Hi everyone, welcome back to the Stefan Lea podcast. Rejoining me on the show today is Mike Belshe, CEO and founder of BitGo. Mike, I think it's been like maybe six or seven years since your last appearance on the show, so welcome back.
Well, thanks for having me back. I guess you probably took a pause for the last five years or something, huh?
That's right. Well, who knows? But obviously I thought, you know, there's lots of things going on in the world of Bitcoin and security and AI. I thought it would be a good time to get you on to talk about it. Obviously hearing a range of views, you know, across the industry, whether that's relating to people who are doing like, you know, full, you know, self-custody stuff or obviously like yourself running one of the, you know, largest Bitcoin custodians. So let's just start there. I mean, obviously this recent round of hacks and attacks in the Bitcoin world has got a lot of people concerned. Do you have any initial reaction on that?
I have a lot of things to say. So let's see. For anybody who doesn't know who BitGo is, we've been around since 2013. Started, you know, as a technology play for how do you secure Bitcoin better? That was like the original thing. And we helped pioneer the use of multi-sig into Bitcoin wallets. We didn't invent it. You know, it was built into the Bitcoin protocol, you know, as part of P2SH way back when. But basically made a usable form of what's now known today as multi-sig. We do a two out of three variant and help push that forward. I think what's going on right now is actually we're at a transition which frankly I think we talked about all the way, you know, 10 plus years ago as a community, as an ecosystem, which is how much of this belongs in banks and how much of it belongs in self-custody. And before anybody thinks I'm going to just go pitch the bank thing, look, I am a huge, huge fan of self-custody. And I think that if we ultimately lose self-custody, and by the way, it's not a guarantee that regulators won't come and ban it. But if we lose self-custody, we lose the power. We will end up with a system where there's a set of gatekeepers that control the banks. And they get to decide whether you're in or you're out. And most of the time that probably works more or less okay. And sometimes it really doesn't work okay and then you're really sad that you didn't have self-custody. So BitGo offers a full complement, although we're known for custody. We're licensed, we're US regulated, federally regulated bank here. I think we're the largest independent bank in crypto of any other player. Although we're known for that, everything we do we offer in custody and self-custody modes. And in fact you can come to BitGo, you can come right now, you get full, you know, free access for individual users of all the self-custody. You can upgrade to custody if you want, etc.
All right. So, the transition I think that's happening is the asset class has gotten big enough and the security requirements, you know, to secure assets of that value has now reached a level where people are like, wait a minute, can I secure this myself? So, first off, on the thesis and the premise, a lot of people are really excited about self-sovereignty, the ability to hold it on your own, have your own control, nobody can take it from you. It's a really important thing. But then that's got a trade-off of like, well, wait, what lengths am I willing to go to to secure my assets? And then also, who can I trust? Now, 10 years ago, there was nobody you could trust because none of the banks were touching it. None of the traditional players that have built up all these layers from regulatory to security, etc. were there. These days, I think that part has definitely changed. But you still have the issue of like what goes into securing your own money? How much are you comfortable with? And I think here's an interesting question for you, for me, for anybody. You know, what percentage of your net worth would you be comfortable having responsibility to secure yourself? And it's an important question you're going to have to grapple with. Even if you're the biggest believer in Bitcoin, at some point, you know, Bitcoin, way bigger than every other market, maybe it's 98% of your net worth. How much are you comfortable holding on to yourself?
I mean for me I am one of those dice roll multi-vendor multi-sig guys but even for me I certainly do believe that you can spread it around like in earlier year and don't forget I think many of us have grown up in this like at the time many of us first got into Bitcoin especially like I'm 38 and a lot of other bitcoiners are kind of similar bracket when we first got into it we were single no kids it's like and now you know married with children like your life, you know, the risk profile changes.
Yeah. Like what the risks you're willing to take when you're, you know, 25 or 24 or whatever, like versus now. I get a call every month. I get a call every month from somebody that's had Bitcoin. They've been holding it 10 plus years and they're like, you know, it's enough value. It's enough of my net worth. I got to figure out like what's going to happen. I think my spouse could handle it if I disappeared, but maybe not. I'm the technical one. And, you know, how do you pass that on? Turns out to be tough. So it's a real challenge.
