EB53 – Arianna Simpson: Security and Usability with BitGo's Multi-Signature HD Wallets

Transcript

hello welcome to epicenter Bitcoin the show which talks about the Technologies projects and startups driving decentralization and the global cryptocurrency Revolution my name is Sebastian cuccio and I'm Brian Fabian crane uh we're here on episode 53 with Ariana Simpson Ariana is uh Works a big goal I was introduced to her when I was at in a new New York trip this summer and I wanted to meet up with her although it didn't happen but we kind of stayed in touch a bit so and now that she's at Bitcoin well that would be a great time to do a podcast and talk

things they focus on which particularly is a multi-sick so Rihanna it's good to have you on hi thanks for having me excited to be here thanks for coming on um maybe we could start off uh by introducing yourself sure um so my name is Ariana Simpson as you mentioned I grew up in Italy moved to the US afterwards and I actually studied nothing to do with computer science or cryptography or Bitcoin studied International politics in Spanish but decided to um I kind of fell into Bitcoin about oh let's see a year and a half ago now

and um as soon as I read the white paper I was hooked so I really started to delve into it and started writing about it a lot and this was while I was still working at Facebook I was basically working with some of the big managed accounts on the advertising side um but Bitcoin became my sort of real interest and so I decided that ultimately I wanted to move into the industry full-time which is how I ended up at Bitcoin yeah cool and so you've been working at bitcoast since uh August I believe so it's been a few months how are you enjoying it yep that's right yeah it's

been a great few months um really exciting obviously we're still we're still young and it's an industry that's changing at the speed of light so um you know never a dull moment but I think it's it's a really exciting time to be working in Bitcoin particularly with a really great team and I think even within an industry that's fast moving our focus on security really makes it all the more exciting in the sense that security might not always seem like the most uh the most thrilling field to work in in the sense that a lot of what's happening is really happening behind the scenes and so you're not necessarily always adding a cool new feature but you are building infrastructure and

architecture that's really really important and um you can't you can never kind of let the security become Legacy you're constantly having to update and make changes because the minute you start to say okay I'm done um that's when you get you start to run into problems so it's it's constantly evolving and that makes it really exciting yeah and I guess we've seen a lot of things evolve in in terms of uh usability of security I mean I just like to pull out a few examples here I mean before we start talking about bitco uh just under a year ago we were having a discussion about how to safely secure your Bitcoins and at the time uh you know this was one of the solutions and

these uh I believe bit 38 uh cards were another solution for those listening I'm holding up a Raspberry Pi computer on which I installed Armory and printed out paper wallets uh in order to store my Bitcoins and then I think I gave one of those uh backups to a friend on a on a on a USB stick and then I gave another backup to another friend and then you know these little bib38 cards came out I got a couple of those and uh same thing I got three or four and I gave I gave to a few of my friends and thinking you know at the time that this was the way to secure your Bitcoins and and and now uh a lot of companies I mean a few companies like coin

um uh coinbase and Bitcoin are coming up with these really awesome and easy to use solution for uh for securing your Bitcoins with multi-sig and uh so I guess you know just goes to show that in such a short amount of time we've gone like leaps and bounds in terms of usability for securing your Bitcoins yeah I think that's really important in the sense that um you know in this kind of field you're constantly working to um you're working against a trade-off in the sense that the most Secure Storage is not necessarily the most usable uh actually I would say that they're in some sense inversely proportional to one another

so what we're really working on is making the security uh you know as robust as possible but also allowing companies institutions and individuals to transact because ultimately if you know everybody is holding their Bitcoin in some sort of um storage that's not accessible that will end up with no liquidity and um it's ultimately not really a very viable system so building out the ability to actually transact and use the money while still keeping it secure is really important yeah I mean I I do think we we will see

it and perhaps we have seen to some extent uh that that segregation as well right where on the one hand you have some people who are like advanced in their Bitcoin knowledge and they're like extremely enthusiastic and they want to sort of do it on their own and then they will use something like you know uh what you said you know raspberry offline Armory and those kind of things and then at the same time that obviously doesn't scale um and it doesn't it doesn't it's not going to work for the masses and it's really nice that I think we have this um this powerful thing we can do especially with uh with multi-sig where you can get uh you can get both usability and you can get security

