Obi Nwosu (00:03:46):

And there was a clear problem that the exchanges around at the time were, that Mt. Gox was in the middle of failing and they weren’t trusted. So this simple idea of making a trusted exchange in the UK where focus came about. And so I decided to, with my co-founders, co-found Coinfloor which was the UK’s at that time, a young exchange, but that at eight years later, when we sold. It was the longest running Bitcoin-only exchange in the UK. And yeah, that was the story. I started off as a CTO. Within nine months, I was the CTO and CEO of Coinfloor and we had multiple ups and downs, but ultimately more ups than downs. And I sold at the end of last year. So that was my background.

Preston Pysh (00:04:36):

That’s unreal. This is unreal. And I can’t-

Obi Nwosu (00:04:39):

Now that you know-

Preston Pysh (00:04:41):

I can’t believe you’re regulatory… Trying to do this back when it had never been done, like you said, it was Mt. Gox over in Japan and that was basically like it, and it was very boutique. And you’re probably looking at trying to do this in the UK. I just couldn’t imagine the regulatory burden that you were dealing with.

Obi Nwosu (00:05:03):

I’ve been in the Bitcoin space for eight years and that’s about 80 years of regulatory. When we started, we applied. In fact before started, we applied to the FSA at the time. Now it’s the FCA. And I believe FSA was Financial Standards Authority. I can’t even remember. They changed that. Now it’s the Financial Conduct Authority. And we said, “Look, we’re on this company. We want to be regulated. And here’s what we’re doing.” And they came back very politely saying, “Thank you very much. But what we believe you’re doing is not a regulated activity. So go ahead and do it. We’re not going to regulate you.” And so with that letter, we started. But that was where we began, but we still wanted to be incredibly transparent. There was a Bitcoin Core engineer who suggested this idea called provable solvency or Proof Reserves. And we decided to implement that.

Obi Nwosu (00:06:01):

I think a number of exchanges, Kraken, Coinbase, blockchain.info at the time. Now it’s blockchain.com. BTC China and now it’s defunct. And I think, I’ll put this well, they all also made these public statements that they would also improve reserve. Unfortunately, we’re the only ones who actually did it. I think Kraken did one and stopped. All of them removed the public statements off their websites after six months. You can go back in the way back web machine and find the original promise to do this. I’ll leave it for the readers or the listeners to do determine why they decided not to do Proof of Reserves. But we did it every month for eight years. And this is something, in fact, Nick Carter talked about continuously.

Obi Nwosu (00:06:49):

And yeah, many other things. In the Bitcoin cash wars, we were one of the few exchanges to be not a fans or this sort of 2X compromise. And we said, “Look, whatever they use like to be Bitcoin is Bitcoin.” We educated everyone ranging from the intelligence services to the police to politicians. I gave evidence in front of the UK parliament treasury select committee, which is a bit like the Senate committee hearings. We did everything to try and educate people and educate regulators. We started at a position when it took us talking to nearly 200 banks across Europe to get a bank account at that time.

Obi Nwosu (00:07:36):

Now for this new project we’re working on, I’ve talked to four banks and four banks listen to me and are interested in opening bank accounts. It’s still tough. You still have to fill in 70-page forms, but it’s much better than when I had to travel to Estonia to become an Estoniain E-citizen just to get a bank account or travel to Poland or travel around Europe. So I’ve seen a lot when it comes to regulation.

Preston Pysh (00:08:04):

So your impetus for starting the exchange in doing this was custody related, correct?

Obi Nwosu (00:08:11):

Yes. Well, the impetus was to solve the problem of helping people go from fiat to Bitcoin. We saw ourselves as this Robin Hood-like… I saw myself as a Robin Hood-like character. So rescuing people from this world of this regulated inflationary money and allowing them to move over to this regulation-free, inflation-free money. And as part of that, you had to provide them a custody solution that was safe and reliable, et cetera. And so we decided that we wanted to be as transparent as possible because we’re holding people’s money on their behalf. And also to bring back trust, especially in the wake of Mt. Gox, we felt that we would go down this road to regulation and that was the way to do it. Because at the end of the day, we are a third party. We are effectively a stranger to our customer and we are incentivized to earn money. And you are asking us to look after your money.

Obi Nwosu (00:09:18):

So there is a perverse incentive that where in most cases, if you’re incentivized to make money, that leads to competition, innovation and so on. Because to earn money, you have to provide an incredibly… The most efficient way to earn money is provide incredibly good service your customers. But in the case where you are custodying money, then the most efficient way to earn money can be just to take the money. And especially some entrepreneurs who walk the line might start, as we’ve seen recently, start doing things like gambling with your money or they might have abscond with the money or it might just disappear, et cetera. And so we felt that the way to bring that trust back is to go for regulation. Little did I know that actually that led you from one problem into another, but I discovered that over the next eight years.

Preston Pysh (00:10:10):

So I’m assuming you had no experience with exchanges before going into this. And you hear these people who build something really large and substantial like what you did with Coinfloor, and they’ll jokingly say, “If I only knew what I know now, I would’ve never taken the first step because it was like climbing Mt. Everest or some type of massive, massive undertaking that you just don’t know.” So your lack of knowledge or understanding of how hard the problem is, would’ve prevented you from starting. Do you have a little bit of that sense when you look back at those eight years of running such a [inaudible 00:10:48].

Obi Nwosu (00:10:49):

I’ve had ups and downs as anybody who has been in a startup for eight years, and there were many, many, many times that I wished I hadn’t started the business. It was eight years, but I probably lost 20 years of my life. I’ve had some of the first healthy days in my life, some of the most stressful periods. Now that I’ve gone through it and because of what I’ve learned from it, I’m grateful for it because it’s prepared me for what I’m doing now which I cannot describe how happy and excited and passion I have about what I’m doing now. And if I didn’t have those skills applied to this, then it wouldn’t have been the same thing.

Obi Nwosu (00:11:29):

But yeah, I didn’t have any experience of running an exchange at the time. We were very naive. Eight years is a long time. So I’ve got not only experience running exchange, but running a Bitcoin exchange in an unregulated Bitcoin exchange. We were the first exchange to be regulated in Gibraltar, one of the first jurisdictions to provide regulation in Europe. We were one of the earliest in Europe in many different things. And in fact, actually not coming from the traditional markets was a boon for us. Because a lot of people who run exchanges come from the market where they were traders themselves. And there’s always, we found with certain customers, there’s always a slight concern when the person on exchange has the same mindset as the traders. There’s always a worry, are they trading against you? Are they doing all these different things?

Obi Nwosu (00:12:24):

Whereas with us, my background was that of a technologist. So I just wanted to make system as well as possible. And I’m not a good trader. So we have no interest in doing anything other than making sure the systems worked incredibly reliably. We were never hacked. We never had these issues, which teams have played exchanges orders of magnitude larger than us. We were a medium-size exchange. We a good size exchange, but exchanges that were much larger us when there were these massive moves in the market and people really needed to trade, they all seemed to just go down.

Preston Pysh (00:12:57):

I know exactly which exchange you’re talking about.

