spend some. And it was the medium of it was, it was used a lot like money then, and I didn't have to worry about KYC or AML or any of that. It was just, so it was, it was very simple in terms of usage, just those, it was just, it was difficult to to buy bitcoin and to sell and what about your guys experience with the banks? Were they? Was that a challenge? Well, that's a very different set of that's very situation, different situations. So the banks, once they there was this period where people started to understand Bitcoin more. So when you set it up and you see your technology company using Bitcoin, they like fine stamp technology, here's an account. And then over the years, this was the period of lots of FUD. Bitcoin is dying. Bitcoin is bad because all of this misinformation. And so invariably, what would happen is you'll have a bank account doing nothing wrong. You're following all of the of the laws, the regulatory guidance. And then this is me imagining, because I can't know what's happened, but I can, and sometimes they can know because you have an account manager, and they will tell you, because they like you as a customer, you're generating them revenue, and you're giving them no problems, and you're not you're following the law. But one day or another, someone senior on the board or something, would have read something in some newspaper, probably the Financial Times, which was for years doing giving a lot of misinformation about Bitcoin, and they'll wake up and they say, We don't want any bitcoin clients. And then you'd be told that you've got two weeks notice, and you can if you're running an exchange where people are sending you deposits and withdrawals, the amount of chaos it causes to have to change your bank, you have to contact your first of all, your 500 customers, then your 10,000 customers, then your 100,000 customers, and in two weeks, and if they deposit to the wrong address, it gets locked up, and it does eventually get returned, but that could take a week to get returns, two weeks, and if the price is moving, it's disastrous. And I. We had to over a period of it probably wasn't until five years that we had stable ish banking experiences. The first five years, I approached and applied to well over 200 banks, maybe 300 we had, at one point, an entire team that was constantly just opening banks accounts. So when people say, Oh, it's difficult to get a bank now I'm like, this is super simple compared to them. We literally had a department opening bank accounts, and we made sure we did everything absolutely. We were always the best performing, the best most. If they asked for information, we would give it to them immediately. And still, some days, people literally, sometimes, especially account managers have to hit targets who are just so upset that they had to let go of us as a customer because they're like the perfect customer. Generate them revenue, never give them problems, never complain. We never want to complain about anything, even if the service is terrible. We never complain. We probably had actual accounts that were approved and we onboarded maybe a dozen, a dozen and a half over that period. And then, and then we learned, and now for current banking, I just have a PTSD about that. So we always have four or five bank accounts in multiple jurisdictions, spread the money across shut down. Also never keep more than a certain amount in each account because of the because banks, the banks themselves go bankrupt, yeah. So they have, I mean, especially if you've grown up with, for me, a child of two worlds of Nigeria and UK, growing up, it was very common occurrence for a Nigerian bank to go bankrupt, and that means it's just just gone, and then the money is locked and and you may never get it back, or a tiny fraction of it. So partly because of familial experience and also seeing what happened a few years ago in the US, where we were a few days away from multiple banks going bankrupt as well. We don't keep more than a certain amount in any bank. I always worry when I have Fiat versus when I have Bitcoin, but something you need it for. But I really feel I've switched so much that I feel very scared to have any Fiat I just have it the minimum amount that I need to just do working capital. It's so amazing. How much more sovereign you feel holding Bitcoin like there's nothing anybody can do to stop you from using it to sending it for somebody you don't have anybody's permission. I know you ask good questions, but when did that switch happen from when you were like you were scared to have scared to have Fiat versus scared to have Bitcoin.

Mike Peterson: 32:42

I think in El Salvador, it just made sense from the get go, because the banks are so bad here and so horrible that you felt scared to have money in them for any time at all, and then, you know, because oftentimes they would reject you couldn't even get the money in, then you get it in and they won't, like, actually allow you to use it. It's the crazy rules, like, you open an account and then they won't let you deposit any money for six months. It's like, that's and that's the thing, when you feel, if you don't experience the pain, then you may not realize that is, this is the experience for many people in the world. So the thing for me travel,

Obi Nwosu: 33:26

growing up in UK, but traveling back to Nigeria all the time. Often I would see multi month, multi month strikes by teachers. So you realize that reliable education, that happens all the time is something that's happens in some parts of the world, but other parts of the world where disconnects in education are very common. I would see issues where, I mean even more recently, you could go for hours or days without power because there were power cuts all the time, instability and power supply. So again, once you see that and experience that, again, again, you realize that actually, there's many people in the world live or lived with inconsistent power. And another one is when you see bankruptcies or banking failures, and you realize that banking, you know, there's a phrase, it's like, just put it in the bank. It's like, it's like, it's like, it's like, safe as houses, and it's just, it's like money in the bank. These are statements to say that these things are absolutely reliable. And that's a very privileged viewpoint, because many parts of the world, housing could be confiscated. You can have natural disasters, just flood, take away your housing. So housing isn't safe as houses and banking, banks can just disappear overnight. So when and I find that there's a big correlation between people who experience problems with banking and their readiness to understand the value of Bitcoin, well, I think that's why the global South, I think, is quicker to see the value in the.

