David Layton: Is to become a Bitcoin-only exchange. So we’ll start, we’ll start there. But the first most important thing that I think you said there is that Bitcoin on an exchange is not actually Bitcoin. You have a claim to it. It’s not the actual Bitcoin. So I’ve said that a lot. I know I’m not alone in this, but if you hold Bitcoin with an exchange or custodian, you don’t actually own any BTC Bitcoin, what you have as an IOU.

David Layton: [00:03:00] And in most cases, if you can remember the infamous Coinbase 10 Q at the SEC. He said that their if a bankruptcy occurs that their customers are actually unsecured creditors. So in most cases, you’re legally an unsecured creditor. Second thing that I wanted to touch on there that you said that’s very important is that there’s speculation that other exchanges may be in trouble.

David Layton: Yes, I would, I would agree with that. I’d probably take it a step further and say that I think there are other, you know, crypto exchanges potentially hedge funds, crypto lenders, brokers, basically anyone that was caught up in that offering yield or taking custody of their client funds. Like you know, Terra, LUNA, Celsius, BlockFi, FDA X, Alameda, all of those guys.

David Layton: Anyone that’s, that has been doing that or will continue to do that, I think they potentially could be in trouble. 

Clay Finck: Mm-hmm. I was thinking about this the other day. I think it’s also really, really important [00:04:00] that people have this reminder that it’s so important to understand what it is you actually own.

Clay Finck: I know many people in my life who were, you know, scared or worried about losing their coins. They held it on some exchange or some yield platform, and they ended up just selling it out for a loss. And then I know people on the other side who are like, heck, if the price is going to go below $20,000, I better average down and take advantage of that opportunity and then just send those SATs to cold storage.

Clay Finck: And when I think about those two groups of people in general, it’s pretty clear too who it is that’s actually done the research, read the books, and then it’s also pretty clear who is just acting on their emotions. And I was actually sifting through the book, the Bitcoin standard the other day by Saifedean Ammous.

Clay Finck: And every time I go through that book, I’m just amazed at how much good information is in there. If you’re newer to Bitcoin in the audience or just interested in learning more about it, this is definitely a book that’s a great primer [00:05:00] for just getting a sense of why so many people are so passionate about Bitcoin.

David Layton: Oh yeah, absolutely. I think that’s probably one of the highest recommended books that I give out to, to clients and to people that are interested in Bitcoin. Another one, if you wanted to take it a step further, if you’re interested in the technical side of things, would be mastering Bitcoin by Andreas Antonopoulos.

David Layton: That is one that you have to really. Have found yourself in the rabbit hole to enjoy, but it’s my most-read book for sure. 

Clay Finck: Now, I could imagine that a lot of people look at this situation and think that this is just a huge loss for Bitcoin. And from my perspective, I think this may actually potentially be a really good thing for Bitcoin in the long run, for a number of reasons.

Clay Finck: I think it’s a harsh reminder to people again, that you need to be holding your own keys to your Bitcoin because when more and more people take self custody, it means that there’s less paper Bitcoin or less fake Bitcoin, whatever you want to call it. I think I read that [00:06:00] FTX had zero Bitcoin, but they had.

Clay Finck: $1.4 billion in Bitcoin liabilities that they owe to others. So essentially, if you were a user on their platform and you had say, $10,000 of paper claims on their Bitcoin, well, they don’t actually have what they say they have. And then the second reason is that. I think it builds a much more sustainable future for Bitcoin as the frauds and the scammers are just washed out.

Clay Finck: And then companies that are responsible that provide real value to the space, those companies are here to stay and they’re going to continue to grow. And that’s what I like about what you guys are doing at Unchained. And ironically, when bad and poorly run businesses fail, this ends up being a really good opportunity for those responsible companies to step in to fill the gap and fill in on those customer needs. So I’m curious if you agree with those points and agree that the FTX deal, as bad as it was for some people, is actually good for Bitcoin in the long run. 

David Layton: Yeah. So first I’d [00:07:00] say everything is good for Bitcoin in the long run, even if it seems like it’s a bad thing when it happens.

David Layton: No, but second, this, this isn’t the failure of any sort of decentralized system. It’s not the failure of Bitcoin, it’s the failure of a central custodian who mismanaged a client. It’s actually the exact same problem we face with any central organization trying to micromanage a complex system. So think of the Federal Reserve or central banking as a whole.

David Layton: The only way to fix something like this from my perspective, is to get Bitcoin private keys into the hands of as many people as possible. And we can get into why. I think that, why I believe Bitcoin will be the next global reserve currency. But when something like this, like the failure of FTX happens, people tend to think like, oh my gosh, if institutions are losing people’s Bitcoin, it must be so hard to custody this thing. But again, you know, the problem isn’t, you know, the Bitcoin is too hard to self custody. It’s actually very easy to custody. If you look at the numbers you know, 21 million supply cap [00:08:00] we’ve mined about, you know, 19 million.

