From Coffeehouses to Cyberspace: How Bitcoin Fixes Insurance | Aaron Daniel - THE Bitcoin Podcast

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
The first level analysis is like, how does our current regulatory environment address this new digital currency slash digital store of value?

(00:08):
But going like one step deeper, like, well, how is this new form of property rights?
Which to me is like an attorney also is like it's an immutable form of property rights.
Like there is nothing stronger than Bitcoin when it comes to preserving.
Like that's that's just it. It's the end all be all right now of property rights.

(00:28):
You don't need a court to enforce it necessarily.
So what does that do, right, to society?
Like how does the law change around something like that?
So as Bitcoiners, we want to kind of say, well, here they're in money in state.
We're here to, you know, fight the system, right?
Which is true.
Like that's all important.
But insurance sometimes gets lumped in with the existing system just because the fiat system is degrading the insurance industry.

(00:56):
Like it's degrading everything else, right?
FDIC is the analogy for BDIC, but BDIC is totally private. It's totally free and open to anybody to
join it, just like Bitcoin, right? It's not mandated by the government, right? The amount
of capital that's sitting in Bitcoin in these Bitcoin treasury companies is so massive right

(01:16):
now. They're going to want to find ways to create Bitcoin yield on that. I just love that story
because I think in my mind, like Bitcoin can be this like stimulant, like coffee to commerce. And
it is. We're seeing it, right? It's shortening trade lanes through digital space, right? All
these treasury companies get the question, like, what are you going to do with the capital, right?

(01:37):
Like, you're just going to sit there, run the arbitrage play that MicroStrategy is doing,
right? He pointed to insurance. He said, we're actually looking at insurance. And if you go to
the Caribbean markets, you can get Bitcoin-denominated insurance. And that presents
interesting opportunities for yield. The challenger of Bitcoin treasury companies
will probably move into this space.

(02:03):
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(02:24):
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Without further ado, let's get into this Bitcoin talk.

(03:13):
Well, Aaron, glad to have you on here.
Excited to dig into a few different topics today.
Thanks for coming on the show.
Thanks for having me.
Yeah, thanks for having me again.
It's a pleasure to be here.
Kind of like I was saying a little bit earlier off air, you know, I've been aware of what
you and Carla have been up to for a long time since like the 2021 Bitcoin conference in

(03:34):
Miami, which was a total scene, felt like a music festival compared to all the other
ones that we've had since then.
But yeah, to see the journey you guys have both been on, you know, and how you started
this podcast, you know, what was like a year ago or something like that.
almost through Noster is kind of where I saw it first taken off and experimenting there.

(03:57):
And just really pushing that medium forward has been really cool to see.
So pleasure to be here with you today.
Yeah, no, I've been – I just really – I love Noster.
And I do still say Noster.
I know a lot of folks say Noster.
I'm going to keep bucking the trend.
But it's such an incredible medium,
and I think that it's one that's going to be viewed as increasingly important in the years to come.

(04:19):
obviously it's right now being used primarily as a you know social media copycat yeah there's just
so much that can be done on it and even just if it even if only it the only thing it did was
censorship resistant social media that's right still be that would be enough you know that would
be a win in and of itself but it can do so much more and so i'm i'm really excited to see what
happens in the years to come but yeah let's let's start out just because i actually don't uh i don't

(04:44):
really know your story can you just kind of give me a little bit of a background and kind of you
know, who you are, how you got here today. You work in a number of different areas in and around
Bitcoin. So just kind of, yeah, walk me, walk me through that. Yeah, sure. So Aaron Daniel,
I have been a Bitcoiner since, yeah, about 2020, 2021. And, you know, my, my entire career has been

(05:07):
as an appellate attorney, a licensed attorney. And so I discovered Bitcoin, you know, that time
period when a lot of people did, you know, post pandemic or during pandemic, you know, looking at
investing and came at it from that angle first as just an investor. I actually trying to think the
first, I think I started learning about it on like SoFi, you know, that kind of like neobank platform.

(05:32):
They had like these little explainers about all the different cryptocurrencies and like,
I didn't know anything about any of it. So I read about Ethereum and I was like, oh, okay,
like dApps and like, you know, kind of the infrastructure for technology or world computer
or whatever. That sounds interesting. I'll do something there with Bitcoin. And then I read
Lynn Alden had this like, I think it was like a seven point, like just epic takedown of Ethereum.

(05:58):
Yeah. From like 2020 or something like that. And I found it and read it. And then immediately it was
like, oh, I made a mistake. Like, and just sold all the Ethereum, went into Bitcoin. And so luckily
came along at a time when, you know, I was not really swayed by the rest of the cryptoverse.
I didn't have to make those hard decisions and learn those hard lessons that others made,

(06:20):
primarily because of advocates like Len and others who had come before, right? So standing
on the shoulders of those giants. But as an attorney, kind of always thinking through like,
well what is this not only like okay the the first level analysis is like okay how does our
current regulatory environment like address this new you know digital currency slash you know

(06:44):
digital store of value but going like one step deeper like well how is this new form of property
rights right which to me is like an attorney also is like it's an immutable form of property rights
Like there is nothing stronger than Bitcoin when it comes to preserving.

(07:04):
Like that's that's just it.
Like it's the it's the end all be all right now of property rights.
Like you don't need a court to enforce it necessarily.
So what does that do right to to society?
Like how does the law change around something like that?
Some, you know, just novel species that has come in.

(07:25):
Like how does how does the law adapt around that?
Right.
And how is it going to change in different ways?
So I was writing about Bitcoin for a long, long time. Just from that perspective, I had a little blog. And then really, yeah, Noster came along. And I was reading and writing about Noster and how it's this combination now of you've got almost like property rights infused with freedom of speech, right?

(07:49):
You have, you know, cryptographic keys that attest to every note that's going out.
You know, you associate those keys with someone somehow, you know, that they're, you know,
either someone who has possession of those keys, at least, is authoring these notes, right?
And so I said, yeah, this is like we were saying at the top of the pod, like this is
just really revolutionary, especially when it comes to like the other stuff, right?

(08:12):
Like we've got notes, we've got social media, but the other stuff is where it can get so
interesting.
so fast. So what I was trying to figure out was how to bring all these technologies together to,
to like fix kind of the justice system at first. Right. And, um, I had some designs through Nostre,
like a bounty board there. Like if you remember early, like there was a lot of bounties on

(08:37):
Nostre, like people wanted to see, well, the, the big famous one was Jack Dorsey, right. Put out,
I forget how large of a bounty it was. Um, it's still out there. I think that can be claimed for
a Nostra-based GitHub, basically.
But then the problem came where it was like, okay, so you put up a bounty, somebody puts

(08:57):
up a bounty, a developer goes out and fulfills the bounty, and then the poster of the bounty
says, yeah, but you didn't do this other feature I didn't tell you about, or I don't think
it actually meets my criteria.
That actually happened with HRF, with a bounty they put out, and there was a little bit of
like controversy around, you know, that and they ended up giving like half of the bounty to one