Yeah. And of course there's no one-size-fits-all. It's all kind of like what's your net worth? What percent of your net worth is Bitcoin? Like and if it's a very large percent of your net worth, then yeah, you do need to be extremely careful about how you do that, whether that's like doing going full DIY self-custody or you kind of use a guided solution or use a custodian such as yourself or use, you know, a BitGo wallet, this kind of thing. So I guess all of these happened is the same thing that happened with traditional finance, you know, I mean, you know, there was a time when people held on to their own assets you had it in your house right, it was the wild wild west and then banks did start to emerge and then you had this problem of like well that looks like a reputable guy that's going to hold my money he says he's a bank but like what if he runs away and were there rug pulls in the 1800s absolutely there were rug pulls from folks posing to be banks, you know, obviously nothing to do with digital assets this happens and so eventually, you know, you build up layers of systems and you build up some regulation, you build up some laws and you build up some insurance.
Okay, so I think it's a destiny that of course we're going to have a mix of the two. And as an individual, you're going to have a choice. What do you want to put where? So, just like you have some cash in your wallet. And probably you wouldn't want to lose that cash in your wallet. You probably also wouldn't mind terribly and it probably wouldn't completely destroy your life if you did. But as you go forward with all of your assets, remember it's not just Bitcoin, right? Your stocks are moving tokenized. Your stable coins are moving tokenized. Everything is moving tokenized. So, there's going to be more than just Bitcoin in terms of assets that you're going to need to figure out how to protect either at a bank or not. And then lastly, as the value goes up, I think individuals need to start thinking a little bit more like institutions have. At BitGo, we have this saying, we say retail deserves what institutions demand. And you know, BitGo started back in, you know, 2013. And at the time, the people that gravitated towards what we built were people that had large amounts of asset. And so they were willing to pay some for security. So we quickly found ourselves down this institutional path. But at the end of the day, why is the security of institutions somehow better or more advanced than individuals? Well, humans are good at some things, but security is probably not one of them. In particular, OPSEC, we are terrible. I am, you are, I call everybody out. There's not an elitism here. Like humans just are not very good at OPSEC. And so the structure that we built with multi-sig, you know, two out of three. The number one principle of securing your asset is don't have a single point of failure. So if you have a single person that's responsible for your money, hey, make it so that there's two. If you have it in one location, hey, make it so there's two. If there's one private key, make it so that there's two. If you have a single machine that can have malware on it, make it so that there's two. So this is a problem that we solved literally over 10 years ago. The ease of use of multi-sig has been perceived to be hard. I would argue that we have this solved at BitGo.
Feedback. Like there's things we can do to make it easier. Absolutely always open to that, but we've been doing this for a long time. At the end of the day, when you're using a multi-sig wallet at BitGo, you really can't tell much difference between that and a single sig wallet. But I'll tell you one big difference. When you get malware on your single sig wallet machine, whether that's your phone or whether it's your desktop, and we see these posted on X every single day. I opened up a new wallet. I just provisioned it. I deposited $10,000 and now it's gone five minutes later. Why did that happen? You had malware on your machine. That's why it happened. And with multi-sig, much, much harder. Now, there's still more to be done than just multi-sig. I'm not trying to say there's a panacea here. But we do put all of that multi-user, like you and your spouse both want to be on the account. Pretty simple. You want to have like a spending policy. Hey, spend $1,000, who cares? Spend it. You want to spend a million dollars? Maybe I'm going to get a second person to approve that. And I'm going to do that, you know, through a high security mobile app, which got another application level programming key around it. Anyway, all these bells and whistles that we've been building for institutions for the last, you know, 12 years, I guess 13 almost, we make them available to individuals as well and try it. It's not hard.
So, talk to us a bit about the suite you offer then. So, on the BitGo wallet side or the self-custody side, can you talk to us about how that's working? Is there can you use like a hardware wallet with that or is it more just like a phone and a server or what's the model there?