David Layton: So there’s 2 million left to be mined. About 12 million of those are already held in self custody. Three to 4 million are considered to be potentially lost. And only two to 3 million, that numbers probably even lower now are held on exchanges. So the problem is not, the Bitcoin is hard to self custody.

David Layton: The problem is that the business model of central banking does not work with Bitcoin. You can’t play the same games like lending and paper, IUs and reification with an asset that settles with finality and 10 minutes or less. You just can’t. And the last thing I’ll say on that is, you know, the be your own bank meme.

David Layton: That’s not a meme, it’s an actual option for 8 billion people. This financial system, this parallel financial system is already built out today. It’s ready for people to use and I think it’s frustrating to see people lose their Bitcoin or what they, you know, what they thought was Bitcoin, but I think it’s you know, more frustrating that people continue.

David Layton: Trust these third parties that are incentivized to breach the trust of their customers. That 

Clay Finck: reminds [00:09:00] me that just so many people are just conditioned to believe, you know, if you’re working with a large company, they have hundreds of millions or however many users. If something ends up happening to them, the government or the SAC is going to be there to look out for.

Clay Finck: But people are beginning to realize that it’s just not the reality with the crypto space. There’s just so much that needs to be worked out from a regulatory standpoint. And I think a lot of people would say this is going to be a regulatory nightmare for Bitcoin. I’m curious what you think will come out of this situation from a regulatory standpoint.

David Layton: Yeah, so that’s a great question and it’s hard to tell. You know, I don’t claim to know what the future holds. As it sits today, I know the CFTC and the SEC are fighting over regulatory oversight. Those are the two like main bodies. Gary Gensler is the chairman of the SEC. He wants oversight. He believes that everything other than Bitcoin is [00:10:00] currently, you know, trading as an unregistered security.

David Layton: He said publicly that NATO’s meaning Satoshi’s Nakamoto innovation is real. And the other 16,000 crypto projects are dino or decentralized in name. Now I do strongly agree with him on that. I think that Bitcoin is the only sufficiently decentralized project, the other 16,000. They operate more like companies that issue shares promising return on investment kind of sounds like a security.

David Layton: But the other side of things would be the CFTC. They want oversight over crypto more broadly. That’s who Sam Bankman-Fried, CEO of FTX was working closely with. There’s actually still a bill in front of Congress that SBF helped craft and heavily influenced and CFTC having regulatory control over crypto.

David Layton: Kind of be more lax from a regula regulatory standpoint on the broader crypto space, would maybe classify more things as commodities which would mean, you know, that they would be handled the way [00:11:00] that I believe Bitcoin should be handled. But you know, I would normally say, and I’m a very big proponent of free markets, I would normally say let the market decide and, you know, let chips fall where they may.

David Layton: but there are, you know, legitimate Ponzi out here hiring celebrities to trick people into buying snake oil. And I think a little regulation might be good for the space and tend to agree a little bit more with what the SEC is saying than the CFTC. 

Clay Finck: That’s really interesting. I’d like to transition to chat more specifically about Unchained.

Clay Finck: The FTX deal obviously highlights the importance of actually holding your own Bitcoin because you don’t have to trust anyone else to take care of those coins for you. And I think about how many people might not, you know, many people might wanna own Bitcoin, but they don’t want to take this process of understanding how you actually take self custody.

Clay Finck: what you can do, what you can’t do. It just seems so easy to mess up if you’re [00:12:00] not a technical person and you don’t really understand what you’re doing or how it works or the back end of it. Maybe someone didn’t grow up in the digital age like you and I did, and I think that’s totally understandable from my perspective because not everyone is going to be comfortable with these things from a technical perspective.

Clay Finck: So thankfully we have companies like you guys at Unchained who are really the gold standard when it comes to self custodies. So talk to the audience about what you guys do, what Unchain does for those who might not be familiar. 

David Layton: Yeah, so first, I totally agree with what you just said. We try to make multisig and self custody approachable for everyone, and we’ve been very successful in doing so, creating a system or creating a service that eliminates all single points of failure and removes that counterparty risk that we were just talking about.

David Layton: On Unchained Capital, we’re a Bitcoin native financial service provider. You can go to unchained.com, set up an account, and you can set up your own two to three multisignature wallet for individuals. Set it up yourself. It’s [00:13:00] completely free and, and it’s free because, you know, multisig is native to the Bitcoin protocol.

