Parker Lewis and Buck Perley of Unchained Capital join me on the show to talk about updates on the Caravan open source project, making multi sig accessible and easy for the masses. Previously it was single address only, and now it works as a wallet! We’ll chat:
- Why use Caravan
- What the new updates are
- Hardware wallet testing
- xPubs and multi sig
- Bitcoiner Ventures raise
Time zone: Thursday 21st May 4:30pm PT 7:30pm ET, Friday 22nd 9:30am AEST. It will be broadcast on YouTube Live at the link below, and on my twitter periscope @stephanlivera.
Parker Lewis & Buck Perley links:
- Unchained blog: Gearing up the Caravan
- Parker Lewis Twitter: @parkeralewis
- Buck Perley Twitter: @buckperley
Related episode:
Sponsors:
Bitcoiner Ventures:
Stephan Livera links:
- Show notes and website
- Follow me on twitter @stephanlivera
- Subscribe to the podcast
- Patreon @stephanlivera
Podcast Transcript:
Stephan Livera:
Welcome to the show guys. I think just in terms of, for the listeners who aren’t familiar, well, I think most of my listeners are all familiar with Parker. He’s in business development at Unchained Capital. He’s a past guest of the show and Buck is newly working at Unchained Capital. So welcome to the show guys.
Buck Perley:
Thanks very much.
Parker Lewis:
Yeah, thanks for having us on excited to talk about our latest release, Caravan. Buck’s, a new member of the team, but he hopped right in there and he was the lead developer on bringing us a lot of the upgrades that are in the latest edition of Caravan. So looking forward to that and talking about other things that we’re working on it on chain.
Stephan Livera:
Awesome. Yeah. So look, I think for the listeners, I think my listeners are probably all very familiar with you, Parker from your past episode here and also with tales from the crypt. But Buck, do you want to just tell the listeners a little bit about yourself? I know you’ve been around for a while.
Buck Perley:
Yeah, sure. So just trying to keep my Bitcoin history the short version. But I got into the crypto. I started learning about Bitcoin back when I was living in China back in 2014, 2015 was actually using it for remittances when I was working freelance. And so trying you know move money back and forth between the U.S. And China and kind of just started diving deeper and deeper from there. My background is originally in economics, but I’ve been doing the software engineering and web development for I dunno, it’s been a while now, since maybe a decade. And yeah, for after moving back to the States. I’ve been working in a few different Bitcoin companies. So primarily in open source. So I’ve been really fortunate to be able to work in building open source projects for the community. I’ve done some stuff in, I was working for a couple of years on the Bitcoin team, which is a JavaScript implementation of Bitcoin. Recently also was working on some lightning tools specifically around L-SATs which were something that’s been recently released by inaudible and I’m working on right now, Caravan, but also a bunch of the other stuff that Unchained has going on too.
Stephan Livera:
Fantastic. So look, let’s get into a little bit around the context of this. So obviously we’re all bullish on Bitcoin, right? We think the value is going up. We have to start thinking more seriously about our security. So maybe you want to just lead us into a little bit and tell us, you know why should we be considering multisignature?
Buck Perley:
Sure. Yeah. So a multi signature is, it’s a great way to both keep your Bitcoin secure while also maintaining control over it. And so the kind of, the quick way to explain how it works, it’s in the name multisignature and it basically means you need multiple signatures in order to spend some Bitcoin. And that has a lot of benefits if you think about it, kind of like a safety deposit box where you need multiple keys in order to open it. The same type of thing, except you can even do some really cool things with multisig where you have a set up, which is what we use it at Unchained Capital to have three key. So you can have a total set of three keys. But only two of those keys are needed to spend the Bitcoin. So this can be really great for such as unchained capital our setup where you can have total control of your Bitcoin if you want two of those keys and you know unchanged and have a backup.
Buck Perley:
And what we’re introducing with Caravan is that you can create this setup very easily yourself with a browser. And so if the key is, the best way to do this is if the keys are stored in something like a hardware device and in order to spend the Bitcoin. So the main advantage of this is let’s say your security is compromised somewhere and you’re storing your seed somewhere unsafe, it’s on plain text or whatever. You shouldn’t be doing that regardless. But if that happens, you still need one other key to spend from a two of three multisignature wallet. And so that just kind of, it spreads out your risk a lot more and makes your funds a lot a lot more secure.