(09:18):
developer and half to the other. I was like, okay, this is interesting. This is like an area where
like you do kind of need some assurances, some kind of adjudication system maybe around this.
And like, is there something we can do? So I had some designs around like a Nostr
based bounty board that had kind of like dispute resolution built in. And then, you know,

(09:39):
following various developers on Noster, kind of pinged them because there was a hackathon that
was coming up at the end of 2023, the Bolt Fund hackathon, Legends of Lightning.
And I had also been, so I was trying to recruit people to help me build this thing, right?
And somebody pinged me, who's now my co-founder of InsurTech company, Resolver, that I've

(10:04):
founded. And he pinged me because he heard me on Peter McCormick's podcast talking about this
bounty board system and other legal issues. And so this is why you need more Bitcoin podcasts,
so you can facilitate more and more company formations and capital formation. So never
enough Bitcoin podcasts. So my co-founder pinged me, just cold DMed me and was like,

(10:28):
hey, I'm chief product officer of a legal tech company. Let's do something together. I don't
know what it is, but let's, let's build something together. Uh, so we did, we built, you know,
a very early prototype of this, this bounty board marketplace dispute resolution system with, you
know, obviously lightning payouts for bounties and stuff. Um, and got, you know, runners up in that,

(10:50):
that hackathon and then got to the point where we said, well, we've got this amazing team,
which is still with us at the company that is resolver. Now, what are we going to,
what let's keep building. Right. And let's, let's see what we can do. Um, so that was my essentially
long nutshell journey of, uh, you know, Bitcoin, uh, finding Bitcoin to like founding a Bitcoin

(11:13):
company. Uh, and, and all the while, um, just, you know, every incremental step, it seems like
there was either a podcast or something, right. That, um, you know, like Lynn Alden's pieces,
you know, Noster, this new technology coming out that really helped kind of shape and guide my
journey. I love that Nostra was such a kind of instrumental part in putting together this initial

(11:36):
team, but then it's amazing that team is still with you guys. Okay. So talk to me about Resolver
a little bit. What do you guys do? How is it different than what exists in the market today,
if such a thing does exist? Yeah, absolutely. So Resolver, we're an insurance technology company,
primarily um it's bitcoin native so what does that mean insurance technology so to position

(12:00):
where we are within the ecosystem um you've got insurance companies right that's the ones you
think about that issue your policies right and then you've got you know the brokers those are
the ones who represent your policy holders and you know get you that your quotes and and work on
getting the the quotes down or coverage is larger right um you also have reinsurers who are the

(12:21):
insurance companies for the insurance companies, right? And that's a whole different huge sector
of the insurance industry that is very broken and Resolver is actually building tools to fix
right now. So we're none of these, right? We are the insurance technology providers, right? So
you've got fintechs for finance, ag tech for agriculture, right? And where insurance has its

(12:47):
own, you know, SaaS system. So we're filling that niche. And, you know, the best example I can give
is our first product that's coming to market is called BDIC. It's the FDIC for Bitcoin. And it is a
marketplace of many different insurance providers that's embedded with custodians and wallet

(13:11):
providers. So the example is you go onto your, you know, let's call it your collaborative custodian,
right? That is holding one of the keys and you've got two keys of your multi-sig setup.
Our embedded software will be right there when you go in and look at your Bitcoin and allow you
to go and find a policy, right? You just click through just like buying a travel insurance policy

(13:35):
on airfare when you check out, right? And the key differentiator for us here, besides being,
you know, not an insurance company, we're distributing, helping them distribute their
policies directly to the policyholders. You know, we're creating that marketplace, right, with BDIC.
BDIC is Bitcoin Denominated Insurance Collaborative. So we are prioritizing

(13:58):
insurance policies that are denominated in sats.
okay so that that's fascinating to me help me understand too because i've had becca from uh
from anchor watch on the show yeah how how is that what you guys are doing kind of similar but
like how is that different you guys are at a different layer than anchor watches is that

(14:19):
fair to say hello friends you may notice that there are no sponsors for this episode and that
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(14:42):
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(15:03):
out Fountain. You can also go check out the big print audiobook, which I narrated. You also,
of course, do not have to do any of those things. Bitcoin does not care, but I sure do appreciate
all of your support. So thank you. Yeah. So go back to the, you know, the ecosystem of different
providers. So Anchor Watch, who, by the way, OGs in Bitcoin insurance, like, we're thinking about

(15:29):
this back in the clubhouse days, right, when nobody else was talking about insurance in Bitcoin.
And, you know, it was still still very nascent, right? And then they went, and then they went to
London, and they went to Lloyd's of London, and they got a syndicate there to back them, right?
So what they do is they're an MGA, Managing General Agent. They are issuing policies on, you know, right now it's their specific stack of, you know, collaborative custody tech, Trident Vault. But they're not the capacity, like they don't hold the backing for those policies, right?

(16:03):
So they have to work with their syndicates to issue those policies.
And, you know, it's directly with users, right?
And specifically on their piece of technology for right now.
Again, we're not issuing policies.
We are working with the anchor watches, you know, like that type of MGA could come on
to BDIC and offer policies through BDIC if they were going to ensure different custody

(16:27):
providers, different wallets, different platforms, right?
So that's like the main difference is we're not trying to be insurance company. We're not trying to be regulated like an insurance company. We just want to help bridge the insurance world, right? The small nascent Bitcoin insurance world, but also the larger traditional world to the Bitcoin economy.

(16:48):
Because, you know, we're talking about basically insurance on your Bitcoin where you're holding it right in case of loss just generally.
But, you know, there's a lot of other risks in the Bitcoin economy.
You think of mining and like any kind of interruption in a mining facility.
How do you insure against that without doing it denominated in Bitcoin?

(17:11):
Right. It's hard to model out if you have a hurricane that goes through like Helene and knocks out a bunch of centers.
for like a few months, right?
They've lost not just revenue, but blocks, right?
And like, how do you get those blocks back
and those block rewards back?
You need something that's denominated Bitcoin to do that.
So there's a lot of different tools that we think

(17:33):
and use cases for Bitcoin denominated insurance
beyond just that initial use case.
But that's kind of where we are versus, you know,
or vis-a-vis the other players in the insurance ecosystem.
Sure. I'm curious too.
I mean, what are their – like why do the Bitcoin-denominated insurance – like is there a unique benefit about that when we're talking about this?

(17:55):
Because I know if I'm remembering correctly from like my conversation with Becca, they have like kind of a slightly different approach to it.
Or it's something that's in their pipeline, but that's not actually like their primary use case at this moment.
So how do you guys think about that?
What's the rationale basically?
Yeah, the main the primary main benefit you get, especially as an insurance company who is providing the capital is you're matching the risk to the liability, right? The risk of lost Bitcoin. You've got to pay out a Bitcoin amount and you're backing it with fiat, right? That's scary.