Obi Nwosu (00:12:58):

I won’t name names, but they would always seem to go down, but we would keep on ticking and people like that, even they knew that. We just made sure we kept people happy. We made sure we were reliable. We were very conservative. So philosophically, we were always aligned to the ideals of Bitcoin. So it was like, it was TikTok next block and it was also the same for our exchange. And that’s I think because we were first and foremost engineers and second commercially minded traders. In fact, we were zero in that regard.

Preston Pysh (00:13:39):

Yeah. I love that. I love that background and which led to the success of the performance, which is really what you’re trying to get at, with providing the customer service. Now, when you’re looking back at that experience, if you were going to explain to your kids, “All right, these are the two big things I learned from those eight years that felt like 80 years.” How would you summarize your two big takeaways of what that was all about?

Obi Nwosu (00:14:06):

Ooh, I have immediate thoughts to mind, but [inaudible 00:14:10]. No, let me just not. No, I think there’s two things. One, you have to realize that you need to avoid regulation if you can, even though we got it. I think that the innovation for Bitcoin is to be able to be regulation proof. So I’m using all that learning to build systems which just don’t need to be in. If you really want to do something of global impact for what we are doing, you want to build systems that are cognizant of how the world works, but don’t wait for the world to catch up for you because that just… Don’t. So that’s the first learning.

Obi Nwosu (00:14:55):

And the second is to be very, very, very careful of who you partner with and who… whether it’s partnering organizations or people within your organization or so on, so forth. So that would be the second thing, I think. Or who invests in you. All of this stuff. If I look back, although everybody had their own perspective, I don’t wish anybody I knew very well. I do think that there was a lot of differences or perspectives in all those regards in terms of the direction of the organization and that caused us a lot of challenges. I was very focused on going to Bitcoin-only road. Some people came round to that, but it took several years. Some people never came round to that. And then it led to us to just like a fork in Bitcoin that led to a fork in Coinfloor where we eventually split ways and recreated the world’s first physic futures exchange, Bitcoin futures exchange, but that was eventually there was a schism and that was sold off.

Obi Nwosu (00:16:01):

We retained a small equity sake, which we eventually sold last year, but that became CoinFLEX, which you now see in the news. And they went their own way, which was a very much a Bitcoin cash, multi-crypto 200X leverage approach. And we were the Bitcoin-only focus for retail dollar cost averaging approach which was closer to my philosophical view. But these things by themselves, and if you focus on them are different business models and it doesn’t really matter what you think of each one. There is a way where they can flourish. But when you have two philosophies and where to go with the business, and they’re so different, you end up in this No Man’s Land. Well, in the end, it was actually a really good decision for us too, and everybody could then go the direction that they wanted to go in and they could have the future that they were destined to have.

Preston Pysh (00:17:02):

Fascinating. I love those two points. Avoid regulation, if you can and be careful with who you partner with. And I think with the three arrows capital situation, boy, that last point really hits home for a lot of people these days of who they’re partnering with or who they’re working with and such a salient point across all time. When people are… this is a, I think a question that I get a lot when I’m just talking to anybody about Bitcoin in particular. People are always asking which exchange to use. Do you have any tips for people as they’re looking at selecting an exchange? What are some rule of thumbs or something that’s really simple for them to do, a little bit of an analysis on who to select as they’re trusting?

Preston Pysh (00:17:49):

Because what we’re about to talk about gets into the future of trust and custody and all that kind of stuff. But for people today, right now, as they’re looking at exchanges that they can trust, what are some things without naming names that you would look at or things that make should make your eyebrows go up when you see it as a person who has built an exchange?

Obi Nwosu (00:18:11):

So I guess you start off deciding what is your reason for wanting to use an exchange? Are you someone who wants to speculate, is comfortable with the risk of speculating? Effectively, somewhere between the spectrum of trader to gambler? That’s the spectrum. Some people consider them all the same thing. Some people consider them different, but if that’s where your mindset is, you should be open and true to yourself. In which case everything is about risk and you should be focused on who has the most features, who has the most liquidity and just accept that there’s a risk that they could blow up as a business. But that’s just one more risk you’re taking along with the trading risk.

Obi Nwosu (00:19:00):

If you are someone who is interested in using this as a custodian for holding your value in the long run, you see this as a savings technology as opposed to a speculation technology, then you should have a very different set of criteria. It isn’t about who’s the biggest name, is about who has a consistent commitment to focus on social capital over financial capital i.e. it’s more important for them to maintain honor and dignity and a good reputation. And their actions have shown that over the short term money. They want to make money of course, because they have to be profitable, but they want to make sure that they may maintain their own social credibility and that’s better high value for them. And so if that’s the first thing you do, now how do you do that?

Obi Nwosu (00:20:00):

Well, you look for science and symbols. So one, how they speak, what they talk about, what they prioritize. Do they have a clear set of criteria for what they list? And is there criteria based on the safety of their users or is the criteria based on how much money they can make from their users? If it’s the prime first, then this is probably the biggest indicator. If it’s the first, then that’s a good sign. If it’s the second, that is a sign of they’re probably the place to go if you want to speculate. Now, if they don’t clearly communicate their criteria or they communicate it but don’t follow it, those are both, you should assume in that scenario that they’re in the latter camp. Unfortunately, the vast majority exchanges are in that latter camp.

Obi Nwosu (00:20:50):

What we found is we came up with a criteria which is just very sensible. We thought one, we would only list items which were technically mature. Because if you are asking people to put money on something which is not technically mature, there’s a high risk it could explode and that’s not good for your customer. It can make a lot of money for you, but it’s not good for the customer. Two, you would list something which had very good community support. Because if it didn’t, it could fluctuate a lot, it could disappear and money has network effects. You need to have strong community support. So again, it seems a very sensible criteria. Small cap tokens, and so on didn’t make sense there. Three, there needed to be have regulatory clarity. Because you are regulatory exchange, you need to have regulatory clarity around the token.

Obi Nwosu (00:21:41):

And four, ultimately, you want these things to be store value. Money. So it needs to have a core use case which was around storing value and money. Because if it wasn’t, then it wasn’t a thing to store your value. And if you’re thinking of customers you want to save, that didn’t make sense. Now when you take those four criteria and we thought there were four very sensible criteria for, if you’re focusing customers trying to save and dollar cost average or sensibly invest in the hold for the long run. We only found one currency that actually fit host criteria, which was Bitcoin.

Obi Nwosu (00:22:19):

So when I say that I’m a Bitcoin maxist, I just think it’s actually from a very rational position. If I found something else that let those four criteria, I would’ve listed it, but I’ve never found anywhere thing that came close to those four, which is why. And Bitcoin-only just meets those four by the way. Even Bitcoin-only just meets those four. Otherwise, if it didn’t, then we would just shut up shop and say, “Well, there’s nothing to offer people,” but Bitcoin does meet that criteria. And we were reviewing it every month and it was only Bitcoin. And in fact, with further decisions by other cryptocurrencies, they’ve further and further gone away from being able to fit those criteria.