David Layton: So we don’t really think it’s fair to charge for something like that as a service itself. But we do also offer the same 203 Multisig wallet setups for businesses, for trusts, for retirement. We have a trading desk. We do Bitcoin collateralized loans, Bitcoin retirement accounts, and we recently just launched an inheritance protocol.

David Layton: So we’ll walk you through those steps to set up your Bitcoin inheritance plan and make sure that you know your loved ones have possession and title over your Bitcoin. If something was to happen to you. I was gonna mention here Preston recorded a podcast that I think would be really good to shout out right here on the Bitcoin Fundamentals with Phil Geiger and Jeff Vandrew, because they go through and break down the difference between possession and title.

David Layton: The benefits of having an inheritance plan, they touch on the retirement product. And I, I wouldn’t be able to do it the same justice. So I think that it would be cool just to kind of, you know, point people that direction as. But to answer [00:14:00] the last bit there, what I do at Unchained, and this is kind of the final thing that I haven’t touched on, is I’m on the concierge onboarding team.

David Layton: So at a very high level, we teach clients how to take custody of their Bitcoin. This includes setting up devices, constructing multisig wallets, going through operational security, best practices, and continued education. We do webinars, tutorials, we do all kinds of stuff. And the, the main objective of my team, of the concierge onboarding, Is just to, you know, create an environment to security of Bitcoin that has zero single points failure and no counterparty risk.

Clay Finck: I’m really glad you mentioned that episode that Preston did. It was episode BTC108 on the We Study Billionaires podcast feed. I’ll be sure to get that linked in the description below. That also reminds me that I talked with your colleague Tyler Campbell from the concierge team a few months back on our Millennial Investing show.

Clay Finck: In that episode is a good deep dive into self custody, why it’s important if anyone is interested in checking out that [00:15:00] episode as well. 

David Layton: Definitely check that one out. Tyler Campbell is just an absolute whizz when it comes to Bitcoin technicals. He’s my go-to when there’s something that’s a little too technical of a deep dive.

David Layton: I go to him and Tom and Carl. I mean the, the entire team is just fantastic. And Phil has been our managing director for a long time. He’s kind of focused more, shifted more recently into kind of leading the charge for some marketing and some initiatives that we’re working on, but he’s still very much, you know, he’ll always look at him as our, our original managing director.

David Layton: He made a comment there that sticks out to me all the time. So in that, in that bitcoin fundamentals episode that we were just referring to, he said to Preston that whether or not people know it, their biggest fear is not necessarily the technology, but it’s the potential of having a single point of.

David Layton: And that is, that is so true because people do not want to hold or custody their Bitcoin. They wanna [00:16:00] trust a custodian because they think they’re going to lose it, or they think they’re gonna do something. You know, you hear about somebody losing all of their Bitcoin because their seed phrase was typed into a computer.

David Layton: Or you hear about the, you know, bitcoin that’s lost in a dump. . Well, it’s a private key that wasn’t backed up properly. That’s lost in a dump. It’s not somebody’s Bitcoin. That bitcoin’s still on the Bitcoin blockchain. Mm-hmm. . But the way to access it is now gone. Mm-hmm. . So that’s what we do.

David Layton: That’s what we teach people. And I think it’s really important to hammer home is that we teach people how to hold your private keys without single points of failure. So that if you do lose a device, you lose a seed phrase, you lose multiple pieces of your setup. Your Bitcoin is still there on the Bitcoin blockchain in your address, and we can show you to gain access to it again. 

Clay Finck: Mm-hmm. You mentioned before I hit record, that you kind of niche down on who you help with the onboarding process. Maybe you could talk about some of the typical clients unchained as a whole, works with in terms of onboarding for self custody. [00:17:00] 

David Layton: I’d say there’s not really a typical client.

David Layton: We onboard all types of individuals and organizations, so you’ll get your hardcore Bitcoin or who has 99% plus of their net worth in Bitcoin, and they just want to eliminate the single points of failures that we’re talking about. We also get individuals and companies that come to us that want to purchase Bitcoin for the first time, but they wanna set up an environment.

David Layton: That’s more secure than just a single device, no counterparty risk compared to custodian. So they’ll come to us and say, Hey, we wanna build this multisig vault that we hear about on The Investor’s Podcast. Let’s set that up first and then we’re gonna purchase some Bitcoin and put it in there. So we really, I mean, have various products that bring all different types of clients.

David Layton: You know, lending will be. Somebody wants to take out a Bitcoin collateralized loan to start a business or purchase a house. Businesses want to tap into their Bitcoin reserves, like mining companies to free up some working capital to purchase more asics. Usually that’s the type of lending product [00:18:00] client that we get.