Parker Lewis:
Yeah. And just one thing that I would add too is that, you know, I think most of us experienced this individually as Bitcoiners. And then when we think about as a company, as we’re talking to people that are adopting Bitcoin for the first time, the idea of facilitating self custody makes sense. It eliminates counterparty risk. You’re not relying on any institution and potentially bearing the risk of the liability whether the institution is hacked or becomes insolvent. And those ideas resonate. But then there is permanence to private key management. And I think, you know, one of the realities of self custody at least in a single key setting is that even if you are backed up and you have say a hardware device and a backup they both backup each other. But then they both also represent single points of failure such that if anybody gets any single device or a backup to that device they’re very close to being able to walk away with all funds.
Parker Lewis:
And as we think about not only, you know existing Bitcoiners preserving their own wealth as the value of Bitcoin increases. But as you know, additional people come into Bitcoin and they’re thinking about storing a significant amount of wealth. As that wealth and the value of Bitcoin rises, the idea of being able to have that wealth be lost by a single mishap becomes untenable. And that’s really where the idea of multisig, especially commercialized for both the individuals and businesses to be able to hold their own private keys is really critical that the default doesn’t need to be to go back to a custodian as value increases because there’s more at risk. It can be, we can solve this problem through diversifying that risk through multiple keys, having backups, having redundancy. And in our case, again, you know, people don’t have to work with third parties and that’s why we’ve made, you know, there’s a number of reasons why we’ve invested so significantly in Caravan but if someone is working with Unchained, then we’re also a backup and we’re creating diversity not just in keys but in who owns those keys.
Stephan Livera:
Yeah, that’s a great point as well because you might want to just have another entity, right? So you might yourself have like all this good backup and all that stuff, but ultimately having just another entity is holding that other key. So in this case, if you’ve got two of three and Unchained has that other key, well then that’s another entities help helping you kind of manage your keys. And it might be also good to just talk a little bit. Maybe just historically, what have people had to do? They might’ve had to do something like glacier protocol. They might’ve, maybe they would have tried with Electrum to try and do, you know, multisignature what were some of the tool sets that people were trying in the past? And you know, why is Caravan now it’s a step forward in that regard. Can you guys touch on that?
Buck Perley:
Yeah, sure. I mean, it’s funny too, like for anybody that’s been in, been in the Bitcoin space for for a while now, there’s famous stories of people having, you know, thousands of Bitcoins stolen off of them. But like there’s one story, someone lost like 7,000 Bitcoin just at some conference. And you can really see how important it is to have a multisig and easy multisig as well. So that, okay, I get some keys stolen off of me, but that doesn’t put everything at risk. And one of the things that’s unique about multisig actually in Bitcoin compared to that we hear in some of these other blockchain protocols is multisig is native to the protocol as well. And so you hear some of these hacks that happen in other multisig setups. That’s not a risk when you’re, when you’re doing multisig in Bitcoin.
Buck Perley:
And so then the next challenge is like how to do this in a user friendly way. There are some challenges with just the complexity of how to set up how to the keys that are involved in the devices. And there has been, you know, multisig has been around for years and we’re still as an industry trying to figure out the easiest way to do it. And so Caravan is kind of our answer to that. And one of the things that we’re really trying to focus on with Caravan is to do one thing really well and that’s essentially coordinating the keys with for your multisig address or, wallet. And so how that contrast is to kind of sum up. So glacier protocol is kind of like how to go through all these protocols, these steps to to make sure that your private keys are really safe and that you’re not compromised at any step of the way.
Buck Perley:
That’s kind of like the extreme end of the security conscious spectrum. You, you don’t have to go to such extreme lengths when with multisig especially cause you’re diversifying your risk. Electrum has been the primary answer for many years now. And with good reason. I mean it’s a very robust, it’s a battle tested platform. It’s got, you know, it has a lot of experienced developers behind it. But from our point of view, and especially just as a company about why we needed our own type of solution. There’s a couple of answers to that. But what I think Caravan brings to the table is just a bit of a simplicity. So whereas Electrum has this you know, the functionality of being a node and being a server and part of this peer to peer network and it has normal key management, single sig and it has multisig.
