Why HTC's Exodus 1s Will Have a Full Bitcoin Node - Ep.073

Transcript

Hi everyone, welcome to Unconfirmed, the podcast that reveals how the marquee names in crypto are reacting to the week's top headlines and gets the inside scoop on what they see on the horizon. I'm your host, Laura Shin. If you haven't yet signed up for the crypto workshop, Milton Demiris of CoinShares and Jala Jovanputra of Future Perfect Ventures and I are all teaching at Omega Institute in September, check out the show notes for more details. Also, if you're not yet signed up for my weekly newsletter, go to UnchainPodcast.com to sign up. Ciphertrace makes it easy for exchanges and crypto businesses to comply with cryptocurrency anti-money laundering laws. Avoid illegal sources of funds and maintain healthy banking relationships. Ciphertrace is helping you grow the crypto economy by keeping it safe and secure. Today's guest is Phil Chen,

Decentralized Chief Officer at HTC. Welcome, Phil. Thank you. Thank you for having me. Last weekend, you made news about the upcoming version of HTC's Exodus phone at Magical Crypto Conference. What did you announce? We announced a few things. I think first is, you know, an entry-level phone. We wanted to make a crypto phone more accessible. And so it'll be at a much lower price. Details to come, you know, when it's closer to the full launch end of Q3. And then the more, I guess, the more interesting thing announcement for the crypto world was that we will be supporting a full Bitcoin node on the phone. Yeah. And that was pretty amazing.

Why did you guys decide to put a full node, Bitcoin node on the phone? Yeah. So, I mean, if you think about what we thought about where we stand and what we represent in the community, I think the first thing We've done and we continue to we want to make that better is to empower people to own their own keys We believe and that that is the foundational one of the foundations for this decentralized internet or decentralized movement or web 3 to happen So everybody needs to be empowered on their own keys and that's a tour to empower yourself And then the other parts and then we wanted to sort of extend that technology to help to allow people to

secure the network, help secure the network. And so that was it. Let's start with by owning your own keys. And then now we're extending that technology to empower you to run your own node. And so, yeah, I think high level that was our intention. So that's something kind of altruistic to help the network, but is there anything in it for the users to have a full Bitcoin node on their phone? Yeah, well, it's part of the ethos of Bitcoin round. You can call it altruism or you can call it being able to self verify, right? I think the node plays such a crucial role in the whole sort of Bitcoin blockchain space. One, of course, from an altruistic standpoint, sure, you're helping to secure the network, but at

the same time, you can self verify transactions, you can relay transactions. And so it's a little bit of both end. Yes, it is. There is, I mean, you don't get paid for running a node like you do in mining, but it's part of the ethos of what I find so attractive about Bitcoin, right? Bitcoin represents open, neutral, censorship resistant, borderless. I think anybody that believes in those core tenants of Bitcoin will want to be able to run a full node. And yeah, we built technology to make that easier for people to do. And were you responding to consumer demand when you decided to put that in? Well, it depends on consumer, not the mass consumer, but I would say for the Bitcoin enthusiasts,

right? I think if you look at the success of, you know, Casa, for example, being able to run a node, even a Lightning node as well, I think what we have is, is, is more powerful than a constant node, right? And not just that, we actually have something that's called a secure element or trusted execution environment. You use our hardware to sign keys, to sign transactions, and now you can use the memory of the phone and, of course, with the bandwidth and power to be able to verify those transactions. And so, yeah, I think it's expanding on this notion of owning your own keys, run your own node, and be part of this this money revolution. And then to continue that direction, do you think that you'll ever

make the phone able to mine Bitcoin? So for proof of work, I don't think that's possible. I think proof of work, it's fundamentally power and compute heavy. And so the phone is not really used or we don't see a phone even with Moore's law, compute power being able to double, to be able to jam that into a phone to compete with servers. I think what we like to do is own your own keys, own your own node, but also be able to buy hash rates on the phone, like the same way you buy an iCloud service, for example, to be able to buy and not compete with mining sort of clouds that are in

the cloud, but be able to access it. I think that's something that we would think about. And I actually don't exactly follow. Do you mean like participate in a mining pool or? Yeah, participate in a mining pool or buy some hashrate or some compute power that's resold by a partner of ours. Okay. Yeah. And so just out of curiosity, we know that the entire Bitcoin blockchain is kind of... It's been around for 10 years. So there's kind of a lot of data on it. So how much physical space does it take up in the phone? Yeah, it's, you know, right now it's between 200 to 220 gigs.