Mike Peterson: 34:59

US and much of Europe, banking works, more or less you still. I think a lot of people are a little naive to how vulnerable they could be if the government decides to target them, or if the bank decides that, you know, they no longer want them as a customer,

Obi Nwosu: 35:18

you know they but most people haven't experienced that, and so

Mike Peterson: 35:22

yeah, and I think some will over the following years. And when it does, it's going to be, in a way, it's going to be far more dreadful, because if you've been there's, there's the, there's the, there's a story of this, of this village near the banks of a river. It's fictional village, but and every, every now and again, there will be a flood, and all the, all the properties, not very big, properties, that are by the banks, could get destroyed and flooded away. And so they decide to

Obi Nwosu: 35:58

make a dam to control when there's floods to prevent it from happening. So the dam happens, and years go by, no floods. So people start building more houses along the river, then they build skyscrapers and so on and so forth. And then this major event happens, and it breaks the dam, and the floods happen. But this time, instead of washing away five or six properties, you're washing away skyscrapers and so on. And when you take into account the total amount of damage, it's probably more than the damage caused by the people who constantly had to deal with this on a small basis, on an ongoing basis, because they were used to it, and they and they built they built it. They built a resilient system to that, not to try and stop it from happening, but to just be able to repair quickly when it does, and and so this system that seemed very stable is actually very fragile. And that's actually how I, in my view, is a lot of the West that we build all these systems to sort of keep out the hordes and and it seems stable, but every system eventually breaks. And when you lean too much on this as a crutch, and you build so much on top of it, when it breaks, the damage is going to be pretty, pretty appalling. So in a way, it doesn't seem that way, but the global self has more of a anti fragility to these things happening, because it happens so frequently.

Mike Peterson: 37:24

So one thing that struck me from one of our earlier conversations was you talking about how hard it is to get people to take self custody of their Bitcoin, that you experienced that when you were running the exchange that you would guys were prodding people to do that, but in general, people were just unwilling to go through those steps. So I'd love for you to kind of give a little bit of that background and then how that has caused you to think about what, what type of self custody or hybrid systems that we should use now for people to Yeah, to make sure that we're not relying just on people keeping money on the exchange, but also deal with the reality of how people like to interact with money.

Obi Nwosu: 38:12

Well, yeah, and there's so much to that question, but I would say that I was running the exchange and at that time on chain, fees were also quite low, and as is the Bitcoin way, it makes sense to self custody, and so we, again, unlike most of exchanges, because they make money when people keep their money on an exchange, because then they can, especially with multiple cryptocurrencies, they can upsell, cross sell. They can give you news and advice, which basically gives you FOMO, saying, This is the next big thing. Buy it, and then people will buy and go, Oh no, it's going, it's failing now, and they'll sell, and they'll sell, Oh, it's coming back again. You'll see this. And this is help but, or education, but ultimately, they're educating you to be constantly in a state of fear and and, and FOMO, and we didn't do that. We had, we had the, what we call the no BS Bitcoin education section to our site, we can guess what BS means, but we said the no BS Bitcoin education. And so, for example, is very simple language. And for example, how do I trade? On, on, and should I trade? And other people will give you examples of how to trade in stops and limits. And our reply was, if you're asking me quest this question, the answer is probably no. So that was like our answer to it, like the no BS answer to the question. So trading, we explained we had some of the most professional traders in the in the UK trading on our platform, and after multiple years of study, even the professional traders in the City of London, when we looked at the stats, the vast majority of them made a loss over just buying and dollar cost averaging professional traders. So if you're an amateur, you. You probably got no chance to beat them. But what we did suggest you should do then is buy regularly, or you can buy when you can afford it. That seems to not make so much of a difference. And then we as an exchange, could be a risk. You should try in self custody, but after years of trying and educating in person and online, we realized that very few people were self custody, and so we all do spot interviews. We would meet up with people. This is UK, so at the pub, we'll organize events and and check in with people, and after a while, you realize that this is, this is just a massive challenge. And one person really made it hit home to me when I asked him, Look, I've explained this again. You've explained that I completely understand the the need to self custody, but OBI, the reality is, is that, and I get why it needs to be that way, but the artists, I trust you more than I trust myself, and if, and while, and so the and that was, like, it comes down to trust, is risk. Yeah, it's, it's not they're more afraid that they're gonna do something to screw it up. And you, and if you look at the numbers, it's like the big risk is they could be especially if they get above a certain age, they could be exploited. Or below a certain age, they could be exploited. There's a technical effort, and we could get that down to zero. Let's just assume we can get those zeros. There's the cost. And again, in the West is paying 50 $100 for a hardware wallet is not a big deal, but in many parts of the world, that's a big deal. But even if you can get the cost down to zero, and you get the technical capabilities to zero, the risk management, if you think about what people spend their money on in life, the vast majority of the things they spend their money on are are things that reduce their effort convenience or reduce their risk, or both? That's what people people want to export effort and export risk. So what you're asking them to do by self custody is to do the opposite of what they want to do, which is, you want them to effectively increase their risk, because now there is another risk, holding a third party is a risk, but that's a potential risk that's very hard for someone to be able to estimate, and then you've got this absolute risk of, Am I someone who's really thoughtful and careful and so on. There are some people like that, and there'll be, there tends to be the people who are happy to serve custody. But if you look at your group of friends, well over half of them are probably not the sort of people who are sort of measure, twice, cut once type people, or, you know, dot, every cross, every T type people, most people are not like that, and so you're asking people who are not super careful and super considerate to become very careful and considerate, and then you're asking them to go against their nature. And that's and that's the realization I had, and that's why I think, fundamentally, unless people literally change their nature, most people are going to be uncomfortable with self custody. The only way to solve that is you're going to have to find ways to reduce the risk of self custody down to the point where it's as low risk as custody with a third party. And so that was an insight. Is that a solvable problem, I don't know. I think the technological problems can be solved, and I think the cost problems, I think you can get the cost down to near zero at some point, and I think you can get the effort, the technical complexity, down to near zero, but, but the perception of the risk that feels like that feels like you're asking someone to change their personality, or everybody become more careful, and that's like everybody become humorous. So everybody to become introverted, or everybody's extroverted. There's some people who will be extroverted for their whole life, or introverted, and then what do you do with those people who aren't comfortable with taking on that risk? You just leave them behind. And that was the fault for me. With that thought, I met my co founder, now co founder, Eric Sirian. This was in Prague, and he'd invented this thing called fedimint. It was a chance encounter, and I was looking for a solution. And what I realized that fedimint did was having run an exchange, I realized, well, why? Why should people trust us? What are we doing and and I think, Well, what we do is we hold Bitcoin on their behalf. We the people who are holding the Bitcoin are very trustworthy people within the organization. We keep their identities quite secret, even within the organization. Not everybody knows who they are. They might know it's one of 20 people in the finance, technology and operations department, but they don't know exactly who it is, and we hold it in a multi SIG, so their identity is a secret, or at least kept anonymous amongst anonymity sets that we hold it in multi SIG, which, up until today, is the best way to hold large amounts of Bitcoin. Nothing better every every exchange. If they're not using a multi SIG, you should run away because, because that means it's in a single SIG with one person having the keys, and then they they come together to sign transactions, and then they have a small amount in codes in a hot wallet, but the majority is held that way, but it's but almost every exchange would have built their own systems in a proprietary way over a period of years, and they've got their own multi SIG set up, ideally geographically distributed with with Anonymous parties. What fedimint Is, is that thing in a box? It's effectively a is it? And on top of that, we give each user privacy. So it's two things, but it's the fundamentally, the actual structure of what we're holding is, is the same as what these exchanges are doing in the same way exchange, you can think about them as some sort of big supercomputer, mainframe and fedimint My co founder invented was a way of miniaturizing that down to a microchip, but it's the same, same logic. So before we

