063 - Deep Dive: Holding the Keys to Your Bitcoin Future, Max Guise of Bitkey

In this conversation, Max Guise, lead at Block, Inc. for Bitkey, discusses the importance of self-custody in Bitcoin, the design and functionality of Bitkey, and the company's mission to empower users economically.

Max explains the multi-signature recovery mechanisms, the role of private keys, and the recovery options for Bitkey. The conversation also touches on inheritance planning, market adoption, and the future roadmap for Bitkey, emphasizing the need for user feedback and the commitment to Bitcoin as a core asset.

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⚡  Get personalized onboarding at River for Bitcoin-only financial services: https://partner.river.com/buildwithbitcoin
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Chapters
00:00 Introduction to Max Guise and Block's Mission
03:53 The Shift to Self-Custody in Bitcoin
06:38 Block's Evolution and Bitcoin Integration
09:46 Understanding Bitkey: A Self-Custody Solution
12:47 Designing Bitkey: Multi-Signature and User Experience
15:50 The Importance of Private Keys and Self-Custody
22:42 Addressing Common User Concerns with Bitkey
27:36 Secure Recovery Mechanisms for Bitcoin
31:09 Inheritance Planning in Bitcoin
38:10 Adoption and Market Insights
40:02 Future Roadmap and Privacy Innovations
46:57 The Importance of Bitcoin-Only Solutions

References
https://bitkey.world/
https://bitkey.build/

https://www.buildwithbitcoin.xyz/
https://x.com/BuildwBitcoin
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❗ DISCLAIMER: This show is for entertainment purposes only. Before making any decisions, consult a professional.

Transcript

Max: 0:00

Really our development process focuses at every level on serving customer needs and doing that in the easiest way possible. We do a lot of taking on complexity ourselves, to hide complexity from customers, and I think that in self custody in particular, that's really necessary to help simplify things for people. And it's not just to simplify things for people from a sort of new audience, or folks who are just coming over from an exchange. I think we've gotten to we've gotten to the point where there are a lot of Bitcoiners out there. There are a lot of Bitcoiners who've been stacking for a long time, and you know, their self custody setup might not have scaled with them. Might not be as safe as they like. They might not be covered from as many potential issues as they think. And I think, you know, everybody has plenty of things to do in their lives, other than design a self custody product. And I think even even for Bitcoiners who've been in the space for a long time, we really need to bring that sort of hiding complexity from people to make sure that they can gain take control in a way that's easy and seamless for them.

Israel: 1:02

How do you design a self custody solution that removes most of the complexities from the end user while maintaining a high standard of security? We get into this topic with Max guys lead for the Bitkey product at block we cover self custody, how the organization thinks about Bitcoin and their origins in financial empowerment, we hope you enjoy. And as a reminder, this podcast is for educational purposes only if you like what you hear, remember to subscribe to stay connected. Lynne and Israel are partners at baystow Air advisors, where they employ their strong network of Venture Capital Partners and startups to connect investors with unique opportunities within the Bitcoin innovation space. Alongside this, they support founders with their strategic growth and fundraising goals. Visit our website's advisory section to learn more. Welcome to build with Bitcoin. I'm co host Deirdre el Munoz and joined with co host Lynne Bairstow, today we have the pleasure of welcoming Max skies lead at Block for the Bitkey wallet Max. First of all, welcome. We're excited to get into today's conversation, and before we get into self custody and the hardware wallet, can you maybe start, start the episode with telling us a little bit more about you, your background and how you first got into Bitcoin. Sure. Yeah,

Max: 2:14

happy to maybe. I'll start with the quick intro. So I'm I'm Max Guise. I work at Block Inc, for anyone who doesn't know, that's the company that brought you square and Cash App, and I'm leading development at Bitkey, our self custody bitcoin wallet there. My background is primarily in security, cryptography, engineering and product development, and I've been fortunate to contribute and contribute in those domains to a lot of different products at Block over the years, and I started learning about Bitcoin originally, I want to say 2011 or 2012 at the time I read the Bitcoin white paper, was really excited by the technology, and like the Cypherpunk ethos that I saw in it. A little bit after that, in 2013 I started at at what was then called Square and I got to know the payments industry. And as I got to know the payments industry and the internals of it better and better, I started to understand what I had read in the Bitcoin white paper more and more. And what I found was that there were so many things that we develop and that other companies would develop that were great products, that turns out, it's really hard to bring to lots of people. And what I saw in Bitcoin was, you know, anyone can develop on it. When you develop products on it, you can bring them to anyone. And that flexibility and that openness started to make more and more sense to me as I learned more about the the industry, and then was fortunate enough to contribute to the launch of Bitcoin buying and selling and Cash App. A couple of years later, just a small role, but the team did an amazing job bringing that to market and turned cash app into the best way to get bitcoin. And then a couple of years ago, I've got the chance to lead development of Bitkey, and looking forward to talking about that more

Lynne Bairstow: 4:01

So Max, how did, how did Square make that leap from going from having the payments processing, the square and the Cash App, to getting more involved with Bitcoin and self custody? I mean, it's an exchange, and so a lot of the exchanges, the perspective is they want to hold all the Bitcoin, but square made the decision that you actually should be self custodying it, or have the option to self custody it. And so how did that decision process kind of come about, in terms of what was the belief behind developing a hardware device, particularly for self custody?

