November 26, 2025 • 57 mins
Max Guise from Block joins the show to break down one of the biggest leaps forward for Bitcoin self-custody: BitKey’s new privacy upgrade, why it matters, and how it removes one of the last major trade-offs between safety and privacy.
We get into how BitKey’s new chaincode-delegation system prevents Block from seeing balances or transactions, and why this BIP unlocks a new era for private, user-friendly multisig.
We also get into Square switching on Bitcoin payments across the US and why that’s a much bigger deal than most people realise - removing the friction of onboarding merchants and making Bitcoin everyday money. As well as the structural risk of mining centralisation, how relying on a handful of foreign ASIC manufacturers threatens Bitcoin’s long-term resilience, and how Proto’s approach is designed to spread hashpower, strengthen the network, and give miners real optionality for the first time in years.
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Max Guise: https://x.com/max_guise
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
There are some great existing tools out there, but to really get a complete solution to safely
(00:08):
hold Bitcoin, you got to combine a lot of them. By the time you actually put together a full
solution to keep Bitcoin safe long term, like you've kind of designed your own wallet at some
level by putting these things together and you sort of have to trade off amongst safety,
usability and privacy. We believe that Bitcoin will be the native currency of the internet.
We believe that its openness and its permissionlessness is what will make that true.
(00:31):
That's what we're focused on, making Bitcoin everyday money.
Max, good to meet you, man.
I'm excited for this show.
You guys over at Block have just been shipping relentlessly for the last few months.
Was it just maybe three or four months ago you relaunched Proto?
Then Square have just announced that they're allowing Bitcoin payments to all the merchants in the US.
(00:54):
BitKey have had a big security upgrade, which we're going to talk a bit about today.
A big privacy upgrade, I should say.
But I want to get into this in detail.
But before we do, this is the first time you've been on the show.
The listeners might not know exactly who you are.
Do you want to start with just a bit of an introduction?
Who you are, what you do?
Sure.
Yeah, and thanks for having me.
Excited to be on.
So I'm Max, guys.
(01:15):
I'm leading BitKey and helping to develop Proto.
And also just generally excited about all the things we're shipping at Block.
And can't wait to talk about more of them.
Uh, and, uh, I've been at Block since 2013 and helped work on, you know, early Square
hardware, uh, helped, you know, some of the development of Cash App when we launched Bitcoin
(01:35):
buying and selling capability.
And then, uh, in 2021 started leading and developing BitKey and now contributing to,
to Proto as well.
That's awesome.
So you got into, you were working at Square way before Bitcoin was like an integral part
of that business.
When did Bitcoin actually become something that you were focusing on there?
It's an interesting question because I think, honestly, from as long as I can remember at Block the whole time, we've had an interest in Bitcoin.
(02:03):
I think the fact that we started off disrupting the payments industry with making it possible for small sellers to never miss a sale, that came from frustration with the existing system.
that came from hidden fees, that came from crazy Byzantine processes that people had to go through
(02:24):
to sign up for merchant accounts. And that came from a desire to help enable people who were
basically being left out of the financial system. And that's really what Square was born out of.
And so I think we've attracted people and talent across the company that has been interested in it
for a long time. And we also have a history of making bets early on that we think can be
(02:45):
disruptive long term. And, you know, sometimes we're early with those. And so we actually did
have some very, very early Bitcoin experiments where we were probably a little early. And I
think where we really, really took off is when we introduced buying and selling a Bitcoin and cash
app that was, you know, timed incredibly well with people's interest and also part of creating
that interest. And so I think it helped take, put Bitcoin in front of a lot of people in 2018.
(03:11):
and inside square or inside block maybe who is is it jack driving all the bitcoin stuff or have
you got a load of people internally that are also sort of very keen to push bitcoin as far as possible
jack's been a visionary for this for sure um i think he got lots and lots more people interested
in bitcoin who maybe hadn't heard of it originally and you know once they discovered it started to
(03:33):
understand um you know how it can help uh and so i think there's been a massive enablement from jack
at the company to sort of point the way.
And then there's a ton of folks that have helped build all the things we're going to
talk about.
And I think, you know, some of those folks started off as Bitcoiners who came here specifically
(03:53):
to build those features.
And some of those were folks who are incredible electrical engineers, incredible software
developers and incredible marketing folks that started to learn more and more about,
you know, what we could do with Bitcoin and, you know, now have sort of joined the ranks,
so to speak.
And just in the last week or so, you've announced that all Square terminals in the US at the moment can now accept Bitcoin as payment.
(04:18):
This is really cool because everything previously has been Bitcoiners going into their local butcher or wherever and just nagging the owner to accept Bitcoin.
And then when they finally do, they're the only person paying in Bitcoin.
So they forget how to do it in between sales.
It's always been a very clunky experience.
and you guys have just basically turned this on
(04:40):
on their normal payment terminal,
making it really easy.
Like, do you want to explain what you've done there?
Yeah, this is huge.
I'm really excited about this
and just a huge hat tip to Miles Suter
and the whole team who's driven this
and I love seeing it go live.
So we launched acceptance on Square
and so what that means is that Square merchants
can accept Bitcoin.
(05:01):
Now they can actually receive it as Bitcoin
or they can receive it as dollars
and I'll talk in a minute about why that's important.
And, you know, we've also launched the ability in Cash App when paying with Bitcoin to fulfill that either by debiting your dollars balance or debiting your Bitcoin balance.
And so what this means is when transactions happen at a Square Merchant and with Cash App on the other side, basically any combination of sending dollars and receiving Bitcoin, sending Bitcoin, receiving dollars, all of those combinations can happen.
(05:28):
and this is really interesting because it means that square merchants can accept bitcoin but if
it doesn't make sense for them or for their business to receive in bitcoin right now they
don't have to they can still accept make the sale and receive in dollars and on the cash app side
you know if i'm paying at a merchant and i want to you know avoid a taxable event given the
(05:50):
current status of of you know where i live in the laws i can debit my dollar balance and one one of
that's really interesting about this is that you know in the background what we're really targeting
here is three percent fees that everybody has accepted we need to pay on every transaction
and to small businesses three percent is a lot more than it sounds like so you might you know
(06:12):
see a credit card fee be annoyed by it um you know but for most transactions might not matter
that much but when you look at the books for small businesses and the actual profit they're making
these are businesses that they're not they have thin margins like they're they're really and a lot
lot of, especially right now, a lot of small businesses are actually really struggling.
And so the fees that they don't have to pay because of transactions like this, that can
(06:36):
be really, really meaningful.
And so I think this is really exciting.
I think it's a really big deal for small businesses.
And, you know, you mentioned Bitcoiners nagging folks to take payment.
We also added the Bitcoin map in Cash App, which makes that even more possible.
And we're actually, if you follow Miles on Twitter, you can see we're paying bounties
for folks who, you know, help Square sellers get started with this.
(06:58):
So definitely check it out if you haven't already in Cash App.
If you go to the Bitcoin tab, you can see a map in the spend Bitcoin option.
You can see a map of, you know, local Square merchants that are accepting Bitcoin
and local merchants that are accepting Bitcoin, even if they're not using Square.
Do you know how many people are actually accepting Bitcoin as of sort of right now?
(07:19):
You know, I'm probably not the right person to ask about the stats.
So I don't have anything to share right now.
But I think one thing that I've found really inspiring is that there are an incredible number of videos of folks, you know, going around to businesses that are, you know, on the map and patronizing them and also, you know, and supporting their businesses.
And also folks who are, you know, have shared some videos of convincing merchants to turn it on because it's opt in for right now.
(07:45):
And I think it's really neat to see.
Yeah, it's really cool.
I've seen Parker Lewis has been posting a load of videos around Austin, going to different places, buying with Bitcoin.
and so when on the like merchant side of that um how do they actually accept it is it does it work
in the exact same way it would for just a fiat payment or do they have to do something else
like do they have to actually select bitcoin payment you have to tell them you're paying in
(08:06):
bitcoin uh today you do need to tell them you're paying in bitcoin uh and they need to opt into
doing that um we're starting small uh but you should expect to see that expand yeah because if
that got to the point where there was no noticeable difference in how like the ux of that flow worked
and you could just pay in Bitcoin. The merchant doesn't even need to know you're paying in Bitcoin.
That would be huge. With this, though, obviously one of the challenges is the merchants understanding
(08:30):
why they would want to accept Bitcoin. Is there a kind of an educational thing that goes along
with this? Are you sending out like care packages of Bitcoin information to these people?
There's actually a page that I should point folks to. It's BitcoinMerchantCommunity.org
that talks about it. And, you know, credit with Steve Lee, who leads Spiral here, I think is a
(08:53):
great champion of highlighting when we need to speak in terms that aren't purely drawn from the
Bitcoin community. So, you know, showing up in a merchant and talking only about Bitcoin without
the why or kind of putting things in the terms that make sense to them in their business today,
that can be a miss. And it's much stronger if we can explain why this is important and where this
(09:14):
is going to take us. And really the central theme here is fees going to third parties that we rely
on for most transactions. And when this is an open network and you can pay, not even just with
Cash App, you can pay with any Bitcoin wallet at Square Terminals, like there aren't 3% fees.
And, you know, this is really about that. And the openness of the network, I think,
(09:36):
is going to support that and make this very, I think, make it really widespread long term.
and I think you know the path we're on where we're headed is all the signs we've seen in the past
they're like there's a three percent surcharge for for credit cards I think this is going to
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(12:11):
you're focused on the BitKey stuff. I've sprung this on you because this is news since we sort of
set this show up and I really want to talk about it. It's something I'm very excited about.
so last question on the square stuff
obviously this is US only at the moment
I don't live in the US although I spend a lot of time there
and when I do I'll be searching out these places
but
is this going to expand globally or
(12:31):
is it at the moment just focused on the US
it's a good question
Bitcoin's an open global permissionless network
we started with the US
we have the strongest network there
and you know
a large base of merchants
large base of cash app users
so we're starting there
but you should expect to see I have intentions beyond that over time.
(12:51):
It's very exciting.
I think it's one of the coolest things we've seen in a long time
because this has always just been a mess,
trying to get merchants to accept Bitcoin, trying to do the education.
It's just like Bitcoin is going around to their local shops and doing it.
Having this from, I don't know how many people use Square,
but an insane number of businesses, particularly small businesses,
are using Square.
Having that just enabled on everyone's machine, that's very cool.
(13:15):
But we should talk a little bit about Bitkey
because you guys have had a huge privacy upgrade there.
Before we get into the details of that,
do you want to just explain like where BitKey came from
and like what it is trying to,
you know, where it's trying to fit
in the hardware wallet market?
Yeah, so we started BitKey,
we wanted to make it safe and easy
for people to truly own their Bitcoin.
(13:36):
And you could probably guess based on,
you know, me talking about an open network earlier
that what's driving that is that,
you know, the strength of Bitcoin
is that it's permissionless.