When you provision the wallet, it gives you a few choices about how you make your keys. So, we use what we call a two out of three model. It protects against both theft and loss. So, theft is like no single point of failure. You can't have a single machine breach and lose all your money. Loss, we worry about it less, but we probably ought to worry about it more. This is where you, me, as a user, we forget our passwords, we lose our keys, we forget our seed phrases, our house burns down, and we didn't realize, oh shoot, I have my ledger and my seed phrase both in the same house. You know, loss is the backup key. And the challenge with backup keys is that you can recreate the single point of failure problem. So, first you devise a system so that there's no single point of failure, but then you create a backup. Well, that can't be a single point of failure. Like just giving a key to a lawyer or whatnot. Well, he can steal all your money. And of course, this has happened many, many, many times in history. So we use this two out of three model which protects against both. I think we're the only ones to do it. We do it on every chain we support. We think it is a fundamental underpinning that you absolutely have to have. The alternative is to create a secondary backup which you know has a single point of failure problem. All right. So in this model we hold one key and you hold two keys. So when you provision a wallet with us, that one key we provision on our servers. It's in HSM. We've been doing those are hardware security modules. We've been doing that longer than anybody because we're the first kind of into the space. I think we're on generation four or something like that now. And then the other two keys you get some flexibility about how you create. If you just create it through the browser, one will get created in your browser. Another one you can use like a Coincover is a third party service that we use. They've got a provisioning system that they've done completely separate or if you want you can bring your own third key. You can provision that however you wish. So you've got a lot of flexibility and of course all of this is available programmatically although, you know, individual users use that less it's probably more for businesses but you can so you get total flex in terms of how this does. Then we give you some backup materials in terms of a key card which by itself, you know, doesn't create any single breach point and there's a couple of other security features that we build around it but you get a lot of flexibility. So if we disappear off the face of the earth, you can still fully recover your assets. By the way, we put out this thing. It's open source. It's on GitHub. It's called the wallet recovery wizard, which allows you to recover any BitGo wallet, self-custody wallet. The hard thing about that is a simple tool generally except we don't use any BitGo.
So imagine we disappear, whatever reason, good, bad, nuclear war, I don't know. You can use that tool. And by the way, our clients audit this stuff. They care a lot. They want to make sure, and these are our big clients, our institutional clients are using self-custody. They want to know that like, hey, if for whatever reason BitGo isn't there, be it regulatory, be it business fails, be it nuclear war. All right, so they test it. Anyway, you can use that to recover completely without BitGo. So anyway, you got a lot of flexibility. And then on the custody side, you can also use custody of course for that we have to go to an AML KYC process as a regulated institution. It's got insurance behind it. It's 100% cold storage. That means that all those assets are offline. In that case, BitGo does hold all three keys. You can still, you know, withdraw 24 hours a day, 7 days a week. We've got staff that manages that. We stick true to the cold storage. We also make it faster by we've got some hot buffers where, you know, we can fulfill a withdrawal without having to go all the way to cold storage. When we do that, that's our risk, not your risk. Your money's in cold storage. So you can then use a blend and you can just decide, you know, I'm going to have this wallet for myself custody. I'm going to connect it over here. I'm going to be doing DeFi stuff like crazy, whatever. And then I've got my savings on this other side. And you can mix and match.
Yeah. And then give us an idea what are the fees, what are the costs for these things whether you're doing the self-custody side of it or the custody side of it.