Max: 4:38

Yeah, there are really a couple of things that are at the core of this. So the first is that we see a lot of potential and promise in Bitcoin to serve blocks company mission, which is economic empowerment. And with that in mind, there are a few properties of Bitcoin that lead that really enable that from our perspective. One of. Those is the permissionlessness, the decentralized nature of a network, and to achieve that, we really do need to make it easy for people to hold their own coins. And so the role that Cash App plays is an incredible one. It's made it really, really easy for a lot of people to get started acquiring Bitcoin, to move between Bitcoin and local currencies, when you know they need to to do that. And at the same time, we want to make sure that people are really in control of their Bitcoin. And big key is an incredible solution to make sure that that's easy for people to do. And you know, at some level, I think your question also gets to like, why self custody? Why is that important? And I think a couple things that I'd highlight here, when people leave their coins on an exchange, they end up subject to a bunch of different risks, some of which they might not understand, things like mismanagement. So having an exchange suddenly turn out to be gambling with customer funds and not have them when it's time to withdraw, hacks. So exchanges that hold a ton of Bitcoin, become big centralized targets for attackers. And then third, something we tend to call the paper cuts of self custody. And what that, what I'm referring to there is, you know, when an exchange is the one holding the keys, they make the rules about when you can move money, how much money you can move, and to whom. And we think people should make those decisions. And ultimately, whoever has the keys has that control.

Israel: 6:24

For listeners who might not be as aware of Block's efforts within Bitcoin, I remember, actually, you were the first to my memory, well established, at least public company that began through the efforts of cash app, also being very proactive with educational material. I remember within the app, you guys, at one point had those, even those animated figures, and just very well you block has done an amazing job as far as Bitcoin education and providing different tools. So before we get into the big key specifically, can you give listeners who have less context, who is block and and when did this bitcoin core strategic focus kind of begin?

Max: 7:06

Yeah, so block started as square, and square was and is an incredible platform for making sure that people never miss a sale. And what we did is we served basically small sellers whose other option was cash only or having somebody leave their booth at the farmers market instead of purchasing from them, and we brought together a couple of components to serve those sellers needs, and it's hardware, software and services that we tied together in an incredibly easy to use Way, and started to fill gaps in their financial lives, starting with making sure that they could take credit card payments. And in retrospect, it sounds obvious at the time, there was an incredible web of products and services and companies that you would need to go to to try to cobble this together. You'd be trying to get a contract through a merchant acquiring bank, and struggling with very poorly managed, long processes to figure out how to get an account. You'd be waiting for a third party company to send you actual acceptance device, and might take a really long time. You'd be dealing with hidden fees and all of these things that didn't work well together. And what square did was we pulled all those things together, and we made it incredibly easy to use, and managed to turn on credit card payments, almost like a light switch for a huge number of small sellers in the United States, and then started to try to bring that to more and more folks throughout the world. And what we've done in each of the you know, business, businesses we've gotten into at block is we've recognized where there was a huge gap, and then we brought together hardware, software and services to bring a really easy to use. It's basically to serve seller needs and then eventually consumer needs, with cash app. And with cash app, what we saw is that, you know, moving money around is actually quite difficult. Getting an account for services that can move move money around is quite difficult. And we made that radically easier. And then we built more and more financial services on top of that, building cash app into a incredible, essentially, bank and and then, you know, along the way, we started to realize, hey, there are a lot of tools that we can use to further these kinds of of products, and one of those is Bitcoin. And we, we actually experimented a long time ago with allow enabling sellers to accept Bitcoin payments. I want to say it was maybe 2014 or 2015 we're probably a little ahead of our time at the moment, but more recently, we've come full circle, and you may have seen it Bitcoin Las Vegas, again, we accepted payments on square using lightning, and which is layer two on top of the Bitcoin network. It was incredibly awesome to see. Conference. We actually sold big keys at the big key booth using this as well. You know, I can't speak directly to all of that. We'll have to get some folks from the team that's working on that back on here. But really excited for that to roll out some more sellers.

Lynne Bairstow: 10:14

You know, I do remember. I remember visiting the square headquarters on Market Street in San Francisco, back in the day when it was first launching, and just how exciting it was, because at that time, it really was difficult for for sellers to accept, for small businesses to accept payments on an easy way. And then all of a sudden you started seeing the proliferation of the square machines and coffee shops and things where you could take payments. And do you see that Bitcoin, I mean, is the evolution of the company to kind of think about Bitcoin as a the immediate payment process. I mean, with the immediate settlement, will that displace credit cards or become like a primary form of payment? In your mind