Anyone can use it.
And part of what's behind that is the decentralization of the network and the fact that, you know, we don't have centralized entities controlling it.
And so, you know, if we ultimately have coins stored on, you know, a couple of exchanges worldwide, then that's not particularly permissionless in the end.
(14:02):
And so we want to make it easy for people to safely own their coins and not to sit there with them on an exchange subject to hacks and mismanagement like we seen with exchange collapses and also just in charge of their Bitcoin instead of listening to somebody else about you know when they can move their money who they can send it to and how much they can send And so that why we built BitKey And when we started this off
(14:28):
one of our observations was that, you know, there are some great existing tools out there,
but to really get a complete solution to safely hold Bitcoin, you got to combine a lot of them.
quite a few of them are hard to use for most folks and like really capable tools but things that are
just by the time you actually put together a full solution to keep bitcoin safe long term
(14:49):
like you've kind of designed your own wallet at some level by putting these things together and
you know for some people that's an awesome exercise uh it is for me i that's that's literally what i
do uh you know every day um but not everybody is you know wants to take on that odyssey and so our
intent with BitKey was to make it easy for folks. And historically, what that's meant is, you know,
(15:12):
you sort of have to trade off amongst safety, usability, and privacy. And so, you know, in sort
of the basic case, or the most vanilla case, somebody might use a hardware wallet, single
signature, they have one key, they have a seed phrase backup. And you've probably heard my
opinions many times on this, but that often leads to a situation that isn't as safe as people think
it is. You know, things like storing a seed phrase improperly and having someone see it and be able
(15:36):
to steal your funds, or in some cases, accidentally being tricked into, you know, revealing part of
the seed phrase and getting funds stolen or having the seed phrase back up in the hardware wallet in
the same place and suffering a house fire and being out, you know, completely out of luck.
These sorts of things just for long term safe storage of Bitcoin, like they're a problem.
And so, you know, another alternative is people gluing these things together,
(15:57):
using something, doing a sort of DIY multi-sig,
it turns out you can build something
that's really safe and really private.
It's just really hard.
And it's really hard to maintain it
and keep it in a safe state over time.
And so what people have often gone to
is something we'll refer to
as collaborative custody services.
And that's where you ask a third party
to help keep your Bitcoin safe,
(16:19):
not by handing it over like a custodian
where they have unilateral control
and can move it without you,
but where they're holding on to maybe one key
or a backup or some combination of those where they can help you when you start to lose things.
But the default state is you can unilaterally exit at any time. So to me, that's part of the
definition of self-custody, that you can unilaterally move your funds at any time. And
collaborative custodians have historically been able to help you more safely store Bitcoin while
(16:45):
retaining control. And the problem is exactly what you said, which is the trade-off in that case is
privacy. When you give that third key, for example, in Bickey's case prior to this upgrade,
to a custodian, you know, we had what's called a wallet descriptor, which meant that we could see,
you know, your balance and we could see your transactions on the blockchain.
(17:05):
Like we could pick out on the blockchain, which activity is associated with that wallet.
And that's true of every other collaborative custody service out there.
And this is highly unfortunate because as you and I both know, and I think as most of the Bitcoin
community knows and values, like we don't want that. We don't want people to know, you know,
which coins are ours. We don't want people to know how much we have. There's a fundamental need
(17:29):
for privacy that we want to be able to fulfill. And we found ourselves torn between how do we get
that if we have to trade off safety? And so the really interesting thing about this upgrade is
we've figured out how to do both. So the big key product didn't change at all with this upgrade.
It's the same great recovery features, the same safety that comes from that, the same ease of use.
(17:50):
and suddenly we can't see your balance and we're not sitting there with a descriptor where we can
pick out which transactions are yours um so it's really really exciting upgrade because it kind of
takes away one of those fundamental trade-offs that comes with you know comes between safety
and privacy yeah i think it's really cool and and like any of these um security solutions like you
(18:10):
say is always trade-offs like you can go and use you know five cold cards to a three of c three of
five multi-sig and like that's great and it's incredibly secure as long as you know how to deal
with your backups and like i think the the risk kind of changes from going from single sig to
multi-sig where it's like with a single sig it's like how well have you it's always how well have
(18:31):
you secured your backup but like what is your risk profile of that um and like the probably the
highest probability of you actually losing funds isn't going to be someone stealing it it's going
to be you messing up in the process and and actually just locking yourself out um and so
bitkey obviously has taken that away and then the trade-offs there have always been like what if
like you're basically giving up the privacy bitkey can see every transaction that you make on that
(18:55):
but then this bip has just come out written by was it jesse posner and jervis tan is that how you
say it yeah um so maybe it's worth explaining what this bip is um and how can can you explain how it
works yeah so what this bit so so first of all um really exciting and really proud of the team that
we're working on things like this and and also sharing it with the community so that it doesn't
(19:17):
have to be just biki that implements this it can be others as well and we can get you know more
private collaborative custody throughout all of bitcoin and and and not just with you know one team
that adopts it um first and so uh super excited about this and basically what the bit does is it
so it has a pretty technical sounding name chain code delegation uh what's underneath the hood there
(19:39):
is that every UTXO,
every unspent transaction output on the blockchain
is locked with a script,
that script,
and essentially locked with an individual key.
And to derive that key,
there are a couple of inputs.
One is a seed,
which is often represented as a seed phrase.
And another is something called the chain code.
(20:01):
And what the bit proposes
is keeping the chain code private
from what's called a collaborator
in the in the BIP so for example a collaborative custody service uh you know something you might
be familiar with um you know from some of the services that were out there before BitKey or
BitKey for example holding the third key for you and by keeping the chain code private from that
(20:24):
third party um the BIP basically specifies how to do co-signing so you have a collaborator because
sometimes you need them to sign maybe you lost stuff and you need to do a recovery transaction or
for example, BitKey has, you know, a mobile pay feature, sorry, a hardwareless transactions feature
where, you know, you can configure a limit and spend, you know, underneath that limit without
(20:45):
using the hardware. There are reasons why you might want to do either of those things, especially
recovery and lean on a collaborative custodian to do that. And the BIP basically makes it possible
to share only the information necessary to sign an individual transaction when there's a need for
recovery. It also specifies a way to do that completely blindly, which is actually like not
(21:08):
what we've implemented up front. But most of the BIP, what it provides for is you can send up
partial information effectively about the chain code so that the collaborator can sign one recovery
transaction. Underneath the head, the BIP is full of some cryptographic equations, which I will try
not to recite here. And also I'm probably not the right person on the team to go into that.
(21:29):
Don't worry, it would go over my head anyway.
Yeah, really interesting though. And basically by sending up that partial information, we can still get the greatness of recovery transactions when we need them, but not have to have the collaborative custodian sitting there with a wallet descriptor that reveals everything.
so just for like the actual users like i want to go through what this actually means for them
(21:51):
because at the moment like the way bitkey works is you have your keystone you have a key on your
phone which is like encrypted and then um block hold one of the keys on on your servers so if you
want to send a transaction now you use your encrypted key on your phone and use this um
unless you lose this or unless you can't like actually use this key and then you have to
(22:13):
contact Block and they sign a transaction. So with this update, what this will mean is that
every time that you sign a transaction with your actual hardware and with your phone,
Block can't see what's going on. But if you end up having to rely on the key on Block servers,
then you can see what's happening. Is that correct? Yeah. So there are basically two paths
in the BIP and one of them requires implementing something called Schnorr signatures. We haven't
(22:38):
done that yet. When anyone who adopts that portion of the BIP, it means that even at signing time,
there's no information revealed. Short of doing that, when the collaborative custodian signs a
transaction, they see the UTXOs involved in that transaction. If that's a recovery transaction,
that might be all of your UTXOs. And what we do is when that happens for BitKey, we don't log
(23:04):
anything. We don't store anything about the UTXOs that we saw. And we're working on a feature that
we call server verifiability that will allow people outside of BitKey to see that that's true.
We use something called AWS Nitro or something called Nitro Enclaves on AWS, which is basically
a secure computing environment that has what's called an attestation capability. It's a way for
(23:27):
that environment to basically provide a cryptographic attestation of what code it's running
that can be checked from outside of the system.
And this is not like, that's not a block thing.
That's like an AWS-wide thing.
And we're working on a feature
that basically will allow people to verify
that this is true.
And even in the interim,
I'm really excited about this
because we're truly blind to balances and transactions.
(23:50):
We don't save this stuff, and so we don't know.
So just as an example,
I've been really excited by,
since we have been able to see,
I'm aware that there's a lot of money
that has been moved on to BitKey and like a ton of momentum around that and folks getting a ton
of value out of storing it. And then I'm simultaneously sad because, you know, now that
we have folks migrating to our newest privacy upgrade, like, I don't know what's on it anymore.
(24:15):
And I think that's awesome. And, you know, I think the whole team actually has just been really
excited about this because it's been one of the things that for us was like a pretty sharp trade
off as we designed BitKey up front and finally able to remove it. Yeah. And I also just want to
reiterate that this isn't like a bitkey specific thing if you use like a casa or an unchained that
(24:35):
you have the same problem in any of these collaborative custody models so the thing that
you guys have focused on really heavily from the very start is making this as easy as possible
making the ux as clean as possible and as as um you know user-friendly so does this remove any of
that ux or is it exactly the same it doesn't remove anything in fact actually this feature is
(24:55):
pretty quiet relative to its power meaning like when you go through the upgrade flow like it's
pretty simple it's a screen explaining what's going on and doing a wallet sweep uh to a you
know new set of keys and you know underneath the hood really you're gaining something huge
and you know new new customers who set up the key now they just get it by default uh and they're not
(25:19):
going to have any different experience they're going to have the same five minute setup they're
going to have the same immediate safety after that point they're going to have the same you know easy
recovery contact setup to protect them against losing you know both their hardware device and
their phone they're going to have the same easy setup for inheritance so they can make sure that
their bitcoin gets passed on to their loved ones all of that's still there oh that's awesome so
(25:41):
that was going to be my next question because i was playing around with this over the last few days
um and for me because it was already set up there's like a private option um and you just like
click on that move funds to a new multi-sig and that's basically all you need to do but for anyone
new setting up a bitkey now it's is that that's just a default that's a default oh that's awesome
(26:01):
that's very cool and and like when it comes to the the trade-offs with something like bitkey or
really any collaborative custody is there anything else that you think is a sort of barrier that you
need to improve on? I think a couple of things. So one is, I think, even though we've made big
(26:21):
strides on privacy, there's still more to come. So for example, with every hardware device,
you have to get a hold of the hardware. You have to actually get it shipped to you somehow,
or you need to go get it in a retail store. And I think historically, that's been a huge
vulnerability for folks uh there are folks who you know lost their addresses in the ledger hack
(26:45):
many years ago that i know that have moved because of it i mean i've been very quiet on this because
like i was i was one of these people um i i don't mind saying it now because all the details who
were released are now not my details um apart from my name um but like it was a huge thing and
And for a long time, like I've actually moved house relatively quickly after that, unrelated.