Mike Peterson: 46:34

dive deeper in that, maybe, maybe talk a little bit about E cash and give the basics of that. And then we'll delve more into FedEx.

Obi Nwosu: 46:45

So what's interesting about fedimint, and I'll talk about E cash, is E cash is only one part of a fairly Minters. The other part is to say the way to custody things into the level of potentially over time, the level of security that you get from the best in breed exchanges, but bringing the cost down to that approach to custody, so that any community can have access to that. But on top of that, we add this. The first thing we implement with this is a way to hold Bitcoin privately so that any one of the users can have monetary privacy. And the way we did that is we're using a protocol called E cash now, e cash was the first digital currency protocol that was actually commercially used, invented in the early 1980s it's 25 years older than Bitcoin, invented by a guy called David Chaum, and it is a very simple set of cryptographic primitives, but what it allows you to do is you can be a mint. You can think about that as a form of custodian of others money, and then you can issue tokens and but you can issue them in such a way where you don't know which tokens you've given to any given person, and those tokens act like tokens in a fairground or or in an event. So once you've issued them, people can spend them and so on. You have no awareness of how they're spending them, if they want to, they can come back to you and they can ask you to switch some of those tokens for new tokens. Maybe these ones are damaged and they want to replace or they can ask you to switch those tokens for cash. And you know that the only tokens that you will be redeeming are ones you've issued, so you're good. It does mean, though, while people are going off and spending your tokens, they have to trust you, because you're sitting on the bank of the vault full of actual cash.

Mike Peterson: 48:53

And the way this works in practice, just because, because of what we saw with all the ICOs and all that the word token has, like, a very negative word, you know, meaning for a lot of people. So I just want to clarify that this is not like some additional token. This is like a one to one exchange that you have for the amount of of Bitcoin. You guys aren't issuing a token as far as, like in a fundraising, no, yeah, maybe you have a better way to explain that than how I just butchered it. But no, I

Obi Nwosu: 49:26

think, I think you explained it correctly. And I mean, and some people will have a negative view, no matter how you explain it. But the reality is, is we are issuing a it still is a token, but it's a token backed one to one with the money behind. But the reality is, you have to trust that the mint is backing it one to one with the money behind. So if you are given 1000 such. Toshis, you could issue 1000 of these, one Satoshi tokens, and the people can spend those. This is a naive way. It will obviously split it up into different denominations. Just like coins in your pocket, you'll have one Satoshis and 10 Satoshis and hundreds. But fundamentally, the total will add up to this. And then when you spend it, you or pass it around, or transfer it someone you or someone else can come back and say, can I have 50 Satoshis actual back into my bitcoin wallet? And you give them 50 tokens, that's fine, and you, as the user of these tokens, gets in, gets incredible privacy, because once they're issued, the the issuer, the mint, has no idea how you spend them.

Mike Peterson: 50:47

In essence, that a coin join of sorts. That's that's just joining all of these.

Obi Nwosu: 50:53

No, it's not a coin join. It's not a coin join. No, it's, it's it's because the coin join would be where multiple people who are doing transactions on on a blockchain are trying to send their money to one place and then, and then and then, in one transaction, send them out here. It's, it's much more similar to what would happen on an exchange where people deposit okay to an exchange, but imagine you had an exchange where people deposited an exchange, and when people wanted to withdraw, they can withdraw from the exchange, but the exchange keeps no records of of who are the customers, or so on. So it's actually this is much more akin to allowing any community to have a facility similar to an exchange, but without the overhead of an exchange, and they can run it themselves, but the complexity of exchange is being simplified down to a protocol that handles it for them. So the idea is, if we can't get everybody to self custody and they want someone to trust, can we change that trust from trusting a third party stranger in Silicon Valley to trusting their community instead? But so I wouldn't call an exchange a coin joint either, because it's not. It's but fundamentally on chain, the relationship is being broken, but in a different way.