Max: 10:55

right now, I'm focused mostly on enabling people to safely own and hold Bitcoin. So with what we're focused on with Bitkey and key, and this is across block more generally, there are obviously other efforts going on, but with bitkey specifically, that's where we finally got to the point of saying, Okay, we need to make sure that it's easy for people to truly own and control their Bitcoin. And so the focus for us on bit key is really in that vein, and really comes back to that observation of, you know, when the alternative is to leave coins on an exchange and be subject to these other risks. That the issue that we were seeing is that the alternatives, you know, to an exchange are tricky to use, and there's a huge barrier to getting started because need a lot of education, a lot of setup time, products that are intentionally trying to give lots and lots of control to folks, but often at the expense of customer experience and what it's like to use the product, and how easy it is to get set up with the product, and how, importantly, how easy it is to stay in a safe state as you own Your Bitcoin. And so we really turned our focus towards that with big key. And, you know, is there a payments future in in Bitcoin? I absolutely think so. But it's also for big key, specifically, the focus is really on holding right now.

Israel: 12:16

So with, with regards to big key, then Max, you mentioned that you've put a lot of effort in designing this product with some of the components you just mentioned. I mean, ease experience. You've mentioned, economic empowerment. With that comes quite a bit of responsibility, of course. And the hardware wallets out there, as you mentioned. I mean, they've, they've been tricky to use if you're going to recommend it to a, you know, close family member or friend, and they know little to nothing about, you know, some of the technical aspects a lot to these. I mean, at least personally, I would, I would still to date, have a bit of, you know, hesitation on recommending just from the ease and experience perspective, you know, some of these hardware wallets that are out there in the market, big key has done a phenomenal job with designing something that's kept some of these problems in mind and tried to mitigate some some of those friction points. Can you speak a little bit to the design of big key, and maybe we can start with the two of three signature component. You walk us through some of that design build with Bitcoin is a proud affiliate partner of river. Ribber is a financial services company that allows you to purchase, sell and transfer your Bitcoin, all through a great suite of products, high security standards, and as of recent even allowing you to earn a Bitcoin yield on your US dollar cash deposits for a personalized onboarding experience. Go to partner.river.com/build

Max: 13:49

with Bitcoin. Yeah, happy to and I think the first thing I'd highlight, even before diving into the multi signature aspect, is that what we're building is essentially a self custody solution. So what I want to differentiate that from is wallets. There are wallets out there that maybe store one key, maybe help you sign a transaction, but are often leaving a big part of the self custody problem that people have for them to solve. So most solutions you finish, or most wallets, you finish setting it up and end up with a 24 word seed phrase, and it's on you to go figure out what to do with that. And that tends to send people on an odyssey, an odyssey That sure sounds like designing a self custody product. Where do I store this thing? What happens if someone sees it? Can I put it in my cloud? Do I bury it in the backyard? Do I split it across friends? What happens if they lose their component and it starts to send people to send people down this path of, you know, really designing, designing a self custody product. And the result is that, you know, most people either aren't ready to do that, don't have the time to do that, don't want to do that, aren't going to finish doing that and end up in a state that's not nearly as safe as. We'd hope for them to be with their now self custody Bitcoin. And so we set off to solve that problem, and as a result, bitkey is something like a comprehensive recovery solution. So we're trying to cover all of the things that can go wrong for folks in all the different ways that you might accidentally lose Bitcoin, hardening against security threats. We want coverage so that people have peace of mind when they're owning their Bitcoin. And we started off figuring out, well, what tools can we use to bring this whole this whole recovery problem to solve this whole recovery problem for people? And what you talk about is something that we chose as kind of the foundational technology for bit key, and that's multi signature, and that's not a block thing. That's not a bit key, developed thing that's a Bitcoin thing, so enforced by the Bitcoin network. You know, when transactions are submitted that have a multi signature restriction on them, it means that multiple keys need to sign, or it means that there's multiple keys involved. And for big key specifically, there are three keys, two of which are required to move money. So the three keys are in the secure hardware device, the mobile app, the big key mobile app, and big key servers. And because two of those three keys are needed to move money, you can always move money with your keys, the mobile app key that's in your hands and the hardware key that's in your hands and block can never move money without you, because on our servers, we only have one key, and the Bitcoin network requires two to sign, and so we always have to have that customer involvement. And what we found is, by using multi signature, we had a really good foundation to build, essentially, services that help cover people from all kinds of accidental loss, and that that's been the focus, and that's really where the sort of core technology choice came from.

Lynne Bairstow: 16:53

And just taking a little step back, I mean, can you explain, for people who may be less familiar, the whole concept of private key, public key, and, and, and this is a difference really, between holding it on an exchange where they have all the keys versus when you have self custody, what your private key involves and the seed phrase that you mentioned and how that works. I think that might be helpful to just have a little clarification on that.