(27:08):
But I had to like change my phone number.
The amount of phishing scams I was getting was insane.
Like that's a real problem.
And there's people like CoinKite who will wipe your data from their servers after a certain amount of time.
But like what can you do to fix that problem?
Yeah, that's one of the things.
And we're actually working on a similar approach for BitKey.
(27:28):
another is retail store pickup can be can be helpful yeah we're actually working on
implementing pickup at retail stores don't think like big box retail stores are selling but more
like pickup points we think that's an important thing to roll out so that folks have more options
for actually getting a hold of a device without having to put a physical address that they're
(27:52):
you know either even if it's work that they're at physically a lot and then we also introduce
the ability to purchase Bickey with Bitcoin. One of the other aspects, there's a lot of aspects to
this, but one of the other aspects is that, you know, when you pay with something that's not
Bitcoin, you need to provide a billing address. And very often that's pretty problematic for folks.
And so really trying to go systematically through where this type of information ends up in,
(28:16):
you know, both our systems and potentially others. And I think, you know, that's something I'd love
to see more focus on industry-wide because I think it's a real problem.
I mean the idea of being able to pick this up
I can see all this coming together now The idea of being able to pick this up at a retail store where you can pay with e through Square Terminal is kind of the perfect solution to this
(28:39):
It's a good idea.
We need to push that forward. The other thing that I really wanted to kind of hit on is
this is a huge privacy improvement for the individual using a BitKey. But this isn't
like a private Bitcoin. This doesn't give you private Bitcoin transactions. I want to make sure
that that's not lost in kind of the nuance of this. Like people who are using Bitcoin,
(29:01):
like your interaction is blocked from like block can no longer see that, but everyone else can see
it on the network and block can still see transactions on the network. They just don't
know they're associated with you. It's probably worth like just reiterating that point.
Yeah, I think it's a really important one. On-chain privacy is a huge challenge.
And I think, you know, this is one of those situations where things like lightning can help.
(29:25):
uh i think most people don't realize that you know if they pay somebody on l1 they're potentially
revealing a lot to that person about their holdings uh and that's something that like there
isn't really a direct analog prior to bitcoin for and i think it's it's like a very bitcoin
specific thing it's not big key specific it's not really specific to any wallet vendor or anything
(29:45):
like that but it is a difference in bitcoin relative to what people are used to like you know
it's basically comes down to you know if i pay for something you know if i pay for a coffee with
a 20 bill they know i had at least 20 but they don't know all the other 20 bills that i've spent
and what i might who i might have given them to or you know uh how much it adds up to or anything
(30:07):
like that and i think um that still flies under the radar for a lot of folks and it's something
that is um payments uh and and sort of bitcoin is everyday money becomes um and as we make it
more of a thing, I think we're going to be confronting more directly.
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(32:21):
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So BitKey is obviously relatively new in the Bitcoin hardware space.
What is like the future of BitKey?
(33:25):
Is there the stuff you're working on that you're sort of really excited about?
Like what will this look like in a few years time?
Yeah.
So a few years time, I probably can't go into too much detail about.
I will say, you know, we have heard a ton of different requests from our customers.
We have a lot of folks using BitKey really excited about it.
And I think getting a lot of value out of safe storage on BitKey and also realizing like we've
(33:52):
made it so simple that like there's actually quite a few feature requests that people realize
like, hey, I would be awesome if BitKey also did this.
And so we've gotten requests for things like, you know, some on-chain privacy tools like we were just talking about.
So things like CoinControl.
We've got requests for things like multiple accounts.
(34:13):
So maybe being able to, you know, help folks.
And not just like personal multiple accounts, not just like, oh, I want to have an account that's my savings, an account that's like something I'm spending from, but also multiple accounts to help friends and family with Bitcoin.
And I think this is something that's really special about BitKey because what we've seen, there are a lot of folks who buy BitKey for friends and family and help them take control of their Bitcoin.
(34:40):
And then one of the follow-on requests we'll hear is like, well, I didn't have to do anything because they did the five-minute setup and it worked.
But I'd also love to be able to like help make sure over time that they're maintaining it in a good state and this type of stuff.
And, you know, to maybe set it up for kids, for example.
You know, lots of folks, lots of our customers, you know, especially with like adult kids who maybe haven't, you know, are hearing about Bitcoin from, you know, their their crazy parent or whatever are, you know, getting started for the first time.
(35:12):
And folks want to kind of help continue that journey for them.
and then really you know our main focus areas are security usability and privacy and so
we've also got a lot of stuff planned on the security and privacy fronts
we we talked a little bit about this earlier in the year in one of our blog posts but
on the privacy front you know we're planning some data retention and deletion changes we're planning
(35:37):
some pickup points you know now that we've shipped the ability to purchase bitcoin and on
the security front we have a couple things planned um around transaction verification uh and um we'll
have more to say about that sometime soon yeah i mean from my perspective and i'm maybe not the
average like bit key user but like things like coin control would be great even if that was hidden
(35:58):
away in advanced settings and you had to turn it on i would love to have something like that
and then on the sort of sub accounts like i've got a young daughter who has been stacking sat
since the day she was born and like being able to have sub accounts that you could kind of put
that Bitcoin away and would also be a really cool feature. But I guess the challenge for you guys is
always that trading off UX with features. Like, will the physical device remain the same?
(36:23):
We're always looking at how we can improve. Some of that's small stuff. And, you know,
some of that is we've definitely heard questions from customers about alternative
hardwares and have some ideas there as well. Nice cagey answer. That means
something could be coming. We will see. And then the last one on this really is one of the,
(36:48):
I guess, criticisms put at BitKey is the fact that you have to use the BitKey app.
Is there any plan to kind of open this up and allow you to use the BitKey with other
software wallet is.
Yeah, it's a good call.
So it's true.
Today, the way this works is
you need to use the BitKey app with the hardware
if you want to get all of the great features of BitKey.
(37:10):
There's actually nothing inherently
causing that.
Like, BitKey is
open source. We've published all of the
code on GitHub under an
MIT license. People can use it for whatever they
want. And that includes the
firmware and the API and how to talk to the hardware.
uh there are some things i should call out like the key is an nfc device and you know that's really
(37:31):
easy to use from your modern smartphone if you use that from a desktop computer you need a dongle to
interact over nfc uh but you know there's nothing inherently stopping you know anybody who wants to
interact with the big key hardware right now from writing code to do that in another product
it hasn't been a focus for us up to this point largely because ease of use the sort of lowest
(37:55):
hanging fruit like most highest leverage work for us was to build something integrated that
you know we can make sure it's that five minute setup we can make sure that things work seamlessly
there's a lot we've done in the past you know with hardware and software and services all tied
together and you know all the other parts of block and all the team's careers before that
(38:17):
and everything that like we know how to do that really well. And so we put all of our energy
behind that. But, you know, I think we are listening to community feedback and we've heard
requests for, you know, potentially using Bickey hardware with other software or using, you know,
other hardware with Bickey's, you know, awesome recovery tools. And, you know, it's something
we're thinking about. It's not like there's something we're launching tomorrow and I'm not
(38:41):
saying it, but it's definitely feedback that we're paying attention to and I think might become part
of our roadmap. With that feedback, though, is there almost a part of this which Bitcoin needs
to have a solution for everyone? Like the hardcore Bitcoiners that want to use like a, they want to
set up their own multi-sig and use Sparrow or Wasabi or whatever, like there's tools out there
that they can go and do that with. Is part of this just a case that like Bitcoin might not be for
(39:04):
those people? It's serving a different audience. Certainly. I mean, I think everybody's threat
model is different everybody's you know tolerance for how much time they're going to spend setting
up and maintaining something is different everyone's technical capability is different
and the kinds of risks that they're subject to in life is different and i think that there are
(39:28):
great tools out there for folks who want to spend a really long time figuring out you know a diy
multi-sig setup like there's great hardware out there there's really flexible software
I've used it. Everybody on our team has used it at various points. And I think for some customers,
like that's the right thing and that's what they're going to use and that's it. And
(39:48):
there certainly is a subset of those folks that, you know, probably never will use BitKey and that's
okay. But I'd also call out that I think there are a lot of Bitcoiners who maybe in theory,
they want to do those things. Maybe they've tried, maybe they did at one point, but you know,
that three or five multi-sig that they set up, like, well, one of the keys is actually lost.
(40:12):
And now it's like less safe state than they set it up in the first place. And, you know,
or they replaced something and didn't rotate other keys and, you know, or had a compromise
of something and didn't rotate other keys. And I think there's a bunch of situations like that,
that more people than we would expect will benefit, you know, or than you might expect
on paper will benefit from what BitKey brings. So I do want to see, I do want to bring more people
(40:37):
uh even even those who are maybe used to some of the most sophisticated tools out there into the
the big key community um but also definitely not forcing anyone and um you know if we can
enable even more people to use big key by you know allowing more interoperability or enabling
more interoperability rather um i think uh i think you'll see us do that at some point yeah i think
(40:59):
that this is my like unpopular opinion which is that like you have to be really honest about what
your actual threat model is here and like it's great having this incredibly robust setup where
you know you're you're kind of removing yourself from any you know nation state attack type threat
against yourself but like if that's never a realistic threat then the the big risk in any
(41:20):
of these setups is you and like taking out as much of that from the equation as possible is probably
a good thing for more bitcoiners um but i also understand like wanting to use the bitcoin tools
wanting to do things in like the cypherpunk uh sovereign individual type way but i think people
just need to be really honest about the actual threat vector that they're facing yeah um all
(41:44):
right i want to move on to the proto stuff is there anything else on the bitkey side that you
want to make sure we hit um i'd love to hear feedback so we have a lot of folks who've who've
set up uh so i guess this is really for for everybody listening if you've set up a key
recently, if you've set up Bickey a long time ago, but haven't been in touch with us,
(42:06):
I'd love to know what you think. I'd love to know what you love about it. I'd love to know
what you think we should add and what should be on our roadmap. And so, you know, whether that's
DMing me on Twitter or reaching out to Bickey at block.xyz or adding the official, you know,
Bickey account on Twitter and telling us like, please speak up. You know, it's how we make this
(42:30):
better one of the awesome i mean full disclosure probably a little bit late bitkey obviously a
sponsor of the show um i think it's a great product and one of the cool things is i i don't
want to exactly say who i don't want to give away too much security information but like i've got
all the members of my family to set up bitkey on their own just me like basically watching them to see if they can do it And it is an incredibly seamless setup where they can take control of their Bitcoin
(42:57):
in a way that's far superior to just having Bitcoin on an exchange. And it's incredibly,
incredibly user focus, which is really cool. But let's talk a bit about Proto, because this was a
really cool announcement maybe, I don't know, three or four months ago. I know you did the launch.