Mike Peterson: 52:27

No, that makes sense. So explain, like on a practical level, what has to happen for somebody to set up one of these communities, and then what it looks like with the interaction of lightning, if they want to pay a lightning invoice or an on chain invoice, how does that look like on a practical level?

Obi Nwosu: 52:51

So one of the things first is we separate the idea of communities versus federations. These are federations. Are the ones that are holding or securing Bitcoin. And communities are places where people just come together to interact, to talk, etc. So if you want to set up a community, it takes two minutes. You just give the name of the community a description and go and that will it's similar conceptually, to a Facebook page or a WhatsApp group or a telegram group. So there isn't a monetary element to the communities, but they are within the feddy wallet. And so because they're within the feddy wallet, even though they don't deal with money themselves, money is never far away. So you you can, you can be chatting with someone, and then one person in your community can send money to another person within your community. But when they do, that's happening peer to peer. So the E cash is sent peer to peer. Is not in not the involvement of community. So you can set one of those up. Think about that. If you're putting in physical terms, it's like the town square. In the town square, people come, they chat around the watering hole, they have conversations, or on the beach. And near where people have conversations, are lots of shops we call those mini apps, where people can where in and each community can say, Here are a list of mini apps that I think are useful for people in my community. Here are some announcement groups where people can discuss and chat, and each person can also have their own private conversations. That's the community. And then separately, we have federations, which is where you're you think about those are like mini wallet services, where you can set up a wallet, and you can be a member of multiple federations, just like people in the real world could be a member of multiple banks or so on here, you can be a member of multiple federations, and each one you can have some E cash with. And those, again, you can set them up in multiple ways. You can go. Can download the source code yourself, compile it yourself, and set it up. Or you can use services that we have with things like start nine, umbrella, no Donna, where you can create your own Federation, your own fedimint service, if you've got this, if you've got the start nine service installed already, or umbrella or no Donna, in literally 30 seconds to a minute. And then there's a nice Wizzy with you interface. And then also, we ourselves created something called the OG setup service, which is basically the same thing. It can help you set up a federation, but it's, it's like a bot which walks you through it, so you just talk to it in chat, and at the end of a one minute conversation of question answers. It goes off, and it will create, it will help you create a federation where you're one of the Guardians. You it will launch a service for you in the cloud, and then it will contact one of a number of anonymous other guardians, OGS, we call them other guardians. And then, in combination, your Creator, it will create a Federation for you, so that one can literally take again two minutes to do, as long as you're willing to pay the cost of your server and so on, and also the cost of the other OGS to be able to run for you. You can be up and running in two minutes, so anywhere from if you're technical, a couple of hours and you do it all yourself to two minutes, ignoring the time to sort of add Bitcoin to your lightning channels and so on. If you use this sort of the simple service, and that's

Mike Peterson: 56:35

if you want to actually create a federation, yes, but you could lots. But you could just join one?

Obi Nwosu: 56:41

Yeah, there's a number of, I think, at last count, public federations. So those are ones where people have chosen to make it public. Obviously, there's a significantly larger number of ones that are private, where people want to keep it to their own group. But public federations, I think we're approaching 30 or 40 public federations. And when you download the app, you can click and you're it takes 20 seconds. You just once you downloaded, you say, get a wallet. You can get a wallet immediately, or you can say, skip, and then you're in.

Mike Peterson: 57:20

And is just quick question, is that open to anywhere in the world? Are there restricted countries? What it's

Obi Nwosu: 57:29

open to anywhere in the world? The the App Store limits us from a couple of countries at this moment time. But if they ask that's we have to pause in those countries.

Mike Peterson: 57:44

That's available to us citizens.

Obi Nwosu: 57:46

It's available anywhere in the world, except for the countries that because we're just providing the software. Yeah, and you download the software, if you download it, and you don't join a federation, then it's basically a chat app, for example, if you join a community, then that's no difference to using Telegram, yeah, and then the Federation's are. It's up to the people to decide where they want, and they have to look at the regulations in their own country and make their own determination, because each one we're basically allowing anyone to run something like an exchange, but without, all without, without all the complexity. And so if you

Mike Peterson: 58:25

but, and you guys don't control it, so it's, it's their, their call on those things, yeah.

Obi Nwosu: 58:30

And so there are 30 or 40 of them, and we expect that number to increase, public ones, and then there are significantly more private ones, and he spent the number to increase significantly over the coming years.

Mike Peterson: 58:45

So what are, what are the real risks of you to join one of these public Federations of the Guardians being able to either either do a rug pull, or to screw something up that would cause you to lose your funds.