(18:30):
That why it that why they basically don exist right And I know Becca and Rob have been advocating for a change in like in the States around the treatment of Bitcoin as an insurance reserve as part of your regulatory capital as an insurance company That will help to unlock Bitcoin

(18:52):
policies at scale. So that's one, that's, I mean, really the main benefit as an insurance company,
as a user, right, of or a buyer of the policy, when you buy the policy, like you do you want
you're buying it to protect Bitcoin, not necessarily the value of Bitcoin at the time you buy the

(19:15):
policy, right? Because if you're insuring Bitcoin, you probably think it's going to go a lot higher,
right over time, and you're doing it for the long haul. So you want to be sure that you can get coins
back when those coins are lost, right? That's, I mean, just fundamentally a massive win for
everybody. The problem comes in when, you know, if you are a policyholder, and it's like you've

(19:41):
got this dilemma, you're like, well, I want a Bitcoin-denominated policy. Let's just, you know,
let's say they're ubiquitous, right? Which they're not. So that's something we're solving for. We can
get into that. But let's just say they're ubiquitous. You've got this dilemma. I want to get
you know my policy denominated in bitcoin so i can get bitcoin claims if i lose them

(20:02):
the premiums thus will be also in bitcoin but i don't want to pay necessarily to let my bitcoin
away right and dilute my stack um why can't i just pay dollars on it but still get bitcoin in
return right that's like the dilemma that is faced right now well we built a platform called

(20:23):
the resolver premium manager and it actually solves this problem so our platform is a real-time
insurance payment processing platform and crucially it splits everybody's commission like if you're a
broker or your premium amount if you're the carrier out of a single policy payment but splits it out

(20:46):
and pays it in different currencies so and you can pay in different currencies too right even
though you have a denominator in Bitcoin, our platform, when you go to pay, you can pay with
dollars if you'd like, and, and have that transmitted over the Bitcoin blockchain, or
lightning network, and pegged out to the various parties in any currency. And, you know, we partner

(21:10):
with different lightning service providers to do this in different jurisdictions, you know, on and
off ramps to make sure everyone gets, you know, about the equivalent, and it's real time. So
there's not too much slippage in terms of the conversion costs there, right? And you always
have the contract, right? Currency, which is Bitcoin, that is the reference currency. So
if you deviate from that, you take on a little bit of risk, but the risk is, you know, if you're

(21:33):
using Lightning Network, it's minutes, right? At the most of slippage. So we've got a system in
place now where if you are a user, you can basically arbitrage that difference there with,
paying in dollars every month if you want for a Bitcoin-denominated policy.
There's some trade-offs there to that too, because I know this is something that you get

(21:58):
as a policyholder in a USD or a fiat-denominated policy is that certainty of the USD amount every
month, right? So if you have a USD limit policy, you're paying, it's always going to be the same
every month, right? But if it is Bitcoin denominated, obviously, Bitcoin's volatile

(22:21):
in the short term. So what it's going to do is you'll have, you know, a discrepancy, you know,
sometimes maybe 20% every month, or more, right, of what you're paying. So if you are a individual
or a company that has all of your liabilities and dollars, that could be a little bit difficult.
to Square as well. But at the end of the day, this is why we're building a marketplace so that we can

(22:45):
offer all of these different options to Bitcoiners, right? Because we just fundamentally believe,
I think most Bitcoiners do in freedom of choice, freedom of contract, right? Give everybody the
tools that they want to contract for and let the marketplace decide. And then we'll see what the,
you know, best is for the most, but, you know, it's not going to be one size fits all.

(23:08):
Are you guys fully live right now?
What's the timeline for all this?
Because obviously there's a lot of moving parts in terms of like you need their – you have to build the tech for people to use the tech.
But you need also like all of these people that are going to be actually issuing these policies as well.
Oh, 100%.
This is where the fact that it's a collaborative means – it's not quite like herding cats because Bitcoiners were all pretty aligned.

(23:36):
And most of the parties we're working with here are all Bitcoiners to start.
But we're aiming over the next few months, sometime in the new year, maybe faster if we get our ducks in a row.
we'll have a couple of different partners, hardware wallet, software wallets, multi-sig

(23:58):
and single-sig, self-custody, some form of collaborative custody coverage as well.
That's what we're aiming to have in the next few months. And again, Bitcoin denominated,
we're prioritizing having those covered. And there'll also be some fiat options too,
fiat denominator coverage. Yeah, exactly. Exactly. And some of that has to do with regulatory and

(24:25):
jurisdiction because we are trying to, you know, America's where, you know,
we'll probably be America, Europe first to start. But it, we could be, we could be global
pretty quickly depending on the regulatory, you know, always caveat the regulatory
navigations there. So it is something we're, we're actively building with our partners.

(24:48):
Some of the partners we can be a little bit more explicit about than others.
One I'll tell you is because they're super transparent and open source anyways is Wizard Sardine and Liana Wallet.
So they have a multi-sig, miniscript-powered system, and we're working with them to onboard them into BDIC and get coverage for users there from the retail level up to the enterprise level too.

(25:16):
So we're not just targeting retail, although we will offer retail, and that's going to be a huge component of it, but enterprise as well.
Where do you guys see the biggest potential for this in terms of the retail usage?
Is it in people who have these collaborative multi-sigs?
Is it protecting people on exchanges?

(25:38):
Is there an area that you guys think is going to be the most fruitful potentially?
Yeah.
I can say we're starting, you know, we're starting kind of in this collaborative custody area. And also, you know, self custody as well as is where we we see starting exchanges. Yeah, I mean, from an exchanges perspective, you know, you have to find an exchange that understands the value that it's going to bring to its customers.

(26:11):
right um and there is value there to the platforms like the platforms are businesses too they have to
make decisions you know and if they're bitcoin companies they have a bitcoin hurdle rate to beat
right with any new feature or product that they're bringing to market so this is where you know by
being part of by being an affiliate partner platform with bdic they earn a share of the

(26:32):
premiums right from all the policies that are sold on their platform so you're giving your customers
peace of mind, you're making their Bitcoin more secure on the flip side, right? Because you have
to get underwritten and pass, you know, stringent security requirements before the underwriters that
will actually issue policies on your platform, right? But then there's also a monetary incentive

(26:57):
there, right? There has to be, you have to align everybody's incentives in a system like this.
So I think, you know, finding good exchange partners like that, that have that mindset,
is crucial. But long term, like where I see this in five years, like bank, this is banks are going
to offer insurance, right on on Bitcoin, banks are going to start cussing insurance, or Bitcoin,

(27:22):
right? The US regulators have all come out over the last few months, with guidance, saying, yes,
banks can provided you, you know, follow your standard prudential, you know, frameworks,
you can custody for your clients and you can purchase or you know outsource with server
providers that custody well if you're a bank now and you have you know i have my fdic covered

(27:47):
dollars right and my checking account for my customers i have sipc coverage which is the
organization that covers for like brokerage accounts right securities then you got to do
something for Bitcoin, right? It's just, and banks are going to have the size to just offer it like
the FDIC, like a default level of coverage. And so that's where, I mean, it's, we're going to get

(28:13):
there. And it'll, if you're doing it at scale, you do it Bitcoin denominated to match, you know,
the assets and liabilities there. So yeah, that is, I think, you know, I know, you know, Latin
American banks are really starting to push and explore this area.
You know, the big banks in America, too, are as well.

(28:34):
So this is where we want to be working to solve this problem, and not just for them,
but for the existing Bitcoin on-ramps and brokerages that have been out there serving their customers
and finding the good fight to get everybody onboarded to Bitcoin, right?
Yeah, it's going to be really interesting to see how the banks kind of jump into this arena.