For individuals you can come to BitGo and you can do everything I just described at no cost so, you know, give it a try and let us know. We hope that some of our individual users will then use our trading services and our staking services and we make money there or maybe you want to take a loan we make money there. So in general what we found is, you know, people don't mind if we're taking a small clip as part of them making money, right? So when you're doing trading or activity, you know, pay for the service. One thing I will say I think our industry has failed retail in terms of living up to our promises of lower fees and fewer middlemen and you can go right now and you can go look at the public financials for the largest US-based retail exchange and you can say, 'Hey Claude, what was the retail take rate? I'm sorry, what was the take rate on retail trading in the last quarter for that company?' And it's going to come up with an answer of about 160 basis points. Institutions don't pay 160 basis points to trade. They never, I shouldn't say they never have, but they just don't. I mean, the fees that we charge institutions is in the tens of basis points at the best. And you can see this by going to BitGo and looking at doing asking the same question. What's BitGo's take rate on trading? And you'll see a big difference. We offer the same price to all our clients. The other thing is we're not an exchange. So when you go to your broker for stocks in the US, there's this regulation called best execution. Broker dealers are required by law in the United States when you go to buy some Apple stock to get you the best price they can. That is they can't fill your trade with their cousin Vinnie and, you know, charge you an extra 160 basis points. No, they have to get you the best price. No such rules exist of course in crypto and further when you go to any single exchange that's only one price. So again, back to the market, like the best price could be on the NASDAQ, could be on the BATS exchange, the American exchange, could be on any one of these exchanges, but the broker connects you to all of them and always gets you the best price. When you go to a retail exchange in the US today, that's a single venue. What BitGo does is look, we're not an exchange. We have a smart order router and what that is is we take your order and we route it in and we get to the best price wherever we can get it. We go to all the market makers, we go to all the exchanges, we connect all over the planet. By the way, we're regulated not just here in the US, but we're regulated seven different jurisdictions, qualified custody and doing a lot of activity. So, we'll get you the best price. Well, what do you think the chances are that whatever retail exchange you happen to be on is giving you the best price today? Not very good. I mean, it's whatever its market share is. If it's got 5% market share, it's probably what it's going to be, right? And look, frankly, everybody in the industry knows if you're not trading on one of Binance, Bybit, or OKX, you're simply not getting the best price. The US prices are just way higher. So, anyway, BitGo connects globally. We get to the best price wherever that comes from. And then, yes, we do charge a small fee for that, but the fee is less by a lot than what those other retail exchanges are charging you. You can check it in the public financials that we publish as a public company. And secondarily, we're getting you the best price anyway across the planet, whereas they don't.
And then on the custody side, what are the rough fee ranges there?
Again, for individuals is free.
Yeah. I mean, at the institution custody level,
It's a different, that's a different thing. It varies, right? So, like when an ETF is holding just Bitcoin, look, we can't stake it, like they're not trading it, like, etc. So, we charge them some fees, but that's going to be different than others. In general, look, I believe custody is really part of a new move to a reserve banking system that we haven't seen in quite the same capacity ever. And it's thanks to Bitcoin that we now have this. We have a whole banking system around depositories, which is different than what BitGo does as a banking system around reserve. So depending on what activity you're doing, you know, we don't lend out your assets ever. We're not allowed to do that. We don't want to do that. It's your assets are your assets. We can't hypothecate it without your permission. So sometimes we have to charge fees, but it varies. So anyway, I know I'm being a little bit non-answer of your question, but it's because it's complicated. On the retail side it's much easier.
I see. Okay. Yeah. And then I guess coming back to what we were saying about like where is the industry going as you said so your points earlier have been okay look people are being charged too much in terms of exchange fees, in terms of custody. Do you think a lot of people are going to get spooked by what happened with some of the recent, you know, hacks, whether that's the Coldcard one or Liquid or kind of addresses being doxed? There's been a lot of these things as I'm sure you're very well aware of. What do you think that means for the industry? Do you think new people will just kind of all go to the ETF or go to custodians instead of self-custody? What do you think?
