066 - Architects of the New Financial Era: Highlights, Episodes 61-65

In this episode of Build with Bitcoin, hosts Lynne Bairstow and Israel Muñoz discuss recent highlights from various Bitcoin innovators, including insights from Marty Bent on venture capital, the potential of digital identity with Portal Technologies, self-custody solutions from Bitkey, and the emergence of Bitcoin insurance with Meanwhile and AnchorWatch. The conversation emphasizes the transformative impact of Bitcoin on various industries and the innovative approaches being taken by these companies.

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Chapters
00:00 Introduction to Bitcoin Innovations
04:55 Marty Bent's Insights on Bitcoin and Venture Capital
10:20 Portal Technologies and Digital Identity
14:39 Bitkey: Self-Custody Solutions
18:48 Innovations in Bitcoin Insurance

References
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

Marty: 0:00

We have companies that haven't gone back to market to raise in many years, some because they don't have to, because of the strength of their Bitcoin treasuries. The other aspect of this is really putting the opportunity cost and low time preference lens on business, building the

Alekos: 0:18

portal app, which is basically an app that lets you use your key that you have created, and your manager securely as your digital identity, as your kind of digital profile. So I would say, like to put it simply, we are kind of trying to recreate, you know, the login with Google or the Apple Pay login with Apple, like cloud, all of that, but we're trying to recreate it in a decentralized, open source way.

Max: 0:43

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.

Zac: 0:55

What we are is, we're a life insurance company, but we are entirely denominated in Bitcoin. What we do is we accept all premiums in Bitcoin, and we pay all claims in Bitcoin, and then we do everything in between, all the like insurance mumbo jumbo and operations entirely in Bitcoin, the actuarial math in Bitcoin. We do our reserving in Bitcoin. We do our audited financials in Bitcoin. Bitcoin is the currency.

Becca: 1:22

The Bitcoin holdings that they had were not really being taken into account whatsoever in terms of of their worthiness as a borrower. And so they were really just being kind of held back from a potential loan that they could get. And so the result is that either they just have to sell Bitcoin to buy a home, and so they're paying gains tax just to be able to make that purchase, or they're just being forced into a financial situation that doesn't match their reality. So I think it was a great development, really, in the right direction, to see that Pulte put out this letter saying that now Bitcoin and crypto, but Bitcoin can be, you know, taken into account.

Israel: 2:12

Lynne and I are partners at base layer advisors, where we use our network of Venture Capital Partners and startup founders to connect investors with unique opportunities within the Bitcoin innovation space. Alongside this, we help startup founders with their growth and fundraising. Visit our website's advisory section to learn more. Welcome to build with Bitcoin. I'm co host I Munoz and joined with co host Lynne Bairstow. Today, we're providing a brief summary of recent highlights from Marty bent, Portal technologies. Bit key, meanwhile and anchor watch. So we have a mix of investor technology companies that are working on digital identity storage, and we finish off with an insurance industry perspective from meanwhile and anchor watch. That being said, Lynne, why don't we get started with Marty. Ben, what do you think?

Lynne Bairstow: 3:02

Well, I could talk to Marty. I mean, I'm a big fan of Marty's and Matt o'dells. I listen to their podcast every week, but I because I think that they give such good insights. And with Marty, I love the integrity of Marty. I really appreciate the fact that he was one of the founding team of 1031 the venture capital fund that is fully supportive of Bitcoin companies. And so his perspective of just diving deep into the technology, knowing the different companies, gives him just such a great breadth of knowledge to share with us. But I also would love to dive with you a little bit more about some of the thesis of ours about how venture bitcoin is remaking venture capital that Marty brought up in the conversation that are kind of proving what we're seeing, or what we think we're seeing, in terms of shifts MVC. What about you, Israel, what did you What did you see?