David Layton: And then our retirement product brings a whole different group of individuals and as well. And that would be, you know, somebody in their mid twenties. Trying to start off and build a tax advantage Bitcoin account or somebody that is already of retirement age and they have a 401K from an old job, they wanna sweep that whole thing over to Bitcoin and start taking distributions right away.

David Layton: So not one specific kind. I guess we kind of cater to the broad spectrum of anybody that’s interested in Bitcoin and holding the keys.

Clay Finck: I find Unchained business really interesting because Bitcoin’s price is obviously very volatile, and then you have these things like FTX. I can just imagine it being so difficult to weather through that volatility because.

Clay Finck: You might have some months where you’re just swamped with people wanting to come in and take self custody, and then some months where you know, people just aren’t as interested in Bitcoin, so you might have a little bit less business until the price picks back up. And that’s one of the things I would think is just [00:19:00] so difficult when it comes to running a Bitcoin type company.

David Layton: Yeah, you mentioned, you know, the price of Bitcoin is volatile. Inbound clients or consultations or people interested are also volatile. But what’s interesting is that we have been in this almost, you know, 12 month sustained bear market. And this year compared to 2021 with that raging bull market, we were actually up across the board close to 90% with most of our metrics.

David Layton: Okay. So that’s like new clients coming on board, people that are interested in cuing their Bitcoin. We’ve gotten a lot of clients coming over from, from competitors even. So it’s really, it’s, it’s proven the business model that we. Like perfectly, that’s self custody. We can’t move our client’s Bitcoin for any reason.

David Layton: There’s no counterparty, you know, all the things that we’ve already covered. it’s really validated that piece of our business model. And even if the price is low and trending sideways, interest and self [00:20:00] custody is still at all time highs. 

Clay Finck: As many people know, a lot of people in the Bitcoin space are outspoken against other cryptocurrencies, and Unchained is a Bitcoin focused and Bitcoin only company.

Clay Finck: And I just look at a company like, say Coinbase, for example. They’re in exchange, and when I look at their incentive structure, one would assume that if Coinbase wants to make a lot of money in the short run, at least they should. You know, just list as many tokens as possible and encourage people to.

Clay Finck: Trade in and outta this stuff because every single trade that happens, they’re getting a fee and they’re getting a spread off of those trades. So in order to make a ton of money today, companies are somewhat incentivized to list a lot of the coins rather than just the top ones, or maybe just Bitcoin. So maybe you could paint some color around why Unchained decided to go this route of only supporting Bitcoin.

David Layton: Yeah. So first there are priorities, right? So if you’re [00:21:00] spreading your priorities across multiple projects unless you’ve doubled your engineering team, that means that their priorities are now split among two completely separate completely different things. And we actually, used to support Ethereum.

David Layton: So I don’t know if a lot of your listeners know this. Parker talked about it recently on another podcast. And I think that it is important to highlight that early on when we started, we tried to support Ethereum, I should say, and it was just a total disaster. So there’s a couple of things there. Not only is it nearly impossible to run a full Ethereum node, you have to outsource that, but we had to write our own multisig script.

David Layton: I’m on top of eth, which made it proprietary, which made unchained a single point of. Okay, so remember I said multisig Bitcoin multisig is not anything that we did special. It’s native to the protocol. That means that if unchained disappeared tomorrow, you can take your wallet configuration, file your ex pubs, derivation paths, you bring them over to something like sparrow or [00:22:00] caravan or m and you can interact with your Bitcoin again.

David Layton: There aren’t many if any other companies that are using the same Ethereum, multisig scripts. So those are proprietary companies. Running them are single points of failure. So that’s pretty much the main point that I wanted to drive home. But. The last thing that I’ll say is that the future of Bitcoin depends on its ability to not change.

David Layton: So to prove itself is the best form of money that we’ve ever had all the metrics that we know about it. The 21 million supply cap, 10 minute blocks, two week difficulty adjustment. No one can change anything about it. It’s entirely opt-in, opt out. So it’s the beauty of Bitcoin. It stays the same, it succeeds in the future of crypto.

David Layton: The other 16,000 depends on, you know, more tokens being created and traded on top of e Ethereum to prop up the trading fees. Or new blockchains, to your point, just being created out of thin air and. Dropped on an exchange. And historically that looks more like [00:23:00] exit liquidity for people that were early to those tokens.

David Layton: So we compared the two. I’ve compared the two personally. I know what I think is going to be around in 10, 2500 years. And I do not believe this is just a personal opinion of mine. I. I don’t believe that we need multiple blockchains. I think the blockchain was invented to solve the issues that we have with other forms of money.

David Layton: It’s the mention of triple entry accounting. It’s a voluntary, fully transparent, fully auditable public ledger. I believe it’s money. It’s what Satoshi set out to create and he was successful. And as far as I’m concerned, the other 16, 20,000 projects that are out there are acting as a test net for what can and is and will be built on top of Bitcoin if it proves to be valuable.