I think over time, yeah, people move their assets to banks and custody in general. I think when you really think about large amounts of your net worth being tied in digital assets, it's a lot of responsibility. It makes people scared and nervous to hold it on themselves. And without getting into the hacks, I mean just for a moment, I mean, even think about how do you protect against fire? I mentioned it earlier, but you got to have your key and then you got to have your backup key, right? And the typical answer would be okay, get a metal backup and you got to have metal backups for each of your keys and this kind of thing or you put in a safe deposit box. There's other ways to do it offsite, but all of these are hard and most people don't do it. The other thing that happens is a lot of people are getting into crypto today. And when they get in, they're like, 'Okay, here's $10,000. You know, it's meaningful, but it's not like the end of the world, but then that asset can grow.' So, when they set it up, they set it up with security at home for how they would secure something that's worth $10,000. Now, it's worth a million dollars. And when you're thinking about how you secure something that's worth a million dollars, of course, you've got to think at a different level. So, you know, wrench attacks obviously become a thing, especially if you're in France. And then lastly, I think what happened with Coldcard is that we like to think of self-custody as being trustless, but it's actually always naive. There's always trust somewhere, unless you're writing the whole damn thing as a developer yourself, in which case you have to trust you didn't make bugs. You have to trust yourself, then you're really good.
And then there's still hardware involved.
Well there's hardware, there's supply chains, there's the algorithms that are used. So with Coldcard like obviously the random number generation was done inadequately. People were trusting that this was done by professionals that wouldn't make those types of mistakes. Most people don't even really know how critical the random number generator is. Even though a private key is nothing more than a random number, it's critical. And so they were trusting that that was being done. That trust was breached. Now they're thinking what do I do? By the way, the answer still whether it's BitGo that you end up using or somebody else multi-signature is better because instead of having one random number you've got three random numbers that are protecting your asset. Now the next thing you have to think about is like well where are those random numbers being generated? Because if they're all being generated with the same broken RNG you're still in trouble. The BitGo model that I described where the keys are generated in different places, different implementations for each of the keys. So, think about the probability of a failure. Like, and insurance guys think about this all the time, right? Like, what's the probability that one of your keys was done badly or you had malware on it at the time you did? Okay, 0.0001% whatever. What's the chances that two keys had that? Well, it's 0.0001 times 0.0001, which is 0.00000001, right? So the way you make things really rare is by, you know, eliminating single points of failure. You can't completely account for every possible type of risk. You should think about as many as you can, of course, especially when it's self-custody, especially when it's a lot of money. But the next thing you need is you need to be able to do this kind of multiplicative protection by way of reducing risk across no single body failure.
Yeah. Now I think for a lot of people it kind of it's you have to balance all of these different things as you said removing single points of failure. Sure. Absolutely. And that's where, you know, people in the self-custody world will be looking at okay I use maybe two or three or three or five with different hardware wallet types. So that way we're diversifying that way. So we have fault tolerance. But then you layer on those other aspects of like okay not just that but how do I make sure it's redundant? How do I make sure it's inheritance is handled that like when I die that my wife and kids will get the coins, you know, all of these things it's kind of like how do you balance all of these things together along with the complexity of dealing with different device types, right? Because if it's just one device type that's kind of easy enough maybe you can teach your wife to handle that but once you now start okay well actually it's this hardware wallet type A type B type C etc the complexity does start to blow out a bit.
Let me give a suggestion. You know, over the years, you know, so many people have come to me and said like oh it should be a two of three, a three of five, and there's a lot of great ways to protect things. The reality is it's a trade-off of security and usability. So having spent a lot of time it's not that I'm wed to like two out of three. It's like the one thing and we stick to it like we've really tried to figure out is there a better model. The nice thing about two of three is that the usability is really pretty strong. So, first off, you've got your account. It's a username, it's a password, it's a two-factor authentication. I strongly recommend a YubiKey. Something that's got a physical component to it. By the way, BitGo hasn't used SMS-based two-factor authentication since before anybody else banned it eons ago. Okay. But it starts with that. And then I lost my train of thought here.
Yeah. So you were talking about how you two of three as the model and then, you know, password user password.