um and and that's it's fantastic no because it's it's sort of like a built-in two-factor authentication or at least that's one way it can be used and I think it's really powerful in that way mm-hmm yeah and I mean things like two-factor author all layers that we've added on to actual like you know basic uh multi-sig wallets in the sense that um you know we think that each of those pieces is very important but it's not sufficient and so layering on things like different levels of user permissions corporate treasury policies spending limits um again two-factor off all of those are key pieces that we've built on top of

the technology um because you know this is this is serious stuff if you're if you're looking to hold or manage many millions of dollars you want to take the appropriate precautions um and so that's that's what we're building um so if you look at Bitcoin is it correct to say that the main focus of bitco is to build an Enterprise tool and to build sort of the Bitcoin wallet that the companies will use in the future whether that is uh maybe investment funds holding Bitcoin or

perhaps also Merchants that decide I don't want to convert all their income through payment processor to fiat currency directly but they want to keep holding Bitcoins but but they do need to have some sort of due processes to make sure that happens in a secure way yeah I think that's exactly right um so we do have a free consumer wallet but we're definitely on the Enterprise side of things um you know multi-sig is important for consumers as well particularly if they're holding um you know a sizable amount but in terms of the additional policies and rules and structures that we've built

they're definitely Enterprise focused um you know if you have a company that needs to for example give its Auditors access to um access to its wallets and access to its transactions but without actually giving handing over the ability to spend that's traditionally something that's not been really possible or easy um so you know we've built in things like view only access so if you have Auditors or accountants who need to be able to see into your balances and your transaction history that's something that you can do using one of our wallets um we also have the ability to set spending limits so the essentially all of these permissions are set at the

wallet level so companies can decide to set up different wallets with different spending levels different levels of um admin view only and spend only access and basically what this does is it enables companies to construct their um you know their storage and their financial systems in the way that makes the most sense for them which is really I think making it a lot easier for companies and institutions to hold and transact while still maintaining a really good a really great security model I'm also kind of curious because it

seems to me what you guys are building is very much something um that for the future and I think that's a good thing because if Bitcoin will be successful I I totally believe that it's gonna be a huge demand for this but it also seems that like it's something where the Demand right now is probably really limited so I'm curious right now is the demand that you are seeing primarily from a financial institutions holding Bitcoins or are you also starting to see maybe some large emergence um that are actually keeping some of the Bitcoins that consumers spend with them sure

um well I would say that this is definitely something that will you know we obviously see at it as a market that's expanding but even right now there's a lot of interest from um you know hedge funds that are starting to hold the percentage of their total assets in Bitcoin um who you know hedge funds may be buying and trading off of it they may be buying and holding um companies you know we have for example the the Bitcoin shop that um holds a percentage of their assets in Bitcoin um and they use bitco to do so um and even institutions for example the Bitcoin Foundation um uses bitco and they use uh they use

it not just for holding but also for their operational needs um so yes it's definitely a market that we see as growing which is I would say always what you want to look for when you're uh you know starting a company because if the Market's kind of capped out then that's not necessarily the best Market to go after but even now I think there's um you know there's substantial interest and we're constantly onboarding new companies and new financial institutions we just announced our partnership with Terra exchange and we have a really interesting model there because basically um their clients are using bitco to hold collateral for their swaps product and

so that's you know that's another whole channel of people who are interested in in trading based off of Bitcoin using both Bitcoin and dollars um and that's another thing we're involved in so it's you know the the market isn't necessarily going to be composed of just companies holding Bitcoin or just institutions or any one of those but we're really able to support a variety and so that I think expands the market substantially cool that's very interesting that's not the use case that I fall off but of course makes total sense now can you also talk a little bit uh before we move

on to multi-sig about bitco as a company and how many guys how many people are you now I know you also did raise a very large around uh financing which is um which type something we can we can talk about briefly sure so right now we are 11 full-time we're growing a lot so I was the third employee in August and we're already at 11 so um that's you know quite a jump we're hiring a lot particularly on the engineering side obviously we're we're very technology focused so um that's kind of core to our business

so it obviously makes sense that we're hiring a lot of Engineers us and everybody else in in the Bay Area um but yeah so the companies the company is definitely growing which is really exciting as well um in terms of I'm sorry what was the other thing you asked but about the recent investments in the company all right sorry yeah so in terms of investment um we just in the past couple months closed a um 12 million dollar series a um and that brought in a number of investors it was led by Red Point um we have the former CEO of verisign