And it'll grow about 60 gigs per year. And so that's kind of how, yeah, the size, so 200 to 220 plus 60 per year. And so a 512 gig, for example, could be able to you know, if you want to run a full node, it will be able to last, you know, five years, something like that. And then just in terms of like space on the phone, does it take up a lot of space or is it something that's, you know, Yeah. So that's the thing, you know, you know, similar to the way the iPod was sold. That's how we think about it too. You used to buy like a 32 gig, a 64, 128 gigs, how many songs you want to hold. I think we see a future in which, Hey, you know, right now we're starting with Bitcoin.

That's like the foundational blockchain. You buy this size memory, you'll be able to run the phone over Bitcoin. We're working, there are also technologies where we're looking to prune it down. So you can prune the 200 gigs down to 20 gigs, even lower than that. And so, yeah, I think memory, just like Moore's Law for compute, memory will also get cheaper. And so we imagine that phones will have bigger and bigger capacity, being able to you know, run a full Bitcoin node, but maybe in the future for other blockchains as well, right? So, and again, that iPod model, you have, you know, X amount of memory will hold this many songs, right?

We're taking that same kind of concept, X amount of memory will hold this number of blockchains, so to speak. Yeah. Yeah. And then since obviously the phone is used for all kinds of other apps and functions as well, will that affect the memory or performance in any way to have so much data taken up? Yeah. So there's built-in ROM and then there's SD cards that you can add. And so like your laptop here has an extra port, you can put extra SD cards. And so we have a port in which you can add extra memory if you run out.

And so our plan is, of course, you'll come with a base memory called ROM, and then there's SD cards where basically you have external memory that you would add into the phone. And would that be for the other apps or for the Bitcoin? But that would be focused on for the Bitcoin. Oh, I see. I think when we ship the phone, we will assume that that phone will be enough for your needs, for your photos, for your music, although that's more and more cloud-dependent. we're kind of, we see this reverse trend, right? Because the Bitcoin full node is client dependent, whereas more and more our media is more cloud dependent. You have to go to the cloud to get your music, your video, your YouTube, your photos even.

And so, you know, those technologies are, you know, very, very established and easy for you to access your content. But the Bitcoin one is special, right? You want it, here on your device to be able to verify and relay transactions. That's part of what's so unique and part of a technology that's so fundamental for this distributed ledger technology. And you were telling me that basically, so you'll ship kind of the most recent version of the ledger, but then when they sync it, they should, because there will be you know, some days where, you know, the phone won't have the transactions, that they should only do that when it's plugged in and on Wi-Fi. And is that kind of how

it will always sync? Yeah, I think that's our plan right now. I mean, we, again, by the end of Q3, when we do the full launch, we'll have details on memory card, how much bandwidth they'll use, how much power. But currently, yeah, we do suggest that you run the full node while you're plugged in with Wi-Fi. unless you have an unlimited cellular data plan. But yeah, I think especially at night when you have it plugged in, you have your Wi-Fi, those are great opportunities to, you know, why not use the resources you have to help secure the network, right? And so, yeah, the plan is that, but then, yeah, we'll have specific requirements and specs for the bandwidth, power, memory, things of that nature. Alright, so we're going to discuss some of the

phones other capabilities in a moment. But first, a quick word from our fabulous sponsors. Did you know that if money laundering were an economy, its GDP would be the size of Canada's? Large volumes of tainted crypto assets move through financial networks, often below the radar of banks. Cyber criminals use unregulated crypto exchanges to avoid detection. No wonder governments around the world are rolling out tough new anti-money laundering laws for cryptocurrencies complying with those laws isn't easy banks and exchanges need the best cryptocurrency intelligence available to avoid penalties now you can use the same powerful aml and compliance monitoring tools used by regulators cyphertrace is securing the crypto economy to learn more

visit cyphertrace.com unchained On May 27th, I will be hosting a conversation about the future of finance and human rights at the Oslo Freedom Forum in Norway. As the world continues to move toward a cashless society, paper currency is disappearing. Companies like Facebook, Apple, and Tencent are becoming increasingly influential in the digital payment space. We'll discuss how individuals and companies can preserve and protect financial freedoms in the digital age. I'll be joined by Bitcoin author and educator, Jimmy Song, Casa Chief Technology Officer Elena Vranova, Coin Center Founder Jerry Pito, and Bitfury Group Vice Chairman George Kikwadze. To register and attend, you can visit oslofreedomforum.com today. Use the discount code UNCONFIRMED25 to get 25% off your ticket price. Back to my conversation with Phil Chen of