Two of three versus others, right? So BitGo has one co-signing key and you tell BitGo and you configure it and it's all cryptographically done like what policies you want to have in terms of approvers or spending limits or delays and all this kind of stuff and we can take care of that. So, normally when you're interacting with your wallet, you're basically coming in, you're signing, you're presenting a key and a signature, but you only had to deal with one. We deal with the other one. That's how you get the no single point of failure. There's still a third key, which is a backup, and hopefully you never have to use it. It sits in a vault somewhere, and like it's fine. When you move to the three of five model, and by the way, Casa does a good job of this. So, Casa is also kind of a retail thing. Well, now you've got five keys you've got to figure out how to protect, right? So you might have a co-signing key at Casa and then they give you recommendations on where to put the others. Well, first off, your co-signer cannot have a majority because then that's not self-custody. So you have to have three. They can only have at most two. But now where do you put those keys? They recommend one at home and one at your office and one as a backup. Which is a reasonable thing to do, but it turns out to also be hard. So it is a level up in terms of how much complexity do you want to have. So the two out of three model I think solves the issue of no single point of failure, solves the issue of having a backup and is usable by you. At the end of the day, you've got one key. It looks exactly like you're using a single key wallet except for that you're not you're using all of these things. So that's why we like it. And it's served pretty well. Certainly compared to any single key model, it's better. And then it solves this problem of having to trust a single RNG because you've got multiple keys that contributed into that. In terms of the other things you mentioned like your spouse, all BitGo accounts are multi-user accounts. So you can invite your spouse onto the account and then you can even choose roles for you and your spouse. So there's administrators that have like control level can set policy. And by the way, if you once you have two administrators, if you want to change the policy, you got to get approval from both administrators. Then you've got spenders, then you got viewers. So, if you have an accountant, you can bring your accountant right in. They can look right into your account and see exactly what's going on so they can pay your taxes or whatnot. Without having any private key material. All right. So, it's multi-user. And then there's policies. And there's all kinds of policies that we build. Just recently added IP restrictions, location restrictions. I think we got timing restrictions, velocity limits. So there's a bunch of things. This gets pretty complicated. I think actually maybe the things that the team is working on in terms of the retail usage is to kind of just give a couple of simpler suggestions. I think one of the great things that Steve Jobs did is, you know, he takes away choice, right? He like limits the things you can configure and on one hand that seems like ah you're preventing me from doing what I'm trying to do but on the other hand there's some good reason for it because it helps make sure that the design is clean and that you're not getting into corners where you can get yourself into trouble. So there's still more work to be done I think for BitGo and others on that and that's an area we focus on right now.
I'm curious, would you say there's a threshold above which, you know, people really should look at having a professional custodian? Like is there a threshold above which, you know, people even with multisig you think people should not self-custody that or at least they should start thinking about splitting and having like some in their own self-custody multisig and maybe some with a big custodian, this kind of thing.
I think it's up to everybody to decide on their own. I'm not sure if everybody actually is equipped to decide on their own, but, you know, I'm really about liberty. So, I think it is your responsibility to figure out what that number is for you. And by the way, if you've gone through life changes where when you started in the industry, you weren't married and now you are married, you might have a different, you know, risk profile either of your own making or by way of your family. So, anyway, I think you got to figure that out on your own. It's, I wish I could say it's easy. By the way, so somebody that lives in the Philippines, you know, their economies are very small compared to US economies generally. So of course they're going to have just a very different number. I had a venture investor years ago. He got into Bitcoin. It was before we were custodian at all. We just had self-custody wallets. And the wallet got to be worth I don't know a couple hundred thousand. And for this guy, it wasn't a big deal, but he was nervous about it. He's like afraid he's going to lose the money. And so he just had to get out. We didn't have custody. He sold his Bitcoin early because he was so nervous about holding on to what he felt was a large amount of money under his own control even though his net worth was so much more. So, it's really a personal choice. I don't think there's anything wrong with his conclusion. That was his choice. Similar to like if you had gold, you know, how would you vault gold? Or if you had a lot of cash, how much would you put in your closet? How much are you putting in your closet before you got bars and you put them on your window? How much would you have in your closet before you decide to hire a security guard or get a gun? These are personal questions.
Yeah. Okay. And so then coming back to the... Yeah. Look, I can only speak of let's say trends or let's say typical things that people would do like above a certain...
Well, actually let me add one more thing.
You know, being CEO of a public company, I've gotten to a little bit higher public profile. So for me, the answer is zero. And I just I don't want to have anyone thinking that they can come and do anything physically to me to either take my money or the company's money or client's money. Simply won't work. So, anyway, I think that also comes into account, which is like if you're a celebrity profile, you know, what are you going to do?