What is Proto? What are you doing?
Yeah. So with Proto, we're building tools to help Bitcoin miners of all sizes.
(43:22):
And that's what we're building is basically hardware and software.
And the hardware we're building is everything from custom chips,
so silicon that's at the core of Bitcoin miners,
to hashboards that pack a bunch of silicon,
to what we call ProtoRig, and that we announced in August,
that is basically a bunch of hashboards, fans, and power supplies
(43:46):
that make up a Bitcoin miner.
And software that goes on top of that, both to run the rig,
but also to manage a fleet of Bitcoin mining machines.
And we got interested in this for a large variety of reasons.
Number one is that the permissionlessness of Bitcoin
depends on the decentralization of the network.
And there are a bunch of centralization pressures in mining.
(44:07):
There are very, very few hardware vendors.
uh and um you know of the very short list that make up you know more than 90 market share they're
all in the same country uh and um we uh we we would like to help fix that so we'd like to add
to the list and and you know make it possible for folks to um you know get bitcoin mining equipment
(44:30):
and software from another entity.
And we basically started looking into this
and realized like we're in an incredible position
to help make that happen for Bitcoin and for Block.
We have, you know, you talked about Jack
as kind of driving the Bitcoin vision earlier.
So we have a visionary CEO who believes in this,
(44:52):
which is actually quite rare.
And then, you know, we're a publicly traded,
US publicly traded company
with a healthy balance sheet that can invest in something as capital intensive as proto.
And then we have, you know, long-term system engineering expertise to be able to bring
some, actually build something like this.
And we realized, you know, this is really important for Bitcoin and let's go.
(45:17):
I love it.
And what are the like challenges that miners face that this is trying to, because obviously,
like you say, the vast majority of ASICs right now are built in China.
having one of those built in the US, which is, I assume you're building this in the US,
that's a massive benefit. But what are the sort of on-site issues that these miners have that
Proto can help solve? Yeah. So we're not Bitcoin mining operators. We didn't start out that way.
(45:43):
So we started off by talking to customers. That's what we do when we begin efforts at Block. And
what we heard was basically that all of the hardware that folks have been using up to this
point just wasn't built to be infrastructure. It was something that was more disposable,
not reliable. People would trash their fleet after just a couple of years and
(46:07):
go through this expensive and time-consuming process to upgrade as machines get more efficient.
And we also heard things like software is a mess. So there's a software tool to do just about every
individual thing in Bitcoin mining. None of them talk to each other. People have these glued
together software stacks and pay high fees for them. And so we set out to make something better.
(46:31):
And our answer came in a couple of forms. So what we announced in August is ProtoRig,
which is durable, repairable, and upgradable. So it's built to be infrastructure. The
hashboards are something that you can swap out. The PSUs you can swap out. The fans you can swap
out um we focused both on making this possible in upgrade cycles um but also while people are
(46:53):
maintaining their fleets to make it you know easy and quick to repair on the rack um every moment
spent not hashing is you know big less bitcoin produced for miners and um in these huge operations
those things add up really really fast and so we introduced proto rig and we also introduced
(47:13):
Proto Fleet, which is free and open source software for managing your entire mining fleet.
And I'm excited to bring those out. Yeah, that's very cool. Because I think
quite often people think of Bitcoin miners as being these like mega miners in the US where they have
like beautiful, huge data centers where they're like clean and things are very efficient and work
(47:36):
like I've been to see the gridless sites in Africa. Not every mining site is like that.
Like when I was with Eric Hussman, he was saying like the biggest challenge is getting like literally flies out the fans.
Like they're just in a shack on the side of the side of a river, essentially.
And like he couldn't even use bit main machines because they're just not durable enough.
(47:57):
And so like the idea here, I guess, is not necessarily I could be wrong here.
Tell me. But like, is it not necessarily to hit those mega miners?
It's to hit everyone else that's helping like decentralize hash rate.
Yeah, it's actually both.
So, you know, the proto rig design is something that can serve folks in a lot of different sort of mining operator settings.
(48:19):
So we see everything from, you know, large industrial miners, meaning folks that, you know, have large sites, many, many, many thousands of miners at a site, many sites, you know, owned by the company or whatever.
And then, you know, we also see miners that maybe have a couple of hundred rigs and they have a lot of the same problems, a lot of the same challenges.
(48:44):
And then we see, you know, folks with with just a couple of miners that are, you know, maybe getting started with a new operation somewhere.
We see settings that are, you know, extreme desert climates with crazy dust everywhere and high wind seasons.
we see situations like what you described with uh with gridless um who are awesome by the way uh
(49:05):
you know where um you know leave the lights on by accident at night and suddenly you know all of the
the miners are are clogged um with with literal flies and um being able to swap fans out easily
and you know understand the state of the system remotely ends up really important in a bunch of
those settings. And so we're building for miners of all sizes. You know, there are some things like,
(49:31):
for example, home miners and stuff like ProRig's probably not for that. I wouldn't recommend,
you know, that if you're looking for a home miner, that's probably not where to get started. But
you know, over time, we anticipate serving a really wide set of groups.
I guess the huge thing as well for the actual operation side is instead of having to have
sort of an ASIC engineer on site who can take apart the fan and the chips and fix the machines,
(49:52):
instead it's literally you just pull something out push something in and press go again yeah we're
really interested in in on rack repairs so one of the things that we saw happening a lot at customer
sites is you know the especially at larger ones there might actually be a couple of folks who are
focused on repairs and have to you know go around spending you know their entire day collecting
(50:14):
machines you know throughout their their their racks and coming and bring them back to a repair
center and taking them apart there. And, you know, we'd watch them take out 12 screws where
we thought there could have been three and, uh, or zero, um, and do all these things that
we wanted to be able to, or we want to make possible in 90 seconds on the rack.
(50:35):
And, uh, that's, that's what we're bringing with ProtoRig.
That's awesome. And, and how efficient are these machines going to be? Have you released
numbers on these yet?
Yeah. So there are a bunch of different ways to configure ProtoRig. Uh, one of the things
it comes with upgradability is we can also configure it depending on what the customer's
needs are. Some customers, they might have different costs of power, focus on different
(50:59):
things. And so, you know, they may want to, for example, spend less up front and, you know,
run a machine hotter with fewer boards and proto rig and, you know, might be okay because they have
low cost of power, you know, compromising and optimizing for, for hash rate output as opposed
to going for the absolute lowest power efficiency they could get.
(51:21):
And others, maybe higher cost of power,
want to drive power efficiency as efficient as they can.
And so what we shared at our launch event in August
is that you can configure it up to or really down to 14.1 joules per ter hash,
which we're really excited about.
(51:41):
Can you put that into context for both me and the listeners?
How does that stack up against the Bitmain's of the world?
Yeah, so Bitmain is definitely still the industry leader.
So you're not going to go look at their website and our website and see us beating them on power efficiency.
But the way we're thinking about this is that power efficiency is just one of the metrics that miners care about.
(52:03):
Everybody that we've talked to, there's a whole equation they're using to figure out how are they going to have a profitable mining operation?
How are they going to optimize?
and when you look across all of those factors uh we think people should you know be be looking to
proto rig so um those factors are uh you know infrastructure costs how much they're paying up
front um you know including when you start to look across upgrade cycles and you can save 15
(52:27):
to 20 every time you upgrade your fleet when you're using proto rig uh and downtime so you
know lots of folks we noticed were tended to measure downtime as like are the miners on or
they off uh and really what matters is how much bitcoin are they producing relative to your
expectations and there's a huge gap there and uh so you know when you look at things like 90 second
(52:52):
on rack repairs from proto rig that hash rate out or that hash output those the hashing hours
basically goes way up uh and then you know of course um power efficiency and and the the total
throughput of the machine matter as well and which if specs and more information about proto rig on
proto.xyz for anyone who's interested in kind of digging deeper it's very cool and so you had the
(53:15):
launch event a few months ago when is this actually going to kind of hit the shelves and people are
going to be able to use this yeah so uh we're uh taking orders for proto rig um proto rig is
in production at customer facilities now and so um what i uh would highly recommend is anyone who
uh is you know looking to uh to to buy proto rig should talk to our sales team
(53:35):
and you can find information about that on proto.exoaz as well i mean i think as bitcoiners
we're very lucky to have a company like block in the space um it the the stuff you're doing is
pretty incredible um i think this this latest square thing is is huge and and a real like game
changer when you look back over the past you know six months and and really even just the past couple
(53:59):
of weeks i think the velocity is incredible so earlier this year at bitcoin las vegas uh we were
experimenting with acceptance on square and uh it was a really exciting time and we were you know
selling biki and um uh and and hearing a lot of good feedback from customers and then you know
since then we've launched things like the privacy upgrade the past week we launched you know the
(54:20):
bitcoin map and cash app um you know we launched square conversions uh about a month ago um where
you know square merchants can convert a portion of their sales into bitcoin um we've launched
acceptance on Square. And the team just has so many good ideas and so much going on and so much
coming out the door that I'm just really excited for the next, you know, not just the past six
(54:45):
months, but the next six. How much, because obviously like Square is a huge company,
was a huge company before any sort of Bitcoin integration, but how much of the company is now
focused on Bitcoin? How much of the mindshare is going on Bitcoin stuff right now?
uh well i think i have to answer that in a personal way which is 100 so this is what i'm
working on uh and across the company i don't know the exact number but um you know the folks that
(55:09):
that are working on it like this is they live and breathe this and why like why has the focus been
so heavily on bitcoin again is this because like jack believes in this thing he wants to push this
as far as he can go i know he's a big proponent of bitcoin as being used as like actual money
rather than just this like saving store of value thing.
Is that where this is coming from?
(55:30):
I mean, we believe that Bitcoin
will be the native currency of the internet.
We believe that its openness
and its permissionlessness is what will make that true.
And so I think really the whole team
is bought in on this being the best way
to really change the financial system.
And so I think that's where it's coming from.
(55:52):
And our goal is to make Bitcoin everyday money.
And that's so all of the things that you see shipping, that's that's what we're focused on making Bitcoin everyday money.
I love it, man. This has been great, Max.
Hopefully I'll actually meet you in person at some point in the in the coming year.
But I've really enjoyed this.
You should tell everyone where to go to find out more about you, BitKey, anything we've talked about today.
(56:14):
Yeah. So for BitKey, you can go to BitKey.world.
Use code WBD.
Yeah, of course.
And and then for Proto, you can go to Proto.xyz.
and then would highly encourage, you know,
following some of the official accounts
for BitKey, for Block.
And, you know, I mentioned Miles Suter
earlier in the call.
And so especially if you're, you know,
following along with Square payment acceptance
(56:37):
and Cash App features,
I definitely want to plug him as well.
And Miles, if you're listening to the show,
we need to record, man.