(28:56):
Obviously, now that they are legally able to do so.
But at the same time, I think their customers are maybe going to be not as much the people who are already Bitcoiners, but the ones who are going to become Bitcoiners.
I feel that's just my perception.
I don't know what you think.
It seems like, for one, I'm not letting Jamie Dimon anywhere near my stats.
That's right.

(29:17):
It's just not going to happen.
Yeah.
Yeah. Certainly not. But like if you're, you know, if you're new to Bitcoin, you know,
JP Morgan is a name that you trust. Like, okay, yeah, that's what you're used to, right?
It's your, you're already accustomed to this. I don't know if you have that same kind of vibe.
Yeah, this is what I consider like, you know, my stepdad, you know, he's the archetype for this.

(29:37):
It's like, he's got, you know, he understands property, you know, he's invested in property.
He understands, you know, dollars. He's got FDIC coverage there. But, you know, when you start
talking about Bitcoin, like he knows what I'm doing. He sees the value it's bringing to the
world, right? He, he has that mindset, but he's just like, what am I going to, how am I going to
do this? Like, how am I going to, you know, onboard? But if it, I have an insured solution,

(29:59):
right. Um, right there with my, my bank account. Yeah. That's a huge boost, um, that to on ramping
a lot of new customers that you can eventually get into like self custody, right. Um, over time,
Maybe not a large selection of older population, but if you're already an insured account that's custodial with a bank, then if you see that there's a self-custodial or collaborative custodial solution that's a little bit more – you understand now.

(30:35):
You have to kind of own Bitcoin before you start to really have the incentive to understand it, right?
It's kind of this chicken or the egg type dynamic.
Like you got to have skin in the game.
Then you start to understand it.
You understand the power that that immutable property right has.
And you're like, well, okay, I want to access that power.
I don't want to infuse counterparty risk into the first asset that humans ever made that doesn't have counterparty risk, right?

(31:00):
So how am I going to do that?
Well, now I see there's some hardware solutions that are insurable.
There's collaborative custody accounts.
That shift becomes a little bit easier.
You've got a safety net to make that shift. It's a lot better. And if platforms can also start bundling insurance options from the BDIC within their existing concierge, white glove services, their support services, you teach people how to self-custody, you teach people the best practices of Bitcoin.

(31:34):
It makes them better risks to insure, too, by the way, because now, you know, as an insurance company, this collaborative custody platform is really good at educating its users on security best practices.
So if we can certify that they've done all the best practices, we'll give them a discount on their insurance.

(31:56):
So there's those kind of pricing incentives that come into play when you start bringing insurance into an industry like Bitcoin, into a new technology.
Right. Not only just the policy holders get better and the risk reduces, but the ecosystem as a whole just gets safer and safer.

(32:17):
So as Bitcoiners, we want to kind of say, well, here they're in money in state or here to fight the system, right?
Which is true.
Like that's all important.
But insurance sometimes gets lumped in with the existing system just because the fiat system is degrading the insurance industry like it's degrading everything else, right?

(32:40):
And so insurance, it's a private contract between you and – it's highly regulated.
by the various jurisdictions, but it is a private contract between you and a company
that you've entered into of your own free will. And you've said, I'm going to create a safety net
through this company. And this company seems to have a good track record. So it takes the place

(33:08):
of, I mean, FDIC is the analogy for BDIC, but BDIC is totally private. It's totally free and open to
anybody to join it, just like Bitcoin, right? It's not mandated by the government, right? And I think
that's a crucial distinction and something that insurance as a whole has been great historically

(33:29):
at creating safety. So you go to, as an example, like city fire events used to be just
utterly catastrophic right before building codes you know great fire of chicago was massively
destructive um you know fires in san francisco after hurricanes uh because there wasn't a standard

(33:52):
set of best practices for building um and so the insurance industry slowly started to engage
with building practices and like in england one of the first um one of the first examples of this
was the insurance companies would put like a plaque on a building to certify like this is a
solid building that we've underwritten and we think it's you know using best practices and they would

(34:17):
even like have um their own fire brigades like the insurance companies would like actually go out and
like put out the fires for their company their buildings that they've insured right which is
kind of a funny you know very anarcho-capitalist thing to do right who's gonna put out the fires
Well, the insurance companies, right?
I mean, yeah.
Who's going to build the roads?

(34:38):
These things tend to fix themselves in the absence of government.
Shockingly, people, you know, you don't need to give half of everything you've ever earned to the government to have nice things, it turns out.
Who knew?
Exactly.
And insurance is a great example of that because over time, they helped develop the best practices for buildings, right?

(35:00):
And so the incidences of these catastrophic fires just decreased drastically over time.
And a lot of that was like pricing mechanisms too, right?
It wasn't just like a flat rate that insurance companies would charge to all their policyholders regardless.
No, like they would get very granular over time in what, you know, we're going to build with stone.
You know, we're going to eliminate thatch roofs and things of that nature then created market signals, like you're saying, like market pricing to drive best practices, right?

(35:29):
Another great example of that is like electricity, right?
Everybody was like, oh, my God, this is hyper dangerous.
Like, you know, by the way, they've got uncovered flames in their houses and they think that's more safe, right, than electricity.
But just a lot of FUD on electricity when it came out.
And then over time, the insurance industry started to engage with this risk because they saw the potential it had for humanity, right?

(35:58):
To harness this really powerful tool, right?
This technology.
And they created Underwriters Lab.
You ever pulled your smoke detector off the wall to change the battery?
And it's Underwriter Lab, UL on the back.
That's from the insurance industry, right?
They created these mechanisms and these collaborative systems that help to understand risk and price

(36:21):
it better and make things safer for new technologies.
This is why as Bitcoiners, we need to put the red carpet out for insurers to come in and start engaging with our industry.
Because if you do it on the front end and have market-based pricing and market-based research around what is safe and what isn't, then you take that to the regulators and you say, this is what works empirically, right?

(36:52):
And this is what the building codes should be.
So it wasn't the other way around. It wasn't that regulators came up with building codes with just suesponte out of their brains.
No, they just were like, all right, well, what's working? Well, the insurance company seems to have figured it out.
So let's engage with them and pass regulations that standardize what they've already done through a market.

(37:17):
It funny because you brought up insurance kind of gets lumped in with general fiat shenanigans I think that so true because for me at least I guess an American when I hear insurance the first thing I think of is health insurance right oh just what an utter catastrophe and a racket that is and just like that that is not a free market at all right that I mean it

(37:38):
it's just like we could we could spend hours going into just how corrupt and awful all of that is but
that's what you think of right but it's like something isn't necessarily bad just because
fiat has found a way to really screw it up because the incentives are so broken it's like
And I think for me, at least I think for a lot of Bitcoiners, like the number one fear you have is like losing some screwing something up.

(38:00):
Right. And losing your Bitcoin, you know, maybe through no no faults of your own or some faults or whatever.
But like that's the main thing that people have.
And like, yes, you can, you know, I mitigate that with like with multi-sig as a start.
You still you still just worry. You still just worry.
And so I get it because it's like having kind of a fail safe, essentially, where you say, look, even if you screw something up or somebody else screw something up or whatever, there's a way for you to be made whole.