Buck Perley:
And there there’s just a lot of extra complexity. It also has state and that’s something that Caravan, so it like, you know, it has a whole history of all of your transactions that’s located in the database of the wallet. And so with Caravan, this is a stateless wallet. So essentially you import your keys from the hardware wallets and you can basically boot up the your wallet and the address history. You can generate new addresses, but it’s not really stored anywhere. So you query the blockchain, whether it’s to an external blockchain API or to your own private node as well, which is supported to. And so that, just that helps Caravan kind of be focused in its mission in terms of what it’s doing. We coordinate the keys, you have your multisig wallet, we load up the addresses, and then you can receive funds to those addresses.
Buck Perley:
And then you can very easily spend from it as well. And we have a couple of different ways to manage that, which we can get into later.
Stephan Livera:
And maybe Parker. You could just, oh go on Parker-
Parker Lewis:
Yeah, I was going to say that I like to simplify it down to say that it’s gotta be so easy that a business development guy can do it. You know, or me or my dad or you know, any one of our parents that not, you know, not only is it lighter weight and I think that Buck didn’t say it really well, but it’s designed to do one thing very well and it’s designed to make it easy to do in a browser. And you know,
Parker Lewis:
From, my own experience, and again, you know, I run my own full node and you know, I’ve been involved in Bitcoin for quite a while now, but still kind of, you know, seeing, you know, we had, you know, had our big Austin Bitcoin developer meetup. We had Michael Flaxman doing a demo of Electrum and just seeing the challenges that someone as technically sophisticated as Michael struggling through an Electrum demo. And again, Electrum is a very powerful tool and Caravan isn’t a replacement for Electrum for all things, but for many people it becomes an easier application to use. And there’s many ways that people can use it. And when we think about it, you know, a few of the, and we’ll talk about a number through the conversation about why Caravan so strategic to us, but one of those reasons is that it not only is an asset for Unchained Capital and its clients as a recovery tool, it’s now a more comprehensive tool in that regard.
Parker Lewis:
But for clients that rely on Unchained, our vaults and find value in having Unchained be keyholder, we also design tools and that core principle tool being Caravan to ensure that that Unchained is as trust minimized and organization as possible. And one of those key elements is that if Unchained’s site goes down or you know you were locked out of your Unchained account or for whatever reason Unchained is unavailable, that you have a tool and one that is easy to use with a very low bar for someone to be able to access their Bitcoin. But then in addition to that, we recognize that, you know, expanding multisig and creating solutions that are easy for the common person to use and in which they feel comfortable with, that they will be more likely to hold their private keys with these types of applications. And that many people will not want to work with a third party.
Parker Lewis:
And the more people using multisig and making multisig ubiquitous as a form of self custody is, you know, provides a tangible benefit to Unchained as an ecosystem but also to individuals that you know, don’t value Unchained holding a key or for whatever reason preserve their anonymity and be able to do that in a way that they don’t have fear that they’ll create some error that results ultimately in loss. That you know, by accessing multisig it has to be in a way that you’re actually protecting yourself and not potentially getting into a situation where you make some error or then can’t lose your funds when you need to.
Stephan Livera:
Yeah, I think that’s a great way to summarize it. I would say maybe just to summarize for the listeners, you might be somebody who is more concerned about privacy and you want to run it yourself. Well that’s, you know, you can use Caravan. You might be unsure about, okay, I’m only used to single signature. I’m not quite comfortable with multisignature yet. Well, this is one way you can test it out and try just with a little setup before you then move it into Unchained Vault. It can be a recovery tool as you mentioned. And also I think there’s those broader points around the ecosystem, right? You’re making self custody easier. And that way you could arguably say this is strengthening the ecosystem of Bitcoin and also we can probably get to some of this later is around helping build towards having multisig standards and just kind of commonly accepted ways and practices of doing things just like now, let’s say it’s quite a common thing that people use BIP39 seeds, right? And that’s just a known thing in the industry. And so maybe that’s a similar kind of thing that can be built out towards. So let’s talk, let’s bring it to Caravan then. So Caravan up until very recently was a single address solution and now it’s got an actual wallet to it. So perhaps Buck, you can tell us a little bit about the changes coming to Caravan.