Yeah, I appreciate this, Max.
It's been great.
I will hopefully see you around at some point soon.
And yeah, thank you for the time.
Thanks.
Thank you.
There are some great existing tools out there, but to really get a complete solution to safely
(00:08):
hold Bitcoin, you got to combine a lot of them. By the time you actually put together a full
solution to keep Bitcoin safe long term, like you've kind of designed your own wallet at some
level by putting these things together and you sort of have to trade off amongst safety,
usability and privacy. We believe that Bitcoin will be the native currency of the internet.
We believe that its openness and its permissionlessness is what will make that true.
(00:31):
That's what we're focused on, making Bitcoin everyday money.
Max, good to meet you, man.
I'm excited for this show.
You guys over at Block have just been shipping relentlessly for the last few months.
Was it just maybe three or four months ago you relaunched Proto?
Then Square have just announced that they're allowing Bitcoin payments to all the merchants in the US.
(00:54):
BitKey have had a big security upgrade, which we're going to talk a bit about today.
A big privacy upgrade, I should say.
But I want to get into this in detail.
But before we do, this is the first time you've been on the show.
The listeners might not know exactly who you are.
Do you want to start with just a bit of an introduction?
Who you are, what you do?
Sure.
Yeah, and thanks for having me.
Excited to be on.
So I'm Max, guys.
(01:15):
I'm leading BitKey and helping to develop Proto.
And also just generally excited about all the things we're shipping at Block.
And can't wait to talk about more of them.
Uh, and, uh, I've been at Block since 2013 and helped work on, you know, early Square
hardware, uh, helped, you know, some of the development of Cash App when we launched Bitcoin
(01:35):
buying and selling capability.
And then, uh, in 2021 started leading and developing BitKey and now contributing to,
to Proto as well.
That's awesome.
So you got into, you were working at Square way before Bitcoin was like an integral part
of that business.
When did Bitcoin actually become something that you were focusing on there?
It's an interesting question because I think, honestly, from as long as I can remember at Block the whole time, we've had an interest in Bitcoin.
(02:03):
I think the fact that we started off disrupting the payments industry with making it possible for small sellers to never miss a sale, that came from frustration with the existing system.
that came from hidden fees, that came from crazy Byzantine processes that people had to go through
(02:24):
to sign up for merchant accounts. And that came from a desire to help enable people who were
basically being left out of the financial system. And that's really what Square was born out of.
And so I think we've attracted people and talent across the company that has been interested in it
for a long time. And we also have a history of making bets early on that we think can be
(02:45):
disruptive long term. And, you know, sometimes we're early with those. And so we actually did
have some very, very early Bitcoin experiments where we were probably a little early. And I
think where we really, really took off is when we introduced buying and selling a Bitcoin and cash
app that was, you know, timed incredibly well with people's interest and also part of creating
that interest. And so I think it helped take, put Bitcoin in front of a lot of people in 2018.
(03:11):
and inside square or inside block maybe who is is it jack driving all the bitcoin stuff or have
you got a load of people internally that are also sort of very keen to push bitcoin as far as possible
jack's been a visionary for this for sure um i think he got lots and lots more people interested
in bitcoin who maybe hadn't heard of it originally and you know once they discovered it started to
(03:33):
understand um you know how it can help uh and so i think there's been a massive enablement from jack
at the company to sort of point the way.
And then there's a ton of folks that have helped build all the things we're going to
talk about.
And I think, you know, some of those folks started off as Bitcoiners who came here specifically
(03:53):
to build those features.
And some of those were folks who are incredible electrical engineers, incredible software
developers and incredible marketing folks that started to learn more and more about,
you know, what we could do with Bitcoin and, you know, now have sort of joined the ranks,
so to speak.
And just in the last week or so, you've announced that all Square terminals in the US at the moment can now accept Bitcoin as payment.
(04:18):
This is really cool because everything previously has been Bitcoiners going into their local butcher or wherever and just nagging the owner to accept Bitcoin.
And then when they finally do, they're the only person paying in Bitcoin.
So they forget how to do it in between sales.
It's always been a very clunky experience.
and you guys have just basically turned this on
(04:40):
on their normal payment terminal,
making it really easy.
Like, do you want to explain what you've done there?
Yeah, this is huge.
I'm really excited about this
and just a huge hat tip to Miles Suter
and the whole team who's driven this
and I love seeing it go live.
So we launched acceptance on Square
and so what that means is that Square merchants
can accept Bitcoin.
(05:01):
Now they can actually receive it as Bitcoin
or they can receive it as dollars
and I'll talk in a minute about why that's important.
And, you know, we've also launched the ability in Cash App when paying with Bitcoin to fulfill that either by debiting your dollars balance or debiting your Bitcoin balance.
And so what this means is when transactions happen at a Square Merchant and with Cash App on the other side, basically any combination of sending dollars and receiving Bitcoin, sending Bitcoin, receiving dollars, all of those combinations can happen.
(05:28):
and this is really interesting because it means that square merchants can accept bitcoin but if
it doesn't make sense for them or for their business to receive in bitcoin right now they
don't have to they can still accept make the sale and receive in dollars and on the cash app side
you know if i'm paying at a merchant and i want to you know avoid a taxable event given the
(05:50):
current status of of you know where i live in the laws i can debit my dollar balance and one one of
that's really interesting about this is that you know in the background what we're really targeting
here is three percent fees that everybody has accepted we need to pay on every transaction
and to small businesses three percent is a lot more than it sounds like so you might you know
(06:12):
see a credit card fee be annoyed by it um you know but for most transactions might not matter
that much but when you look at the books for small businesses and the actual profit they're making
these are businesses that they're not they have thin margins like they're they're really and a lot
lot of, especially right now, a lot of small businesses are actually really struggling.
And so the fees that they don't have to pay because of transactions like this, that can
(06:36):
be really, really meaningful.
And so I think this is really exciting.
I think it's a really big deal for small businesses.
And, you know, you mentioned Bitcoiners nagging folks to take payment.
We also added the Bitcoin map in Cash App, which makes that even more possible.
And we're actually, if you follow Miles on Twitter, you can see we're paying bounties
for folks who, you know, help Square sellers get started with this.
(06:58):
So definitely check it out if you haven't already in Cash App.
If you go to the Bitcoin tab, you can see a map in the spend Bitcoin option.
You can see a map of, you know, local Square merchants that are accepting Bitcoin
and local merchants that are accepting Bitcoin, even if they're not using Square.
Do you know how many people are actually accepting Bitcoin as of sort of right now?
(07:19):
You know, I'm probably not the right person to ask about the stats.
So I don't have anything to share right now.
But I think one thing that I've found really inspiring is that there are an incredible number of videos of folks, you know, going around to businesses that are, you know, on the map and patronizing them and also, you know, and supporting their businesses.
And also folks who are, you know, have shared some videos of convincing merchants to turn it on because it's opt in for right now.
(07:45):
And I think it's really neat to see.
Yeah, it's really cool.
I've seen Parker Lewis has been posting a load of videos around Austin, going to different places, buying with Bitcoin.
and so when on the like merchant side of that um how do they actually accept it is it does it work
in the exact same way it would for just a fiat payment or do they have to do something else
like do they have to actually select bitcoin payment you have to tell them you're paying in
(08:06):
bitcoin uh today you do need to tell them you're paying in bitcoin uh and they need to opt into
doing that um we're starting small uh but you should expect to see that expand yeah because if
that got to the point where there was no noticeable difference in how like the ux of that flow worked
and you could just pay in Bitcoin. The merchant doesn't even need to know you're paying in Bitcoin.
That would be huge. With this, though, obviously one of the challenges is the merchants understanding
(08:30):
why they would want to accept Bitcoin. Is there a kind of an educational thing that goes along
with this? Are you sending out like care packages of Bitcoin information to these people?
There's actually a page that I should point folks to. It's BitcoinMerchantCommunity.org
that talks about it. And, you know, credit with Steve Lee, who leads Spiral here, I think is a
(08:53):
great champion of highlighting when we need to speak in terms that aren't purely drawn from the
Bitcoin community. So, you know, showing up in a merchant and talking only about Bitcoin without
the why or kind of putting things in the terms that make sense to them in their business today,
that can be a miss. And it's much stronger if we can explain why this is important and where this
(09:14):
is going to take us. And really the central theme here is fees going to third parties that we rely
on for most transactions. And when this is an open network and you can pay, not even just with
Cash App, you can pay with any Bitcoin wallet at Square Terminals, like there aren't 3% fees.
And, you know, this is really about that. And the openness of the network, I think,
(09:36):
is going to support that and make this very, I think, make it really widespread long term.
and I think you know the path we're on where we're headed is all the signs we've seen in the past
they're like there's a three percent surcharge for for credit cards I think this is going to
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(12:11):
you're focused on the BitKey stuff. I've sprung this on you because this is news since we sort of
set this show up and I really want to talk about it. It's something I'm very excited about.
so last question on the square stuff
obviously this is US only at the moment
I don't live in the US although I spend a lot of time there
and when I do I'll be searching out these places
but
is this going to expand globally or
(12:31):
is it at the moment just focused on the US
it's a good question
Bitcoin's an open global permissionless network
we started with the US
we have the strongest network there
and you know
a large base of merchants
large base of cash app users
so we're starting there
but you should expect to see I have intentions beyond that over time.
(12:51):
It's very exciting.
I think it's one of the coolest things we've seen in a long time
because this has always just been a mess,
trying to get merchants to accept Bitcoin, trying to do the education.
It's just like Bitcoin is going around to their local shops and doing it.
Having this from, I don't know how many people use Square,
but an insane number of businesses, particularly small businesses,
are using Square.
Having that just enabled on everyone's machine, that's very cool.
(13:15):
But we should talk a little bit about Bitkey
because you guys have had a huge privacy upgrade there.
Before we get into the details of that,
do you want to just explain like where BitKey came from
and like what it is trying to,
you know, where it's trying to fit
in the hardware wallet market?
Yeah, so we started BitKey,
we wanted to make it safe and easy
for people to truly own their Bitcoin.
(13:36):
And you could probably guess based on,
you know, me talking about an open network earlier
that what's driving that is that,
you know, the strength of Bitcoin
is that it's permissionless.
Anyone can use it.
And part of what's behind that is the decentralization of the network and the fact that, you know, we don't have centralized entities controlling it.
And so, you know, if we ultimately have coins stored on, you know, a couple of exchanges worldwide, then that's not particularly permissionless in the end.