(38:28):
Exactly.
And it's done in Bitcoin.
So that makes a ton of sense to me.
I wanted to push a little bit deeper, too, because we were mentioning this just before we got on air, but just about a little bit more of the kind of the actual history going back even a little bit farther about insurance.
If you want to get into that a little bit.
Yeah.
Yeah, that's it. It is an interesting, I mean, at least to me, you know, people are like, oh, insurance, not interesting. But when it so there's, there's kind of two. I like to say that insurance was like birthed from through coffee, right? Which is so how that happened was, this is going to be a little bit roundabout, but I'll bring it back eventually.

(39:06):
So in like the mid 1700s, maybe 1650 something, this guy, this scholar named Canopius brewed like supposedly the first cup of coffee in I think it was Cambridge or one of the universities in the UK.

(39:27):
And now there's an insurance company called Canopius.
Okay.
So there's a connection here with coffee.
I'm not just making this up.
But Canopius was like a Dutch scholar. So he came from the continent over to England to study. And so he would have brought that coffee with him. England wasn't importing it at the time because the trade lines were, I mean, it was basically in Yemen was where coffee started. And that the only way you could get it was like overland, kind of like through Istanbul, and then, you know, through like Eastern Europe.

(40:00):
so that's probably where he brought it with him um and then pretty shortly thereafter you know
the following decades um coffee houses started to pop up um around england and kind of migrated
into london and you know more and more of them began to pop up because technology was increasing

(40:20):
the ability to you know like make longer shipping lanes right and more consistent um shipping
voyages. So you have this like little cycle where now coffee was even being transplanted now from
Yemen into like Suriname and, and, you know, areas of like Asia, right, and being cultivated there,

(40:40):
where we think of as like typical, some typical coffee growing area, Sumatra, right,
coffee, and then much easier for the English to start importing from there at once that happened.
So, you know, better technology, better trade, brought coffee. Then the coffee houses became the collaborative spaces where commerce started to happen because coffee is a stimulant, right? So every, you know, instead of being on ale and, you know, dulling your senses, everybody was on coffee and they were, you know, basically doing deals all night long, right?

(41:12):
Um, and these like commerce hubs.
So there was one that was called, you know, Lloyd's coffee house.
So that eventually became Lloyd's of London.
Um, but there was another one, I think it was Edwards maybe.
And that became the stock exchange, the London stock exchange.
Right.
So these two major coffee houses became, you know, the financial centers of London and

(41:35):
it would just be, you know, in the insurance, you know, at Lloyd's, um, you'd have essentially
ship owners who are going to have a voyage, but they wanted to spread the risk around because
they pull all their capital into one ship, and then that ship gets lost at sea, they're toast.

(41:55):
You're bankrupt. So they would underwrite, so meaning the insurers would slip a paper and would
literally write their names underneath the slip that said who was insuring and backing the voyage.
They would pass that around the coffeehouse and pitch.

(42:15):
There would be like proto brokers who would take it around, agents and hawk this great voyage.
And, oh, look at this ship, top of the line ship.
Look at these masts from wherever, new world masts, like super strong, great rigging.
um you know this captain's done three voyages already like this risk is you know is great you

(42:37):
could just imagine this with like coffee stains on the on everything right like that's the and that
created like this virtuous cycle again where you now you have this um diffusion of risk this risk
transfer right in the marketplace that allowed more risk taking to happen right and better voyages and
more progress, right? And more commerce. So I just love that story, because I think,

(43:00):
you know, in my mind, like, Bitcoin can be this, like, stimulant, like coffee to commerce,
and it is, we're seeing it, right? It's shortening trade lanes through digital space,
right? And if the insurance industry, like we talked about insurance, it's good for Bitcoin to
bring insurance. And if the insurance industry starts bringing and harnessing Bitcoin, you know,

(43:24):
And it's like, that's twofold, right?
It's one, the payment reels, right?
Like it's a medial exchange and it's instant and it's real time, right?
And it's borderless, permissionless.
And if I, when I tell you that a reinsurance contract takes 180 days to settle, like money

(43:44):
to the premium to get into the reinsurance bank account, reinsurance bank account, like
that is a conservative estimate.
Like it is, there's so much, you know, AR at the end of the year, it's like 68% of the Lloyds of London marketplace, like 68% of the premiums that are written that year are still not paid at the end of the year.

(44:05):
Like it is so broken.
And if you just put that on Bitcoin now and use Bitcoin as the rails to settle, like boom, your efficiencies as an industry have just, has just gone down.
So that's one place where the insurance industry really needs to address their payments issues.
And we built RPM, the premium manager, to offer that service, right?

(44:26):
And to be an easy on-ramp to the Bitcoin network, you don't have to run nodes, you don't have to even really custody.
We're swapping out Swift and correspondent banking with the Bitcoin network, basically.
But then store value, right?
And like you were saying earlier, the investments just not keeping pace with the level of risk and the price of risk increasing.

(44:51):
Just put a little bit of Bitcoin in that regulatory capital and you've got a huge boost.
And that's going to take a little bit of time.
Insurance industry can start settling over the Bitcoin network now.
There's a little bit of regulatory maneuvering you have to do.
But ultimately, if an insurance company gets a bank deposit in their statutory trust account that they're required to have, that solves the regulatory problems.

(45:20):
Whether it came over the Bitcoin network at one point doesn't really change things.
It will take time to get Bitcoin as the asset in the regulatory capital.
Okay.
First of all, that is fascinating.
I did not know that about the coffee house.
I didn't know they actually, like the coffee houses actually became the institutions, which is kind of just like fascinating.

(45:42):
Because we think tea, right, for England, but like coffee actually predated, you know, tea being ubiquitous in England.
That is fascinating.
Okay, I need to like go down this rabbit hole because I feel like this is like a whole other rabbit hole I just found out about.
I'm curious, you know, you mentioned, okay, yes, the insurance industry and a bunch of other industries could start settling on Bitcoin right now.

(46:04):
Like as Bitcoiners, we're, you know, within our kind of Bitcoin or bubble, which is expanding, no doubt, but is still its own bubble.
We say to ourselves, well, of course they should do this right now.
This just makes this makes sense.
Like you should be doing this.
You know, Bitcoin is the perfect tool for this.
It's the perfect payment rails for this.
It's, you know, it's perfected money and it's a, you know, it's a medium exchange and a store of value.
And there's so many different things you can do.

(46:26):
How, how long do you think that actually takes?
I'm not going to hold you to like a specific year, but like, where do you think we're actually at in this?
Have we kind of – because I think we're still firmly in like the innovators stage of the tech adoption curve.
I don't even think we're to the early adopters yet.
Are you there?
Are you kind of with me on that?
You know, actually, I think we – so it's – Resolver wouldn't exist when I started my Bitcoin journey.

(46:53):
Like the infrastructure just wasn't mature enough and the market capitalization of Bitcoin wasn't deep.
I don't know when it was.
Now it's a $2.4 trillion market.
The liquidity is deep.
You can move large sums.
Because when we're talking about large enterprise premium payments or reinsurance payments, we're talking half a million dollars at a clip.