Israel: 3:58

Yeah, so apart from his also very interesting journey into Bitcoin, which we do try to highlight in most episodes, so encourage people to have a list. And Marty go goes through exactly how what his journey was getting into Bitcoin, and why it's become just the cornerstone of his business and maybe personal life as it becomes for all of us. But you know, to your point, Lynne, I agree. I mean, he he really kind of confirmed some of the themes we've been talking about for quite a few months, and we've been seeing play out with some of the entrepreneurs and startup stories that we've been highlighting throughout the past year. And in the conversation with Marty, I think there's, there's a couple of strong points of reference and and just early examples of proof that incorporating Bitcoin as a treasury asset is having some very powerful effects. So Marty speaks a little bit to, I believe the example would strike. Week with Jack Maulers, but also just as a portfolio of 1031 that they're seeing less necessity to raise from some of the companies that have successfully implemented a Bitcoin Treasury strategies. I mean, super interesting to hear. And 1031 of course, is one of the most prevalent funds in the space. They they have a very sizable portfolio, and Marty touches precisely on that right, which we've, we've been discussing for for a while now, and now there's just proof, right? I mean, you're starting to see some real examples that companies are able to maintain more ownership and have less necessity to continue raising and raising funds in order to expand their business. That was a super interesting touch point, as well as the hurdle rate aspect, right? It was

Lynne Bairstow: 5:49

the first time that we really had anybody give us a concrete example of how they recommend, how they advise their funds. And so he said that they they advise to keep three months in cash runway and to cover expenses and put the rest in Bitcoin, which is really aggressive, I think, from, you know, I think other, most people think, keep a year in cash. But, you know, their 1031, has a little bit more, you know, Bitcoin focused strategy that I think has played out well for them. But then also, just in a talking about raising more than you might need, and putting the balance in the Bitcoin treasury to to give you that capability of not needing to raise in the future. But yeah, the metrics that he went through and the examples of the companies strike also talked about fold, which is the one public company you know, that that's gone public, that's out of their portfolio. And then the other thing that I thought was super interesting that he mentioned, that we, we have talked about, and it's the first time that we've had a guest talk about it as well, is What are potential exit strategies for founders, if you're not thinking about an IPO or a sale of your company, which I you know, I think between us, we've seen that a lot of the founders are not thinking In that way, the same way maybe traditional tech companies think of it. And he said that they have one of their portfolio companies that's actually returning their LP investment to them in Bitcoin. And so this whole idea of a Bitcoin dividend or a Bitcoin payback to investors, I think, is such an early concept. But I think as Bitcoin becomes more scarce and it's harder to come by, that any company that's actually earning revenues in Bitcoin and has the ability to distribute it could just be a whole other remaking of investment capital to, you know, to return to your investors in Bitcoin. And Marty talked about that in our conversation with them too. So, yeah, fascinating. Look into how somebody who's really early into bitcoin VC is is is actually demonstrating the changes that it makes in the companies that they're investing in. Yeah. And

Israel: 7:55

one final point there as well. I mean, some of these things might sound a bit, I would even say, absurd or irresponsible to some people from traditional finance or venture capital. But keep in mind the Bitcoin founder mentality as well. And he also gets into, you know, the power of AI, for example, for companies, which is a broader theme, but the hurdle rate of that all this ultimately reflects into what we're seeing as a common theme of very efficient startups. I mean, all of these companies, well, not all of them, but let's say the majority of these companies. I think it's safe to say you and I, Lynne, are seeing a very clear trend of extremely capital efficient, very lean on resources, and how they deploy those resources, keeping the team small, leveraging technology. Part of that is, of course, leveraging the hard asset technology of Bitcoin. And so, you know, you get into how can they be so maybe aggressive with their Bitcoin Treasury strategy, or how can they be so profitable early on? It's because I think there, there is a interesting story in the background. You're absolutely right.