Buck Perley:
Yeah. So a big idea with this was to just expand Caravan support for xPubs essentially. And xPubs allow you to coordinate a rather than just a single multisig address. It allows you to coordinate between multiple keys or key holders, a wallet. And what, so xPubs basically give you a path or a recipe to generate essentially, basically an infinite amount of addresses. And so that’s what a wallet is at its core. And in any situation, whether it’s multisig or otherwise, it’s a deterministic set of addresses that have balances associated with them. And so that’s what we’re introducing in this release. So that’s the main thing that we’re introducing in this release in Caravan. And so the way that the process that this works now is we still maintain the support for the previous functionality that we had before, which people might be familiar with through the Twitter bet that was made and coordinated using Caravan that was with a single address.
Buck Perley:
And now you can essentially do the same thing with the whole wallet. So rather than just having a single bet on a single address, you could coordinate many bets or you know, you could coordinate a wallet maybe with family or family members. And so the pattern still is the same as we had for the single address. But now when you’re a coordinating the wallet, so you still pick OK, what’s the, what’s the quorum look like? So you could do the default, the two of three as I was explaining earlier, and you can go up to a total of seven signers and then you pick your type of address. You also pick which network main net or test net. So if you’re not totally comfortable putting real funds on yet, you can also move on to test net and get some Bitcoin from a test net faucet and then just kind of see how it works and play around.
Buck Perley:
And so once you’ve picked all of that, you can generate the wallet, you’ll import the xPubs. Usually this will be done from a hardware wallet. Right now we support Trezor and Ledger. You can also import them as plain text, but we have Oh in hermit of course as well, which is our own wallet solution. So programmatic command line wallet and we have coldcard in the, on the roadmap. And as another option, soon as we build closer towards this xPub extended public key, as you see in the demo there is kind of the step towards getting full PSBT support too. So once you’ve set up your wallet by importing the keys from your hardware wallets or the hardware device, then the Caravan, which again, it’s all, you know, a static website it’s running in a browser, it’ll call out to a node.
Buck Perley:
You can. Now, this is something that we’ve expanded. We ha we had the ability to call out to your own private Bitcoind node before we had that still and what we’ve expanded it by allowing the ability to actually import addresses. So this is important so that if you’re querying your own node, you don’t have to go through the command line or go through the Bitcoin GUI. You can actually import the addresses that are in the wallet so that the node becomes aware of those addresses and can determine your balances and the total balance of your wallet. And yeah, and then you know, you’re basically, once you’ve imported, those xPubs, you’re off to the races, you’ve got a wallet, you can see your balances, you can generate new addresses, you can see spent addresses, you can send funds from it as well.
Buck Perley:
And when you’re sending, the trick is, and you know, this is one of the tricky things with multisig is you you have to coordinate the signers. So anybody that’s familiar with using a hardware wallet for single sig, you know, you have to make sure your device is plugged in and the private key is safe on the device, but just still going through that process. And now you have to do that for each key in the quorum that is signing away, signing for the funds. And yeah, that’s all possible now through the wallet, which is kind of nice.
Parker Lewis:
Yeah. One of the big pieces there is. So if you, if you would use Caravan previously thinking about you know, generating a single address and then needing to, you know, in a single address world, we’d essentially export pub keys, generate a redeem script, and then you could deposit Bitcoin to those addresses and save your BIP32 paths, essentiall the key paths to communicate to the devices where to find the keys to sign transactions. But you would also need to store that redeem script. And what this also allows in terms of just the functionality improvement is by moving to a world of xPubs it gives you the flexibility to basically store and save those xPubs. And then, you know, at any time in the future you can recreate your wallet and you don’t have to spend, you know, recurringly to the same address or you know, conversely, if you didn’t want to do that, you don’t have to create a new address and then separately store a new redeem script to able to spend in the future.
Parker Lewis:
And you know, one of the benefits of this model is this really, you could have three devices, you know, if you choose to have backups. And really as long as you’re saving those xPubs, you’ll be able to or you know, the bit 32 inaudible you’ll be able to recreate, you know, and spend from any addresses associated with that wallet. You’ll be able to preserve better privacy and be able to not reuse addresses and then be more efficient when you are spending so that you can actually manage UTXOs and manage addresses such that you’re only spending, you know, the UTXOs you know, one of the pieces of feedback that we don’t yet have but we’re contemplating adding or we’ll plan to add is being able to let label UTXOs. So this really, you know, in terms of if you were wanting to operate in an independent way, a multisignature wallet today, now Caravan is really, truly functional to be able to do that and not overly burdensome.