HTC. So we've only been talking about Bitcoin, but the phone also does support some other coins. What are those coins? It's Ethereum, it's Stellar, ERC-20, ERC-721s. I don't have the full list, but Litecoin. But yeah, we support about 10 cryptocurrencies right now. And there are some other capabilities the phone has that are particular to some of those. I think with Ethereum, Etherscan is somehow built directly into the phone. Is that like through an app or? Yeah, I mean, it's built directly into or... Today, what we launched is you'll be able to do direct things in our wallet. I think one special partnership I want to call out is our integration with the Opera browser, right? The

Opera browser, I think, has maybe over 300 million users. They actually built their own crypto wallets into their browser. And so what's interesting about that is right now we have about 25 dApps. You know, these are Ethereum-based dApps. And so when you sign into there, so there's a Dapp store on the upper browser, and then you can click on a Dapp. You can log in. But the key thing there is you're logging in for the first time with your private keys. You're not logging in with your Google ID or your Facebook ID, right? It's the first time it's, it's, there's a digital identity you starting to own. And then once you're logged in, of course, your wallet is attached, right? And so now you can

do micropayments, right? Again, it's the first time in history, digital history, where micropayments make sense, right? Because in crypto, there is no middleman, right? Literally, you know, you, Laura Shin, you know, you can have a publishing site where you write an article and once people sign in with their private keys, you have a direct relationship with that user or that reader, right? And they can literally pay, and we already have that implemented. You can pay 0.002 ETH for a thousand words that you wrote. And so there's no mobile fee transaction cost. There's no credit card transaction cost. And most importantly, there is no ref share with the app store. What does that mean for content publishers?

Content publishers that had only the ad-based model to experiment with. I think I'm really excited to see how this will start to transform the content industry again and how this combats good behavior for writing good articles rather than just clickbait titles. I think there are many, many implications about enabling micropayments for publishing. Yeah, we'll see. I'm very, obviously, because this is my area, I'm super, super curious to see how it plays out in frankly, how I might use it myself. But as you mentioned, the phone also functions as a hardware wallet. So how do you keep the private key safe on a phone? Yeah, so we use something called the ARM Trust Zone. So it's built within

the chip. So in the chip, there's this kind of secluded area that, for example, the Android operating system doesn't touch. And so it's the separate part. and it can be implemented by the hardware manufacturer like us. And so it's separate from Android, and then we built this secure, some people call it a secure enclave, a secure element. I think a secure element would be next level security that we're working on. But it's this secluded area that's separate from the operating system, and then that's where we hold your keys. But that's where also the other thing that we launched at Magical Crypto was We also have SDK.

And so this SDK is a, for example, we have a key management API. And so the wallet that we build is not really, you know, it's built more of a test case. We want to empower other wallets to use our hardware to sign keys, right? Whenever a wallet, a software wallet today, for example, if they want to extend the security of their software wallet, right? Because that software wallet is still on the software operating system, if they want to extend that security into hardware, hardware protected, we have APIs for that. And so those are the grounds we want to start pursuing developers to use our hardware wallet to sign keys, to sign transactions, but of course, build applications. What can you do

when you have this private key in this architecture where people own their data, their identity, and of course their crypto, what sort of apps are you gonna build on top of that? That's what we're really, really excited to see. Yeah, it reminds me of, I guess, maybe the way that Apple fostered app development for its app store. Yeah. And just for people who don't know SDK is software development kit. So one thing, of course, I think everybody will be wondering is, okay, if I lose my phone, how do I recover my keys? That's right. That's the great question right there.

Like, and when we ship the phone to you, right, we don't have your keys. So when you lose your phone, you can't call, you know, the Exodus team and says, Hey, where are my keys? Right? Because if we did that, that would be completely counter to the whole Bitcoin blockchain ethos. And a total headache for you guys. That's right. And so we built something called a social key recovery. And so when you buy your, or when you set up your wallet, when you generate your keys, when you opt in, you can, we'll split your keys into five parts. And you share these five parts to five of your friends and family. All they have to do is download an app and they keep one of the five. And

so when you lose your phone, you can recover it by calling three out of the five to recover your keys. And so, yeah, I, The other really cool thing I think that's really exciting for the developer community, again, is we're going to open source that. So although we built it for our platform, you know, other wallets or other blockchains who want to use this social key recovery mechanism can go to our GitHub page and utilize that too. And so that's, again, that's propagating this key management hygiene we're trying to work on. Wow. Yeah. I think that just sounds super fascinating. So one other thing that you mentioned was that you guys also have capabilities for non-fungible tokens or crypto goods. So what can