Lynne Bairstow: 9:08

I think that prioritization on profits, which gives you the ability that if you're not putting your, you know, your your seed funding into Bitcoin, that you're putting an allocation of Bitcoin as you generate revenues. And so I mean, and using the example of Mallory's and strike, you know that any investment they make, whether it's a new hire or a new technology or an expansion into a market that they say, is this going to outperform Bitcoin? And then I love Marty's example, where he talked about the contrasted strike and Coinbase, and how many more companies strike is operating in versus Coinbase, and just the number of of team players, you know the difference in the team players between striking and Coinbase, and so that's like a Bitcoin mentality company versus a non a shit Coin Company. Yeah,

Israel: 10:01

yeah. And there's a few examples out there of that, of that contrast, right? So, yeah, definitely very worthwhile conversation. That was with Marty bent. Then we got into a conversation which so portal technologies, we we spoke with alicos, the founder, and we first got in touch with alcos actually in last year's 2024, Bitcoin Conference, and so he participated in the pitch. They then we were, we were reintroduced to alcos at this year's conference in Las Vegas, because alcos, with Portal technologies, they were the ones who won the hackathon. So very interesting company as well. I mean, a bit under the radar. But alcos is actually a very seasoned, young, but very seasoned bitcoiner. And he explains that he got early experience, had block stream. He developed the, was it, BDK,

Lynne Bairstow: 10:59

the Jade wallet. I believe he was on that team, the Jade

Israel: 11:02

wallet, and then the development kit for that's widely used for for other wallets, correct? Yes, yeah, right, yeah. So, so all that to say, season bitcoiner, young founder, Portal technologies. It sounds a bit abstract at first, but he does a good job running through what they're working on, and it's a shorter episode as well, if I recall correctly, and they're working on digital identity. So what were some of your takeaways from Portal technologies then? Well, 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,

Lynne Bairstow: 11:52

with Bitcoin. I mean, first of all, just talking about Alekos himself. I mean, that's the founder to watch. I mean, you know, I think in my years of VC, it's like you learn that there are certain individuals that just have something special. And I just see that in him. I think that wherever he puts his attention, he's going to be really successful, and obviously just a brilliant mind and really loves Bitcoin, and really loves innovating. And so his idea, I mean, he's got a huge idea. I mean, his idea is to remake digital identity, where, instead of having this mess of passwords and password managers, and, you know, saving your passwords to centralized systems like iCloud or Google password that you have a digital identity that kind of mirrors your Bitcoin key pair, private key, public key, and so you have a public key that is present in the universe that would enable you to do anything from unlocking your apartment door to paying for a hamburger to verifying your college transcript, and then you and but your private key is what enables you to unlock that or move that around. And so, you know, it's a huge idea, and and he wants to make it open source, because he said that helps it become more global and not captured by any particular geographic domain or or centralized service, and just increases adoption, increases the ability for people to use it. So I just love his vision for this, and I just think it's really exciting. So I can't wait to I thought it was a great pick as a winner from Bitcoin magazine teams to have recognized this technology. And honestly, Israel, I just can't wait to see where he goes and where what happens with portal. So that'll be one to keep watching.

Israel: 13:40

Yeah, we spoke about it afterwards, right? We're both particularly excited with what alcos is working on at portal. And one last point there, maybe to highlight, is alcos does speak to this, to the power of protocols and open source technology. So it's, it's definitely worth a listen. I think they're going to be doing some very interesting things. That was portal technologies with alcos. And the next episode we have in the highlights reel is bit key. So that was with Max guys, who was the head of bitkey, the product at block, formerly square. Many people are familiar with that company. So this was a deep dive into self custody, and I like that. Max actually makes this clear in the episode. They think from a product perspective and how they design the big key that they're more they consider it a self custody solution, more so than a wallet, which is interesting because most of us, and myself included, to be honest, before speaking with with Max, kind of associated, what do you mean? You know, so self custody and is, is a wallet, essentially, right? But he goes into the design thinking behind the big key product that it's by by design, a to. Three signature. They have one key in the app, one key as a hardware, a beautifully designed hardware device. And he goes through some of the intricacies of you know, how it actually functions, some of their recovery mechanisms. But what were some of your takeaways from that episode? Lynne,