Parker Lewis:
And that ability to have multiple addresses to preserve privacy, not to reuse addresses and then more efficiently spend by being able to manually manage UTXOs. That’s really a big improvement. And there are some others I think in this, and maybe Buck you can, you can speak to this. I think with the Trezor we can now confirm on device which is something also that when we think about multisig and we think about multisig relative to single sig, we are still advancing down the path. You know, in many ways multisig is, is more secure than relying on single sig. One of the challenges within multisig is verifying addresses on device and then also allowing those devices to verify change. So one of those first pieces that we’ve implemented in this implementation of Caravan is being able to at least on the Trezor be able to verify addresses on device and then the next steps through would be able to coordinate various different devices and keys to be able to verify or at least have the devices be able to verify change.
Stephan Livera:
Right.Well I think it would also be good to just compare and contrast, let’s say a Caravan multisignature with say Electrum. Would you be able to just highlight some of those differences there for the listeners if they’ve used an Electrum multisignature, how would it differ when they’re doing with Caravan from like a standards and like the pathways and so on? Could you outline a little bit on that perhaps Buck?
Buck Perley:
Sure. Yeah. I mean, I think that the big difference again is just we were saying earlier in terms of Caravan only focusing on one thing, which is the coordination of the keys essentially for the wallet. And what that means is just a much simpler user interface for people to understand what’s going on. So there’s a lot more setup I think that goes on with an Electrum setup when you’re coordinating the keys. And there’s a lot more in the view. But when you go into Caravan, there’s one job it has and that’s to get your xPubs and it’s to create a wallet from it. So if you think about like one of the key, you know, one of the reasons you might be using multisig is actually to coordinate with other people. And you know, as Parker was talking about, it’s like you’re coordinating with a family member for example, it’s less comfortable to ask them to spin up.
Buck Perley:
A whole Electrum set up is just it doesn’t make total sense for them to be able to hook it up. But whereas with Caravan, you can actually just send them to a website, you can even send them a file that will open up in their own browser, that’s not even a live on the web. And, you know, it’ll step, it’ll walk them through the steps and how to, so the steps, essentially, as I was describing before, you know, you get the xPubs there’s even a config file that we have for the wallet, which is basically just the xPubs and the the paths. So one of the difficulties, there’s some standards around how to generate essentially how to generate addresses based off of certain hierarchal HD paths for the wallet.
Buck Perley:
And we actually leave a lot of flexibility for that. So that means that whereas Electrum does have, they’re pretty strict to their own standard, which is not accepted in all implementations I should say. We leave it quite open. So if you know the path of the wallet that for where the xPubs were generated, then you can generate it. So that allows us to kind of leave, be flexible to support whatever the different standards are. Although we will default to the industry standard for how to generate based off of your network if it’s a SegWit enabled or not, for example, as well. And so, yeah, I think really the differentiator is just that simplicity and really being able to walk you through those steps.
Stephan Livera:
Cool. And can you just tell us a little bit about the address types as well? So you’ve got that option there. When you setting, when you are setting up your multisig, you can either go with p2sh, which is pay to script hash. You’ve got the middle one p2sh-p2wsh and then the bottom one, which is pay to witness script hash p2wsh.
Buck Perley:
Right? And yeah,as you’re saying, like each one of these has a certain standard about the past that is used to generate the xPubs that you’ll end up using. And so trying to explain this without getting too technical I guess, but so these are different script types. Essentially. In Bitcoin you have paid a script hash, which is a way to compress the data that incorporates a a multisig address. So multisig script is essentially has the rule set to say, in order to spend this output, you need to have two or three keys that match up with these set of keys. That’s a lot of data to have in address. And so paid a script has a way to compress that for when you’re sending to that address. And it just makes it a little bit more compact.
Buck Perley:
It makes it a little bit more private as well. So that all three standards, the ones that you listed out have that. But what they the way that they differ is moving towards the SegWit rules. And SegWit was a enhancement that was introduced to Bitcoin a couple of years ago now to essentially like, it effectively is a block size increase, but it also came with a lot of other benefits. And so these just have different signing rules associated with them and how a transaction is meant to be parsed and signed. And the reason why that’s important when you’re dealing with the generating of the multiple addresses is because you can share information about what type of address and what type of script it is and where a wallet that is receiving or trying to spend funds to or from an address like this, it tells the wallet how to deal with it.