(47:21):
And Lightning sure couldn't do that in 2021.
Now it actually can.
Those channels have gotten pretty girthy there on the Lightning Network.
So you can move a lot of funds.
There's some big ones, for sure.
So for sure, we're hitting the right time where the actual just technological advancement in Bitcoin and around Bitcoin is hitting, as well as the market development, is hitting a crucial inflection point.

(47:53):
But you are seeing insurance, maybe early adopters starting to come.
Maybe we're still in the innovator phase.
We're right on the cusp there of that transition.
And it's exciting to see.
I think what's going to happen is you're going to have a few, I think, traditional insurance companies that start to get it and adopt it.

(48:19):
And they probably won't be the ones at the top.
Right. There'll be like the hungry challengers that come in first and they're looking for the edge. Right. So it's like, oh, well, I can get my, you know, if I'm a broker, I can use the Bitcoin network to settle the premiums and I can get my insurance companies, their premiums, you know, six months faster. Right. Like that's they're going to keep giving me business. Right. If I can do that, like they'll want that edge.

(48:44):
Um, but it, it is, we're, we're, we're close there.
What we're seeing out there is, is some early adopters are, you know, the payment side,
they'll get there.
It also, you know, the Bitcoin is a great, um, source of, you know, emerging risk.

(49:06):
So insurance companies, while they are conservative, right?
They want to find new risk that doesn't exist on the market that's not saturated yet, right? And they want to be the first movers, a lot of them do, into these emerging risks. And so Bitcoin offers that opportunity, right, to harness a new emerging risk and create new premium flows.

(49:29):
So again, it'll be those kind of challenger parties from the traditional insurance sector.
And then I think you're going to have homegrown Bitcoin native insurance companies like Anchor
Watch.
But beyond Anchor Watch, I think the amount of capital that's sitting in Bitcoin in these
Bitcoin treasury companies is so massive right now.

(49:51):
They're going to want to find ways to create Bitcoin yield on that.
Um, and insurance, like if you go, I think it was in back in July, Sean Bill, who is a chief investment officer at Blockstream, also chief investment officer of BSTR, which is like the $5 billion Bitcoin treasury company that Adam back helped to, uh, fund.

(50:13):
Right.
He was on Bloomberg saying, you know, he, all these treasury companies get the question, like, what are you going to do with the capital?
Right.
Like you're just going to sit there, run the arbitrage play that MicroStrategy is doing, right?
And he pointed to insurance.
He said, we're actually looking at insurance.
And if you go to the Caribbean markets, you can get Bitcoin-denominated insurance.

(50:34):
And that presents interesting opportunities for yield, right?
So the smart, you know, again, the challenger of Bitcoin treasury companies will probably move into this space.
And just to give an example of where we could go if someone like BSTR did that.
so i think in terms of the amount of regulatory capital that exists to back bitcoin nominee

(50:58):
policies right now there's a handful of insurance companies that are licensed to do it that have
raised funds to do it in bitcoin i'm going to conservatively say it's like 250 million worth
that's exist to settle or to to back policies which you know i think that's like the master
policy that coinbase has right um yeah but but you also get you also get a multiple on that so

(51:26):
like insurance companies don't have to keep one to one they can go up to sometimes like 10 times
they can write 10 times the amount of policy risk that is being backed by that amount
probably not gonna the regulators probably aren't gonna allow a 10 10x on bitcoin but let's just
call it that. So we're talking like, you know, 2000 Bitcoin out there, right? In the Bitcoin

(51:49):
denominated world, backing policies, if BSTR put like 10% of their whatever it is, over 300,000
Bitcoin into insurance, like they immediately dominate the market, right? It's so that's,
that's the kind of interesting inflection point that we're getting towards and like floodgate

(52:10):
that could open. And then you've got like Bitcoin companies that can actually are really incented,
you know, in our mission aligned with Bitcoin to do insurance, the Bitcoin way and put it on
their balance sheet and back policies. And, and then even what gets really interesting
is, again, as a store of value, not just backing Bitcoin denominated policies, but backing fiat

(52:33):
denominated policies because if you're using bitcoin for like a long tail um risk like
meanwhile right they're they're backing um you know they're a life insurance company they're
also bitcoin denominated but like they have a lot of capital that you know if you're paying out a
life insurance policy that's done on dollars for example you know over the course 20 years from now

(52:56):
right and you're using bitcoin to back it like your ratio is going to be great over that time
period, right? It is going to be super interesting to just see how much Bitcoin, like we have more
acknowledgement now. I think it's still, again, on a small scale, like there are still a shocking,
shocking number of people out there who just either think Bitcoin's a scam or whatever. It's

(53:17):
still just magic internet money for computer nerds. But there is a growing realization, I think,
and it's, you know, it's gradually then suddenly that, oh, look, Bitcoin is this kind of, you know,
it is it is money perfected as close as we can get to it right and it is this store of value unlike
anything we've seen before that you also happen to be able to transfer you know at the speed of
light across the world and no one can stop you and you don't need an armored truck and a giant

(53:41):
you know tanker ship to be able to do it like which is you know like gold gold is great gold's
been great money for 5 000 years but gold's not built for the information age it's just plain and
simple it's not and you know not to knock not to knock the gold bugs like your heart is in the
right place with it and it still serves it's purpose they were just too early and and had you
know the yeah technology hadn't come around yet right yeah but we're getting to such a fascinating

(54:05):
time and i was it's going to be amazing to see what happens in the next few years in the next
couple of decades because i think the companies that are embracing bitcoin and what it can do
for them either as a store of value to be able to you know yeah essentially well allow them to
arbitrage the guaranteed depreciation of the value of fiat currency. That's right. Or, or as a medium

(54:29):
of exchange, like, and thereby, you know, you're also, if you're doing it, both of those, you're,
you're also thinking about it as your unit of account, it becomes your, you know, your hurdle
rate is how you're denominating everything else. You are going to have an incredible advantage.
And I think that's, it's very interesting to think about the Bitcoin treasury companies. I mean,
they're getting absolutely hammered right now. Um, I, and I, I didn't realize, uh, uh, uh, BSTR had

(54:52):
that many bitcoin i just checked yet so over 30 000 bitcoin they have now which is yeah i think
they raised i also think they raised um like another billion that's your mark to purchase
more bitcoin or something like that like the they're gonna be they're gonna be a big player
now yeah it's it's wild to see this happening and i think again we're in the very early stages of

(55:13):
this where companies are starting to figure it out and right now it's like a lot of bitcoiners
running these companies starting to figure it out, because they already grok it.
But that's going to permeate into the larger financial ecosystem, I think.
And it's going to be quite interesting to watch.
Yeah, we've got to go through some pain first, though, because now you've got the Solana treasury

(55:36):
companies that are trading publicly, Ethereum companies.
uh you worry we gotta we gotta go through some pain and and some um told you so the crypto
company you know crypto and treasury companies are a scam uh fud for a little while but i think
we'll get through it as we always do uh or bitcoin will you know bitcoin doesn't care

