Hello and welcome. We're super happy today to welcome Konstantin, the CEO and founder of Blockdaemon, and Chris Sharp, Blockdaemon's CTO, to talk today about Blockdaemon and crypto infrastructure.
This company started late 2017, early 2018. I've been an entrepreneur for a while. I got really passionate about crypto sort of towards 2015. So, I started structural engagements and working with projects and joining some of the open-source collaborative nature of things. And decided to start a company in this space. I was fairly analytical at the time thinking what has legs, what really solves a problem that I have experienced myself in the space. And one of them was trying to run an Ethereum node with a few friends for an ERC-20 token launch and really struggling keeping the node in sync. And so, the sort of idea of like, 'Hey, there should be a company that makes this really professional.' So, professional users can ultimately use node infrastructure. Right from the start, the idea was to be very institutionally focused. And we started in LA after I secured a little more money after we launched the first product suite, which was really Bitcoin and Ethereum full nodes. We had that early 2018. I think we were the first who had kind of that type of product. Pretty hard to market at the time because not a lot of people saw the benefit of like, 'Hey, why do I want to pay someone to do something? I can just download some open-source software and run on a server myself.' And also at the same time, the market collapsed on us. And so, it was a difficult birthing process. But, we believed in a future in which crypto ultimately revolutionizes our financial system because we saw a lot of problems in the financial system. So, our long-term strategy of providing rails for institutions to connect to crypto networks has never changed. We've been true to that since the beginning. And over time, adoption of our product suite has increased and then ultimately accelerated in 2020. At that point in time in late '21, I knew I needed a wallet stack. We acquired a company called CPR. And we also really thought about who's a great leader for this, who represents the sort of strong focus on quality that these institutional players we work with can respect. And so we looked around in the world. And one of the financial applications we really admire is Apple Pay. And so we felt like I come from the mobile phone space. And so I always think of like, mobile innovation is really a driver also connected to crypto networks in a way. And payment networks. And so what's the most stable, most reliable, most ubiquitous wallet and payment architecture you can think of? It's probably on the iPhone, you know. And so Chris was the sort of lead engineer in that project. And we courted him for a long, long time. And he finally decided to make the jump at a difficult time also in the market, you know. And so we really valued his professionalism, his background.
Very kind words. So thank you, Konstantin. Yeah, just as an introduction, I'm the CTO. But I'm also responsible for engineering, but also product. And that was something that Konstantin kind of trusted me with. And it's been a whole heck of a lot of fun. Before joining Blockdaemon, I was at Apple for 23 years. Now, between late 2013 and 2022, I was the engineering leader responsible for all server-side stuff related to Apple Pay. And so, one of the things that we sort of prided ourselves on was trying to think in terms of platforms, right? And so, the same platform that's used to provision a credit card or a debit card is actually used for transit in Shanghai or Beijing or Tokyo. And so, the same sets of APIs, the same sort of abstractions, that's the same sort of mentality from a platform perspective was something that gave us a lot of bang for our buck. And when I joined Konstantin's team, one of the things that I had been thinking about was, 'Hey, how can I take some of the core learnings?' Institutional wallet is, for me, just a super fun playground, right? Because I get to take a lot of the experience I had in building the Apple wallet and attempt to provide that same love and care and feeding to this product. Now, it's obviously institutional focus, and so there's going to be changes in the kinds of activities, but the focus on really doing things from a platform perspective.
What's the difference between an institutional wallet that makes it institutional grade compared to, say, a MetaMask?
Look, MetaMask is incredible. It really is. It's pioneering, it's feature-rich, it's really quite an amazing product. When we think about our institutional wallet though, we're thinking about how do you make sure that the private keys are as secure as possible. And the big difference for us is that in some ways you could say we don't have a private key because we're using multi-party computation or MPC. And what that does is it takes that private key and splits it up into these anonymous shards on some number of computers that are running as part of the institutional wallet cluster. And in simplistic terms, instead of recombining that private key in order to perform a signing operation, what's happening is there's a series of mathematical calculations between the nodes that's occurring. And so the private key actually never exists in any one place at any time, ever. And so, if you have a hacker that's able to get into your infrastructure and gain access to one of your institutional wallet hosts or nodes, it's really not going to compromise the security story at all. And so, that's the basis, and then on top of that, we have our policy engine. And the policy engine, if you think about the way things have been done, and I built my whole career off of building applications using hardware signing modules or HSMs. And the wonderful thing about HSMs is that the private key is secured by hardware, that's great. But, who can tell the private key to perform a signing or encryption operation? Well, anyone can, like anyone who has access to that host. And so, the secret, the devil in the details is really that if you don't have a robust policy engine that is as secure as the private key being protected by hardware, then all bets are off, right? And the thing that we think is so amazing about the institutional wallet is that that policy engine is as secure as any of the MPC operations, right? And so, I can say, 'Well, if I'm going to send half a Bitcoin to whoever, then I need at least three people in the treasury department.' So, we have the notion of groups. Very sophisticated, right? And all of this is totally on prem, right? So, you're completely in control of how these things work. After we sell a customer the institutional wallet, it's technically impossible for Blockdaemon to negatively impact the security story of that software. And so, that really makes a lot of folks feel very, very comfortable.