Max: 17:20

Sure, one of the core components of Bitcoin is public key cryptography, as you highlighted. And essentially what's happening is that on the blockchain bitcoin is the ownership of Bitcoin is governed by the possession of a private key. So if I have a private key, I can move that Bitcoin. If I don't have the private key, I can't move that Bitcoin. And it's in Bitcoin is essentially held in what are called unspent transaction outputs, or utxos, and those utxos are locked by a key and for custodial products, for exchanges systems where it's a third party holding the key, they're the ones actually signing transactions that move that Bitcoin in the blockchain. If I decide to send bitcoin to a friend using a custodial exchange, the exchange signs the transaction and moves the Bitcoin for me. And it also means that, you know, an exchange essentially has full control over that Bitcoin, and what they're giving me is a window into, you know, the Bitcoin that I that I own with them, and they're doing things on my behalf, but I don't actually have the key. If they go away, I'm just going to have to email their old support email and ask what happened, and if I can have my bitcoin back. And unfortunately, there have been far too many people who've had that experience. And you know what? What happens in self custody is essentially individuals take ownership of that key material. So the simplest form of this is if you have that 20 word forward seed phrase that's actually representing a key, and that's representing a key that can be used to move money on the blockchain, and one of the sort of common misunderstandings we get is big key doesn't have seed phrases. So does that mean it's custodial? Does that mean that somebody else has my keys? And something I want to highlight here is that a seed phrase is just one way of representing a key, and it's just one way of storing a key, and it's a it's that that way of storing a key is one that puts a lot of burden on the person storing it. So when we finish setting up a hardware wallet, and I think we're all familiar with doing that, we end up with that that seed phrase to protect, and it's really on us to figure out how to do that. And with big key, you know, we base this on multi signature. We have a key in the app and a key in the hardware, and both of those don't export it. They hold it safely. And the recovery mechanisms we've built on top of multi signature make sure that if you lose components of your wallet, you can get back and you can recover. And most of the time in other setups, you're really depending on things protections that you take, safeguards that you go set up around your seed phrase in order to recover from fairly common

Lynne Bairstow: 19:54

events. And you know, maybe just clarify. I think sometimes when we hear the term hardware wallet, people think that the. Bitcoin is actually held inside of that physical device. Can you, can you clarify? I mean, I think what you've just explained about the movement on the blockchain, but it's really a device for unlocking the Bitcoin that's on the blockchain and moving, and it's not actually held inside of the device, correct?

Max: 20:16

That's correct. And so the secure hardware device in Vicky, for example, is holding a private key and enables you to unlock Bitcoin on the blockchain at the same time. I also want to call it where I think that question comes from. For a lot of people, being able to hold in your hands a tangible device that is part of securing your Bitcoin, part of the ownership that you take with self custody that matters to me, and I think it matters to a lot of people, it's having a hardware device involved in your self custody setup often means you have more resilience from different ways to lose funds. Ends up providing you resilience against security threats that you know might not be protected if you choose another you might not be protected from if you choose another method. I think the tangibility really matters, and it's one of the reasons that, you know, we spent time designing beautiful hardware with big key. And I've heard, heard from a lot of customers that they enjoy that

Lynne Bairstow: 21:10

component of it. Yeah, I just, I just want to say, I have a big key. I just want to show it here, but it is beautiful. I mean, compared to every other device that's on the market right now, I think I actually described this as the iPhone of Bitcoin hardware signing devices, because I think it just has a just a gorgeous feel to it. It's comfortable in your hand. It's kind of a sexy device compared to some of the clunky ones that look more like old school calculators, or, I don't know, whatever, but, yeah, so or little thumb drives. So, you know, there's all kinds of range of it, but it is a it is a beautiful device, and you guys must have thought about like how it presents in the marketplace and the attractiveness of it,

Max: 21:52

absolutely and really, our development process focuses at every level on serving customer needs and doing that in the easiest way possible. We do a lot of taking on complexity ourselves, to hide complexity from customers, and I think that in self custody in particular, that's really necessary to help simplify things for people. And it's it's not just to simplify things for people from a sort of new audience, or folks who are just coming over from an exchange. I think we've gotten to the point where there are a lot of Bitcoiners out there. There are a lot of Bitcoiners who've been stacking for a long time. And, you know, their self custody setup might not have scaled with them. Might not be as safe as they like. They might not be covered from as many potential issues as they think. And I think, you know, everybody has has plenty of things to do in their lives, other than design a self custody product. And I think even even for for Bitcoiners who've been in the space for a long time, we really need to bring that sort of hiding complexity from people to make sure that they can gain, take control in a way that's easy and seamless for them. And so really at every level of the stack, at picky that's what we thought about, from how the app works and how we design the app, to even the choice to have a fingerprint sensor, for example, on the hardware, and certainly, how we think about how recovery works if you lose your phone, or if you lose the hardware, or even if you

Israel: 23:19

lose both, on this theme of stripping away the complexity Max. I mean, I want to return to something you mentioned a little bit ago, as far as the recovery process, because you guys have done a phenomenal job with this, but maybe in in the simplest of terms, you know, if, if I'm an interested user, and I'm kind of thinking through, okay, so what? What happens if I purchase this big key, I get it all set up, and then I lose my device, or I forget, you know, I lose my phone in the Uber and can you? Can you kind of just in simple terms, walk us through some of these, what if scenarios of the recovery process?