Buck Perley:
And so p2sh in both versions of the p2sh versions that you were describing p2sh and p2sh-p2wsh are kind of the legacy version. p2wsh is the SegWit version and the it will generate averages of type bech32 which the address itself is a little bit longer, but it means all the signatures, input data is going to go into the witnesses are going into a separate data structure that will be cheaper to send actually. And you know, in this time as we’re seeing fees going up a little bit more as the inaudible pool increases, it’s becoming increasingly important that we do try and use SegWit native from the beginning as much as possible because that’s going to help you save on fees. It saves on block space, which is going to help reduce the load on the mempool too. And so, you know, I think that’s also another advantage of having a tool like Caravan that like kind of puts that choice front and center when you’re creating your wallet. And so hopefully it will help encourage people to be defaulting to that more and more because it’s a common good. The mempool, it’s something that we all have to share and we all pay the consequences of people that are not using those more efficient data structures.
Stephan Livera:
Yeah. So I guess just for listeners who maybe you’re not familiar with that, I would say if you’re concerned about maximum availability of being able to, you know, spend and receive, just take p2sh. But if you want to be more efficient and you want to be able to take advantage of having the lowest fees, then you want to look for the p2wsh. But I guess not every exchange supports sending out to the native SegWit bc1 addresses, but pretty much by now, most of them are supporting it because, I mean, SegWit was like three years ago now, so they should be getting to that,
Buck Perley:
That’s kind of an important disclaimer too, because you, you might generate a wallet that’s p2wsh because you listened to all this stuff. I just said, Oh, I want to save on fees and you generate a while that’s p2wsh and then you want to withdraw from an exchange that maybe doesn’t support bech32. And they’ll say, Hey, we don’t recognize that address, that’s a wrong address. So it’s just important to just like stay calm and know that actually that’s not what’s going on. It’s just that they, it’s not that your wallet is broken or it’s a lost wallet or whatever. It’s just that the wallet, the wallet that is sending needs to recognize the format of that address. And so they don’t recognize the format. You could do this all with Caravan, you could create a kind of intermediary, there are some wallets that’ll do this for you that understand both. But if you want to set up a wallet that is, you’re kind of in between step, you would do a p2sh-p2wsh that’s basically hiding the new version inside of the old version so that it’s in a format that older wallets will recognize. And so that’s kind of how you can deal with compatibility issues.
Stephan Livera:
Yup.And let’s talk a little bit about multi signature support amongst hardware wallets. So I think one interesting point that I’ve noted also just from discussions with you also is that having this tool set allows people to test their wallet against these different standards, if you will. Can you tell us a little bit about that and what your hope is for the space around multisig and potentially what they might do if more people start using Caravan.
Buck Perley:
Sure. Yeah. So I think there’s two pieces to that, what Caravan brings to the table in that regard. And the first is just, you know, having another offering out there, having something that’s user friendly, having something that we, you know, we hope that users will really enjoy and that will encourage more use, more eyeballs essentially towards hardware wallets and you know, that just kind of gets the market involved. So you know, if if somebody did want their wallet supported like, Hey, well, you know, you’re not supporting this or that standard yet, or it doesn’t meet our security guidelines, then you know, you can add pressure to the hardware manufacturers too. So just kind of having something out in the ecosystem, helping bring awareness to multisig and multisig best practices I think is a good step so that more people are using it.
Buck Perley:
The more that you’ll get market pressure. And I think that’s a really good thing. The second piece is something that we built up in the process of our own work at Unchained, which is this testing suite that’s included in Caravan and it’s not something that teachers super prominently in, user interface. But if you’re on the landing page, there’s a panel on the right side and you can see this little button that says run tests. And if you go to the run tests. It’s a testing suite for the different, yeah, here we go for different hardware wallets. And this is a really cool thing. And it actually, it highlights how important multisig itself is too. Because if you notice that at the bottom of this page, we have a list of seed words. This is a list that you can generate a Bitcoin wallet from.
Buck Perley:
And but importantly for the test, this is all testing in multisig. And so this is one of two keys involved in the wallet setup. So in our tests would be what multisig allows, and this really highlights how important multisig is to security. What this allows is that we can have real wallets with real funds both in Testnet and main net that are still totally secure, even though we’ve publicized the seed for the wallet. Now, if you could imagine doing that with a singlesig, I mean, it’s there’s no possible way to do that. And I think an even cooler way to think about if you could think of that in a normal banking context, right? Like, imagine a bank putting up an API key to access their live real U.S. Dollar funds in order to test how their API works.