(55:58):
it's crazy to me that it doesn't seem that a lot of these folks running these crypto treasury
companies have thought too deeply about the game theory of what happens when you centralize a vast amount of proof of stake tokens in a single entity And I don know I think those of us who have maybe thought about it a little bit are like yeah I know exactly what going
to happen here. But I seems like a lot of other folks haven't, or maybe they haven't. That's

(56:22):
exactly what they want. I don't know. I don't know. Yeah. I wanted to being conscious of your
time here, because I know I think we have a stop here coming up in a few minutes, but we didn't get
a chance to talk yet just about some of the stuff you do on sort of the open source freedom tech
legal side of things. Do you want to talk a little bit about that? Because I think that's
a really important part of this. Yeah. And there's a pretty timely... So again,

(56:43):
I'm appellate attorney by training, practiced full-time for 13 years. And for those who are
unfamiliar with appellate as especially, I was hardly ever in front of juries. I would
accompany trial counsel to trial and help preserve records, et cetera. But then

(57:05):
And once a judgment existed or a disposition happened, then that's where I would come in and take it to the next level, take it to the federal appeals courts.
I didn't make it to the U.S. Supreme Court.
I have argued in front of the Florida Supreme Court, though.
So that was not too bad.
A little ways to go to get the U.S. Supreme Court from there.

(57:26):
But so that's what I did and did happily for 13 years.
I still love the practice of law.
I also think that's an institution that has broken by fiat, and that's a whole different conversation.
We can talk about how the incentives have been really perverted within the justice system in a lot of different ways.
So I still practice the occasional case.

(57:51):
I still have my license, and I'm actually our general counsel at Resolver, too.
Um, but one case that I'm working on right now, I'm not primary counsel, but I, I have helped draft, um, specific arguments in the appellate brief is, um, Roman Sterling off.
He, um, was convicted of running Bitcoin fog, which was a custodial Bitcoin mixing service.

(58:17):
and that was really, I mean, like from 2011, 12, 13,
like we're going back to like Bitcoin ancient history here, right?
And was convicted and denies having ever run it.
There's no direct evidence that he built this marketplace,

(58:39):
built the code, built the service.
The only, I mean, there's really no direct FBI, IRS,
searched all of his servers, didn't find anything related to Bitcoin Fog, right? The only evidence
connecting him is the forensic evidence from chain analysis. Then that isn't even really
connecting him directly to these transactions, but clustering all the transactions that Bitcoin

(59:03):
Fog ever made to get this ginormous number for conspiracy to commit money laundering, right?
And then some really untested, unproven IP overlap analysis that one of the agents did, where basically they just said, well, he at one point used an IP address that was used, same IP address that was used by whoever ran the mixing service, right?

(59:29):
And so thus one-to-one overlap match, right?
But of course, everyone could be sharing, you know, we could be sharing an IP address right now if we're sitting in the same room, right?
Or if you're sitting across the street from me, or if we're using the same VPN, right?
Like that in and of itself was not a link, right?

(59:50):
And so basically, he was a proponent of privacy.
He knew that you needed to use something to obfuscate your activity on chain if you didn't want your grocer, if you were buying groceries with Bitcoin, knowing that you donated to a Chinese dissident group.
That's what we're talking about when we're talking about financial privacy, right?

(01:00:14):
It's the ability to protect yourself and shield yourself from authoritarian regimes.
That's what it's all about.
he knew you needed to do this and was an advocate of the service and used the service but by doing so
put himself in jeopardy of of you know being fingered by technology and chain analysis is a

(01:00:36):
proprietary piece of software that the company you know the reactor software licenses to the
federal government want to talk about incentives being you know kind of out of whack chain analysis
gets government contracts, right? So, you know, then they're going to provide reports to the
government and, you know, assist in law enforcement. Like, you know, you wonder how often you're going

(01:00:59):
to get matches there. And so at trial, Roman's counsel and Roman, he challenged the reliability
of chain analysis reactor reports, right? Of the actual chain, you know, the on-chain data analytics,
Right. And the so-called tracing of the funds is unreliable. There's no there's chain analysis admitted. There is no no testing, no peer reviewed testing on it. It's black box software. No one can see the code. Right. To see if it's it's, you know, compiling and executing properly.

(01:01:34):
they stuff in a bunch of different heuristics that are outside of bitcoin that are just you
know data that has been scraped from outside sources that helps with this this clustering
technique that they do so an example of how that might skew a report from a chain analysis
a competitor's software was used to run the same uh tracing and to cluster the bitcoin fog

(01:02:01):
transactions, the mixers transactions, and came up with something like 400,000 fewer transactions
than chain analysis. So chain analysis clustering was, yeah, order, it just totally over-inclusive,
right? Compared to this other software, right? And at the end of the day, there's nowhere,

(01:02:21):
no real way to verify it. No false positives are on record or known, no false negatives.
Like there's just no testing that has been done of this software.
And under the federal evidence code, you actually do have to prove these things to get it in as forensic evidence, expert evidence, right?

(01:02:43):
You have to prove that it's reliable scientific evidence and meet those thresholds of peer review, you know, the safety records, right?
Which just weren't done here.
So that's primarily what we're challenging. And it's a case that often gets overlooked because there's, you know, Tornado Cash and the other, you know, the other Roman, Roman Storm. And that is a, you know, a non-custodial mixer of Ethereum. Right.

(01:03:12):
And then, of course, in Bitcoin, Samurai Wallet and the developers of that tool were prosecuted and had to take a plea.
Otherwise, they were going to spend 20 plus years in jail for creating code.
So all of this is bad.
But yeah, our client, Roman Sterlingov's case, often gets overlooked because it's from an older time period.

(01:03:36):
He wasn't the developer of the software.
He was just an advocate of privacy and a user of this tool.
But it's extraordinarily frightening to me as a Bitcoin user that if I use these tools like Samurai Wallet, right, or something else that comes along, I might get fingered as the one who created it.
And there's no way to verify that because the government's using black box evidence.

(01:04:01):
It can be frightening, but that's why we're out here.
And thank God that Roman, all credit to him for taking it to trial and standing on his rights to be presumed innocent until convicted otherwise.
And then continuing to fight through sentencing and on appeal.

(01:04:25):
So it takes a lot of bravery to face the justice system.
What happens next in this process for him?
Yeah, so the brief should be filed this week, actually.
And that will be filed in the District of Columbia Circuit Court, which here is cases out of the trial court, the District of Columbia specifically.

(01:04:48):
And yeah, just a great team of attorneys that I came on right towards the end and was able to assist as much as I could.
but a great team that put together a lot of arguments.
There's a lot of things that went wrong in this case,
but it'll go to briefing.
Now, a brief will be filed this week.

(01:05:11):
The government will have their responsive brief.
In a few months, Roman will get one final reply brief,
and then maybe there'll be argument in, call it June of next year,
and then the court will decide whether to vacate his conviction.
or at least his sentencing and send it back down.
But this case has been going on since I don't remember exactly when it was filed, maybe 2021, 2022.