Lynne Bairstow: 15:18

yeah. I mean, it's really interesting when you look at the the contrast between alicus, who's a who's a founder just starting, and then block, which is one of the more sophisticated technology innovators in the Bitcoin space, in a variety of things. And this is there, as you point out, a solution for self custody. And I think they looked at it. And as you, you know, as Bitcoin grows and adoption and usage, it attract, I mean, the core initial group of people who were attracted to Bitcoin were more technologists and people who kind of understood, I think you either had people who were very attracted to the hard money aspect of it, but most were technologists. And as this is broadening up, and as we see more and more people adopted, as more and more people become curious about it, it's not easy to sometimes to think about self custody, and I have found that it has turned people off when you start talking about private keys and public keys. And it's like I had had one friend say, I can't even remember my password to, you know, to my phone. It's like, I'm not going to remember. So if people are looking for solutions that are more intuitive easier, and I think they've done a great job of designing it a beautifully attractive hardware device, and it kind of pairs with it. It does take it off of the exchange so it is in your control. There's an element of centralization to it, but it also gives you a lot more, a lot more sovereignty over you know, you can have, like, a trusted contact that can help you with recovery. It really has a beautifully designed inheritance solution to it. So I think for a broader base of people. It's a great product, and I know, personally, I have gifted it to family and friends that were earlier on in their Bitcoin journey, just because it's less scary, and it does help them get it off the exchange and into their own hands. And it's a great initial first step for for taking control, and maybe not a first step, maybe ending stuff. It's just, it's a, it's a great solution. So it was exciting to see. And I think, you know, just connecting with Max offline block has some really interesting additional products related to Bitcoin coming out on the horizon, like a mining solution and things like that. So we'll, we'll be chatting with Max, I'm sure, again, in the future. But any other takeaways from block and Max?

Israel: 17:45

No, I mean, I think you summarized it well. And, you know, it's just, it's an interesting look into one of the solutions being developed within the broader custody space. And there's a lot of innovation going on there, and it's a wide spectrum, of course. So it's it was a great conversation getting into the to the mindset and design behind a solution like the big key. Give that a listen if, if those topics are of interest to you. And then finally, Lynne will kind of blend these two together, two startups in the insurance and Bitcoin industry, their their solutions are quite different. So meanwhile, is operating in the life insurance umbrella and anchor watch is is working under the property and casualty section of insurance. So I think it actually works out nice that these two are back to back, because there are different lenses within the insurance industry, but just broader than than speaking about specific insurance products in this highlight. I mean, I think it goes to show how Bitcoin is maturing, because there's a few very interesting parallels between these two companies, the strength of their founding team, the strength of their cap table. So you have some very prominent and great investors on the cap table of both of these companies. Insurance, just as as a whole, tends to be an industry that's very conservative and long term thinking very careful steps. And you see some of this blending of traditional insurance with Bitcoin, and it's just such a healthy sign. What were some of your comments from these two conversations? Lynne,