Buck Perley:
It’s impossible. You cannot do it. But with this, we have this public seed, and because we have a second seed that is hidden, you can play with a real wallet, see real funds on it and see the addresses or there are some associated in these tests, but you won’t be able to spend with it because it’s a two of two. And so that’s just kind of like one cool aspect of this. And this allows you, what you would do is you would take this, the seed list, you would load it up onto a Trezor, Ledger or Hermit as well. And once you’ve loaded up on the device, you can run through these tests and all these tests or these are kind of like the main pieces of functionality that you want to ensure that your hardware wallet can support.
Buck Perley:
And so you can run it with different firmwares. You can run it with a different, you know, the model T or the Trezor one for the different hardware from a single company or you had the same thing with ledger too and run. Okay, well can I export a public key, can I export an xPub? Can I sign a real transaction? And again, this is only one of the two signatures so you won’t be able to send anything, but we can confirm that a signature came out correctly because our, the test fixtures know what the signature should look like based off of the database, based off of the key list the seed phrase and we can test against that and you’ll get a thumbs up, thumbs down if that works. This has been really useful in our own development. There were a couple of bugs that we were able to find.
Buck Perley:
One was just trying to the Ledger and the Trezor. The different hardware manufacturers have different ways of interacting or they just have different APIs which fine, it’s to be expected. And ledger was a little bit trickier for exporting their xPubs. And so as we were developing the wallet, we needed to export the export from the ledger. And using this tool I was able to you know, iterate fairly easily to make sure that I was getting the information correctly and that I was doing it properly. It’s not an easy thing to do. Normally software when you’re running tests you have, it’s all running on the computer, right? You have some file of data and it’s like, I’m doing this function. I’m expecting this to happen. It’s a little bit harder to do with hardware devices cause each time you’re running through a test.
Buck Perley:
Because you have to press the buttons, you have to click confirm, you have to check your addresses is a little bit harder to automate. But having this test suite, while it’s not fully automated, it gives you a standardized way to walk through these steps and very easy to read visual cues about whether or not it’s working in a secure way as well. So that was one thing we were using it for. And another thing we were able to find a bug in find and debug a bug that was in Trezor connect eight that we were unable to send to a p2wsh to the new bech32 addresses for multisig. And we have this inner test suite. If you scroll down on the left, you’ll see there’s a test for signing two all the way to the bottom. There’s a signing to p2wsh and using this test we were able to say, okay, this is actually a problem, should be at the very bottom.
Stephan Livera:
So just for listeners, most of the listeners are on the audio stream. I’ll just call out what we’re looking at here. So this is on Unchained Capital. If you go to the Caravan and then you go on the right, there’s a test suite. And then if you scroll down, there’s a bunch of different tests here. So one of them is like export the public key for different derivation paths. And so what Buck is referring to here is the, there’s a particular test relating to signing a transaction for p2wsh pay to witness script hash in a two of two multisig address.
Buck Perley:
Yeah. And so what we’re finding is that the Trezor was working to sign to a p2sh. So we had the right keys, everything was working fine. p2wsh should work fine, but trying to send it to the p2shw was not working. And so this turned out to just be a small inaudible where you’re able to publish a fix and the Trezor development team, to their credit, they merged it in very quickly and were able to get it fixed and it was deployed to Trezor connect. And that was great. And so this just kind of highlights the importance of having something like there’s a set of expected behavior that the hardware devices should be able to meet and going through a test suite, you can identify, this is also helpful if you’re running into some issues with your own devices somewhere else.
Buck Perley:
Maybe in another application to say, okay, this is a problem with the application. Is this a problem with my hardware device? What’s going on here? You can run them against these tests. And for me also just like this was kind of useful for me. I’ve beenat Unchained for a few months and just kind of onboarding and kind of like going through the workflows about how multisig really works, how the development workflow for multisig works and how to use it with the different devices without any funds really at stake. And because there’s this predictable environment set up, you can really go through the steps and see what’s expected and what didn’t come out and move forward from there.