Max: 23:57

Yeah, we wanted to make sure that common cases are really easy to recover from, and that lots and lots of cases are possible to recover from. And so let's take, for example, leaving your phone in in the Uber definitely happens. I think everybody's probably had some variation of this happen to them. And though, because big key has multiple keys, there's still two keys in existence. So if you lose your phone, and you're not going to have access to that again, there's still a key in your hardware device and a key on bit key servers. The way it works is, you get a new phone, we'd install the big key app and then tap on your hardware and you're done. That is it. And what's going on underneath the hood there is that we make an encrypted backup of your mobile key, and we put it in your iCloud Drive or your Google Drive, and what it's encrypted with is a key that's held by the hardware. And so that backup that's not useful to Apple, Google, that's not useful to an attacker who gains control of one of those accounts, because they have to have that hardware and they have to. Have that hardware unlocked. And so what this means is that, you know, we're able to, and this is a pattern you'll see in some of the our other recovery designs as well. We're able to put something that's not sensitive in your cloud, unlike a seed phrase where you know, if an attacker sees that, they control the money and they can take it now or whenever afterwards and move because of this, two of three, you still have a key and a secure device to use it from that can get you back into a good state. And so phone loss is one that's is very common for folks. And we want, and even like phone upgrades as you're kind of changing, you know, between between phones, for example. And we want to make sure that this was really, really easy to do, and I can talk about losing the hardware. Yeah, so let's talk about losing the hardware. So this is also something we want to cover for and similarly to the scenario we just covered, if you lose a hardware device, there still are two keys in existence. There's one in your mobile app, and there's one in blocks back end. And so we have a process that we refer to as delay and notify. And the way this works is you can begin a process to say, Hey, I lost my hardware. I'd like to add a new one. And that begins a seven day timer. During that seven day timer, block is it's essentially security delay period. Block is reaching out to you via the email, via an SMS, if you provided one, via push notification, telling you, hey, you know, somebody's taking this action on your account and to try to add a new hardware because they're claiming they lost it. And if it's you, then you do nothing. And if it's not you, then you you you can cancel it. And the way this works is, you know, if you're wandering around one day and you see that you didn't lose your hardware, then you need to say it's canceled, and as long as it you know it is you and you're trying to replace it, you can bring that new hardware in after the seven day period expires. And this is the type of resilience to accidental loss we want to make sure was possible with the key, because these things just happen, and we wanted to make sure that the key is, really fits with people's lives, even when things start to go wrong. The other thing I should highlight is we decided to take it a step further. So a natural next question for us is, what happens if I lose both suddenly I realize we like to joke about boating accidents. So hopefully that's not what happens here, but house fire is a really good example, and sort of an unfortunately increasingly common one, at least in the US. And so we thought about this a lot during our design, and we came up with a mechanism that actually allows you to recover from both and the way it works is very similar to the encrypted backup that I mentioned before. So we put an encrypted backup in your cloud. It's a backup of the mobile key, but it can't be encrypted with the hardware, because what if you lose that too? And so we provide a process where you can enroll what we call a recovery contact, and that recovery contact can hold on to a decryption key for you. It's not a key that can spend Bitcoin. They can't see anything about your wallet. They're not gaining control of the Bitcoin. The only thing that they can do is help you when you need to recover. And so the role they serve is essentially identity verification. When we go through this process and I say, hey, I need to recover my wallet, I lost everything. You know, Lynne, if I had set you up as my recovery contact, you'd be confirming that it's me and entering a code that I gave you into the big key app. So we'll walk through this process. I just lost both and I get a new phone. I log back into my Cloud account, I now have access to that encrypted backup, and I call you and I say, Hey, I'm trying to recover. Here's a code. Can you put it into your big key app when you do that block, can facilitate the transfer of that decryption key to me so that I can decrypt the backup? The beautiful thing about this is your recovery contact never knows your balance. They don't know anything about your wallet. They can't go identify transactions on the blockchain. They can't move your money. And block never sees any of these decryption keys, either. We never have the ability to gain more control than that one server key that we have. And so we set the system up to make sure that people can recover from losing both but in a way that doesn't change any of the properties of the security and privacy properties that we want out of the key. And this is, I think this feature is incredible. I use it quite a bit in my usage of bitkey, and it's something we've been really, really excited about and seeing customers adopt, and something that I'm hoping to

Lynne Bairstow: 29:37

expand in the future. That's fascinating, because it really has nothing to do with the Bitcoin itself. It's just you. They're verifying your identity. So that's the that's what you you want.

Max: 29:48

Um, yeah, and we really didn't want to go to, like a KYC, you know, back end process, like a very conventional way of doing this is to, you know, have somebody verifying who you are, because you, like. I, you know, gave biometrics to a company that's double checking them, or you're on the phone with a customer service agent who's, you know, double checking some account details. And that's a very conventional way to do it. And it's the way, you know, very often exchanges will do things. It's the way that plenty of other, even sometimes self custody solution providers, gravitate towards. And we, we want to help people rely on their networks. We want people in control. We don't want data shared with third parties in this type of setting, like we that's that's not the that's not the approach that we're asked.