Obi Nwosu (00:22:59):

So for example, Ethereum, you might think it fits three of those criteria, but in terms of technical readiness, the Ethereum developers decided and announced publicly that Ethereum 2 was coming out because Ethereum was never going to meet the original objectives of community for of the Ethereum developers. So if the developers of Ethereum say, it’s not good enough, objectively, it’s not good enough at that stage. So at that point, it was very obvious that we delist Ethereum after only listing it for six months. It was only in short period. And so we delisted it at that point because the developers of Ethereum themselves are telling you, it’s not good enough.

Preston Pysh (00:23:39):

Yeah. You don’t want to argue with them.

Obi Nwosu (00:23:43):

[inaudible 00:23:43].

Preston Pysh (00:23:44):

So Obi, you are a board member on ₿trust. This is a nonprofit. Talk to us about what this is about.

Obi Nwosu (00:23:56):

₿trust. And B is the Bitcoin bit in ₿trust. It’s always difficult to find that symbol. We need to make it a permanent character on the keyboard. So it was originally over a year ago, Jack Dorsey and Jay-Z tweeted this idea that they’re putting 500 Bitcoin towards a trust to promote the development of Bitcoin protocol engineers in the global south, starting in Africa and India, but ultimately all across the global south. And so they were on the lookout for board members, three to four board members to take this 500 Bitcoin, form this trust and locate, educate and enumerate talented Bitcoin engineers so that they could hopefully become the next generation of Bitcoin protocol engineers. Because there are only a few people who actively work on some of these globally vital tech technology. So Lightning, Bitcoin Core and other core protocols.

Obi Nwosu (00:25:06):

So the idea was great. The impact is also great because if you take Bitcoin Core, as I was talking to the main Bitcoin Core maintainers also a month and half ago, and they’re saying actually right now, although there’s a few hundred people who had contributed, the people who actively contribute to Bitcoin Core, for example, it’s about 10 right now. And you can see Peter Willer just announced stepping down. So it could be even less. So even if you add one or two or three people to that, you’re making a significant increase in. And this is a point where the global south is not only you’re helping increase the education of the global south, but they’re going to then contribute to something that is of global importance. So the global south is supporting the world as opposed to the west supporting the global south. So I love the idea.

Obi Nwosu (00:25:54):

I applied with 7,000 plus other people because it was an open invitation. I didn’t want to have these things where I was backrooms, old-boys club type application. And I know many people from the Bitcoin space applied, but many people from outside applied as well. And so began 10 month process. This also began in the same year that I was already looking to move on from Coinfloor. And there’s a reason why, and that was all because I started to realize that we needed to get a lot of people off exchanges, but that’s something we talk about a bit. So over that 10 months while I was still working on Coinfloor but started to look at offers before I just ignore them, but starting to look seriously at offers to acquire the company.

Obi Nwosu (00:26:44):

We went from 7,000 people applied and then a few months later, I went to the next round, the next round. And at some point around just before adopting Bitcoin and San Salvador, which I was planning to go to, because at that point was getting close to us finding buyers. We were in negotiation phase and I had finally the opportunity to do things like to go to Hackers Congress for the first time in Prague, as a CEO of a regulated exchange. It’s not a good look to go to Hackers Congress, but now I know I’m selling it. I finally do that. And to go to San Salvador. I got down to the last few hundred, I believe. And then I thought, “Okay, maybe there’s a chance here.” And yeah, we kept on going through. And then we got some final interviews. And just a few days before I was about to sell the business. It was pure coincidence. It was finally announced that I was going to be one of the four board members.

Obi Nwosu (00:27:41):

We had our board meeting with Jack and Jay on the call and all these other incredible people who’d helped and donated their time from Spiral, from Chaincode, from Brink, from just everywhere. And yeah, the four board members met each other for the first time on that call as well. We introduced ourselves to everybody. And so I began. I mean, it was formally announced in the same day as I stepped down as a director of Coinfloor, just pure coincidence. The same day. I don’t think my other board members know that happened. So one life ended and the new life began.

Preston Pysh (00:28:21):

Insane. Insane. Everybody listening to this right now is doing a fist pump in the air like, “That is awesome. That is so cool.”

Obi Nwosu (00:28:29):

I’m pretty blessed. The people I’m working with are incredible. Amazing.

Preston Pysh (00:28:35):

Wow. So you had mentioned Lightning and core obviously. So do you see Fedimint in that mix of protocols potentially moving forward? How does the board view Fedimint? Is it something that’s been brought up?

Obi Nwosu (00:28:49):

Yeah. We have a number of principles that we put on our site. And one is, I’m very careful not to bring up Fedimint in ₿trust meetings. Other people have and sometimes candidates that we talk to have brought it up, which is really good because there’s so much, just natural excitement for it. So that’s actually, but what I don’t want do is we seem to be promoting something that I’m working on. And that’s one of our policies as board members, to not try to promote our own bags to work, even though this is an open source project, but I do fundamentally see this as the third key pillar of the Bitcoin open source ecosystem.

Preston Pysh (00:29:36):

What are the first two? What are the first two, Obi?

Obi Nwosu (00:29:40):

The first one, the central pillar is Bitcoin Core itself. Bitcoin. So this is decentralized, censorship resistance, store value of money. And that’s the base that everything else is built across. Fixed supply, immutable, decentralized and also very, very secure. In terms of extra function, the sacrifice it makes is it’s not got very much functionality and so on and that’s where other technologies can add to it over time. But it needs to be as a base, very, very, very secure and very, very decentralized. And what you don’t want to have is compromise those two for bells and whistles in the core protocol. Because if you’re compromising on centralization, then what’s the point of using a blockchain. It’s a massive overhead. You might as well use a database. If you’re compromising on security, then you end up with something like terror and so on. Why would you store money on something that’s insecure? It’s eventually going to be lost. It makes no sense either. So you cannot compromise on those two.

Obi Nwosu (00:30:45):

The next pillar is decentralized censorship resistant payments, and that is being provided through Lightning. And that allows you to… if you are set up correctly and the network is architected correctly from a scaling and congestion point of view, allows you to settle between parties at the speed of Lightning and at incredibly low cost. So that allows you to scale the payments aspect, but it’s built on top of the first layer. And then the third pillar which is missing is decentralized censorship resistant custody. And at the moment, if you think about it, we’ve really got two choices. You come along and you are someone who’s passionate about Bitcoin, knowledge about Bitcoin. It’s invariably friends of family when it’s the right phase.

Obi Nwosu (00:31:39):

In the bad period, no one wants to talk to you and you are the social [inaudible 00:31:42]. In the bull period, everybody comes back and say, “You are the one who always goes on about Bitcoin. Can I actually, can you tell me…” Well, they, first of all, ask you for financial advice to say, “Where can I buy it from?” And whatever you say, because they trust you, they’re going to do, but you really have two choices. You can either tell… you take a view, are these people technically proficient enough? Then maybe you suggest to go with a hardware wallet approach. But for nine times out of 10, you don’t think they are, especially early on. So then your only choice is to tell them to go to a regulated exchange even though you know that’s not a good thing to do, that’s literally the only [inaudible 00:32:21]. And that’s not centralized and you are basically telling them to store their money with a stranger. Effectively is stranger custody by definition, third party custody.