Obi Nwosu: 59:05

So I think that the those are the risks that people cite. I actually think there are way bigger risks in any custodial system, which is where you say the one is rug pulling. A lot of people, especially in the West, focus on Rogue pooling. We have never seen an example of that. The more common risk is human error. People making a mistake, screwing stuff up, forgetting their keys, if you think about it, on an exchange. We ran exchange for, say, a long period of time, and I can count on two hands the number of times customers were exploited, maybe not. Maybe about 20 examples, hundreds of 1000s of customers, of customers being exploited, seriously, many attempts to exploit. But even then, compared to the number of people who forgot their password, it's like 100th of the number one. 1000 for the number, forgetting your passwords, machine breaking is a way, way bigger risk. So it's always very interesting to me that people focus on the rug pool when the bigger risk is the risk of lose, of failure or mistake, the honest mistake. And so if you were to have a single server mint, which you can do, if any mint, just a single server, the big risk I would worry about is that person makes a mistake, and everybody in your community has lost their money, you know, or their machines explode or damage and so on. So in which case you now need to put a lot of effort to make sure that infrastructure is redundant and reliable, which means that you effectively created a redundant system anyway, but we've just so it's still you've federated your setup, but with one single guardian, as opposed to with four guardians. But at least that deals with the thing. If one database fails, you don't want to lose your entire thing. So that's the first thing that ferdiment protects you from. The second is because they're separate people. Now, no single actor, no single person can take the money. It requires collusion. And just statistically, the larger the Federation, the harder is to collude. It never goes to zero, but at some point. I mean, with Bitcoin, you require 51% to collude, of many 10s of 1000s. But still, in theory, what happens if the majority of people rug poor is it's just that the risk never goes to zero. So right now, many of the federations are for Guardian federations that would quite free to collude, not to steal. But I think we're going to be seeing over the coming years, we've made it easier and easier that people are going to start making seven, Guardian, 10, guardian, or more federations. And when you're getting to 10, 1316, at that point, you're getting to the same size of the liquid network. So it gets harder and harder, and that's each Federation. And then we'd want many, many dozens of those. So if you're starting to say, well, I've got 10 federations I'm a member of, and each one of them is the same size or similar to the liquid network, and I'm only storing small amounts of money across all of them. Then you've federated it and decentralized it, it starts becoming lower risk on top of and there's one more thing. This is what we found is the is that a lot of the Guardians want to be private, and the biggest reason is especially this increasing number of range attacks. Yeah, so if I'm costing my own money, I'm at risk of wrench attack, but if I'm cussing others, it's an increased risk. So the fact that they're private and they're in a weird sort of way, the more these attacks happen, the more people want to be private, but, but it's very hard to collude and be private. So, so, so actually, the more it actually, in a weird sort of way, is has the same anti fragile properties of Bitcoin and its 51% attack process, that the more you try to attack it, the more lucrative it becomes. So the less you want to try and attack it here, the more people try to attack privacy or people's holding of custody, the more you want to be private as a guardian, and the more you want to be private as a guardian, the more disinclined you are to collude, because that requires you to breaking your privacy signaling someone that you you you have the ability to move funds, which could put you at physical risk. So so it's so you it's possible to set up a federation with, especially with the OG setup service, it's possible to, we're working on more of that over time. It's possible to set up a federation where you retain your privacy, and then unless you, unless you choose to break your privacy. Which is the nature of privacy? Is your choice. No one need know who you are, and to collude requires you to break your privacy, so the incentives are aligned as well.

Mike Peterson: 1:03:59

Is there a danger of as you increase the number of guardians that there becomes people that just become unresponsive, and then you don't have enough people to sign off on transactions. Or is there any risk there?

Obi Nwosu: 1:04:15

Well, I think that actually reduces the risk because so what you want to do is you have to have some mechanism to identify guardians as being, to some degree, trustworthy. And I mean trustworthy in terms of able to run software reliably and are committed to bitcoins values and mission and to some degree unique from each other, and this is something that we're looking at and working on, but if you can identify those things, then it shouldn't matter who the people are, because they have an incentive to be responsive, because they have a profit incentive if you're. Um, whenever a Bitcoin transaction will happen, the Lightning Network will earn money, but the Federation guardians will also earn a small fee as well, and so they have a reason to do something and and also to run a federation. Is very, very simple. The overhead is, is far less than running a Bitcoin node. A 30 min server can run on a Raspberry Pi. We've actually shown it running on a old, old mobile phone. So if you've already got a box which is running a Bitcoin node, you could probably run a dozen, two dozen fairly mint services on that and it wouldn't even notice it. So you so basically the so again, if you do nothing for almost no marginal increase in your costs, you earn, earn Bitcoin. And if you turn it off, you don't own Bitcoin if you but it costs, but you don't save anything in terms of your fixed costs. And if you try to collude, you put yourself at risk. And so, and and, and there's, there are other instances as well, but, but again, I'm not saying this gets the risk to zero, but it's, it's very interesting how, especially because of the federated structure, the incentives align to to lead people to the simple thing to do is to do nothing, increase your costs almost by zero, and earn revenue. And that's, that's where people's incentives will lie.

Mike Peterson: 1:06:38

So when, within this, whenever you're sending funds to somebody else that's within your federation, it's using the E cash mechanism within is that also, if it's sending to another Federation, no,