people do with those? Yeah, I think, you know, one of the things that the whole point of owning your keys, you know, it's kind of opposite of, you know, it's a decentralization movement, right? Right now, currently all the exchanges centralized, right? And then not only that, they, in most exchanges, and most people still hold their keys within these centralized exchanges, right? What we've enabled with Kyber, for example, is a decentralized exchange. And now you can do peer-to-peer, and the keys are held by people. And so that's, you know, again, it's very early. It's the beginning of this movement, and And now you can swap directly with,

with, with others directly with your NFTs. So, oh, okay. I thought the integration with Kuiper was just for ERC twenties, but it's also for ERC seven 21s. I don't know specifically, but yeah, at least ERC 20. Okay. Okay. Yeah. Which also is super cool. So what's your vision for how people will use this phone? I mean, just, well, also I have to tell the listeners that at magical crypto Phil, kindly like let me hold the phone and play with it a little bit. And yeah, I have to say like, there's something about using it where you're a little bit like, oh, I see glimpses of the future in this. Like this is a different way to interact with the phone. There's these like built-in kind of cryptic crypto native capabilities in there. And yeah, I was a little bit like, hmm, this, this

definitely is an interesting development. So you know, just like, I'm sure whatever I'm thinking about how people might use it is just a fraction of what you're thinking. So what is your vision of how people use the phone and how it could change the way people in general interact with their phones? I have some ideas, but I think I'm more excited about, of course, the ideas that I don't have, right? I think that's why, you know, we focused on building the foundations of the technology and we want to work with the developer community on building those new applications. Of course, there's many ideas of being your own bank, being your own telecom, building a data marketplace. I think those are all great, and those are all things that we can't work on ourselves. We need the ecosystem and the developer

community to work with us. And so there are data marketplaces where we're really excited. to work with because now when you start owning your keys and in the example I gave you, you sign in with an identity that you own. Okay, then now what about the data that you generate, right? And so for example, we're working with a company called Numbers and it allows you to own your walking, sleeping data and driving data, for example. And so now that you have a you know, your health data and your driving behavior, they'll go and work with insurance companies. And so when you can prove to an insurance company that you walk this much, you sleep this much, maybe you can lower your

health insurance premium. And then more importantly, driving, right? When you can prove that you're this good of a driver, you can lower your health insurance. And so, you know, these are, again, glimpses of of how people will use this. But these are kind of very behaviorally, very different. But the interaction with the phone itself is the same. There's nothing different. You're still holding your phone, looking at a screen. There's a behaviorally, there's nothing that has changed there. And just out of curiosity, I mean, you did mention that the price point would be lower. But I just wondered also, like when you were talking about being your own bank and stuff, is your target customer kind of like you know, somebody here in the U.S. where they have

like access to a ton of financial services or is it a different type of person? So right now, I think our target audience is a lot of it is in the global south. I think in the beginning we started and I think we've reached, you know, a little bit of education on the developer community to develop apps for, and most of them are developing for first world countries, right? Countries that have, you know, developed financial systems. But I think we all know that the global south, Argentina, Venezuela, Cambodia, Vietnam, Nigeria, you see these countries where Bitcoin is a necessity, they have to use it, right? They need this store of value or unit of count. And so one space where we really

wanna focus on is just remittance, for example, that's a huge space, right? Like what if we can target migrant workers, They can buy a phone that's affordable and let's say, well, let's choose a corridor like Hong Kong, Philippines, right? And they each, the Hong Kong migrant worker with their family in Philippines, they both have the same Exodus phone and they can do these peer-to-peer exchanges, right? And transfer money across borders. Those are some of the applications or some of the target audience we want to focus on.

But yeah, I think there's in the developing nations where financial systems are not as developed, remittance, for example, is a huge target for us. All right. Well, we'll see what happens when the phone comes out. Thanks so much for coming on Unconfirmed. Yeah. Thank you for having me. That was a pleasure. Thanks so much for joining us today. To learn more about the topics we discussed, be sure to check out the links in the show notes of your podcast player. If you are not yet signed up for my email newsletter, go to unchainedpodcast.com right now to get my thoughts on the top crypto stories of the week. Be sure to check out our new channel on YouTube. Unconfirmed is produced by me, Laura Shin, with help from Fractual Recording, Anthony Yoon and Daniel Ness. Thanks for listening.