Obi Nwosu (00:32:30):

What we need is a solution which is much simpler to use and also can be rolled out anywhere. It’s decentralized, is censorship resistant, which is not the case of a regulated exchange and it allows you to custody safely and securely. And ideally just like Lightning bakes in privacy into the standard because everybody needs it, but they don’t actively do stuff for it. Your custody solution should also do that. You shouldn’t have to go off and do extra things to get privacy. It should be just bait in and you shouldn’t even think about it. So that is missing and Fedimint provides that. I can go into how I discovered it and discovered that the person who invented it.

Preston Pysh (00:33:15):

Yeah. Yeah, I have that as a question here. I wanted to hear how, because you don’t know this person, correct?

Obi Nwosu (00:33:23):

Oh, well now, well, no. Now I do know him.

Preston Pysh (00:33:25):

Okay.

Obi Nwosu (00:33:28):

But at the time I didn’t. As I mentioned last year, in the final few months of negotiating sale of Coinfloor, I decided to visit Hackers Congress and I was going there for two reasons. One, I’ve always wanted to go, but I just felt as the CEO of a regulated exchange, it wasn’t appropriate for me to go to certain events at the time. But this time I thought, “Well, now I can go. It doesn’t matter. And I’ve always wanted to go.” But there was another reason. In 2019, it seems that there’s a segue that related. The Financial Action Task Force, FATF, approved something called the Travel Rule. At that time, people who were in the industry especially were very favor of was happening in regulation realized how significant was going to be. The FATF is this unelected body who advises regulators around the world on appropriate regulation, but that’s just advise.

Obi Nwosu (00:34:33):

But throughout the history of FATF, there’s no piece of advise they’ve ever given that hasn’t been unanimously implemented by the different countries who have signed up to the FATF policies, but almost every country in the world has signed up to the FATF policies. Even they’re waring with each other or so, and they’ve all signed up. Now, the only question is how long it takes to implement. The quickest, smallest agile countries do it in route three years. The less agile take five, six years, but they all do it eventually. So 2019 was when the cock started. And so we’re in 2022. We’re now at the period where you’re starting to see the countries implement it and people think, “Well, this is not going to implemented.” But there is not a situation of a policy implemented by FATF that hasn’t been implemented.

Obi Nwosu (00:35:21):

So knowing this, I realized that as we were getting close to this timeline, that we needed to get more people off exchanges. We as an exchange, and again, as an exchange, you generally not incentivized to do this, but again, an exchange that’s concerned their customers would be one that’s constantly trying to get them to self custody. If they’re not trying to do that, or they’re trying to explain why it’s better to custody with them. Again, you need to be careful if your objective is to save. For example, if it’s a trade and gamble, it’s a different thing.

Obi Nwosu (00:35:53):

So we were constantly trying to get people to self custody. And after a number of years, I realized that this was just not going to happen. We might get 5% self custody, but we’re never going to get anywhere near 100%. One day, one of our customers, amazing woman, a really funny, and now a very good friend of mine, very smart switched on, but not super technical said, “Okay, Obi, I get it. I understand what you’re saying and I understand I should self custody, but the problem is I trust you more than I trust myself.” And I-

Preston Pysh (00:36:28):

I think you have a lot of this. Obi, I think you have a ton of this.

Obi Nwosu (00:36:34):

You do. You do. And I realized that this was what was stopping most people moving across. So then I asked her and I thought about it. “Well, who do you trust more than me as an exchange?” And she thought about it. And she went, “Well, I guess my friends and family, because they’re the ones I asked for where to custody and they suggested you. And they could have suggested we wobble exchange. I would’ve just gone with what they’ve said. So implicitly, I trust them more than you. I’m only using you because they told me to use you.” And so that was something I to use as Sherlock Holmes. I stored in my mind palace just fills up there, but then I just left it.

Obi Nwosu (00:37:17):

But then a number of years later, I was at Hackers Congress thinking about ways in which we could help get people off of exchanges. I also had a very strong interest in the global south, especially even more so it’s always been running through my experience at Coinfloor, but just never going to happen. A UK regulated exchange with UK and European-based traditional finance based investors. They were never going to have Nigeria as a second market, which was not going to happen, but I’d always wanted to do this. And I also realized that self custody and the hardware water solutions don’t work in places where if you send 100,000 or 10,000 hardware wallets to Nigeria, you are lucky if 1% get through and don’t get stolen on the way in [inaudible 00:38:03]. Or in certain regimes, are they going to be sabotaged or all this sort of stuff. It works in a Western context, but it doesn’t work there.

Obi Nwosu (00:38:13):

So I was thinking about ideas like using existing things that were already there, like Nokia phones, they’re everywhere. Their users door stops in most places now, but they have the functionality and power to be hardware wallets, for example. And they preexisted the mention of Bitcoin. So it’s hard to think that chips could have been added to something before the FATF was actually in existence. So I was talking to some of the Hackers [inaudible 00:38:40] there about how we could redeploy them. And then at one lunch break, we were outside the front of Parallel Polis, if I pronounced it correctly, where Hackers Congress takes place. And I bumped into Eric Syrian and he was wearing his cap and sunglasses and face mask and so on because he is very privacy focused and I told him about my ideas and he gave me very, very honest feedback. I thought these were terrible and I really appreciated it because I liked to get good feedback on these things. And then I wanted to hear about his ideas.

Obi Nwosu (00:39:21):

And he then told me about Fedimint, which is a port Monte of federated Chaumian Mint. And this is the idea. And I thought, “This is a really interesting idea, but isn’t it going to be stopped by regulators and so on and forth.” Because I’ve had eight years of background dealing with regulators, dealing with some of the largest law firms in the world, regulatory advisors and so on. And so I had a very strong knowledge of all the different regulations that are happening in different places. And he said, “Well, I don’t really think about that. I’m just making this incredible privacy technology, which it was.”

Obi Nwosu (00:39:57):

But then I thought about it for a bit. And I realized if these people who are, and I can explain how it works in a bit, but if the people who are running these nodes effectively, these Fedimint nodes for, we now call them guardians. If these people are friends and family or they have some sort of preexisting non-commercial relationship and if they are not looking to do this by way of business, they’re basically not earning money. They can earn money if they want, and certain jurisdictions are fine with that. And the way federations work, it means that they don’t have a majority of keys. They have a minority of keys. They can’t act single-handedly. Then through various exemptions, depending on the jurisdictions, they’ll be exempt from regulation in most reasonable jurisdictions. By that, I mean, west of Europe, UK, and US, for example, they would be exempt from regulation. [inaudible 00:40:59].

Preston Pysh (00:41:00):

As long as they’re not doing it for profit, you’re saying.

Obi Nwosu (00:41:04):

There’s multiple things that the system does and the design is designed to make it so that the people operating it have a strong case to be exempt from regulation.

Preston Pysh (00:41:15):

Okay.

Obi Nwosu (00:41:15):

So one is, and this is very clear. You can see it on the website of, very helpful websites for the FCA, for example, is this guide, do you need to be regulated not? And one clear exertion is, are you doing this by way of business? And then he goes, well, how do you know it’s doing by way of business? Well, there’s no hard or fast rules and they never give harder fast rules. The examples are you looking to make a profit from it? And to make revenue work. So if you say, “I’m not,” and also if you add on things like, well, if you add on, like you’re doing it for people who have preexisting relationships with, and they’re not, and it’s clearly, it’s friends and family, that’s also just adds to the argument that you are not doing it by way of business.