Obi Nwosu: 1:06:54

if you have Federation a here and Federation B here within, let's say this is Las Vegas, and this is and this is Reno, and we know ever happens in Vegas, stays in Vegas, and whatever happens in Reno stays in Reno. It's the famous sayings go so that's e cash internally, fully private. E cash internally, fully private. But if you're standing between the two, you need some sort of road, the highway, and that could be Bitcoin on chain directly, and that will always work. Doesn't matter about channel balance and so on, but it will potentially be more costly, especially in future, if bitcoin usage grows the way we expect, or you can send of the Lightning Network, which will be, which is what we expect most people to do. And so if you do that, transfers inside will be the least expensive. Transfers between Lightning Network will likely be the least expensive and the quickest as well. And so for amounts below a certain amount, people use lightning. Above a certain amount, they use Bitcoin. Lightning, I still think is always the best, because not only is the quickest and it's more scalable in terms of being from price, but also with lightning, you have sender privacy. So you don't have recipient privacy, but you have sender privacy. But that will mean as if I was in this in Reno, and I sent value to to Las Vegas, then if it was on chain used, you know that someone in the entire city of Reno sent value to someone in the entire city of of Las Vegas, which is very, very high level privacy. It's not perfect privacy, but you're pretty good. If you send over the Lightning Network, not only would it take seconds and would be your final settlement, you also have sender privacy. So you don't actually even know it came from Reno. You just know someone on the Lightning Network sent value to someone in Las Vegas, which is even better, but with you, if you send it within the Federation, then you just know. You just know someone in Las Vegas sent value to someone in Las Vegas. And that's basically could be pretty much anyone. In all three cases, though, you're basically nearly very, very high levels of privacy. And from a user experience point of view, you don't have to change anything about behavior. You don't have to send it to somewhere or where. It's just, it's just, it's just very, very, very very easy user experience. I always find as this last point was, when I first heard about Bitcoin, I think a lot of people did. They had this view that it's a coin and it's going to work like the coins in my pocket, and I've got like, 15 different coins in my pocket, and I want to pay for something, I find the ones that add up to the amount, and I give you those, and I keep the rest. Cost, and maybe if there's something left, they get some change. And then you spend the next one or two years find out that Bitcoin doesn't actually work that way. It doesn't actually work like a coin, and there's this ledger, and there's in all these different rules and so on. When you see E cash, it actually operates like that. That's how it works. When I have money in my wallet, it's actually on my phone. My phone is actually a wallet, and there's different files, each file representing a coin. And when I want to send you money, I just take some of those coins and I transfer them to you. And because I'm doing that, I can even do things like even if I have no internet. And that was one of the I remember coming back here a few here, a few years ago, and I wanted to pay someone for pupusas. This was before I was keto, so for poops on the streets, and I had no internet on my phone, and I couldn't pay them even though I had the money on my phone, or I had the money not on my phone. On the blockchain, they had a Fetty wallet, you would have been able to, if they had a Fetty wallet and I, and I had a Fetty wallet at a time it didn't exist at that time. I came three years ago. If they had a Fetty wallet and I had a Fetty wallet, I could have, I could have taken my E cash, and I can do it right now, and I could create an offline send, where the E cash in my phone. It will say, Well, how much you want to send, and you say, $1 and it will find notes that add up to $1 and it will create a QR code that contains all of the notes in the QR code. And if they scan it, they can receive the E cash through the screen, even though I have no Internet, and I can get my pupusa, they can get their their money, and if they want to, they can instantly convert that in and transfer that out to lightning to their own wallet, if they if they wanted to. And that, for me, is a big unlock. We use that a lot around the world, many places where they have limited internet, they can still send and receive, not not all day long, for for weeks on end, but for short, because we we always highlight any coins that haven't yet been settled with the mint and replaced, because there's a risk of double spend. But still, it still allows me to know I've got money. I can give you the product interesting.

Mike Peterson: 1:12:20

So I know you guys have been very focused on circular Bitcoin economies and supportive of them. You've you guys have done a lot of time on the ground, whether it was with Bitcoin Akashi or, I think you guys did some stuff with Bitcoin Lake and Guatemala,

Obi Nwosu: 1:12:38

but not to the same level as you guys. But we're always looking at you guys as an inspiration, but we're trying.

Mike Peterson: 1:12:44

So I'm just curious, would love to hear kind of some of the things that you've learned of like, what you know, maybe you thought that something was needed, and you, after work in the community, realized, actually, we need to do this, something different, or or maybe it was like, wow, we're on to something, and this is exactly what they need. But curious as to why, why are you guys so focused on circular Bitcoin economies?

Obi Nwosu: 1:13:08

Circular Bitcoin economies, the way we describe it is people living in disempowered communities, and they're disempowered because of financial resources, or potentially living under the yoke of authoritarian regimes and in desperate situations, we focus on those. But that has always been, if you want to have an insight into our original pitch deck was market number one. We have market number two is far greater than that. That's every person anywhere in the world who's currently holding money on exchanges. And you know, as a way to which was original idea. It came into for for me when I was looking at it, how do I get people off exchanges? Is market number two, which is obviously far greater. And then, yeah, market number three, which is one everybody wants to aim for, which is hyper bitcoinization, when? But that could be a while away. But why do we focus on this one first is because, the way I describe it is, by working with the people who are in the most challenging environments, you're more likely to learn the most, the most uncommon insights, and you're more likely to build a product which actually solves a problem for everybody. If I build a product that only works for hyper wealthy people in New York or in Miami, then it's great for that small market, but it's very unlikely to translate into being useful for people the other sort of 8 billion people on the planet. But if I build a problem product that works for the most disempowered communities around the world, then it's easy to see how that can be. For everybody, and that's why I look at an example is WhatsApp. That that product works everywhere you see it in all around the world, and it's probably the most used messaging app in the world,

Mike Peterson: 1:15:16

ironically, except for the US. It's funny, because hardly any of my friends in the US use WhatsApp, but everywhere else in the world, what do they use instead of WhatsApp? Then, I mean, a lot must use iMessage, because they all have iPhones.