Clay Finck: What I really like about that is you aren’t trying to maximize for the dollar. You’re actually looking out for your customer’s best interest. And I think a lot of people, they’ll pull up their exchange app, they’ll [00:24:00] say, Hey, they’ll look five tokens down and you have whatever coin list. , that one might be down 95% from its high, and the exchange could really care less that someone was misled to believe that, hey, maybe this Bitcoin’s as good as Bitcoin, or maybe the viability of it long term is as good as Bitcoin, which we all know isn’t true.

Clay Finck: But you guys actually believe that Bitcoin is here to stay and you’re out to, you know, try and look out for what you believe is in your customer’s best interest. 

David Layton: Yeah, you’re absolutely right there. You’re spot on. And we have prioritized for the long term. We have a very low time preference as a company and as in individuals that come to Unchained.

David Layton: We’re Bitcoiners first and then you know, we wanna see. This project and this company succeed. And the way to do that is to keep the long-term slow growth. Don’t break anything, make it as secure and build the foundation out as strong as possible [00:25:00] above everything else. And that does mean turning down the wrong kind of investors that want us to add a yield product or.

David Layton: Want us to do something that goes against the ethos of Unchained and of Bitcoin. And again, with, you know, FT X and Celsius and all this stuff that’s been blowing up this year, we’ve hunkered down, we’ve looked at our product, we’ve decided to just continue building out the system that we you know, that Joe and Drew created in 2016.

David Layton: and not much has changed other than this has become a much more strong, secure, robust infrastructure that we’re building on top of now, and we’ve done that by having an incredibly low time preference. 

Clay Finck: I have a point I’d like to expand on there. On Unchained’s website, it says, we expect our clients to hold Bitcoin for life.

Clay Finck: Our services are built with this in mind, including collaborative custody, retirement, and inheritance. I just really like how this is included on the site because we live [00:26:00] in such a short term minded world. A lot of people think of Bitcoin as a trade, that they’re simply just trying to get-rich-quick on. Maybe you could expand on that concept of holding Bitcoin for life, or at least having that mindset of not really caring too much about that short-term performance, and maybe you could touch on what it took for you to get to that point and adopt that mindset.

David Layton: I’d say as a company you know, we view Bitcoin as multi-generational wealth. We believe that it’ll be the next global reserve currency, and we also believe the banking system will become a network of private keys held in collaborative custody. Okay. So that is something that we’ve decided to really peg to or anchor to moving into the future.

David Layton: And we’ve designed all of our products and services around. As an individual. I also believe that Bitcoin will be the next global reserve currency. I also view it as a way to, like, currently today, a way that I store my productivity. [00:27:00] It’s a tool for saving for me, and I don’t trade it and I rarely spend it.

David Layton: If I do spend it, it’s paying somebody back for, for dinner or drinks or, you know, buying Pupusas in El Salvador using the Lightning Network, which is a good way to spend Bitcoin. But I know that it’s there if I ever need it. So it’s this long-term savings plan. I plan on passing it down to, to my daughter and to other kids, to my grandchildren.

David Layton: Right. But I know it’s. So one thing that I like to say about Bitcoin is that it’s not a get rich quick scheme like we see in a lot of other areas. It’s a build wealth slowly. And it took me probably about three months to realize that when I first got introduced to crypto through it was one of the Bitcoin forks, the Charlie Lee coin my buddy introduced me to that.

David Layton: That’s, that’s exactly right. I didn’t wanna say it. No, I’m just kidding. No, this is something I’m very public and vocal about because [00:28:00] I did get introduced to crypto. I thought that light coin was the next Bitcoin. You know, I thought that the scaling was such a big deal that decentralization didn’t matter.

David Layton: Bigger blocks, that could be a good idea. You know, I went through all those avenues. I was reading all the white papers. . I owned, you know, a couple dozen of these you know, crypto tokens at, at one point. Mm-hmm. . And then I started to do my research to really dig into what the innovations were with bitcoin.

David Layton: and where the security comes from. How can you stop it? How can it fail? And once I had that aha moment that Bitcoin is the innovation, the other stuff is, you know, either forks or copy and paste versions of it that are claiming to do things that you can still do with Bitcoin. But once I had that, that aha moment, that’s when I realized that, oh my gosh, this is the most important project from my perspective that we can be working on at this point in history.

David Layton: You know, money is 50% of every transaction. The money is broken. We know that. [00:29:00] So 50% of every transaction that occurs globally is something that is not sustainable. It is fundamentally broken. And there’s a couple of things that I really like to think about with this and then I’ll, I’ll, I’ll pass it back to you.