Obi Nwosu (00:41:55):

If you can think of the idea, if I’m going to store money in a piggy bank for my kid, I know that I don’t need to regulate this a licensed custodian. If I go to the shop and buy stuff for a friend, I don’t need to regulate as a payment Institute. They give me money to buy stuff for them. Or if I buy something in a restaurant and I said, “I’ll pay you to pay me like next week.” I don’t need to be a credit Institute to do that because I’m doing it not by way of business. And it’s the same. If you are holding your private keys for, if someone has got a hardware wallet and then they ask you to hold it back with their private keys, that backup is also the wallet. But we realize that’s not regulated, because you’re not doing it by way of business, but you are literally custodying their money as well by holding that backup of their private keys. And most people will be storing the backup of their private keys with friends or hopefully, or they might be storing in a bank vault. But which case you are still storing your money in a regulated third party, bank at that case, in which case why use the harder wallet if you are going to store your backup in a third party regulated institution.

Obi Nwosu (00:43:10):

So all of these things, you don’t expect those to be regulated. And it’s the same thing here it’s effectively. Fedimint is the same as you storing the keys as a backup for your friends, but just on steroids and we’re taking the best practice way of doing that. I.e. you should be storing them as cryptographically on secure shares and then splitting it up amongst a number of trusted friends. That’s where you get automatically when you join a Fedimint federation.

Preston Pysh (00:43:41):

Talk to us through…. explain an example, let’s say that you, me and four other friends. So there’s six of us. Is that a federation size that you see this playing out in application? And then walk us through what that application would look like.

Obi Nwosu (00:44:02):

So that’s all a matter of experimentation and it’s also very flexible. It’s a technology, it’s a protocol and we are going to see a lot of experimentation. If I talk to 30 people, I get 30 different topologies of how it could be set up, which is a great because that tells you that this is a really flexible tool, but let’s just take one example. But before I do that, go back to the last point. When I realized that was the case and that is possible to be exempt from regulations, but the experience… And then I realized that this was far more than just a privacy technology. This was a decentralized custody offering. You could have the user experience of an exchange, but better. You can have privacy levels which were better than both an exchange in a hardware wallet. You could have access to the Lightning network as in natively. And you could also have a level of custody security which is very strong approaching that over hardware wallets, but it was still a software solution which could be delivered anywhere in the world for free. This was this centralized central resistant custody. And so that’s why I became really excited and I wanted to do everything supported off that point.

Obi Nwosu (00:45:14):

But let’s go back to your question about a given example. Let’s say you and some other friends of yours are Bitcoiners through and through and you run your own full nodes and you are always going to get friends and family who want you to become like their uncle Jim, to support that. I think that’s the phrase to support them and help them provide them advice, maybe help buy Bitcoin on behalf, maybe hold some for them, et cetera. But you are then taking a lot of risk on that. And if something were to happen to you, you’d lose your Bitcoin, but now it’s something up to you lose yours and their Bitcoin, which is extra stress. You could then say, and also your Bitcoin, you want to work out how am I going to hold my 24 word backup seed securely?

Obi Nwosu (00:46:09):

And again, if you go to sites like 10X Bitcoin Security, Glacier Approach and things, the recommendation will be multi-signature custody. And then where do you saw those different multi-signature keys? We’ve trusted friends and family. So what you’ll do is you take your Bitcoin nodes, you install the Fedimint software as well. There needs a full Bitcoin node running, but the services only adds a very little additional overhead to that. And then with a little bit of configuration, just like you have to configure your Lightning node or Bitcoin node, a little bit of configuration, mainly just putting the IP addresses of the other federation members, the system will form a federation. They will connect to each other. They will form a multisig wallet and that’s it.

Obi Nwosu (00:46:58):

And then just like Bitcoin and to a lesser extent, Lightning, but just very much like Bitcoin, once you do that, the idea is you just keep it running. Other than the odd bit of maintenance running out hard drive space or something like that, you just have to keep it fed and watered with electricity and internet. And that’s it. It was just all just rough.

Preston Pysh (00:47:22):

So let’s say the six participants in this network.

Obi Nwosu (00:47:28):

Six. Yeah.

Preston Pysh (00:47:28):

Let’s just say we have six. And each one of us has Bitcoin on an exchange, all six of us. And now we’re going to deposit it into our own local addresses inside of that federated network that we just established. So we all have our own private keys or, walk us through what something like that would look like.

Obi Nwosu (00:47:51):

It is a multi-signature address. So each person has their own private key, but then they use their private keys to form a multi-signature address, which requires a subset of the keys to sign a transaction.

Preston Pysh (00:48:04):

So if three of six, if we decided that or four of six-

Obi Nwosu (00:48:08):

[inaudible 00:48:08] number. Let’s say five people, and it’s three of five. Or if it was six, you’d probably want to go… Again, you could do whatever you want, but I’d probably suggest you go for four, six. You need an absolute-

Preston Pysh (00:48:20):

Majority. Yeah.

Obi Nwosu (00:48:21):

… majority to transact. But let’s just say you want to go six and you choose to have a four of six multisig. So each person would take their own private key either then manage themself. But then they would put in the IP addresses of the other federation members, it will create a multi-signature address which requires four of those six keys to sign. And if you lose any two of those six keys, you can still keep ticking along and still keep signing. So it provides a bus factor of free. So it needs at least three people before it stops being in sign. And you have a… and at least you need at least the majority of four people to sign as well. So no one person. And in that case, no two people can cause the system to stop. And also it will keep going. And also the vice versa.

Obi Nwosu (00:49:13):

So that falls its multi-signature address. Now at that point to send money to any one of the OU, you would send it to the same multi-signature address. But when a deposit comes in, there’ll be additional information that we passed along that will allow you to know which address that’s related to. So for example, if it was on-chain, you’d create an address. And the federation, the Fedimint federation will know that this address, just like when you use an exchange and address is created and it’s associated with a user, that address will temporarily be associated with a user as well. And so when the deposit comes in, federation knows that’s allocated to a given user.

Obi Nwosu (00:49:55):

Now here’s the thing. Unlike an exchange where you have this concept of accounts and user account 1, 2, 3, 4, there are no accounts. At least no permanent accounts in a Fedimint federation. A temporary account is set up just to receive the money, but it’s not actually attached to a person. Instead, you what’s implemented internally as well as this multi-signature wallet is a Chaumian Mint. So a Chaumian Mints were, or a Chaumian E-cash is a privacy protocol that was invented by David Chaum in actually 1983. And it was used in his company DigiCash, which was one of the first sort of e-money systems.

Obi Nwosu (00:50:44):

Now this protocol is actually very elegant. Relatively simple. Is obviously using very mature mass because it started, it was 1983. So we are talking about 40 years old now, four decades old. And in theory, it provides for cryptographic perfect. Not near perfect, not a narrow near perfect or E-cash trusted startup perfect, cryptographic perfect privacy. And it’s been around for a long time as well using very mature cryptography. The only problem was that it required centralized bank to receive your cash, whatever that cash would be.