Lynne Bairstow: 30:31

And there was recently a large data breach by a company which I will not name at this point, but of all customer data related to Bitcoin wallets. And so if you had KYC there, this at least gives you a different layer of an individual contact. Yeah, that's super important. And I guess the other thing that that might kind of lead into is inheritance planning, which is a new feature that big key announced at Vegas or at the recent Bitcoin conference a couple of months, well, actually since February, I think you announced it, but this is something that I see, you know, talking about the evolution of Bitcoin users. And you know, you have two different, two different types of users, I think the really early adapters of Bitcoin, who have now grown up and grown older and have accumulated Bitcoin, and they know they want to have a plan for passing it along, but perhaps their children, partner, whatever, is not as knowledgeable or comfortable with the technology of Bitcoin. That's one scenario. The other are the newer Bitcoin adopters that have it. They're not as technically adept, and they know they want to have an impair an inheritance plan, but they want to protect it from from key. You know, you don't want to have your keys lying around, or even at your attorney's office or whatever. So hey, can you describe how big key has approached, inheritance planning and the features that you've just recently implemented?

Max: 31:55

Yeah, and I love your description. It's very commonly what we see with customers is that, you know, they start to think about all of the things they need to be resilient to when they're storing their own Bitcoin, and it's a pretty natural next question to start thinking, and especially as people stack more and more, to think about, Well, how am I going to pass this on to my loved ones? And then to really hit a wall right in the industry today, there are not a lot of options out there for this rarely, if ever, integrated with, you know, the wallet or self custody solution that you're using. They're usually like a third party option. And this is hard, and it starts to get even harder when people dig into the options. And so we want to make that as easy as it is to set up big key so somebody should be able to, you know, enable an inheritance and be, you know, be able to pass their their Bitcoin on in the same way that they can set up a key in five minutes. And so the way our inheritance solution works, which we, you know, you pointed out we has been live for a few months, and which we've gotten some really good feedback on from customers, is that essentially, what you can do is name a beneficiary. That beneficiary gets an entire big key Wallet. So you get them big key hardware, they set up the big key mobile app, and then that five minute setup, and then they're in a state where you can name them as a beneficiary on your wallet. And what has to happen after you you're no longer around, is that the money needs to move to a wallet they control on the blockchain, and this is where it gets a little tricky. So if your two keys aren't accessible anymore, we need to make sure that it's possible to move the money, and we want to make sure that that doesn't happen while you're alive. And so the way this works is we have an additional encrypted backup. The decryption key for that backup is stored with your beneficiary. The encrypted backup is stored with block. So we can't do anything with this until you're we abide by a security delay period that we use for this as well. So it's not a week, in this case, it's six months. But the way it works is, you know, if, if you pass and you know your beneficiary wants to begin a claim, they start a claim in the big key app that starts a six month timer. During that six month timer, we reach out to all the contact you know information that you'd provided on on your along with your wallet. And you know, if it's if you're still alive and you see an inheritance claim happening, you're probably going to say, hey, not yet. And you know, in the case where you're not around, that security delay period will elapse, and after that point, we can provide the encrypted backup material to your beneficiary, who can decrypt it and then follow through with our other recovery processes to gain control of Bitcoin. And what I love about this is that your beneficiary goes through a couple minutes of setup. We were talking just before this about how folks who are not very familiar with the space maybe haven't used a lot of self custody. Wallets before. It's far more likely that that's going to be the case with the beneficiary that you're setting up. And they can go through this setup very, very quickly and very intuitively. It's a familiar product experience, something that doesn't take them a very long time, and then they're suddenly in a great state for holding onto that key material long term. And it's really easy from the wallet owner side too. Like when I set this up, I don't have to do a lot in the app. I can, you know, I ordered my beneficiary a bit key, and they got it set up, and it's taps in the app. And so we really wanted that ease of use to enable resilience from yet another way of Bitcoin, you know, not making it to where it

Lynne Bairstow: 35:39

should be. Jenna, it's also a great way of educating your your loved ones or your beneficiaries about Bitcoin, because if you say, This is my plan, you know, and I think it becomes a you know, I don't know. I've had a lot of friends and family that just feel like it's overwhelming to just learn about the process, or certainly beyond the exchange. But I'm given Bitcoin as gifts for years to family members. And last Christmas, I gave keys, my bit key client, to my to my niece and nephew, and just the ease it was for them to set up my nephew's very technically skilled. My niece very smart, but not in a technical field, and she set her up immediately, in, like you said, five minutes, and moved the Bitcoin off the exchange into her own self custody, and felt so empowered, and really loved the experience. So it's really easy, and so I think in the giving of a bit key for an inheritance device, you're also helping educate and they can then purchase Bitcoin on their own through bit key, and start that process and start becoming more comfortable with it, so that they feel empowered at the time they do inherit that they understand a little bit more about how it works and how, how, how easy it can be.