David Layton: On my comment that you know, we think bitcoin’s gonna be the next global reserve currency. I always think back to Parker. Parker Lewis has two really good points on this. And the first one is something like, you know, historically monetary systems tend to converge to a single medium. There’s not typically more than one global reserve currency.

David Layton: That’s the point. So tends to trend and converge on the, the strongest form of money. The other thing is the value of a currency. Trends towards the cost to produce it. So you can’t print energy out of thin air. So you know, that means you can’t print more Bitcoin. You can change the code if you want.

David Layton: You can create more Bitcoin. But everyone else running the actual Bitcoin network, no, there’s never [00:30:00] going to be more than 21 million. And you can’t actually create any out of thin air. You have to mine it. You have to trade electricity, you have to sell your hash rate to a mining pool. In return, they give you Bitcoin dollars, however, have no limit.

David Layton: Any fiat currency has no limit. Nobody actually knows the supply. Stocks, bonds, gold. No one knows the total supply of any of that stuff. You can audit Bitcoin, you know, so from the characteristics of money and what a strong money is, perspective Bitcoin wins, beats everything out, like hands down, no questions asked.

David Layton: And if historically the monetary system tends to converge on a single medium, and that’s the hardest form of money, then. I believe, and a lot of people believe for those reasons that Bitcoin will be the next global reserve currency. 

Clay Finck: One thing that stuck out to me there, I first got introduced to crypto and Bitcoin in 2017.

Clay Finck: I was just coming outta college at the time and pretty new to investing, and I saw all these coins just going straight up into the moon. And [00:31:00] you mentioned Charlie Lee’s coin and. I think that the talking point around that time, you know, for Litecoin is Litecoin being the silver to Bitcoin’s gold, meaning that light coin’s going to be good at transactions and Bitcoin’s going to be good at the store value aspect.

Clay Finck: And just thinking back at that now, five, six years later, it’s almost laughable. Now you have things like the Lightning Network on Bitcoin and it starts to make a lot more sense when you start to do your research and learn from these really educated people in the space and going through a cycle or two and you know, just learning as much as you can from podcasts and articles and books and such.

David Layton: Yeah. Yeah, I think you’re spot on there. And I was hoping you’re going to mention the Lightning Network because that is what disrupted the narrative around silver to Bitcoin’s gold. Cuz that was exactly what I thought. Smaller market cap, it’s gonna, you know, increase in USD and this is, you think in USD terms, when you’re looking at the rest of the crypto space, what’s going to pump harder than Bitcoin.

David Layton: That’s what, you know, a lot of these. I would say most of these traders and you know, [00:32:00] altcoin enthusiasts do as they, how do I, how do I find something that’s going to pump harder than Bitcoin that I can convert back into US dollars? But Bitcoin, if you’re looking at Bitcoin, is your long-term money. You can see that just like TCPIP is the base layer of the internet.

David Layton: BTC in Bitcoin Lightning Network is the base layer of the internet of value. And the Lightning Network is the payments rail that is built on top of Bitcoin. And the transactions per second on the Lightning Network is exponentially higher than any of the other cryptos, especially Litecoin. So that argument was a very attractive argument back in 2017, and I remember that.

David Layton: Perfect. But it doesn’t hold any water anymore. 

Clay Finck: Turning back to Unchained, when I think about your guys’ company, I immediately think of the Multisig product that you guys have. You discussed this with Stig and your previous episode with him on our YouTube channel, but maybe you could talk about the Multisig product you guys have for those who missed that episode, what Multisig [00:33:00] is and why it’s the solution you guys went with when it came to helping people out with self custody.

David Layton: A very high level multisig or multiple signature is the only way that you can truly eliminate the single points of failure that we were talking about when it comes to Bitcoin. So, to understand Multisig multiple signature, we need to kind of think about what a signature is and why it’s important.

David Layton: So I’d be, I’d be happy to break that down, but to understand a signature, and this is where things can be complex, I’ll try to keep it very high level. So to understand what a signature is, we really need to understand where Bitcoin lives. So where does Bitcoin live? It doesn’t live on an exchange or on your treasure or cold guard.

David Layton: It was never on FTX or Mt. Gox. All Bitcoin live on the Bitcoin Blockchain in an address. Addresses are constructed using public keys. Bitcoin can be unlocked from these addresses using private keys. So you can think of public keys information that’s like a lock. [00:34:00] Public key is used to create an address.

David Layton: Address is where your Bitcoin lives. A private key is what you use to unlock Bitcoin from those addresses. And the way that a private key unlocks Bitcoin from an address is by providing a signature or permission to move the Bitcoin from one address to another. Mm-hmm. so multi. Multiple signature and a multisig address is constructed using two or more public keys where a certain number of signatures from the corresponding private keys are needed to unlock the Bitcoin.