Preston Pysh (00:51:21):

This is unreal.

Obi Nwosu (00:51:23):

And then if on the back of that, when you receive money in, you’d receive in it’s place, these digital tokens which would effectively be E-cash, what they call E-cash. So you can think of it, conceptually, you’re going to a fairground, lots of different [inaudible 00:51:38], lots of different things you can do. And you go there with your family and your children, et cetera. You go to the front and there’s no money for the rights. You have to buy tokens for everything. So you get to the entrance and there’ll be a cashier or a teller. You give them some cash and then they would give you tokens. Once you receive those tokens, let say the mother buys these tokens. She’s going to give some to her husband, some to her children and they can go off. They can go around, see her friends pass into the friends within the confines of this fairground. These are very ancient tokens, and it’s the same with E-cash. You literally a different token for every single individual coin.

Obi Nwosu (00:52:22):

So in the same way you have, if you want to give someone five pounds 50, you have to give them five pound notes. I’m saying pounds because of British background, but $5 50 cents, for example, or 52 cents. You give them $5 notes and then you… or let’s say six, you give them $5 note, a $1 note, and then you give them a 50 cents coin and a 2 cents coin. It’ll be the same with E-cash. You’ll have to do the same. You have to create, you’ll add them to tokens together to add to the number. So it acts exactly like conceptually how you think cash works. And when people talk about Bitcoin, how they naively think it works that’s exactly. But they find out later it doesn’t work that way. E-cash works the way you naively and intuitively think digital cash should work within the confines of the domain of the federation.

Obi Nwosu (00:53:10):

So one federation member can send that E-cash tokens directly to another as well, but where the cryptography comes in is it provides this ability for these tokens to be signed but in a blinded manner. So basically a user can receive the tokens, blind them locally, send them to the mint. The mint will then stamp them to say, “This is valid,” and then return it back. And then the user can unblind them. And now they can spend them. But the Mint never knew who requested it for it to blinded.

Obi Nwosu (00:53:45):

So to stretch the metaphor of the fairgrounds, you can imagine it’s the same fairground, but it’s still of this big glass window. You replace it, you break it up, and all the people in the can see is this whole, where money comes in and they give back tokens or tokens come in and give back money. If you add that addition, that’s the blinding, then you effectively do not know how many people are in the fairground, who’s got what, and also most of the transactions don’t even need to interact with you for long periods of time, only if they want to blind them and to prevent double spending. But again, you won’t know who it is.

Obi Nwosu (00:54:24):

So with this deposit coming in for one of your users, you would have some shared secret which the person who’s receiving the money would’ve known, and they will therefore add that shared secret to this address. And then when the money comes in, once it arrives, they can then provide you some information to prove that they’re the ones who are the right recipients for that money that came in and therefore you release it to them and you issue tokens to them. But that way you can issue tokens to someone when based off of a deposit coming in without knowing who you are issuing tokens for.

Obi Nwosu (00:55:00):

So the Chaumian system allows you to hold money on behalf of someone without knowing who you’re holding for. Allows you to receive deposits for someone and pass it on them without knowing who it is that you’re passing it on for. And also, the opposite can happen. Someone can send back tokens to you, which you then destroy because you mint the tokens and you destroy them and you can then send off Bitcoin on-chain or over the Lightning network without knowing who made that request. It’s very simple and provides crypto perfect privacy.

Obi Nwosu (00:55:35):

What was the additional innovation, and someone actually theorizes in 2002. Actually, someone recently showed a paper. Someone thought Chaumian Mint, lots of people have looked at them again and again. Someone thought that Chaumian Mint would be great, but maybe as their way for us to decentralize the bank, but they didn’t think about how to do it, but it was proposed. And then a year and a half, two years ago, Eric Syrian looked at the idea of that was popularized by blockstream of federations with liquid, where you’re taking this one address and you’re federating amongst multiple people and thought, “Well, instead of having this sort of global scale federation, why don’t we apply this technology to Chaumian Mints and we federate the bank so that it’s not just one person, but a number of people work together to provide the service of this Chaumian Mint.”

Obi Nwosu (00:56:24):

And that was where the idea of so removing one of its main weaknesses, which was the fact that he was one centralized actor. And it’s solved that by federating actor and federated Chaumian Mint were bought. Where came in, how you could have a use case where it could be exempt from regulation, which would… and if you look at a modern day exchange, 80 to 85% of people working there one way or another are only there because of regulation. So if you exempt from regulation, it just simplifies everything and it makes it global scale.

Preston Pysh (00:57:01):

Do other people know the size of the transactions? So if there was a substantial transaction inside the federation, would the other participants know that the size of that?

Obi Nwosu (00:57:09):

No, the other participants wouldn’t know the size and the federation guardians, the people who were running the federation servers will be very limited in what information they would have about the size. They will be aware of the type of coins used if they… They might know that you use a combination of $5 coins, or let’s just split it. You use some point, 0.1 Bitcoin coins, some number of coins, 0.01 coins and some number 0.001 coins. But you won’t know. To the extent, that they would have awareness, but they wouldn’t know how much of each could have these. You could have used a million of one or one of one. They won’t. If we wanted to, and you only had one denomination of coins, then you wouldn’t even know that. But that’s where there’s the theoretical perfect privacy. You would only get perfect if you had one denomination only because then they would just know some number of coins was used, but you lose some information because you do know that denominations, but that’s still incredible levels of privacy.

Preston Pysh (00:58:15):

Let’s say that somebody, a member of the federation wants to send some of their coins onto an exchange, call it Coinfloor and they’re doing it, let’s play two different scenarios, because my understanding or at least my perception of how this works is you can do this with Lightning, Bitcoin layer two, or you can do it with layer one Bitcoin, setting up these federations.

Obi Nwosu (00:58:37):

Yeah.

Preston Pysh (00:58:38):

So let’s say that they take funds, they deposit it over at an exchange through both of those scenarios. Let’s say they do it on layer one and then they do it on layer two. Is the exchange receiving those coins the same way that they are before any of this protocol would potentially ever be split up?

Obi Nwosu (00:58:57):

Yeah. From their point of view, it appears like a normal Lightning transaction, normal Bitcoin transaction. Because Bitcoin transaction ultimately, the E-cash is only within the domain of the federation.

Preston Pysh (00:59:08):

Of the federation.

Obi Nwosu (00:59:10):

But outside the federation, the federation will destroy the tokens that are being spent and then release to the address that’s being sent to assert an on-chain transaction. For example, if you are sending a Lightning transaction, what will happen is a Lightning service provider would also have a connection, be connected to the Mint and you, as the user can connect up to your own Lightning service provider. You don’t have to actually interact with the guardians to do this. But what would happen is you would send your E-cash tokens to the Lightning service provider and they then in a trustless way would effectively, because it effectively emulate the logic of a hashtag time lock contract, but where one part is E-cash as opposed to one part being on-chain or on network. And then they would within their own channels, send off Bitcoin over the Lightning network to the address sent. But from the recipients point of view, they receive a Lightning transaction.