(01:05:37):
And he's been incarcerated pretty much the whole time.
It just seems like such a perversion of justice to use this black box, unproven technique when there's actually no hard evidence linking someone to a purported crime.
Yeah.
That's without even debating the merits of whether or not that even is a crime in the first place.

(01:05:57):
Just like taking that aside, how can you possibly convict a man and send him to prison when you don't actually have any evidence?
The only evidence that you have, you're not going to actually share how that evidence is in any way meaningful because there's no way for anyone to test it or look through this in a meaningful way beyond like, trust me, bro, basically.
Yeah.
That's just crazy to me.

(01:06:18):
Yeah.
I mean, it's overused, but I think it's apt here.
Kafka-esque is like this would be almost too unreal for Kafka to write about, right, to satirize.
It's too on the nose.
And it's not just Bitcoin, really, or cryptocurrency where this kind of black box evidence is used.

(01:06:41):
It's pervasive in the justice system now.
Um, so there's actually some pretty decent precedent, which gives me hope.
Um, there's some pretty decent precedent on, you know, exactly how you need to go about
verifying proprietary software.
And a lot of it does involve disclosing the code under confidentiality orders that are

(01:07:02):
not, that was also an issue in this case, the confidentiality orders that like, Oh,
you can see the code, but any of your experts has to basically certify that, you know, that
They can never work for any kind of blockchain tracing company ever under this non-compete.
And it wasn't that broad, but subjecting themselves to significant civil liability if they were to just look at the code of chain analysis and provide an expert opinion within the scope of this trial.

(01:07:32):
So this is pervasive across the justice system.
Like there's DNA testing, right?
There's certain probabilistic DNA tests that can be done if you have kind of a compromised DNA specimen that can kind of reconstruct the DNA.
And that was heavily litigated.
There were like two main companies that had just basically there was a the founder of that company was going out and trust me, bro, in his testimony all over the place.

(01:08:00):
There's no peer review, but trust me, bro, like it works.
Here's our system and how we've tested it.
Right.
And court said that's not enough.
Like they had reversed convictions on that and said, you actually need to show peer review testing, you know, reliable, you know, the statistics from them, incidents of false positives.
Right. You need to have that data so that the so that the jury can actually wait and determine.

(01:08:24):
Well, first first of all, whether or not it even goes to the jury. Right.
This is this is like if it's so unreliable, the jury can't consider it. Right. That's in the federal evidence code.
But that was one.
There's another one that's actually pretty scary, too, called Shot Spotter.
And this is something that police departments use.
There's like microphones.
A company puts up microphones up high, like all around high crime areas, right, which, you know, is generally code for, you know, black areas, right, in the United States.

(01:08:54):
Low income areas.
Put them up all around.
And if there's a shot, like a blast, you know, that sounds kind of like a gun shot, then that immediately gets sent to the local police department and sent out for investigation. Right. So this now becomes like, oh, the only evidence we had was that the shot spotter said there was a shot fired when this guy was in the neighborhood over here. Right.

(01:09:21):
And that's, you know, I know folks who work with the police departments in their like IT department and they're like, this stuff is not reliable.
It is with the cops have actually stopped using it as like their primary source of reasonable suspicion because it's just not it's black box technology.

(01:09:41):
It's hyper sensitive to, you know, you think about like a car backfiring or something like that, you know, setting it off.
So like this is sentencing software to like if you want to get really like minority report, there was some software that was used to help set sentencing guidelines to help judges understand like what the sentence should be and like recidivism rates based on, you know, factors of the case and factors of the defendant.

(01:10:12):
And, you know, what would be the appropriate amount of sentencing in this case, right? That's why, you know, I think there's some countries, and don't quote me on this, but there's some countries I think that are leaning towards just mandating any kind of forensic evidence in court has to be open source, especially if it has to do with liberty interests, right? Just make it open source, have it available for everybody to test, right?

(01:10:36):
And as we know, open source software is the safest, right?
It's constantly being tested.
And at least if it's a sufficiently used open source technology, you know, there's a lot of eyes on it all the time, right?
And testing it, probing it, and making sure that it's accurate.
I'm glad you brought that up because I was literally just thinking that.

(01:10:57):
It seems like the only way you can possibly have any sort of trust in a justice system is if it is transparent.
And so if you are using technological tools that obfuscate that process, you cannot possibly have faith in that justice is being done fairly.
Like you need to open source it.

(01:11:18):
Exactly.
Necessarily must.
I mean one would think that that would be like kind of a common sense prerequisite, but apparently not.
I'm sure there's a lot of lobbying that goes into that as well to say, look, we have to keep it closed source.
It's the incentives.
It has to be closed source because if we disclose it, and this is literally what, you know, chain analysis and the government argued in Roman's case, is that, oh, then, you know, this is a cat and mouse game, right?

(01:11:43):
And so then the money launderers are going to be able to know how to trick our system and know exactly how to structure their transactions to avoid capture through chain analysis.
So it must remain closed source, right?
Which if you think about it also is like, okay, well, now you're presuming the defendant not only guilty of money laundering to begin with, but that he and all of his attorneys are going to disclose the code and disseminate it beyond the trial, right, confines.

(01:12:13):
Like, you know, that's multiple horrible assumptions that are – one of which is unconstitutional, right?
but yeah the incentives are there nonetheless to keep to keep the software closed the financial
incentives are there and there's a bunch of different rabbit holes we could go down there
but i do want to be conscious of your time save it for another one yeah looking forward to well

(01:12:34):
hey uh this is a great chat glad to have you on here where do you want to uh we're doing the sun
folks or anything else you want to leave people with yeah absolutely so you can just go to you
Resolver's website, resolver.io, and there's no E at the end before the R because we're trying to – again, we came from Nostre, so no unnecessary vowels.

(01:12:56):
Yeah, so just check out the website for updates on when BDIC is coming live.
You can find me on Nostre.
You can tag my inpub on X as well.
I'm out there on LinkedIn too.
You got to stay in that universe as a founder.

(01:13:17):
Yeah, fair enough.
Fair enough.
Well, hey, great having you on here.
Looking forward to seeing what the next few years hold for you guys.
And yeah, wishing the best of luck to you and the team and Roman Sterlinghoff as well,
because let's hope there's some justice that can actually be delivered there.
Yeah.
Yeah.
From your mouth to the judge's ears, right?

(01:13:39):
Let's hope common sense may prevail still.
There may still be hope.
Great talking to you, Aaron.
We'll talk again soon.
All right.
Good talking, Walker.
Talk to you soon.

(01:14:12):
and this podcast at primal.net slash titcoin.
On X, YouTube, and Rumble, just search at Walker America
and find this podcast on X and Instagram at titcoinpodcast.
Head to the show notes to grab sponsor links,
head to substack.com slash at Walker America
to get episodes emailed to you
and head to bitcoinpodcast.net for everything else.

(01:14:36):
Bitcoin is scarce, but podcasts are abundant.
So thank you for spending your scarce time listening to The Bitcoin Podcast.
Until next time, stay free.

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From Coffeehouses to Cyberspace: How Bitcoin Fixes Insurance | Aaron Daniel

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}From Coffeehouses to Cyberspace: How Bitcoin Fixes Insurance | Aaron Daniel