Stratton slavos a number of Bitcoin related angels and funds um so it's yeah I mean it's definitely a a group of investors that has a lot of Eric Khan the former CTO of Netscape it's a lot of investors who have a great deal of experience in the early um the early internet days as well as in the financial space which I think is really core in a lot of ways we see what we're doing as similar to what verisign did for the internet um you know when when the internet was just kind of

growing up I would say and so um it makes a lot of sense for us to have those people on board and I think it's really it's really great validation for what we're building as well great um well I mean perhaps we can get into um sorry go ahead Brian you got a bit of delay here yeah uh we have some we have some lacks so so there there is some confusion now just maybe before maybe before the um

to talk about one thing that if I come back to you again again which is the regulation Mission side but I think in this case it is particularly interesting because multi-sig itself is a very interesting from a regulatory perspective no because if you let's say have a two out of three multi-sig and three different parties hold one key then can you actually say anyone is holding the key it is a it's not so clear um in what way you can assign ownership there and then of course that may affect whether money transmitted or not whether you would have to get certain licenses or not so yeah

what stage is uh maybe you're thinking at or where do you see this going mm-hmm so we do not see ourselves as um you know anyone's money manager or anything like that um we are not holding your funds at any point we are really a software provider in the sense that we're building the technology to allow um individuals companies Etc to hold and transact with their coins but we are never responsible for those coins we're not holding them um and so and that's I think most clearly evidenced by the fact that

um you know and this is available on GitHub if you want to check it out we have basically released a tool that allows you to demonstrate that you can actually retrieve your funds completely independently of bitco so you know we don't have uh ownership or claim or the ability to transact with your funds so really we are um we're really only providing the basically infrastructure um in which to manage that so if you go to GitHub right now you can basically see that if you use your key and your backup key so you're two of the three

keys you don't even need bitco's key in order to remove your funds and I think that gives our our customers a lot of confidence too because I mean this is a highly highly unlikely scenario but let's say bitco is frozen or we ever you know fell off the face of the Earth for whatever reason everyone could still retrieve their funds and I think that's really important and that kind of also demonstrates the facts that the fact that we're not actually holding anyone's funds so in that regard because we're really more of a software platform um we don't like the money transmitter licenses that type of stuff that apply to companies like coinbase don't apply

to us because we're not actually falling under the same sphere if that makes sense no I I agree that it makes sense I think to the regulator it might not make so much sense however uh it's difficult to consider I mean I can definitely see how that's possible but I think it's def diff difficult to consider a website as a software provider because traditionally software is something that you install on your on your computer uh that runs this Standalone that doesn't run in a browser that you don't need to access the internet to to uh to get access to so I mean and we'll get back to this in a minute but um I think that there might be some uh interesting questions that will arise

in terms of Bitcoin regulation with regards to companies like bitco that essentially offer a software that runs in your browser which decrypts uh that which science transactions locally and that doesn't you know and those companies don't have access to your keys and so I think there might be some uh some interesting questions to to be raised with regards to like what are these companies are they software providers are they with regards to regulation like the bid license or other regulation that may come where do they fall into that uh so maybe this is a good time to get into like multi-sig in a general sense uh can you just sort of just briefly introduce multi-signature uh architecture and perhaps just talk about the history and

of multi-sig sure um so I think the the best way to think about multi-sig is that it's really solving a fundamental problem in by eliminating a single point of failure um in kind of the storage and the management of Bitcoin so a traditional Bitcoin address has one private key and if that private key is lost or compromised the funds are basically lost and there's no you know if you accidentally throw away your hard drive um oops unfortunately nothing we can do about it um so that's that's kind of obviously

problematic especially if you're holding large sums of of Bitcoin and what multi-sig does is it eliminates that problem by basically allowing for the creation of multiple keys so the protocol itself allows for the creation of up to 15 keys and you can you can basically create up to 15 keys and then require a smaller subset of those keys in order to sign transactions and move your your funds around so our Enterprise product uses a two of three multi-sig scheme so essentially there's a total of three

um three keys and two of those are needed in order to transact um so we multi-sig has been around since um 2012 and we have been working on R D in this field um led by Mike belshy who's our CTO since early 2013 and we've actually had to do a lot of work on not just bitco's client but actually patching a lot of the core libraries and things like that that are um you know necessary in order to have a robust infrastructure upon which to build so um that's kind of I guess the the origin of multi-sig

um obviously as I mentioned on top of that we've built things like HD wallets which we can go into in a little bit and then the series of corporate treasury policies and rules that um that I mentioned earlier so the for those of you who might be interested so the multi-sig was introduced uh uh in a uh Bitcoin Improvement protocol a proposal which 16 which is titled the pay to script hash uh you can find that on on GitHub it's it covers more than just multi-sig right I mean it covers other things uh like being able to split keys I believe and