Obi Nwosu: 1:15:29

That's, that's, that's sort of like super privileged I message. Yeah, I know, I messages. I almost never use iMessage, just in the US, everybody uses iMessage, and I've tried to use it once. It's just a terrible, terrible program functionality. What? Functionality wise, compared to WhatsApp. But everywhere else outside of that bubble uses WhatsApp and and it's an incredible product, refined over multiple years, designed to work in the most extreme environment. And so with that star was the mindset that we had start there. The other reason why is because, if you look at what's happening in the world, with world is heading into global economic crisis, many, in many places, AI is advancement and the sort of massive societal change that's going to happen, we're going to have massive change. And so many of these people are living in the future. Unfortunately for for other people in the West are going to have a future that's we're going to see there's this. The big dream was that the West and the global South, you'll see that. They'll see this equalization and and I think that's going to happen, but not in the way people expect. It's not that everybody in the global south is going to catch up to the west. I think everybody global stuff is going to increase, but the lifestyles of the West is going to have to come up, are going to come down and deteriorate. And that's what we're actually seeing, and that's going to be very painful for one part of the world, and it's going to be very uplifting for the other part of the world, but as a result, building for this part of the world will help you build a product that's going to help everybody down the line. So that's, that's, that's how we started, that's, that's why we started.

Mike Peterson: 1:17:18

And has there been anything surprising to you, as you guys have run these kind of trial, you know, gone out into, you know, whether it was Bitcoin Akashi or Bitcoin Lake, I think maybe you guys have done some stuff with motive in Peru. Has there been anything that's been kind of like shocking to you, or is it

Obi Nwosu: 1:17:38

Yes, too many to mention. I've got so many stories, but, I mean, we came out with the view that we have to be on the grounds, we have to learn, we have to be humble. No matter how humble you think you're gonna you are or you're being you're wrong. You have to be you have to be way more humble than and even then, I think we're constantly learning that we just don't know and so, yeah, it every day is learning that being the case, when we were hearing feedback from people listening to what they wanted, we went six months without hearing anything new. That caused us to throw everything away and start from the beginning, and that hopefully fingers crossed, means that what we have, I mean, there's still years worth of development to go, but what we have is all the elements. So early on, we we had the idea of adding chats. There was some, well, there was a lot of reticence. Added. It's like we're just a wallet. Why should we add chat? We had a chat. It's now for us, it's a groundbreaker. It's, it's, it's key. I think that it will become clear in time that every wallet should combine chat and wallet. It's, it's a such, more intuitive way to send money. Once people understand that, they can WhatsApp money, they can instant message money, they they never do the other way again, because it's just so much more intuitive. So that was a big, big insight. It was a gut feeling to begin with, and I could see why lot of people thought this doesn't make sense. We're a wallet. Why are we trying to do it? And it's a lot. It and it's a lot,

Mike Peterson: 1:19:42

it didn't make sense to me when I heard and I was like, Yeah, you're going from being a wallet to, you know, to adding all these, but you just, yeah, I know it's, it's, it's not, I'm usually wrong about things, so I don't

Obi Nwosu: 1:19:56

know, but I mean, it's, it's, it's, I. Right? And so that was one big insight. We have Mini Apps. Again, that is huge as well. But again, a lot of people think so. Why do you need that? You've got a web browser, you don't need it. But again, it that is a really, really big thing we're going to keep doubling down on, on that. I think, I think one of the biggest overall insights on why those things seem to not make sense, but they do, is because ultimately, you want people to be you want to train people on how to use a system. And one of the things actually saw this in LATAM a lot, and it's being extensively used to train people all across LATAM, working with various agencies there. And what they came back with is the fact that there's one app which where they can do everything, even though we if you think about what Freddie does, yes, there's a lot of complicated stuff, and you can see the code, but ultimately, the complication is around gluing things together. The actual things weren't built by Freddie. The chat is from matrix, which has been used by the German military, and it's been around for over a decade. The money is handled by fedimint, lightning and on chain Bitcoin, which are protocols that are outside of Fedi as well. A lot of people confuse Fetty with fedimint, but Ferdi is the integrates everything together. The the Mini Apps are effectively a web browser built in, plus similar functionality Albie, but built in, but, and we're, we're and we're aware of nosta, we're aware of Weber N and all these standards, but we don't these are open standards of reading. We're not adding to the body of standards. But something magic happens when you bring it all together in one especially from training, because now I can train someone on one app, even if there is another service outside, like Tando or pleb QR or minmo or money badger or whatever, what you find is when you're training people, they want you to somehow make that a mini app within here. Because conceptually, for the user, it's just easier to understand one app that does it all versus multiple. And that's the big insight. I didn't even think that. I just fought and so and the only way to replicate that is making another app where it's all in what people want, integration. They don't want they don't want to have five apps on their people say, Oh, you can just download this app and download that app. That's a very technically privileged mindset. Most people don't have many apps on their phone, and they don't want to have another six. I would use this one to buy this one to sell this one to hold, and then I have to transfer between the two so but on the other hand, if you try to integrate that tightly and do it all yourself, you'll need them to be a company of like, 1000 employees. And what the reason why Ferdy was only possible now is because the Lightning Network glues everything together because we've got these standards that are widely used, like Noster, login and web LN and ln URL, made by Andre from ZBD and so on, and they're widely used by so many people. So now the entire space of Bitcoin apps can become Mini Apps, and a user doesn't. In fact, what happens is, when a user uses one of our apps, it's not our apps. It's a app, bit refill or Tando, or whatever, they don't even realize it's a different app, even though it is. It says Tando. And they use Tando, they ask, we realize that, you'll realize it, but the average user thinks it's all it's all part of one. So if there's a problem, they didn't start complaining to us, saying, your apps not working. And every worker, Is it us, or is it beautiful or Tando? And if it's Tando, early on, a few people would say, oh, no, that's not us. Sando. No, never say that. We will say, we apologize, and then we will work with Tando to fix the bug, but then the end result is, when that's fixed, that's fixed for all of tandos users, not just so we're effectively business development and UX research for the entire Bitcoin ecosystem. And so as we whenever we onboard a community, all of the they need, they need to be they need someone to run their federations so that start nine or umbrella or someone gets business. They need lightning connectivity. We provide that, but in future, breeze and voltage will get business. Then they need to use mini apps, because they're going to need to onboard and off board. And so all of these, whichever is the. Relevant ones that work in their region get business so and if you look at the average Bitcoin company, is 90% tech people and 10% business development, or 100% tech people. And with us, by the end of this year, we'll be over 100 employees, and almost all of those would be on the ground or UX or marketing. So we're there to onboard other so we're there to help other people on board to Bitcoin. Freddy is just the gateway to Bitcoin.