Lynne Bairstow: 19:24

yeah. I mean, I think, you know, to listen to the episode to get into the depth of what they offer with Zach and meanwhile, it's, you know, I think, yes, it's life insurance, but it's also available globally, and you have the ability to lend, to borrow your appreciation of the life insurance policy. So access some of that on a tax free advantage basis. And then with Becca's the anchor, watch the, you know, the protecting yourself from Bitcoin. And there is an increase in attacks against Bitcoiners. And so this kind of takes. Set away from you, but it also has an incredible inheritance feature to it. So you know, in terms of the products themselves, the episodes will do a great job of just kind of diving deep into that. But to your point, Israel, I think it was interesting for us to take a look at these two founders, and we look at all the different Bitcoin companies and who's successful at raising capital? Because, you know, getting back to the Marty conversation, if bitcoin is the hurdle rate, what company is going to exceed that just on their own in terms of the growth of the profitability of the company, the growth of market share. And in both of these cases, they have investors, really well known investors that have have said, you know, basically, by putting their money down, that this is a leverage bet on Bitcoin. And I think Wences Casarez, who's an investor, and meanwhile, said that specifically, it's like, I don't usually invest, but I can see that this is a leveraged bet on Bitcoin, and and I, and Sam Altman is also an investor, and meanwhile, and and that speaks to the the efficiency that's a super lean team. I think they have 12 people on the team, and they're, or, I don't know what the number is right now, but utilizing AI for greater efficiencies inside of their organization and an anchor watch is also a super lean team, and they just launched, really in December, but the growth they've experienced in seven months or eight months has been phenomenal. And so, you know, these are both when we both after we got off the interviews of the first interviews, it's like founding teams, super strong, investor table, super strong, and they're remaking financial services on a Bitcoin standard, and they're two of the beginning teams to do this, and companies. And I just think it really speaks to the opportunity that people that maybe not looking at Bitcoin companies are just totally missing. I think that more investments should be going into Bitcoin companies. And these are two examples of of just how you know how much potential there is in this, in this particular space,

Israel: 22:07

these two companies are the leaders in the Bitcoin insurance innovation space, which they're they're really pioneering the this emergence of Bitcoin and insurance. And go back and listen to each of the conversations, because they they both do a great job. Uh, both, both. Becca on the anchor, watch side, and Zach on the meanwhile side, contextualizing the size of these industries as well. Go ahead. Lynne,

Lynne Bairstow: 22:34

no, and I think it's really important we can't say this without mentioning the regulatory hurdles that they have to go through in order to do this, like Zach was talking about, there, no, he's issuing policies. The payments are in Bitcoin. The payouts are in Bitcoin. I mean, it's this. It's a full Bitcoin standard company anchor watch, you know, has Lloyd's of London coverage on it. But the hurdles that they had to go through to really, you know, get into this very traditional industry and flip it on its head and get people and regulatory bodies to understand what they're doing, and, and, and and approve them. It's like it's, it's a big task. And I think that strength speaks to the strength of the founders too, and in that case, but

Israel: 23:16

and to that point, Becca on the anchor watch episode also speaks a little bit to some recent events and news on the Fannie Mae and Freddie Mac guidance that was provided on the impact of the mortgage lenders being able to now consider Bitcoin and crypto holdings for risk assessment. So yeah, to you, to your point. I mean these, these are industries that are heavily regulated, and both of these companies are doing an extremely efficient job of being able to navigate that, that regulatory world. And I think even for those regulators and traditional industries, it's extremely beneficial to have such competent founding and technology teams really educating them, I think, in many cases, about how this technology works and why it makes sense. I mean, Becca gets a little bit into that as well, that it actually the technology that they've built out at anchor watch provides for an extremely risk, mitigated product that they're able to offer. So yeah, a lot of interesting points in both of those conversations. Highly encourage people to listen to those because these two companies, I mean, I have little doubt in my mind that they're going to grow big, they're going to mature. They're going to continue attracting probably some more traditional investors if they do raise further rounds. So yeah, keep an eye on them. Great conversations overall, from from Marty to all the way down to the insurance side that we just covered. But yeah, I think it was a great set of five episodes. I

Lynne Bairstow: 24:53

feel the same, and hopefully this gives our listeners just ability to kind of pick and choose which ones are speak to you. The most so saves you some time from from listening to everything to listening to what you what is most important to you.

Israel: 25:07

Yeah, we hope you enjoy if you if you like the content we're producing at Build with Bitcoin, please share, subscribe to our channel. Leave comments, reach out to us. We love the feedback, so yeah, thanks for tuning in.

Lynne Bairstow: 25:31

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 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.