other things that were introduced there's there are some other things than just multisig that were introduced with this uh Bitcoin and Improvement proposal right yeah I think I think multisig is kind of the most say it's the most important aspect in the sense that it's the one that has the most um I would say revolutionary impact on storage in the sense that um it has a tangible effect on reducing the probability of hacking or um you know user error and obviously that's that's core to making Bitcoin

more usable and I think if we want to get uh Mass adoption of Bitcoin people need to be secure in the fact that their funds are not just going to evaporate and multi-sig I think goes a long way in terms of doing that which is why we've you know multiple times uh issued calls for the industry to adopt multisig and um the amount of Bitcoin that's being held in p2sh addresses is I think just under one and a half percent at this point which is still a very small alarmingly small frankly um percentage but it is growing quite rapidly so there's a website actually I believe it's called

p2sh.info yeah I was going to mention that it's really interesting to see how how that's evolved over time exploded in the last few weeks and months yeah it's the kind of stuff that's oh I'm sorry go ahead no I was just saying that it's interesting to see how that's exploded yeah right now yeah I just checked and it looks like it's just over 1.5 oops yeah it's already outdated your but yeah it is fascinating I think uh at the beginning of the year it was like a thousand Bitcoins or something like that and even a month ago I mean I presume

also the coinbase multi-stick Walters has contributed to a lot of explosion over the last month it's it's like more than doubled in the last four weeks um yeah I wanted to ask and another a brief question regarding uh bitco and especially the use of multi-sick there so you mentioned use two out of three multi you also offer uh possible two out of four or two out of two uh or one thing that is perhaps particularly interesting we talked about this with uh on the podcast we did on reality keys because

he uses something like that although apparently it is a non-standard at the moment but that you'd have a multi-sig uh address where it's not like two right or three but for example one address always has to be used and then it's in one of the other two or the just go together I don't know if that's something you use because that would of course be then one way for example to manage it if you had let's say you had one uh a treasure of the companies to sign every transaction but then anyone else things like that that you're also

building or perhaps thinking of your future yeah so uh as of right now we support two of three um we will definitely be expanding the flexibility in terms of what that looks like so more complex rules around a number of keys who needs to sign Etc basically what you just described that's not available yet but uh there's a reason we're hiring all these Engineers so stay tuned for a lot more uh developments coming yeah yeah now I'd like to go into some of the I mean just the usability aspect of this this is probably the the topic that I'm

most interested in so uh just before the show I mean I had created a bitco account a little while back but I had never actually just tried to use it and see how it worked so I uh I I opened up my account I logged in so there is a two-factor authentication so I had to to get an SMS or use authy to to log actually log into the account so that's like one uh I guess level of security which protects you even further than just having a password best practice everybody should use that and then I so I created a uh a a secure wallet uh sort of secure holding so you I guess

you can create just as many as you want right yeah that's exactly right so you can create any number of wallets and as I mentioned before each um each rule that you set is specific to the wallet rather than the account and that's intentional in the sense that it gives you greater flexibility so let's say you have a wallet that you want to hold as that has like 90 of your Holdings and you really never want to transact out of it except on very rare occasions for that one let's say you were an Enterprise user you could set a spending limit of um zero which means that any transaction would require an approval If instead you

decided to um have a wallet that you use to transact more frequently and therefore you don't need security to be quite as tight you could set the spending limit to say five Bitcoins so any transaction under that limit doesn't require any other approval but if you do go over that threshold then you would want an approval on it okay and so when you create one of these secure wallets essentially you're creating it's not really a wallet right you're creating an HD wallet it's not just like one one address you can then create this you're starting from a seed and you can create as many addresses as you want within that secure wallet that's exactly right so if you um go back to the screen share you were

doing but if you go ahead and click into the wallet um there's actually a tab called addresses and that will show you basically all the addresses that you have generated yeah so go ahead and click into the wallet okay so just uh for those of you listening I'm actually showing the Bitcoin interface so I created a wallet here I called it safe um well I'll just I'll explain these transactions later so yeah so I created uh so I've got three at four addresses actually that I created uh I actually moved some Bitcoin at this I want to try it out and I donated a few million Bitcoins to Wikipedia because they've been nailing me about it for for the last few weeks every time I go on