Mike Peterson: 1:25:33

Love it. Well, I don't want to hold you much more. Maybe you can still get get the sunset here tonight. But is there anything that we didn't touch on that you feel like

Obi Nwosu: 1:25:45

we covered a lot? The only thing I would like to say, and I'm going to be talking about it a lot more this year, is for every community is around privacy, and and I've mentioned it before, but it's just really important for us to understand that privacy is a superpower. We're heading into a time where we're going to be not so proudly putting the word Bitcoin on our T shirts or the number plates of our cars and so on. Because, as I said, we're heading into dark Economic Times worldwide, and in those times, people are going to get desperate. And so it's really important now to start thinking about your privacy. Some people who have made the choice that we want to educate, and we have to be public, and we have to take that risk, but for the average person, if that's not you, then, then realize that there are two ways to get security. One is through power, political power, economic power. You could be Jet Li and Jackie Chan and martial power, or whatever security guards and so on. But it's some sort of power or through privacy. And I think about, think about someone like Satoshi Nakamoto. He is. He has no army, no office, no visible power. But and he has a million Bitcoin. So that's $100 billion so he has the money to to buy power, to buy power, but if he or she is still around with us, they've chosen privacy as their mechanism to give them security and and if of the two having to be on the run or not be on run, but look over my shoulder because I might be attacked or range attacked for the rest of my life, and or just be completely private so I can rock along, walk along the beach in El Salvador free as a bird, I would, and I would suggest for most people to choose that approach, but that requires you to act now and have privacy. And yes, you've done a great job by getting into Bitcoin, but think about yourself. Think about your family, often, often involved in range attacks as well. And and focus on your privacy. If you choose to give up your privacy to educate fine, but also do it knowing, knowing, understanding the risks.

Mike Peterson: 1:28:21

Yeah, and I think there are, you know, I know some folks in the space have done things to mitigate by actually making it so that they don't have access to their Bitcoin unless they have to get on a plane and fly somewhere else. And they kind of publicly put that out there to hopefully stave off.

Obi Nwosu: 1:28:38

And that's, and that's, that's risk reduction, but the best is to just be private. But yes, if you, if you choose to be public, because you feel that you have, you know, evil wins when brave men fail to do anything. So if you, and so if you choose to do it, but please do it knowingly, understanding that the risks are there and they're going to increase and but for friends and family of yours, you should caution and advise them to be private about their ownership of this. They wouldn't walk around with gold bars around their neck or so, and so why walk around with a car that says Bitcoin on it? It's just doesn't, doesn't serve you unless you're doing it knowingly and you're understanding the risk

Mike Peterson: 1:29:25

you're taking. Yeah, no, I think that's, I Yeah, no, I think that's, I think that's wise advice. One, think that's wise advice. One, one thing that's a little one thing that's a little ironic, and that's helped a ironic, and that's helped a little bit here in El Salvador, little bit here in El Salvador, and maybe that'll change in the and maybe that'll change in the future, is because Bitcoin future, is because Bitcoin started in the kind of the started in the kind of the poorest communities that to most poorest communities that to most people, it doesn't represent, people, it doesn't represent, you know, like you know, like generational wealth that represents, like the

Obi Nwosu: 1:29:43

unless you're doing it knowingly and you're money of the poor. So I think there's a little less risk here. But, you know, as obviously as the price of Bitcoin goes up in understanding the risk you're taking. Fiat terms, that that will change. So hopefully not. I love that. It's a good thing to consider. Um.

Mike Peterson: 1:29:59

Um, how can people find out more about Fedi? Where can they follow you? Like, what would you advise people that are kind of curious now and want to play around with the wallet? What's the

Obi Nwosu: 1:30:11

so all of the above. You can find Fedi at, Fedi spelled like that, Fedi dot XYZ, and you can check out, and you can find out all the ways to download the app and so on. The app is available in all the app stores, and there's multiple other ways to download it, even if you can't download from an app store. For me personally, I have Twitter. I do the occasional tweet, or you can check out the feddy Twitter. My twitter is just OB because I was in Twitter very early. And yeah, to download it from the store, check it out. It's very easy to set up and run, and it's getting better every day. You don't need to have a community to join the beginning. Everybody joins the feddy global community day one. You don't need to have a Federation to start. There are a number of public federations that are out there and just get started, but it's the private bitcoin wallet. If you use it, you're going to have private communications, private chat, private payments, without having to think about it. And it only is going to get better. Awesome. I think that's a great way to sum it up. And I'm looking forward to here. We're going to share the summit here in a few days. So Hi.

Mike Peterson: 1:31:26

Thanks Toby.

Obi Nwosu: 1:31:27

Thanks very much meeting you.