(14:02):
And so we want to make it easy for people to safely own their coins and not to sit there with them on an exchange subject to hacks and mismanagement like we seen with exchange collapses and also just in charge of their Bitcoin instead of listening to somebody else about you know when they can move their money who they can send it to and how much they can send And so that why we built BitKey And when we started this off
(14:28):
one of our observations was that, you know, there are some great existing tools out there,
but to really get a complete solution to safely hold Bitcoin, you got to combine a lot of them.
quite a few of them are hard to use for most folks and like really capable tools but things that are
just by the time you actually put together a full solution to keep bitcoin safe long term
(14:49):
like you've kind of designed your own wallet at some level by putting these things together and
you know for some people that's an awesome exercise uh it is for me i that's that's literally what i
do uh you know every day um but not everybody is you know wants to take on that odyssey and so our
intent with BitKey was to make it easy for folks. And historically, what that's meant is, you know,
(15:12):
you sort of have to trade off amongst safety, usability, and privacy. And so, you know, in sort
of the basic case, or the most vanilla case, somebody might use a hardware wallet, single
signature, they have one key, they have a seed phrase backup. And you've probably heard my
opinions many times on this, but that often leads to a situation that isn't as safe as people think
it is. You know, things like storing a seed phrase improperly and having someone see it and be able
(15:36):
to steal your funds, or in some cases, accidentally being tricked into, you know, revealing part of
the seed phrase and getting funds stolen or having the seed phrase back up in the hardware wallet in
the same place and suffering a house fire and being out, you know, completely out of luck.
These sorts of things just for long term safe storage of Bitcoin, like they're a problem.
And so, you know, another alternative is people gluing these things together,
(15:57):
using something, doing a sort of DIY multi-sig,
it turns out you can build something
that's really safe and really private.
It's just really hard.
And it's really hard to maintain it
and keep it in a safe state over time.
And so what people have often gone to
is something we'll refer to
as collaborative custody services.
And that's where you ask a third party
to help keep your Bitcoin safe,
(16:19):
not by handing it over like a custodian
where they have unilateral control
and can move it without you,
but where they're holding on to maybe one key
or a backup or some combination of those where they can help you when you start to lose things.
But the default state is you can unilaterally exit at any time. So to me, that's part of the
definition of self-custody, that you can unilaterally move your funds at any time. And
collaborative custodians have historically been able to help you more safely store Bitcoin while
(16:45):
retaining control. And the problem is exactly what you said, which is the trade-off in that case is
privacy. When you give that third key, for example, in Bickey's case prior to this upgrade,
to a custodian, you know, we had what's called a wallet descriptor, which meant that we could see,
you know, your balance and we could see your transactions on the blockchain.
(17:05):
Like we could pick out on the blockchain, which activity is associated with that wallet.
And that's true of every other collaborative custody service out there.
And this is highly unfortunate because as you and I both know, and I think as most of the Bitcoin
community knows and values, like we don't want that. We don't want people to know, you know,
which coins are ours. We don't want people to know how much we have. There's a fundamental need
(17:29):
for privacy that we want to be able to fulfill. And we found ourselves torn between how do we get
that if we have to trade off safety? And so the really interesting thing about this upgrade is
we've figured out how to do both. So the big key product didn't change at all with this upgrade.
It's the same great recovery features, the same safety that comes from that, the same ease of use.
(17:50):
and suddenly we can't see your balance and we're not sitting there with a descriptor where we can
pick out which transactions are yours um so it's really really exciting upgrade because it kind of
takes away one of those fundamental trade-offs that comes with you know comes between safety
and privacy yeah i think it's really cool and and like any of these um security solutions like you
(18:10):
say is always trade-offs like you can go and use you know five cold cards to a three of c three of
five multi-sig and like that's great and it's incredibly secure as long as you know how to deal
with your backups and like i think the the risk kind of changes from going from single sig to
multi-sig where it's like with a single sig it's like how well have you it's always how well have
(18:31):
you secured your backup but like what is your risk profile of that um and like the probably the
highest probability of you actually losing funds isn't going to be someone stealing it it's going
to be you messing up in the process and and actually just locking yourself out um and so
bitkey obviously has taken that away and then the trade-offs there have always been like what if
like you're basically giving up the privacy bitkey can see every transaction that you make on that
(18:55):
but then this bip has just come out written by was it jesse posner and jervis tan is that how you
say it yeah um so maybe it's worth explaining what this bip is um and how can can you explain how it
works yeah so what this bit so so first of all um really exciting and really proud of the team that
we're working on things like this and and also sharing it with the community so that it doesn't
(19:17):
have to be just biki that implements this it can be others as well and we can get you know more
private collaborative custody throughout all of bitcoin and and and not just with you know one team
that adopts it um first and so uh super excited about this and basically what the bit does is it
so it has a pretty technical sounding name chain code delegation uh what's underneath the hood there
(19:39):
is that every UTXO,
every unspent transaction output on the blockchain
is locked with a script,
that script,
and essentially locked with an individual key.
And to derive that key,
there are a couple of inputs.
One is a seed,
which is often represented as a seed phrase.
And another is something called the chain code.
(20:01):
And what the bit proposes
is keeping the chain code private
from what's called a collaborator
in the in the BIP so for example a collaborative custody service uh you know something you might
be familiar with um you know from some of the services that were out there before BitKey or
BitKey for example holding the third key for you and by keeping the chain code private from that
(20:24):
third party um the BIP basically specifies how to do co-signing so you have a collaborator because
sometimes you need them to sign maybe you lost stuff and you need to do a recovery transaction or
for example, BitKey has, you know, a mobile pay feature, sorry, a hardwareless transactions feature
where, you know, you can configure a limit and spend, you know, underneath that limit without
(20:45):
using the hardware. There are reasons why you might want to do either of those things, especially
recovery and lean on a collaborative custodian to do that. And the BIP basically makes it possible
to share only the information necessary to sign an individual transaction when there's a need for
recovery. It also specifies a way to do that completely blindly, which is actually like not
(21:08):
what we've implemented up front. But most of the BIP, what it provides for is you can send up
partial information effectively about the chain code so that the collaborator can sign one recovery
transaction. Underneath the head, the BIP is full of some cryptographic equations, which I will try
not to recite here. And also I'm probably not the right person on the team to go into that.
(21:29):
Don't worry, it would go over my head anyway.
Yeah, really interesting though. And basically by sending up that partial information, we can still get the greatness of recovery transactions when we need them, but not have to have the collaborative custodian sitting there with a wallet descriptor that reveals everything.
so just for like the actual users like i want to go through what this actually means for them
(21:51):
because at the moment like the way bitkey works is you have your keystone you have a key on your
phone which is like encrypted and then um block hold one of the keys on on your servers so if you
want to send a transaction now you use your encrypted key on your phone and use this um
unless you lose this or unless you can't like actually use this key and then you have to
(22:13):
contact Block and they sign a transaction. So with this update, what this will mean is that
every time that you sign a transaction with your actual hardware and with your phone,
Block can't see what's going on. But if you end up having to rely on the key on Block servers,
then you can see what's happening. Is that correct? Yeah. So there are basically two paths
in the BIP and one of them requires implementing something called Schnorr signatures. We haven't
(22:38):
done that yet. When anyone who adopts that portion of the BIP, it means that even at signing time,
there's no information revealed. Short of doing that, when the collaborative custodian signs a
transaction, they see the UTXOs involved in that transaction. If that's a recovery transaction,
that might be all of your UTXOs. And what we do is when that happens for BitKey, we don't log
(23:04):
anything. We don't store anything about the UTXOs that we saw. And we're working on a feature that
we call server verifiability that will allow people outside of BitKey to see that that's true.
We use something called AWS Nitro or something called Nitro Enclaves on AWS, which is basically
a secure computing environment that has what's called an attestation capability. It's a way for
(23:27):
that environment to basically provide a cryptographic attestation of what code it's running
that can be checked from outside of the system.
And this is not like, that's not a block thing.
That's like an AWS-wide thing.
And we're working on a feature
that basically will allow people to verify
that this is true.
And even in the interim,
I'm really excited about this
because we're truly blind to balances and transactions.
(23:50):
We don't save this stuff, and so we don't know.
So just as an example,
I've been really excited by,
since we have been able to see,
I'm aware that there's a lot of money
that has been moved on to BitKey and like a ton of momentum around that and folks getting a ton
of value out of storing it. And then I'm simultaneously sad because, you know, now that
we have folks migrating to our newest privacy upgrade, like, I don't know what's on it anymore.
(24:15):
And I think that's awesome. And, you know, I think the whole team actually has just been really
excited about this because it's been one of the things that for us was like a pretty sharp trade
off as we designed BitKey up front and finally able to remove it. Yeah. And I also just want to
reiterate that this isn't like a bitkey specific thing if you use like a casa or an unchained that
(24:35):
you have the same problem in any of these collaborative custody models so the thing that
you guys have focused on really heavily from the very start is making this as easy as possible
making the ux as clean as possible and as as um you know user-friendly so does this remove any of
that ux or is it exactly the same it doesn't remove anything in fact actually this feature is
(24:55):
pretty quiet relative to its power meaning like when you go through the upgrade flow like it's
pretty simple it's a screen explaining what's going on and doing a wallet sweep uh to a you
know new set of keys and you know underneath the hood really you're gaining something huge
and you know new new customers who set up the key now they just get it by default uh and they're not
(25:19):
going to have any different experience they're going to have the same five minute setup they're
going to have the same immediate safety after that point they're going to have the same you know easy
recovery contact setup to protect them against losing you know both their hardware device and
their phone they're going to have the same easy setup for inheritance so they can make sure that
their bitcoin gets passed on to their loved ones all of that's still there oh that's awesome so
(25:41):
that was going to be my next question because i was playing around with this over the last few days
um and for me because it was already set up there's like a private option um and you just like
click on that move funds to a new multi-sig and that's basically all you need to do but for anyone
new setting up a bitkey now it's is that that's just a default that's a default oh that's awesome
(26:01):
that's very cool and and like when it comes to the the trade-offs with something like bitkey or
really any collaborative custody is there anything else that you think is a sort of barrier that you
need to improve on? I think a couple of things. So one is, I think, even though we've made big
(26:21):
strides on privacy, there's still more to come. So for example, with every hardware device,
you have to get a hold of the hardware. You have to actually get it shipped to you somehow,
or you need to go get it in a retail store. And I think historically, that's been a huge
vulnerability for folks uh there are folks who you know lost their addresses in the ledger hack
(26:45):
many years ago that i know that have moved because of it i mean i've been very quiet on this because
like i was i was one of these people um i i don't mind saying it now because all the details who
were released are now not my details um apart from my name um but like it was a huge thing and
And for a long time, like I've actually moved house relatively quickly after that, unrelated.
(27:08):
But I had to like change my phone number.
The amount of phishing scams I was getting was insane.
Like that's a real problem.
And there's people like CoinKite who will wipe your data from their servers after a certain amount of time.
But like what can you do to fix that problem?
Yeah, that's one of the things.
And we're actually working on a similar approach for BitKey.