Max: 36:53

Yeah. And in addition, beneficiaries who set up a big key wallet today, so that they can be a beneficiary for someone else's wallet, you can, they can use big key as as usual, as well. So it's also actually a mechanism, like, as you've gotten it, like they're onboarded to self custody at that point. They may not, in some cases, beneficiary might not actually own Bitcoin yet, but now they can, and they can do that directly off of the exchange. Definitely a helpful aspect to it

Israel: 37:18

as well. Yeah, you guys have done a great job stripping away the complexities. And I mean, just the design thinking at block is is just very admirable, I gotta say Max and just going through all of these what if scenarios, I think should give users a lot more more confidence that this is a usable product and that there's a lot of security behind it, getting into maybe the broader market Max. I'd be interesting. I'd be interested to hear you. So we made mention to it earlier. It's a relatively young product. You guys did public launch in 2024

Max: 37:55

is that correct? And it's just just over a year?

Israel: 37:59

Yep. Okay, so we're at a year mark, let's say what has been some of the, you know, adoption numbers you've seen. I mean, are there any metrics that you can share with us, as far as you know, sales geographies, who the typical customer is? Anything that helps us understand how it's been adopted to date?

Max: 38:17

So when we launched just over a year ago, we launched to 92 countries. And this is a really exciting component of it for me, because you just can't do that in conventional finance. And it just is. It's this really clear, perfect example of like, when we have a product that we'd like to bring to lots of folks, we just can. And it sounds crazy, but it really is because of being built on Bitcoin. And I don't have sales numbers I can share, but one of the things that we've heard resoundingly from customers is there are a lot of folks that are leaning really hard on big key. They love the comprehensiveness of the recovery mechanisms that we've come up with, the thinking that we put into that and sort of started to realize that lots of the other things that they were doing themselves aren't really covering everything that they want. And even things like our inheritance feature, I think, were huge icing on the cake, on top of resilience from house fires and common loss scenarios, and so we've seen people leaning really, really hard on that, which is a good, I think, validation of what we were hoping to provide people, and also really helping us kind of invest in continuing to add security features, continuing to add privacy features, And continuing to make our accidental loss mechanisms even more resilient.

Lynne Bairstow: 39:43

Is there a roadmap of other features that you're thinking about? Yeah, so one

Max: 39:46

of the things that I realized I haven't talked much about yet here is that we've also been developing quite openly, and this doesn't sound particularly crazy in the Bitcoin space, but for a large. Public Company to announce from day zero when we're working on a product, and then to share details and invite scrutiny and discussion and feedback along the way. Think it's been an awesome journey for us at block and on big key. Specifically, we are continuing to do that. So we actually recently published roadmap information about what's next for bit key, and there are a couple of dimensions that are really important to us, some security features that we're considering bringing, I'll talk about in a moment. But one of the big things I really want to highlight here is privacy. And in particular, what we're seeing or and what we've seen generally in the industry, is that people often end up having to choose between resilience to accidental loss, security and privacy. And very often, to get great resilience to accidental loss, to get good security, they've had to give up some privacy. And so some examples of this. You know, when folks use a hardware wallet, they might get great privacy, but they have to go to go to all these links to figure out how to get good resilience against accidental loss or good security against the things that they want to make sure don't happen. And then conversely, there are folks that go to what I would call collaborative custody solutions. So these are typically products that, you know, help you bring your own hardware, like another hardware wallet, or maybe multiple hardware wallets, and then, you know, add some some services around that that can help you with this sort of resilience, accidental loss component, almost always at the expense of privacy. Some of those services require KYC. All of them require a ton of information about people, knowing what balance you have on the wallet, being able to see all your transactions, knowing quite a bit about your identity. And one of the things that we realize is that we have some technical methods that we think can sort of break this trade off for people and provide something that actually keeps their privacy intact, but brings the same resilience to accidental loss that bitkey brings. And so a big part of our roadmap is focused on this, and there are a couple of different components. So one is, we want to provide ways for you to purchase bitkey privately. One of the things that is tricky about hardware wallets, or solutions that involve a hardware wallet like bitkey, is that got to get you the hardware somehow. And not everybody is necessarily near a giant big box retail store that might sell it. And so very often, that means exposing some personal information in the purchasing process. And we're working on a couple of things to help provide people an option that doesn't do this, things like paying with Bitcoin, things like pickup at a couple of major providers that are widely available throughout the US. And so basically, we want to make sure that people can get the product without having to expose that information. And then another really big component of our privacy push is something I touched on a moment ago with respect to collaborative custody services, which is that we don't want people to we don't want to know how much money people have in their wallets. We don't want to be able to identify their transactions in the blockchain. And so we're working on something that I'll call balanced privacy here, and there are some very creative cryptographic methods that we believe we can use to blind ourselves to this information while offering all of the great things that big key is today. That's probably a whole additional podcast to go into the details of that. And I'd also want to directly tag, you know, some of the really creative cryptographic engineering folks on our team to speak to that. But there's some really interesting methods there that are going to lead to basically having a private balance. And together, I think what you're going to see in our roadmap is, you know, as we add those things, and as we continue to add more in the privacy space, we're going to make bit key, not just incredibly resilient to accidental loss and not just very, very safe to use, but also incredibly private. And I'm really excited about that because, you know, we've seen, you talked about a recent, you know, hack that, unfortunately, I've personally gotten a ton of targeted calls from and yeah, and, and then we've seen, you know, all sorts of other attacks that are targeting people's, you know, home addresses and these sorts of things. And so we're this is really important to us, and big part of our kind of near term focus for big key,

Lynne Bairstow: 44:13

and that brings, I mean, I know Vicky, so you can purchase it directly from big key on on your on your website, and then also through Amazon and through a couple of other places, but that does that, yeah, that does require it to be shipped to your home, but talk a little bit about and I love that privacy, purchasing aspect. I think that's going to be super important. And pricing availability globally. I mean, how's how certain can you be that if you purchase it at Best Buy, that it is untampered? So can you talk a little bit about purchasing details?