Yeah, absolutely. If you're a public name, especially if you're a public Bitcoiner, then yeah, maybe that tips you more towards like, you know, obviously multisig and of course maybe some of that with, you know, professional custodians or whatever different kind of diversifying out your exposure a bit. Of course, you know, there'll be different views on that. But I also want to get back to just for listeners to understand more.
Did you see the Revolut news this week?
Yeah. Unfortunate. So there was like a KYC leak and basically they leaked KYC data to someone who is faking to be the government basically. And so that's like I mean it's AML KYC laws, FATF sanctions laws, all this stuff. I mean yeah it's hard to...
Look I mean first off, you know, I feel sorry for the victims especially given kind of what's going on right now. Second thing, you know, look Revolut screwed up here. Now being at a regulated firm I've seen this stuff come in. It's interesting. You know, the first time you get an email from some guy at DOJ, you're like, 'Huh?' Like, he's just emailing me. Like, how am I supposed to believe this guy is actually at the DOJ? Yes, you actually have to check all these. Like, the idea that somebody's going to just send you an email. I mean, this is not an authenticated channel. But the government officials all do it. I'm not talking about just DOJ. Like, the states all do it, the federal all do it, etc. And then you have to say no, I have to verify you out of band in order to be able to answer this. You know, they'll send subpoenas right over an email. It's crazy. So, but then the second part of this is not just Revolut like we have seen PII leakage over and over in our financial sector and has nothing to do...
with crypto. It has everything to do with the fact that we've created these honeypots. I don't think there's a solution coming here. Unfortunately, I think the government wants to know where your money is. There's a war on cash. They want more of it put into the institutions so that they can get a handle on it kind of if they ever need it. And I think it's unfortunate. So, the government creates this. The government does nothing to protect individuals. And, you know, you can yell at the regulators. It's not quite their fault. There's kind of layers of this. It starts with legislation, goes into this regulator, and then ultimately into this enforcing regulator. And the enforcing regulator is just like doing his job. So, you can complain to him all you want, but you got to go to your lawmakers if you want to get rid of this. My own personal belief is that the PII collection has never worked for stopping crime. And there's I think there's very little evidence that it does work very well. I think it's mostly about making sure you pay your taxes, actually. And you know, they say it's about financial crime, but it's really about pay your taxes. So, it's unfortunate. They are putting us at risk. Ain't going to change. That's one thing that you lose when you go into custody.
Yeah, that's a I mean this is one of I've spoken about this on the podcast and I've hosted people who like there's a academic Ron Paul not Ron Paul P and he's spoken about how the actual number of crimes stopped by these KYC AML it's like a tiny tiny fraction and of course the massive compliance burden and of course you and I in Bitcoin land we see all these you know data leaks and hacks and people getting attacked and crypto kidnappings and all this it's horrific. But it seems to me like of course if I if I could wave a wand and abolish KYC AML sanctions laws, you know, sure I wish. But is it happening anytime soon? Probably not. Most of the people probably believe in it. And so that's probably the challenge, right? That people who are more, you know, Bitcoiners tend to be more libertarian, cypherpunk aligned. So they they might agree with that idea of abolishing those policies, but the masses will not. And they drive most of the policies right around the world.
I don't know. I think actually most Americans don't don't really have a view. I think it's like a lot of debates. You'll have like some people that are staunchly opposed, some are staunchly for. Mostly are in the middle. The staunchly for is the statists, right? The statist want to make sure the state has power. Money is power. Anytime you see a conflict like this, it's usually related to money. In fact, I might even go so far as to say it's always related to money. So maybe that's me speaking my opinion here. But
Well, I mean let's say let's say as you said a lot of people are ambivalent or they don't really know or care. They just kind of think oh my bank officer is always asking me all these questions about what I want to do with my money and I just kind of answer them cuz you know how else am I going to get my money. I guess that's probably how a lot of people are thinking about it unless they're ideologically libertarian or cypherpunk.