Wikipedia so I said oh what the hell um yeah so here are the addresses I've created and I can create as many as I want right exactly yes and those um as you can see you'll you'll see the balance of each of those and for example one use case in which that might be particularly helpful is let's say you're expecting payment from five different people you can generate a different address for each of those people um and that way you'll be able to clearly tell who has paid you and who hasn't um just by keeping track of which address you send to whom yeah and I mean that's best practice I mean recommended to generate a new address every time you receive a payment

from someone anyway right okay and uh so other things that we can do here we can manage the wallet so like you said there are some spending limits that we can determine so we can set a daily spending limit and a per transaction spending limit so that's kind of interesting and like maybe I'll go to the we can go into some detail about how this works and a second there's also a user access tab so this is I think an Enterprise um yeah that's a feature an Enterprise feature there's also an address whitelist so if you're really um restricting the addresses that you're sending your Bitcoins to I guess you can create a white list of addresses uh that yeah

that's not not so much um foreign kind of peace of mind and what I mean by that is obviously Bitcoin transactions are not reversible so you want to make sure that you're actually sending uh your coins to the address that you intended to send them to and So What by adding you know let's say you're a company who regularly pays out a certain amount to a specific vendor every two weeks you can add their address to that um to that white list and therefore you won't need to you know spend a lot of time double checking that you've got the right one every single time you need to

transact okay now one question that that I had before and I I think I mean I have a pretty good idea of what the answer is but it's not really obvious maybe to everyone but these spending limits um these spending limits are enforced by bitco they're not enforced by the protocol so correct um in in what sense so what I mean is yeah that's the layer that we've built on top that's the load that you built on top so uh what that means is however that it all this is a really good idea to set these spending limits if by some chance someone would get a hold

of your key and your backup those spending limits would not uh be taken to into account if they're trying to do a two out of three three transaction with your backup and your uh your personal private key so in order to like bypass that limit somebody would have to get a hold of your well there's quite a lot they'd have to get a hold of you have to get a hold of your phone your wallet passcode your login credentials so the probability of that happening is I would say rather Slim Right regularly if you're falling

um if you're following what we recommend in terms of uh you know best practices for passwords and that kind of management yeah go ahead Brian but if somebody used um your GitHub tool and somehow managed to get access to the backup um and so so well let me rephrase this so if somebody was using and trying to basically spend the money not through bitco through the backup tool that would be used let's also say if we call it disappear Bitcoin disappeared and then

this wouldn't apply right well in that case so basically the way our backup keycard works is that it has an encrypted copy of the keys so and all of those are encrypted with the the passcode that you have set for that particular wallet so what that means is that you can literally like take your I wouldn't recommend it by any means but if you were so inclined you could take your key card and like you know wave it around for the public to see and unless they could somehow you know get a hold of your passcode they wouldn't actually be able to do anything with your coins so um it's again it's very challenging even

if somebody has your key card to even using the recovery tool actually spend those coins if you're not the rightful owner because whoever does that also needs to know your passcode so which means which means that every time you change if you change your password on a wallet you need to regenerate a backup keycard um no you don't um but you what you can do is you can essentially just send the funds to a new wallet if that makes you feel more comfortable so just to be clear so the key card is uh is a document a PDF document that bitco sends to you or allows you to download when you create your wallet and is essentially your backup uh your I

guess your backup key if anything happens that you lose your um uh your password it will allow that key card would allow bitco to retrieve your funds uh well it would allow it would allow us to I mean it would allow you we don't ever retrieve your phone right so sorry yeah either so for example if you forget your wallet pass code using your key card you can retrieve your funds basically move them into another wallet or if you lose your key card you can still using the other two

keys transact regardless so essentially the the basic premise is any one piece can be lost without actually you know losing access to your funds okay and in terms of actually storing this backup what are in your opinion the best practices with regards to keeping this key card I mean should you keep one in your house or should you have multiple uh backups like maybe at a friend's house or your parents or maybe a bank vault and in your and your your password also I mean a lot of people now are using services like lastpasses or their passwords and things like that uh can you maybe talk about some of the

best practices that you would recommend to to keep all that as secure as possible yeah so in terms of storing your backup um you know as I mentioned it is encrypted which is comforting in the fact that obviously that adds another layer of security if somebody finds it it's not just going to be like oh there we go I can read it um but we would still definitely recommend keeping it somewhere you know like a bank vault it's it's important to remember that this key is not something that's needed to transact on a regular basis and so it's really only used in the event of some sort of um Disaster Recovery or something like