David Layton: Okay, so Multisig is. Just an environment where your Bitcoin lives that needs multiple signatures or permissions from the private keys to, to move it out of that address or out of that environment. At Unchained, what we use are the two of three Multisig addresses. So this means addresses built using three keys.

David Layton: Our clients have two keys. We have one key, and any two keys can move the. So clients can move the Bitcoin on their own full [00:35:00] unilateral control over their Bitcoin. Or if one of the keys or seed phrases becomes compromised, we can provide one of the signatures needed to move Bitcoin to a safer environment.

Clay Finck: Just to be fully transparent, I personally have not worked with Unchained yet, at least, but I’ve heard nothing but really good things, and I know Stig worked with you guys in taking self custody of his Bitcoin and he had a really positive experience. As far as I know, I personally use a hardware wallet to store my Bitcoin and think I have a pretty good understanding of what sort of attack vectors there are with that setup.

Clay Finck: But you’re much more of an expert than I am when it comes to. You do this every single day, what words of advice would you give to someone like me who uses a hardware wallet to ensure that the Bitcoin is actually secure? And maybe you could point out some of the common mistakes you see with people in my situation.

David Layton: So first I would say way better than keeping it on an exchange. [00:36:00] Okay. So if you have a single signature wallet, much, much better than trusting a custodian or, or a third party. The biggest mistakes I see, however, with somebody who has taken a step to taking self custody is still securing their Bitcoin using a single sig set up. When Multisig is so easy to use now and mm-hmm , many multiples more.

David Layton: So doing it on your own can be challenging. You have to get, you know, three separate devices. You’re going to spin up your own node, you’re gonna connect a sparrow on your computer, and that’s just, you have to have a good technical understanding of what you’re doing to create your own multisig. That’s why companies like Unchained exist, right?

David Layton: Because we, we walk you through it in an hour or less, teach you how to do it. So first, excellent job getting it off of an exchange. Second Multisig is way easier than you might think. So just consider that and I would have the same message for your listen. That if you have Bitcoin and self custody, but it has single points of failure, like if somebody can find your 12 or 24 words and move your Bitcoin, that’s a single point of failure.

David Layton: That’s something that you should be concerned about [00:37:00] for. Multis specifically, or for any, any type of setup, any type of self custody. The biggest mistake that I normally see is making things too complex. So the security from something like a two of three multi seg would come from physically separating the keys.

David Layton: Meaning physically separate those devices, physically separate your seat phrases. So that means you can peel back a lot of the other complexity that people add with single signature type setups. That means like a long, complex pin. A passphrase the passphrase is a single point of failure. You forget that.

David Layton: Or if you type a an L instead an I you know, you get locked out of the hidden wallet, you get locked out of that, that big one. Adding too many keys. That’s another one. It might seem counterintuitive when you’re thinking about security, but adding additional keys adds complexity and more physical items to secure and it doesn’t actually add any more security.

David Layton: Mm-hmm. , so adding complexity without adding security, that’s what you would do if you had, you know, like a three or five type [00:38:00] setup and coming back to. What we do at Unchained. If you did need a more tailored approach to something like a multisig two of three, if you’re looking at a three of five and thinking we have, you know, this would be for, you know, mining companies or larger organizations, enterprise level companies that have 15 people that want to be involved we can actually give you a more tailored approach with having that two of three because you can go in and, and change your permiss.

David Layton: We’ve recently introduced this granular permissioning where you can decide who makes changes to the accounts, who can author transactions, who can sign transactions, who can approve transactions, who’s an owner, an admin, a viewer. So you have all of the functionality and capability of a higher M of N at 3 0 5, 0 5 of seven with a two of three by just putting an intermediary in the middle that can help you do the view only admin who can make changes type of.

David Layton: But I don’t mean to criticize your setup. I think that anything in self custody is good. I just don’t wanna see anybody lose any [00:39:00] amount of Bitcoin and singles still allows for that. Mm-hmm. , if not handled correctly. 

Clay Finck: Yeah, you did mention a couple of really good points there. Obviously, the single point of failure is something you really wanna be mindful of.

Clay Finck: If I only had one seed phrase written down and I’d, if I were to lose that seed phrase and I had no backups, then you know, I might have potentially lost access to my Bitcoin. You also mentioned the complexity piece. It’s super easy to make this whole process too complex. You know, if something were to happen to me, then somebody else needs to be able to figure out and sift through all of this complexity if I’m not around.

Clay Finck: So I think those are both really good points. And you mentioned running a node. If I were to do the multisig setup myself, And I were to work with you guys. How does the node piece work? Am I going to spin up my own node or are you guys going to help out with that or how’s that work? . 