(27:28):
another is retail store pickup can be can be helpful yeah we're actually working on
implementing pickup at retail stores don't think like big box retail stores are selling but more
like pickup points we think that's an important thing to roll out so that folks have more options
for actually getting a hold of a device without having to put a physical address that they're
(27:52):
you know either even if it's work that they're at physically a lot and then we also introduce
the ability to purchase Bickey with Bitcoin. One of the other aspects, there's a lot of aspects to
this, but one of the other aspects is that, you know, when you pay with something that's not
Bitcoin, you need to provide a billing address. And very often that's pretty problematic for folks.
And so really trying to go systematically through where this type of information ends up in,
(28:16):
you know, both our systems and potentially others. And I think, you know, that's something I'd love
to see more focus on industry-wide because I think it's a real problem.
I mean the idea of being able to pick this up
I can see all this coming together now The idea of being able to pick this up at a retail store where you can pay with e through Square Terminal is kind of the perfect solution to this
(28:39):
It's a good idea.
We need to push that forward. The other thing that I really wanted to kind of hit on is
this is a huge privacy improvement for the individual using a BitKey. But this isn't
like a private Bitcoin. This doesn't give you private Bitcoin transactions. I want to make sure
that that's not lost in kind of the nuance of this. Like people who are using Bitcoin,
(29:01):
like your interaction is blocked from like block can no longer see that, but everyone else can see
it on the network and block can still see transactions on the network. They just don't
know they're associated with you. It's probably worth like just reiterating that point.
Yeah, I think it's a really important one. On-chain privacy is a huge challenge.
And I think, you know, this is one of those situations where things like lightning can help.
(29:25):
uh i think most people don't realize that you know if they pay somebody on l1 they're potentially
revealing a lot to that person about their holdings uh and that's something that like there
isn't really a direct analog prior to bitcoin for and i think it's it's like a very bitcoin
specific thing it's not big key specific it's not really specific to any wallet vendor or anything
(29:45):
like that but it is a difference in bitcoin relative to what people are used to like you know
it's basically comes down to you know if i pay for something you know if i pay for a coffee with
a 20 bill they know i had at least 20 but they don't know all the other 20 bills that i've spent
and what i might who i might have given them to or you know uh how much it adds up to or anything
(30:07):
like that and i think um that still flies under the radar for a lot of folks and it's something
that is um payments uh and and sort of bitcoin is everyday money becomes um and as we make it
more of a thing, I think we're going to be confronting more directly.
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(31:14):
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If you already self-custody of Bitcoin, you know the deal with hardware wallets.
Complex setups, clumsy interfaces and a seed phrase that can be lost, stolen or forgotten.
Well, BitKey fixes that. BitKey is a multi-sig hardware wallet built by the team behind Square
and Cash App. It packs a cryptographic recovery system and built-in inheritance feature into an
(32:21):
intuitive, easy-to-use wallet with no seed phrase to sweat over. It's simple, secure self-custody
without the stress. And Time named BitKey one of the best inventions of 2024. Get 20% off at
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So BitKey is obviously relatively new in the Bitcoin hardware space.
What is like the future of BitKey?
(33:25):
Is there the stuff you're working on that you're sort of really excited about?
Like what will this look like in a few years time?
Yeah.
So a few years time, I probably can't go into too much detail about.
I will say, you know, we have heard a ton of different requests from our customers.
We have a lot of folks using BitKey really excited about it.
And I think getting a lot of value out of safe storage on BitKey and also realizing like we've
(33:52):
made it so simple that like there's actually quite a few feature requests that people realize
like, hey, I would be awesome if BitKey also did this.
And so we've gotten requests for things like, you know, some on-chain privacy tools like we were just talking about.
So things like CoinControl.
We've got requests for things like multiple accounts.
(34:13):
So maybe being able to, you know, help folks.
And not just like personal multiple accounts, not just like, oh, I want to have an account that's my savings, an account that's like something I'm spending from, but also multiple accounts to help friends and family with Bitcoin.
And I think this is something that's really special about BitKey because what we've seen, there are a lot of folks who buy BitKey for friends and family and help them take control of their Bitcoin.
(34:40):
And then one of the follow-on requests we'll hear is like, well, I didn't have to do anything because they did the five-minute setup and it worked.
But I'd also love to be able to like help make sure over time that they're maintaining it in a good state and this type of stuff.
And, you know, to maybe set it up for kids, for example.
You know, lots of folks, lots of our customers, you know, especially with like adult kids who maybe haven't, you know, are hearing about Bitcoin from, you know, their their crazy parent or whatever are, you know, getting started for the first time.
(35:12):
And folks want to kind of help continue that journey for them.
and then really you know our main focus areas are security usability and privacy and so
we've also got a lot of stuff planned on the security and privacy fronts
we we talked a little bit about this earlier in the year in one of our blog posts but
on the privacy front you know we're planning some data retention and deletion changes we're planning
(35:37):
some pickup points you know now that we've shipped the ability to purchase bitcoin and on
the security front we have a couple things planned um around transaction verification uh and um we'll
have more to say about that sometime soon yeah i mean from my perspective and i'm maybe not the
average like bit key user but like things like coin control would be great even if that was hidden
(35:58):
away in advanced settings and you had to turn it on i would love to have something like that
and then on the sort of sub accounts like i've got a young daughter who has been stacking sat
since the day she was born and like being able to have sub accounts that you could kind of put
that Bitcoin away and would also be a really cool feature. But I guess the challenge for you guys is
always that trading off UX with features. Like, will the physical device remain the same?
(36:23):
We're always looking at how we can improve. Some of that's small stuff. And, you know,
some of that is we've definitely heard questions from customers about alternative
hardwares and have some ideas there as well. Nice cagey answer. That means
something could be coming. We will see. And then the last one on this really is one of the,
(36:48):
I guess, criticisms put at BitKey is the fact that you have to use the BitKey app.
Is there any plan to kind of open this up and allow you to use the BitKey with other
software wallet is.
Yeah, it's a good call.
So it's true.
Today, the way this works is
you need to use the BitKey app with the hardware
if you want to get all of the great features of BitKey.
(37:10):
There's actually nothing inherently
causing that.
Like, BitKey is
open source. We've published all of the
code on GitHub under an
MIT license. People can use it for whatever they
want. And that includes the
firmware and the API and how to talk to the hardware.
uh there are some things i should call out like the key is an nfc device and you know that's really
(37:31):
easy to use from your modern smartphone if you use that from a desktop computer you need a dongle to
interact over nfc uh but you know there's nothing inherently stopping you know anybody who wants to
interact with the big key hardware right now from writing code to do that in another product
it hasn't been a focus for us up to this point largely because ease of use the sort of lowest
(37:55):
hanging fruit like most highest leverage work for us was to build something integrated that
you know we can make sure it's that five minute setup we can make sure that things work seamlessly
there's a lot we've done in the past you know with hardware and software and services all tied
together and you know all the other parts of block and all the team's careers before that
(38:17):
and everything that like we know how to do that really well. And so we put all of our energy
behind that. But, you know, I think we are listening to community feedback and we've heard
requests for, you know, potentially using Bickey hardware with other software or using, you know,
other hardware with Bickey's, you know, awesome recovery tools. And, you know, it's something
we're thinking about. It's not like there's something we're launching tomorrow and I'm not
(38:41):
saying it, but it's definitely feedback that we're paying attention to and I think might become part
of our roadmap. With that feedback, though, is there almost a part of this which Bitcoin needs
to have a solution for everyone? Like the hardcore Bitcoiners that want to use like a, they want to
set up their own multi-sig and use Sparrow or Wasabi or whatever, like there's tools out there
that they can go and do that with. Is part of this just a case that like Bitcoin might not be for
(39:04):
those people? It's serving a different audience. Certainly. I mean, I think everybody's threat
model is different everybody's you know tolerance for how much time they're going to spend setting
up and maintaining something is different everyone's technical capability is different
and the kinds of risks that they're subject to in life is different and i think that there are
(39:28):
great tools out there for folks who want to spend a really long time figuring out you know a diy
multi-sig setup like there's great hardware out there there's really flexible software
I've used it. Everybody on our team has used it at various points. And I think for some customers,
like that's the right thing and that's what they're going to use and that's it. And
(39:48):
there certainly is a subset of those folks that, you know, probably never will use BitKey and that's
okay. But I'd also call out that I think there are a lot of Bitcoiners who maybe in theory,
they want to do those things. Maybe they've tried, maybe they did at one point, but you know,
that three or five multi-sig that they set up, like, well, one of the keys is actually lost.
(40:12):
And now it's like less safe state than they set it up in the first place. And, you know,
or they replaced something and didn't rotate other keys and, you know, or had a compromise
of something and didn't rotate other keys. And I think there's a bunch of situations like that,
that more people than we would expect will benefit, you know, or than you might expect
on paper will benefit from what BitKey brings. So I do want to see, I do want to bring more people
(40:37):
uh even even those who are maybe used to some of the most sophisticated tools out there into the
the big key community um but also definitely not forcing anyone and um you know if we can
enable even more people to use big key by you know allowing more interoperability or enabling
more interoperability rather um i think uh i think you'll see us do that at some point yeah i think
(40:59):
that this is my like unpopular opinion which is that like you have to be really honest about what
your actual threat model is here and like it's great having this incredibly robust setup where
you know you're you're kind of removing yourself from any you know nation state attack type threat
against yourself but like if that's never a realistic threat then the the big risk in any
(41:20):
of these setups is you and like taking out as much of that from the equation as possible is probably
a good thing for more bitcoiners um but i also understand like wanting to use the bitcoin tools
wanting to do things in like the cypherpunk uh sovereign individual type way but i think people
just need to be really honest about the actual threat vector that they're facing yeah um all
(41:44):
right i want to move on to the proto stuff is there anything else on the bitkey side that you
want to make sure we hit um i'd love to hear feedback so we have a lot of folks who've who've
set up uh so i guess this is really for for everybody listening if you've set up a key
recently, if you've set up Bickey a long time ago, but haven't been in touch with us,
(42:06):
I'd love to know what you think. I'd love to know what you love about it. I'd love to know
what you think we should add and what should be on our roadmap. And so, you know, whether that's
DMing me on Twitter or reaching out to Bickey at block.xyz or adding the official, you know,
Bickey account on Twitter and telling us like, please speak up. You know, it's how we make this
(42:30):
better one of the awesome i mean full disclosure probably a little bit late bitkey obviously a
sponsor of the show um i think it's a great product and one of the cool things is i i don't
want to exactly say who i don't want to give away too much security information but like i've got
all the members of my family to set up bitkey on their own just me like basically watching them to see if they can do it And it is an incredibly seamless setup where they can take control of their Bitcoin
(42:57):
in a way that's far superior to just having Bitcoin on an exchange. And it's incredibly,
incredibly user focus, which is really cool. But let's talk a bit about Proto, because this was a
really cool announcement maybe, I don't know, three or four months ago. I know you did the launch.
What is Proto? What are you doing?