that so again it doesn't need to be the most accessible thing in the world um so if you have a safe deposit box a bank vault something like that that's definitely um you know a great place to store it but it also depends on the use case right so if you have a wallet in which you're holding like I don't know 20 Bitcoin and it doesn't you know you don't need to go to the same lengths as you would um you know if you're holding many millions of dollars so I guess it it really depends on um you know kind of what you're holding in that wallet and what the what the use case is in terms of your passcode um yeah I mean passcode managers are definitely something that's has

taken off in the past I don't know a couple of years um also something that you can use the most important thing to to remember is just to make sure not to store your passcode with your key card which might seem evident but I always point it out anyways because um you know if somebody has never evidence yes exactly so um if somebody does have those two pieces then that's not a scenario that we want so um obviously just making sure to keep those both secure preferably in your head but if not somewhere safe but just not in the same safe place as the key card so um

I have two questions there are different so let's do one by one first of all um I was moderating this panel on Bitcoin security reminder at a conference recently and he said you know in his View the backups the paperback of should be unencrypted because I guess in his point of view the risk of you being not able to retrieve the funds because somehow you lose the password to decrypt that paper backup is higher than somebody sort of physically

stealing that thing um do you agree with that or do you think maybe that's something that's true for individuals but not for companies no I don't agree with that um the way our model is built is even if you forget your passcode as long as you still have your key card you can retrieve your passcode so there's no reason to have it unencrypted because so long as you have it you can recover your passcode so if you're if you're storing it I mean I wouldn't really recommend storing anything unencrypted because that just adds a layer of um risk

okay maybe my uh so my my second question is this I think personally right so now I have a whole bunch of different wallets there's like so many there some in there um and you know some are in this like offline thing and some maybe paper thing and anything that tends to be the case uh with many people people and then of course you can get very complex I mean even if we talk about something uh as simple quote unquote someone using the Bitcoin something through of like where do I store my passcode where do I store the paper back up like these shouldn't be in

the same place Etc um just to have that clear I think this sort of from an operational aspect is super important so what I thought about look really what one should do is once you write a document right exactly outlining uh uh different scenarios like if this happens and that happens if uh this deals have to be considered so I'm curious is that something you do with your clients is that you sort of walked him through every step and maybe you have this kind of different scenarios that uh so they they know what exactly to consider um and what they have to do if something

goes wrong yeah I mean obviously we are always here to support them in the event something goes wrong um but when you know when we do set up I spend a lot of time kind of walking through um security best practices how to set things up Etc so um you know for example we allow you to import an x-pub um as the to basically create the backup um so one of the keys is generated on bitcoast servers the second is generated client side in the browser when you create the wallet and then you have the ability to import a third one which we recommend generating on a separate

machine because you obviously never want to have any two of the three keys unencrypted on the same machine because that opens you up to a level of vulnerability that obviously isn't good um so you know for example I definitely walk through all of those best practices and that sort of thing um in terms of um in terms of management I mean that really boils down to each individual customers needs and use cases so some of them will have multiple people managing multiple wallets and so depending on you know whether it's a wallet that's used for day-to-day spending or for more long-term Holdings than my

recommendations obviously going to vary so it kind of depends on the use case as well now I had an idea so we're thinking about these sort of scenarios where uh and I think for us we don't think about this enough but you know it you know we all have these Bitcoins and if something happens to us when we get injured or permanently disabled or maybe we die or something like that in an accident or something horrible like that um you know and and those Bitcoins essentially will die with you unless you've done something to uh be able to pass them on to someone else so how does how would be able to implement some sort

of third-party retrieval uh in the case of uh of someone dying well um I mean fortunately this isn't a scenario that we've encountered but I would suppose that if something like that happened um you know let's say uh your father has a bitco wallet and he passes away he's left you with access to say the key card um than if you were to come to us and you know obviously we would take whatever legal proceedings are necessary beforehand but once that's been settled um in that regard then you know with our

key we would be able to allow you to retrieve the funds but again not luckily not a scenario that uh we've we've really encountered obviously the other option is to um you know have multiple administrators on a wallet so for example if let's say your father had an account with substantial Holdings he could add you as an administrator as well as your mother and then in that event you know the two of you would be able to transact even without um even without needing his uh uh approval or signature on the