Obi Nwosu (01:00:16):

And so what would happen is their channel balance would go down, but their E-cash balance of the LSP would go up. The beauty of that approach is that means the LSP needs to have some trust for the guardians. So they will probably be know the guardians as well, or be comfortable with them, be part of the community as well. But the federation members don’t have to have any trust for the Lightning service provider. So in one way. And they don’t have to also lock up any balance. The federation doesn’t need to lock up any balance on-chain or on-network as well. And because it’s not locking up balance, there’s nothing to stop a federation having connections to multiple different LSPs. So if one balance channels were exhausted, for example, you could load balance over to another LSP, for example, immediately and provide a much more reliable payment experience for your users because you’re not looking at funds.

Obi Nwosu (01:01:14):

But it’s also great for the LSPs because after a four and a half hour conversation with [inaudible 01:01:21] about this, Fedimint represents an ideal counterparty for an LSP. If you imagine you had two choices, connecting to 500 intermittent Lightning nodes with small amounts of balance and unlocking up balance amongst all of them to cover potential scenarios all of them. So you have to over for these 500s and they’re also up and down irregularly so that you are constantly, your network graph of how to route traffic is constantly changing and having to be recalculated, which is very expensive for you and leads to a much lower reliability of your transactions. Or you connect to one party who represents the volume of 500 people. And it also is run by a federation of members who are running it reliably. And as long as a majority of them are running, it stays up. So it’s reliability and uptime is much higher and it also represents much more volume. And it’s only one connection. So you now need to lock up an amount of balance which is based on the average for all of them, as opposed to trying to figure out for every individual user who may never use it for a month and then use it once and you have to lock up.

Obi Nwosu (01:02:33):

You get much more consistent revenue for much lower costs, allowing you to become much more profitable from it. So it’s actually… And if it’s much more profitable, you incentivize more people setting up. So without realizing this, why Fedimint actually makes the Lightning network more reliable, more profitable, which again grows the Lightning network as well. So when I realized that, that was the final straw.

Preston Pysh (01:02:59):

All the incentives were aligned. Yeah. All the incentives-

Obi Nwosu (01:03:03):

Yeah, [inaudible 01:03:04]. Exactly.

Preston Pysh (01:03:07):

Unreal.

Obi Nwosu (01:03:10):

The more you hear about it, the more you realize that this is the missing piece of the Bitcoin Upsource ecosystem. It provides at risk very good privacy and incredible privacy. It actually in a community context, we haven’t even gone into the beauty of how you do social recovery so that you don’t have to worry about the challenge of what do you do over a 24 world seed, or how do you recover it? And ultimately even how do you deal with it in the events of your death and inheritance planning and so forth. All covered. And it solves that problem, which is an important problem solve, especially as time goes by. Because right now, if you’re doing it in a first party custody context, it’s very complex. If you think about… Again, if you can do the first party custody approach, you should have at it. You should do it.

Obi Nwosu (01:04:06):

But if you want to do it properly, it’s complex. You need to get a good hardware wallet. You need to be able to get it, to be delivered. That cost money as well. So you’ve got that. You then need to work out what you do, which is the hard bit, what you do with your 24 word seed. Because there’s no point having this for not level security with AI, artificial intelligent, robot controlled sharks in a mode in front of it. Then you go around the back where your 24 word seed is. And there’s an open door where, because it’s stored with a magnet on your fridge or 24 words. It defeats the purpose.

Obi Nwosu (01:04:36):

I met someone the other day who’s a hardcore Bitcoin and this is not recommended, but he memorized his 24 words seed because he just couldn’t think of somewhere else he could be comfortable storing it. And I go, “What happens in the case of your dead and your family?” And he said, “Well, my loved ones have a copy of the key.” And I go, “Where do they store it?” “I don’t know where they store it.” “Well, but that’s your security level. Your keys is not yours [inaudible 01:05:07].”

Preston Pysh (01:05:04):

Yeah. That’s right. That’s right.

Obi Nwosu (01:05:06):

And that’s the thing. And this is the thing you have to remember, that is a security level. And the more you think about it, then what you do is you go online, you check out 10X Bitcoin security, Bitcoin security guide and so on. And they will tell you, the ideal thing you want to do. When all is said and done is for most people, unless you are willing to go to the grave with your keys and contribute to your Bitcoin to the world for inflation, which something willing to do and I respect that. But if you do want to pass it on to anybody, then you are going to once make sure it’s a reliable custody. Or if you do want to recover any event that you use, you’ll drive back up so on. And the best practice way is to use multi-signature type custody.

Obi Nwosu (01:05:48):

And then where you store each one of those, you store them with second parties; friends, families, trusted friends and family, reliable people that you’ve known and they hold it for you. And that’s a not by way of business. They’re not making profits. They’re friends and family, but they are still custodying in a decentralized manner your Bitcoin. And then you’ll want them to be people that you think can be reliably custodying your Bitcoin. That should be the best practice. That’s exactly what you get out of the box when you use Fedimint. You get the best practice by doing nothing but just downloading a mobile app and a federation will have an address. You enter the address, or if you go to QR code. You scan the QR code and you’re done.

Obi Nwosu (01:06:36):

No passports, no driving license, no selfies, but also no figuring out what you do with your 24 word seed. It gets immediately cryptographically split into charts using Chaumian’s secret sharing scheme which is crypto score mechanism split up a key and then it gets split. And then they get shared amongst third guardians who are by definition, you are by definition your trusted third parties. They’re trusted in your community to be the Knights of the community. They’re reliable people who ideally value social capital more than they value financial capital. And anybody can custody it, but if I had a choice of who’s going to hold my money, somebody who’s motivated by money or somebody’s motivated by social capital. I know which one I would choose out those two to hold my money. And yeah. So that’s the idea.

Preston Pysh (01:07:30):

So Obi you are… my understanding is you’re currently working on an application that simplifies setting up a federation. And I’m curious how far along you are in that process. And more importantly, who is the audience or who is this intended for and what solution are you providing through what you’re building?

Obi Nwosu (01:07:52):

Fedimint and the product that we are making is called Fedi based on Fedimint, but it’s just a nice, simple name. And it reminds me of, or reminds us of Jedi. These guardians are like Jedi Knight almost.

Preston Pysh (01:08:06):

And you got the perfect name for that.

Obi Nwosu (01:08:08):

I got the perfect name for it, but I look more like a Mace Windu who is Samuel Jackson’s character, to be honest. I’m probably more of a Mace Windu than [inaudible 01:08:19]. Justin Moon who’s one of my co-founders, wi mullet is very much like the younger Obi one actually. We were discussing this the other day. So he’s probably Obi one. And so I don’t know who Elsirion would be. Maybe he would be Yoda because he’s [inaudible 01:08:41] the idea. We haven’t decided who Elsirion is. Yeah. So it’s called Fedi and it’s simple. Ultimately, this is global scale Bitcoin custody. It’s for everybody and anyone who wants to not custody on an exchange, but wants an experience, very secure, Lightning first and also privacy is basically everybody I think want something like that.