Yeah. So with Proto, we're building tools to help Bitcoin miners of all sizes.
(43:22):
And that's what we're building is basically hardware and software.
And the hardware we're building is everything from custom chips,
so silicon that's at the core of Bitcoin miners,
to hashboards that pack a bunch of silicon,
to what we call ProtoRig, and that we announced in August,
that is basically a bunch of hashboards, fans, and power supplies
(43:46):
that make up a Bitcoin miner.
And software that goes on top of that, both to run the rig,
but also to manage a fleet of Bitcoin mining machines.
And we got interested in this for a large variety of reasons.
Number one is that the permissionlessness of Bitcoin
depends on the decentralization of the network.
And there are a bunch of centralization pressures in mining.
(44:07):
There are very, very few hardware vendors.
uh and um you know of the very short list that make up you know more than 90 market share they're
all in the same country uh and um we uh we we would like to help fix that so we'd like to add
to the list and and you know make it possible for folks to um you know get bitcoin mining equipment
(44:30):
and software from another entity.
And we basically started looking into this
and realized like we're in an incredible position
to help make that happen for Bitcoin and for Block.
We have, you know, you talked about Jack
as kind of driving the Bitcoin vision earlier.
So we have a visionary CEO who believes in this,
(44:52):
which is actually quite rare.
And then, you know, we're a publicly traded,
US publicly traded company
with a healthy balance sheet that can invest in something as capital intensive as proto.
And then we have, you know, long-term system engineering expertise to be able to bring
some, actually build something like this.
And we realized, you know, this is really important for Bitcoin and let's go.
(45:17):
I love it.
And what are the like challenges that miners face that this is trying to, because obviously,
like you say, the vast majority of ASICs right now are built in China.
having one of those built in the US, which is, I assume you're building this in the US,
that's a massive benefit. But what are the sort of on-site issues that these miners have that
Proto can help solve? Yeah. So we're not Bitcoin mining operators. We didn't start out that way.
(45:43):
So we started off by talking to customers. That's what we do when we begin efforts at Block. And
what we heard was basically that all of the hardware that folks have been using up to this
point just wasn't built to be infrastructure. It was something that was more disposable,
not reliable. People would trash their fleet after just a couple of years and
(46:07):
go through this expensive and time-consuming process to upgrade as machines get more efficient.
And we also heard things like software is a mess. So there's a software tool to do just about every
individual thing in Bitcoin mining. None of them talk to each other. People have these glued
together software stacks and pay high fees for them. And so we set out to make something better.
(46:31):
And our answer came in a couple of forms. So what we announced in August is ProtoRig,
which is durable, repairable, and upgradable. So it's built to be infrastructure. The
hashboards are something that you can swap out. The PSUs you can swap out. The fans you can swap
out um we focused both on making this possible in upgrade cycles um but also while people are
(46:53):
maintaining their fleets to make it you know easy and quick to repair on the rack um every moment
spent not hashing is you know big less bitcoin produced for miners and um in these huge operations
those things add up really really fast and so we introduced proto rig and we also introduced
(47:13):
Proto Fleet, which is free and open source software for managing your entire mining fleet.
And I'm excited to bring those out. Yeah, that's very cool. Because I think
quite often people think of Bitcoin miners as being these like mega miners in the US where they have
like beautiful, huge data centers where they're like clean and things are very efficient and work
(47:36):
like I've been to see the gridless sites in Africa. Not every mining site is like that.
Like when I was with Eric Hussman, he was saying like the biggest challenge is getting like literally flies out the fans.
Like they're just in a shack on the side of the side of a river, essentially.
And like he couldn't even use bit main machines because they're just not durable enough.
(47:57):
And so like the idea here, I guess, is not necessarily I could be wrong here.
Tell me. But like, is it not necessarily to hit those mega miners?
It's to hit everyone else that's helping like decentralize hash rate.
Yeah, it's actually both.
So, you know, the proto rig design is something that can serve folks in a lot of different sort of mining operator settings.
(48:19):
So we see everything from, you know, large industrial miners, meaning folks that, you know, have large sites, many, many, many thousands of miners at a site, many sites, you know, owned by the company or whatever.
And then, you know, we also see miners that maybe have a couple of hundred rigs and they have a lot of the same problems, a lot of the same challenges.
(48:44):
And then we see, you know, folks with with just a couple of miners that are, you know, maybe getting started with a new operation somewhere.
We see settings that are, you know, extreme desert climates with crazy dust everywhere and high wind seasons.
we see situations like what you described with uh with gridless um who are awesome by the way uh
(49:05):
you know where um you know leave the lights on by accident at night and suddenly you know all of the
the miners are are clogged um with with literal flies and um being able to swap fans out easily
and you know understand the state of the system remotely ends up really important in a bunch of
those settings. And so we're building for miners of all sizes. You know, there are some things like,
(49:31):
for example, home miners and stuff like ProRig's probably not for that. I wouldn't recommend,
you know, that if you're looking for a home miner, that's probably not where to get started. But
you know, over time, we anticipate serving a really wide set of groups.
I guess the huge thing as well for the actual operation side is instead of having to have
sort of an ASIC engineer on site who can take apart the fan and the chips and fix the machines,
(49:52):
instead it's literally you just pull something out push something in and press go again yeah we're
really interested in in on rack repairs so one of the things that we saw happening a lot at customer
sites is you know the especially at larger ones there might actually be a couple of folks who are
focused on repairs and have to you know go around spending you know their entire day collecting
(50:14):
machines you know throughout their their their racks and coming and bring them back to a repair
center and taking them apart there. And, you know, we'd watch them take out 12 screws where
we thought there could have been three and, uh, or zero, um, and do all these things that
we wanted to be able to, or we want to make possible in 90 seconds on the rack.
(50:35):
And, uh, that's, that's what we're bringing with ProtoRig.
That's awesome. And, and how efficient are these machines going to be? Have you released
numbers on these yet?
Yeah. So there are a bunch of different ways to configure ProtoRig. Uh, one of the things
it comes with upgradability is we can also configure it depending on what the customer's
needs are. Some customers, they might have different costs of power, focus on different
(50:59):
things. And so, you know, they may want to, for example, spend less up front and, you know,
run a machine hotter with fewer boards and proto rig and, you know, might be okay because they have
low cost of power, you know, compromising and optimizing for, for hash rate output as opposed
to going for the absolute lowest power efficiency they could get.
(51:21):
And others, maybe higher cost of power,
want to drive power efficiency as efficient as they can.
And so what we shared at our launch event in August
is that you can configure it up to or really down to 14.1 joules per ter hash,
which we're really excited about.
(51:41):
Can you put that into context for both me and the listeners?
How does that stack up against the Bitmain's of the world?
Yeah, so Bitmain is definitely still the industry leader.
So you're not going to go look at their website and our website and see us beating them on power efficiency.
But the way we're thinking about this is that power efficiency is just one of the metrics that miners care about.
(52:03):
Everybody that we've talked to, there's a whole equation they're using to figure out how are they going to have a profitable mining operation?
How are they going to optimize?
and when you look across all of those factors uh we think people should you know be be looking to
proto rig so um those factors are uh you know infrastructure costs how much they're paying up
front um you know including when you start to look across upgrade cycles and you can save 15
(52:27):
to 20 every time you upgrade your fleet when you're using proto rig uh and downtime so you
know lots of folks we noticed were tended to measure downtime as like are the miners on or
they off uh and really what matters is how much bitcoin are they producing relative to your
expectations and there's a huge gap there and uh so you know when you look at things like 90 second
(52:52):
on rack repairs from proto rig that hash rate out or that hash output those the hashing hours
basically goes way up uh and then you know of course um power efficiency and and the the total
throughput of the machine matter as well and which if specs and more information about proto rig on
proto.xyz for anyone who's interested in kind of digging deeper it's very cool and so you had the
(53:15):
launch event a few months ago when is this actually going to kind of hit the shelves and people are
going to be able to use this yeah so uh we're uh taking orders for proto rig um proto rig is
in production at customer facilities now and so um what i uh would highly recommend is anyone who
uh is you know looking to uh to to buy proto rig should talk to our sales team
(53:35):
and you can find information about that on proto.exoaz as well i mean i think as bitcoiners
we're very lucky to have a company like block in the space um it the the stuff you're doing is
pretty incredible um i think this this latest square thing is is huge and and a real like game
changer when you look back over the past you know six months and and really even just the past couple
(53:59):
of weeks i think the velocity is incredible so earlier this year at bitcoin las vegas uh we were
experimenting with acceptance on square and uh it was a really exciting time and we were you know
selling biki and um uh and and hearing a lot of good feedback from customers and then you know
since then we've launched things like the privacy upgrade the past week we launched you know the
(54:20):
bitcoin map and cash app um you know we launched square conversions uh about a month ago um where
you know square merchants can convert a portion of their sales into bitcoin um we've launched
acceptance on Square. And the team just has so many good ideas and so much going on and so much
coming out the door that I'm just really excited for the next, you know, not just the past six
(54:45):
months, but the next six. How much, because obviously like Square is a huge company,
was a huge company before any sort of Bitcoin integration, but how much of the company is now
focused on Bitcoin? How much of the mindshare is going on Bitcoin stuff right now?
uh well i think i have to answer that in a personal way which is 100 so this is what i'm
working on uh and across the company i don't know the exact number but um you know the folks that
(55:09):
that are working on it like this is they live and breathe this and why like why has the focus been
so heavily on bitcoin again is this because like jack believes in this thing he wants to push this
as far as he can go i know he's a big proponent of bitcoin as being used as like actual money
rather than just this like saving store of value thing.
Is that where this is coming from?
(55:30):
I mean, we believe that Bitcoin
will be the native currency of the internet.
We believe that its openness
and its permissionlessness is what will make that true.
And so I think really the whole team
is bought in on this being the best way
to really change the financial system.
And so I think that's where it's coming from.
(55:52):
And our goal is to make Bitcoin everyday money.
And that's so all of the things that you see shipping, that's that's what we're focused on making Bitcoin everyday money.
I love it, man. This has been great, Max.
Hopefully I'll actually meet you in person at some point in the in the coming year.
But I've really enjoyed this.
You should tell everyone where to go to find out more about you, BitKey, anything we've talked about today.
(56:14):
Yeah. So for BitKey, you can go to BitKey.world.
Use code WBD.
Yeah, of course.
And and then for Proto, you can go to Proto.xyz.
and then would highly encourage, you know,
following some of the official accounts
for BitKey, for Block.
And, you know, I mentioned Miles Suter
earlier in the call.
And so especially if you're, you know,
following along with Square payment acceptance
(56:37):
and Cash App features,
I definitely want to plug him as well.
And Miles, if you're listening to the show,
we need to record, man.
Yeah, I appreciate this, Max.
It's been great.
I will hopefully see you around at some point soon.
And yeah, thank you for the time.
Thanks.
Thank you.
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