transaction okay so one could leave his key card with his in his will for example right yes okay and when when someone comes to you with uh having lost their password and wanting to retrieve the Bitcoins with their key card what sort of identity verification do you have to go through if any to unlock those funds is having the key card enough or is there an another layer of ID verification that goes into authorizing transactions um yeah so we still have two Factor auth on that as well so we have a recovery tool that basically walks through the process requiring uh regular login uh two-factor off as well as the key card

okay and this is perhaps more of a technical question before we move on to uh to other topics is and and it kind of relates back to what we were talking about earlier and then the question of you know who holds the funds and such does bitco with the with the keys that they possess uh with that that third key that they possess do they have the ability to actually see the funds do they have access to that or do they just see a bunch of encrypted addresses um in the sense like do we are we able to view wallet Holdings yeah are you able to see client funds using simply that that uh that

part of the three keys that you have um we have visibility but we don't have the ability to spend or try anything like that because you took cosine right so so essentially what you're saying is like in in this safe in these addresses that I've created bitco has the ability to see the balance or I mean actually see the addresses that that are created in that HD wallet any and the balances okay that's something that wasn't clear with me yep so one thing I would just add to what we've discussed I think we've talked a lot about multi-sig but another thing that's

um I think interesting and not particularly well known is the fact that all our wallets are also HD which is stands for hierarchical deterministic and you know as we mentioned uh when you were sharing the screen that allows for the creation of of basically infinite new addresses from the starting seed um and I think that's that's very important from not really not so much a security perspective but from a financial privacy perspective because the blockchain is a public Ledger it's obviously available to anyone who cares to look at it and what that translates to is the potential for sensitive

information to be made relatively accessible so you know for example let's say I'm a company that pays its employees in Bitcoin I send out you know there are 15 employees I send out 15 transactions on the second Friday of every month if I'm the recipient of one of those transactions I can obviously see which address the the funds came from and I'll also be able to see the other transactions that it made that particular day so for example that would allow me to infer without too much difficulty um for example how much my co-workers salaries were or um you know any sort of thing like that

in the event that um you know I'm a hedge fund that's holding Assets in different uh in different wallets somebody could you know identify me as the person who has control over those and then potentially threaten me or any other number of unfortunate scenarios and so HD wallets prevent that by basically masking where uh you know which one of these addresses the transaction was coming from by spending from a different one each time and so what that does is it just kind of allows you to maintain that privacy even though you're transacting on a public Ledger that's really interesting I like that idea

thanks um yes so we're we're kind of coming up towards the end of our show is there something else um you want to cover with regards to a bit go or multi-sick that we should have asked about and that you feel is important that we haven't we haven't come to yet um no I mean I'm I'm just really excited to see the ecosystem taking the lead and kind of following the path that we've set in the sense that you know we as a company and our CEO Will O'Brien

published a piece um titled something like it's time to end the uh Cold Storage Ice Age we've really encouraged the ecosystem as a whole to adopt um standards like multi-sig we see these as not nice to have but as really core to making Bitcoin something that's a viable Financial instrument across the board and um you know it's not technology that we want to hide away and be the only ones offering we really want the industry to be using it and improving upon it because ultimately it's in the entire ecosystem's best interest to have more people

safely securely holding their money and so I think that's that's really the direction that we're headed in obviously we want to say a step or five ahead of everybody else doing this but um you know we think it's important for the industry as a whole yeah and I think it's important as well for industry leaders to like you say you know set those standards which then get adopted uh by by every other actor in the industry so you know um good job on on bitco for leading the the way on on security and uh you know it's also you know like we talked about being in the show it's it's very it's very interesting to see how that's evolved in in the last like it seems to

be happening so fast uh just a few months ago we were talking about insured wallets in cold storage and kind of looking at that as as a solution for securing Bitcoins um you know I'm I'd be interested in I mean I think in six months from now we'll be looking back at this conversation and saying even though today we're looking at this and saying this is quite secure we'll be looking back on this and saying wow like that was so insecure we've got so many more layers of security Now yeah or I agree with that and also just making it more usable that's something that we're constantly working on so it's

just like um you can never really rest on your laurels and the security and usability space particularly when you're basically creating a new industry so I totally agree we'll have a very different conversation in in six months time so yeah so perhaps moving on just before we end the show uh so you are also a vlogger you write for a client you've written for cointest for Business Insider and you also write on your own blog Ariana simpson.com um and so I I was reading through your blog earlier uh today and and you mentioned this before the show that you were in