Obi Nwosu (01:09:11):

However, what has made me really passionate in the last few months is to see how it can help as part of everybody, the billions of users who are excluded from the current two options. So if you are able to meet the cuts to be in on a regulated exchange and you are comfortable with the risks and trade offs, which we’ve seen quite recently with some of the recent things that even regulated exchanges still can make you lose your money, or if you have the technical charts and the money to properly self custody, that’s great. But if you haven’t got those two really, you’re still talking about billions of users who don’t meet those two criteria, either through reasons of complexity or through reasons of regulation. They’re excluded from custodying Bitcoin. And these include some of the most oppressed people in the world.

Obi Nwosu (01:10:09):

A couple of months ago, I was invited by [inaudible 01:10:14] and I got to hear some of the most heart wrenching, but also encouraging stories of bravery against oppression around the world, generally in the global south, but also in Eastern Europe with Ukraine and Russia, what’s happening there. And all these people are coming to the realization that a big part of the challenge is money. These regimes are powered by money. They often use inflation, aggressive levels of inflation as the tool to extract money from their people. Even if the people don’t want to give them money, inflation is a very powerful tax. And if you take examples like Venezuela with 20000% inflation right now, come down from 50000% inflation, even if you are donating or sending money back to your friends and family into that country, or you’re effectively doing is donating to the regime, which you may not support, but without realizing you’re supporting.

Obi Nwosu (01:11:19):

So they need a solution and they exist, but they need a solution that can be deployed anywhere and it doesn’t cost a lot of money. It’s not going to be stopped in customs’s hardware wallets, and they can’t wait years to be onboarded through a regulatory process through a regulatory exchanges, each one going through KYC and ultimately many of them not even being approved. Fedimint solves that problem, but it needs a very simple user interface for that.

Obi Nwosu (01:11:46):

So having realized that and having formed really strong relationships with some of these incredible brave individuals, it’s become a passion of ours to not only offer this to the world, but with a specific focus on working with some of these people to roll this out at scale in some of the places that need it the most. And the good thing is if it works there, it can work anywhere. So it’s for everybody. But that’s actually a key part of why we decided to focus now and build this interface and make it incredibly simple. And we will be looking to roll out in these markets in Africa, in the Middle East and Eastern Europe, in Latin America over the coming months.

Preston Pysh (01:12:33):

So Obi, are people able to go onto an Umbrel? If you’re running a full node and you’re using the Umbrel software, are they able to download Fedi on that? Or is this specifically for a smartphone like an iPhone or an Android device? Walk us through the software.

Obi Nwosu (01:12:52):

Great question. So remember there’s two things. There’s the people who are running the federation, the guardians or the [inaudible 01:12:58] almost. And there’s the people who are using this app that we’re creating, which we’re calling Fedi. And that’s a mobile app, you download it from Google store or an or Apple store and you have the app. So if you take a Fedimint federation and the users, let’s say it’s a village. So it’s 500 users and there’s six people in the federation. The six people in the federation, they’re the only ones who need to download a Bitcoin phone node and the Fedimint software. We’re looking to implement it on things like Node, on Raspiblitz, on Umbrel so it’s easy to install if you can get the whole shebang and you get the setup or the actual device, you can do that.

Obi Nwosu (01:13:48):

If you can’t get one of those devices delivered to you because of import restrictions or whatever, but you have the beauty of Bitcoin is it’s highly decentralized. It doesn’t need a lot of hardware like other blockchains. So if you’ve got an old computer, 15 year old computer, so on, these exist everywhere in the world. You just need to add a hard drive, which is a terabyte in size. You get those for $40, $50 now, and that’s enough to run a full node. You can then download the Node software, the Umbrel software and use that instead. You also don’t need… the people running the federation don’t need to be in the same place as the people in… They need to be the same place from a relationship point of view, they need to have close contact, but they don’t need to be physically in the same place.

Obi Nwosu (01:14:36):

So for example, members of the diaspora who are sending regularly large parts of their paychecks back to their friends and family in the global south are ideal candidates for running guardians because they are in the west. They’re already giving money to these people. So if they’re giving money to them, they’re not likely going to steal the money that they’ve just given to the people they’re protecting and they could fix it. For example, by a Node or by an Umbrel or set up a Raspiblitz and create a federation amongst themselves for all of their family back home. And the family back home just needs to download a piece of software, scan a QR code and signed up. No [inaudible 01:15:23] them are protecting them. Yeah.

Preston Pysh (01:15:26):

Unreal. Obi, I know you’re active on Twitter. So we’ll have a link in the show notes to your Twitter profile. People have questions coming out of this interview, I’m sure you’re going to get a lot of questions. Give us a handoff to websites. I know there’s the fedimint.org website. Is there any other websites that you want to highlight or timelines for various things that you guys are going to be rolling out?

Obi Nwosu (01:15:50):

Thank you very much for that. First of all, if you want out the base protocol, this is pillar of the Bitcoin ecosystem, go to fedimint.org. And that’s F-E-D-I-M-I-N-T.org. Fedimint.org. If you want to find out about the new mobile app that we’re producing, we’ve got a site and that’s fedi.xyz. So F-E-D-I.xyz. As simple as that. And then if you want to find out about my… We have Fedimint on Twitter. If you want to follow Fedimint on Twitter, there’s a telegram group called Fedimint as well, which is very active in store and that’s really interesting conversations. And then finally, if you want to hear my musings on Twitter, my occasional musings, you can find me @obi on Twitter. So just O-B-I because I was a very early Twitter user. So that’s my Twitter handle.

Preston Pysh (01:16:48):

That’s hard to get Obi.

Obi Nwosu (01:16:51):

That’s hard. That’s really hard to get a three letter Twitter handle. Yeah, it’s very hard.

Preston Pysh (01:16:56):

I bet Disney would love to own that handle by the way.

Obi Nwosu (01:16:59):

I get lots of offers, but I’m comfortable keeping it, being the one Obi. The Obi one.

Preston Pysh (01:17:10):

So in other words, anyone who’s interested buzz off.

Obi Nwosu (01:17:14):

Yeah. I think they’d given up many years ago.

Preston Pysh (01:17:18):

I’ll tell you, what a pleasure. What a pleasure talking with you, sir. Thank you for your time. I learned a ton. I am so excited about what this means moving forward. And I have no doubt that what you’re building is going to be a game changer and something revolutionary to add to this revolutionary technology. And can’t thank you enough for coming on the show today, Obi.

Obi Nwosu (01:17:42):

Thank you very much. It’s been a pleasure talking to you. I really enjoyed it. I think you have… well, I personally think this incredible energy. It’s really enjoyable talking to you. You would be the ideal person as a guardian.

Preston Pysh (01:17:58):

I appreciate that.

Obi Nwosu (01:17:59):

[inaudible 01:17:59] it seem to be, I would be very comfortable to be part of a guardian group that I would be using for [inaudible 01:18:06].

Preston Pysh (01:18:07):

Likewise, sir. Likewise. All right.

Obi Nwosu (01:18:10):

Thank you very much.

Preston Pysh (01:18:11):

Thank you for your time, Obi.

Obi Nwosu (01:18:13):

See you later.

Outro (01:18:14):

If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use, just search for We Study Billionaires. The Bitcoin specific shows come out every Wednesday and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening. And I’ll catch you again next week. Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permissions must be granted before syndication or rebroadcasting.