Max: 44:53

Yeah, so we there's kind of a couple of questions there. So maybe a few basics. One is, we sell on bi world. That's. Our site, and we sell for $150 to 92 countries, and we also sell via Best Buy and Amazon. And the second part of the question that you touched on is, you know, if you buy from, you know, an online service, or even if you buy directly from us, like, how do you know the big key you got is genuine? And what we this is also in the design space, the set of things that we thought about when we built bit key and every secure bit key hardware device ships with a key that's unique to that device, that can prove that it came from from block, that it's a genuine bit key, and the mobile app is able to check this. And the way this works is actually also using public and public key cryptography. So there's a secret key in the hardware device, the app knows the public key, and during onboarding, as you set up a bit key, if there's an issue there, the app is going to tell you about it. Now we don't show that to everybody. We wanted to keep onboarding simple and not try to overload people with information. But if there is an issue, the app tells you, and that's the type of we actually have a blog post about exactly how this works that I can share later. But basically this helps give people peace of mind that they're getting a genuine big key.

Israel: 46:11

These are fascinating topics and and we could go off on a few tangents from from this conversation. We do want to be, you know, respectful of your time as well, though Max and as we, as we maybe begin to wrap up, I'd love to get your take on the importance of sticking to Bitcoin first of all, and then just the the power and actual business benefits of plugging into an open network like Bitcoin, especially for a financial services company, like, like, block,

Max: 46:43

yeah. So maybe on the first point, I can touch on why Bitcoin only so big key that's the only asset you can store in it is Bitcoin, and it's very intentional choice, and it comes from a couple of places. One is that at block, we think Bitcoin has the, by far the most potential on promise, for delivering on essentially economic empowerment for the company and or from a company perspective, and and for people everywhere. And the core properties of Bitcoin are what drives that for us, and we wanted to make sure we're emphasizing that and lots of other things that we could do with bit key come at an opportunity cost of taking away from that mission, and so we want to be really careful with that additionally, big key is a security product. It's something that's keeping people's Bitcoin safe, and any major additional functionality we add to that has to be done incredibly carefully, and usually means more attack surface, a lot more effort to secure unusual functionality that might come with supporting other assets. And because of that first mission, we don't want to distract ourselves and add a tax surface with additional assets. Finally, I'll say out loud, I think there's a lot of bad behavior in the industry overall, and it's something that we want, especially in the early days of bit key, we're really adamant about making sure we're we're staying away from and so we've sort of made a very clear prioritization for big key of supporting Bitcoin and making it safe and easy for people to own it. And yeah, that's what we're focused on. I

Lynne Bairstow: 48:27

loved your earlier description of bitkey being a self custodian solution instead of a hardware device. It's really kind of an all encompassing way of thinking about protecting your Bitcoin. So I think that's a probably the takeaway I have from this conversation that is not just a device that competes against other devices, but it's a comprehensive way of protecting your Bitcoin Max anything, any other final comments you'd like to leave us with?

Max: 48:54

I'd love to encourage folks to follow our development we have a development blog bit key, dot build. That's where we're doing things like talking about the roadmap and what's next for Biki, and so we'd love to hear from folks as they're reading that what they want us to work on and what they think of our direction. And I'd also love to just encourage folks who are out there using big key already, reach out to us. Tell us what you think we focus on ease of use, and we focus on safety, and we do those things with the help of everybody who's using it. And so big key gets better when we hear from you. So you know, give us a shout. We're at Vicky, at block dot XYZ, or you can DM me on Twitter.

Israel: 49:32

We certainly applaud all your innovative efforts around self custody max. And this was a great conversation. We appreciate the time and thanks for coming on to the podcast.

Max: 49:43

Yeah, thanks for having me

Lynne Bairstow: 49:52

on. Thanks for listening to the build with Bitcoin podcast. If you found benefit in what you heard in this episode, we'd truly appreciate it. If you would like share. Or leave a comment on whichever platform you're listening, as this helps others find us, which is especially important for a new podcast. And as a reminder, our content is intended for educational and entertainment purposes only, and is not to be considered investment advice or recommendation to invest in any company or asset mentioned in the podcast. Build with Bitcoin is a proud affiliate partner of river, a full service 100% reserve custody Bitcoin only financial services company for your next Bitcoin purchase, use our exclusive link partner.river.com/build, with Bitcoin. Thank you sincerely for being a part of the build with Bitcoin community.