David Layton: That’s a great question.

David Layton: So a Bitcoin node [00:40:00] is the way that you talk to the Bitcoin blockchain. So if you run your own node, you’re able to verify your own transactions, you’re able to verify your addresses within your wallet, just make sure that you are not trusting a third party to tell you that the bitcoin’s actually there or the transaction is actually going to the right place.

David Layton: So it’s part of that don’t trust, verify ethos running a node. Mm-hmm. . With Unchained, you connect to our node, you can. connect to your own node using something like Caravan or Sparrow with the wallet, the multisig wallet that you build with unchained. So that’s part of how we have completely removed the counterparty risk from the situation is that every time you build one of those two of three environments 2 0 3 Multisig wallets, you can download what we refer to as a wallet configuration.

David Layton: and you can store that securely. And anytime you want to interact with Bitcoin within that Multisig wallet on your own, with your own node, you can do that using something like Caravan or something like Sparrow. And these are just [00:41:00] different multisig coordinator software that you can install on your own computer, connect to your own node, and then you can just exactly as I’m describing, transact in and out.

David Layton: You can look at your UTXOs. You can look at your addresses. You can look at your balance. You can send a coin wherever you want. You can provide a signature. It’s important to note that outside of Unchained we’re not going to provide a signature mm-hmm. . So we can help you with a second signature within unchained.com.

David Layton: But once you go outside and do an external recovery, that wallet kind of becomes a two of two. Cuz then it’s just a wallet built using three keys, but you only have the two keys. Mm-hmm. that can provide a signature or provide signatures to move Bitcoin. So we will never put you in a situation where we would potentially give a signature to you or anybody else outside of un.

Clay Finck: I also wanted to touch on the IRA product you guys have. Your team helps people purchase Bitcoin through an ira. While most IRA providers don’t actually have that as an option, most [00:42:00] brokers, you have to go do something like GBTC or Micro Strategy, which doesn’t look good right now as the discount on GBTC continues to widen, how does the IRA product work that Unchained provide?

David Layton: Yeah. Other than providing actual or having our clients hold actual Bitcoin you mentioned GBTC, the discount to NAV is floating around something like 50% right now, which is wild. So that would be the main point that I would want to bring up. So the difference between an unchained IRA and something like a GBTC or a micro strategy or any of.

David Layton: Securities that you can purchase from your broker is that you own real Bitcoin. You own it. In the same two of three that we’ve been talking about where you hold two keys, we have one just as a backup. You have unilateral control over it. Now you shouldn’t be, you know, taking distributions early or doing any of that, but this is the amount of control you have over a Bitcoin and this type of 2 0 3 vehicle.

David Layton: So you hold the keys to it, nobody can [00:43:00] move it. Except for you. . The other benefit there is that we do the reporting on the back end. So that’s something to think about when it comes to Bitcoin and an IRA and just in general. This is the only way that you can have something in an IRA that you hold the keys to.

David Layton: So I think I mentioned digital bearer assets. This is the thing that you have unilateral control over. Nobody else can move it. Nobody else can touch it except for you. But you actually know what you own. So most of these 401ks are invested in, you know, ETFs that most, I would imagine, your audience.

David Layton: A lot of millennials, most millennials have feel very strongly about some companies, you know, like Exxon or you know the oil and gas companies. I have no problem. I’m a fan of oil and gas, but some people would be horrified to learn that they. Are invested in their retirement account in some of these companies and industries that they [00:44:00] aren’t very fond of.

David Layton: Mm-hmm. . So that’s something to consider too. 

Clay Finck: Well, David, it was really fun chatting with you. I really, really appreciate you coming onto the podcast and the show. Again, we’ll have to reconnect at some point in 2023 as thanks continue to develop in the space. Before we end the show, where can the audience go to learn more about you, learn more about Unchained, and any other resources that you would like to.

David Layton: You can find Unchain Capital on Twitter. We’re pretty active there. At Unchain Cap. I’m on Twitter as well @dmlayt. It’s DMLAYT. We have a YouTube channel where you post webinars and tutorials. We have an incredible educational blog and knowledge base on our website. If anyone’s interested and jumping on a 15 minute consultation, you can schedule something with our client solutions or retirement teams.

David Layton: Go to unchain.com and sign up for a consultation right there. Then. Yeah, the last thing I’d. As a company our goal is to put private keys in the hands of every individual and business who wants [00:45:00] exposure to Bitcoin? I’d say anyone can do it. Everyone should do it, and you can reach out to us if you need any help with it.

Clay Finck: Awesome. Well, thank you so much, David. I really appreciate it. 

David Layton: Thank you, Clay. This was a lot of fun. I’ll come back on anytime.