Africa uh you talk about your experience there and maybe relate that to bitcoin yeah absolutely um so I think one thing that a lot of uh naysayers of Bitcoin uh repeat is that oh you know we don't need it the financial system works and first of all I would argue that that's not necessarily the case it very much works or doesn't work depending on who you ask and what their financial status is but more broadly I think that um yes on the whole the United States for example and a certain part of Europe have um you know Financial systems that are

largely functional but when you start moving into other parts of the world you see that that's not necessarily the case so um I spent a a good amount of time last year traveling through southern Africa and a lot of what I saw was really really eye-opening in terms of you know how different economies work and what those financial systems or lack thereof look like so you know I think the most the most eye-opening uh part of my travel for me was the time I spent in Zimbabwe and I met a lot of people who really gave me a great deal of insight into how the economy had been devastated

by their president slash dictator Mugabe and he had through you know basically completely Reckless um fiscal policies printed money used it to finance Wars excessive pay to his government and army officials and by doing so basically caused rampant hyperinflation um to the point where I think it was the second worst case of hyperinflation in the history of money which is quite uh astounding but basically what what resulted was the fact that money was depreciating at such a rapid clip that people could not afford to buy anything so stores were completely empty because

the merchants couldn't afford to stock them um hospitals had no medication doctors who are not paid so they were not working people were dying for things that should have required a minimal dose of penicillin and it really really destroyed the company the the country's economy um to the point where they eventually had to switch back to the dollar in order to stabilize things and things are certainly improving now but um there's still the the after effects of that kind of economic disaster are still being felt very strongly and um so for me I guess the the the relation with Bitcoin is the fact that

because it's not controlled by any single government or single entity there really is a substantial potential for avoiding this kind of thing in the sense that you know currency manipulation is a lot more difficult in an environment in which there's no single actor be that the government or a president controlling all of the money supply and um you know I I don't think that it's probable that you know in the next 10 years we're going to see everybody ditching their currencies and switching over to bitcoin however uh even having Bitcoin as like a uh secondary or supplemental currency for example in in a place like Zimbabwe I think could have

significantly alleviated the effects of um this kind of hyperinflation and so obviously it's difficult to say how these things will play out um in the long term from a geopolitical perspective but I think that Bitcoin has a whole lot of potential in markets outside the U.S which is sometimes underestimated yeah I mean a lot a lot of times uh uh people will use Africa and South America as examples of you know where Bitcoin can Excel and I think there's a lot of Truth to that however a lot of these people I think maybe have never even set foot in Africa or South America and

um exactly no but that's what I mean and and uh and when I read this post it really shines through that you know not only do you talk about this with uh sort of this the the the obvious uh Advantage is that people can can um foreign take from using Bitcoin and cryptocurrencies in those places but you have actually been there to see how people live and and uh how uh how we can benefit them in their in their daily lives so um I think that you're particularly well placed to talk about it so that uh so that article that you wrote is called

why Bitcoin matters in Africa it's on Europe actually it was just written about eight months ago it's on your site at Ariana simpson.com and along with all the other articles that you've written and I encourage everybody to uh go to Ariana's uh blog to uh to read those articles thank you yeah where the animals in our show so thanks so much Ariana for joining us it was it was really interesting to talk about this um I I very much I think

um can be absolutely integral uh to bitcoin's Future there's not some sort of optional add-on but I think will be totally embedded in how wallets work in the future so it's a really interesting topic and uh it was super interesting to talk with you about so thanks for coming on thanks for having me great to be here [Music] she's so and that's at bitco.com you can try out the just a regular multi-sig or they also have if if you are a company that wants to use some of the more advanced features uh it's like a request form I think it's still in beta but you

know and they will and next week uh we will have uh our hangout with Daniel gems so Genesis networking uh tool that it's also I think it's going to basically incentivize users by paying them and sort of giving them a stock in the company so it's really exciting and they are also doing a crowd sale that's organized by coinify so you may remember quantify from uh our episode maybe a month ago or

something when we had uh Tom ding on uh so that's gonna be uh next uh Sunday third tournament at 5 30 utcc so that's 9 30 a.m Pacific Time or 12 30 p.m eastern time and yeah please watch live with us uh that would be fantastic and uh to maybe want to subscribe to our YouTube channel so you will know and you can of course also find a show on iTunes SoundCloud Stitcher or wherever else you get the podcast please also subscribe to your newsletter at episode bitcoin.com newsletter and leave us a tip so you know if you listen

every week and watch consider giving us uh five dollars a month subscription I think you can do that with coinbase now so that's just 125 and an episode so thanks and we look forward to being back next week