Parker Lewis:
Yeah. One thing to add there because you know, as Buck was talking about, when Trezor connect 8 was pushed and the p2wsh signing flow or the ability to sign had a bug. You know, when you think about how that impacts our business, if we have a number of customers using multisig within our private application, and then, there’s a push from one of the hardware providers and then our customers, our clients can’t sign multisig transactions out of our platform. That creates disruption. And it puts us into a mode where we quickly have to not only identify what the issue is, but then react. And as Buck mentioned, we were able to identify what the issue was and Trezor did quickly then patch the bug, and we moved forward. Our goal for this, and again, you know, we’re starting small and we don’t have, you know, outsized expectations, but our hope is through this tool.
Parker Lewis:
And as multisig applications are being used, whether it’s people using Caravan independently, people using Unchained and using our vault product or other people using multisig and in a way that’s compatible with Caravan, that increasingly the hardware providers as they’re working on updates, this will be a tool for them to be able to come and check very easily to make sure that in a multisig setting that nothing is broken. And so we think about just and realistically, since we launched vaults within Unchained just over a year ago, our single largest investment has been this open source project that is Caravan in earlier I talked about the strategic rationale being providing a recovery path. You’re providing an easy to use tool for people that do not want to work with a third party to be able to access multisig. But in addition to that, you know, there’s the element that Buck was mentioning in terms of helping to drive standards.
Parker Lewis:
But then also just as it relates to interoperability or with this specific issue for hardware providers to be able to interact with Unchained, to be able to be compliments to companies because we do view ourselves as partners to the hardware providers, whether it’s Trezor, Ledger, Coldcard, others to come. And this tool allows them, you know, not only to work with us, but then as we’re working to support additional hardware devices, if there are issues that we’re having in the implementation, we have an open source tool and something that they can come in and look at and help us troubleshoot and get to the answer faster. And so in that way, and in many respects it’s also valuable to us because it accelerates our development cycle because we do, and one of the things that we’re working on now is to be using the same libraries that support Caravan within our private application. And if we can have this tool that is open source that allows us to better collaborate and compliment the hardware providers that the experience for everyone that’s using multisig should improve.
Stephan Livera:
That’s great. And I’d like to know little bit more around how you’re making it work from a hardware connection to your computer perspective. Right. So people are probably aware of HWI hardware wallet interface by Andrew Chow. I’m wondering whether there’s any interaction there with Caravan and whether that sort of takes a bit of work to kind of keep it working because, you know, maybe something changes in a hardware wallet somewhere or maybe there’s an update and you know, that might break the way it connects in. How are you thinking about that kind of issue?
Buck Perley:
The way I think of the HWI project it’s kind of like almost a reference implementation of how you’re going to create an interface for how the hardware wallets can or should communicate with the software, the application users. And so we’re not using HWI at all in our stack. It’s not necessary, but just like everything else we’ve been talking about here, you know, having these types of open source projects to help drive standards to help drive best practices is super important. HWI and a lot of the work that Andrew Chow is doing since he has a lot of focus around wallets and hardware wallets is super important around that. PSBT is, it’s like the real major example of that. So HWI itself is not something in particular that we have to work with.
Buck Perley:
And but we have kind of our own Parker alluded to this. We have two other libraries that are used under the hood and in Caravan that really only developers or people that are curious about the underlying code would even be aware of and that’s Unchained wallets and Unchained-Bitcoin. And this is the same, they have the same type of motivation is the HWI library, which is to kind of help drive standards. It’s also something as well that it’s open source so it can be audited and used by the entire community. And so but that we want to use within our own internal applications too. And so this is what I really loved before I joined the team. Even about what unchained is doing is kind of like marrying this idea of how open source and closed source can really benefit from each other.
Buck Perley:
And so you know, that’s kind of what it’s HWI doing. And is available out there to kind of drive some of that. And with the Unchained-Bitcoin Unchained-wallets libraries, they’re doing the same type of same. So Unchained wallets should just give some background, is the library to do basically a same type of thing. It’s interactions between different hardware while it’s and an application. So it’s creates a unified kind of interface for example, Caravan is an application that’s using, this doesn’t have to know what the specific hardware is that you’re communicating with, but it, because it has this common language, it for how to interface with it can do that. And Unchained-Bitcoin is a set of basically just Bitcoin tools underneath for dealing with keys for dealing with addresses that again, and it includes the test fixtures too.
Buck Perley:
So if somebody wanted to implement their own version of the test suite that we’re looking at, that can all be done with just Unchained-Bitcoin and unchained-wallets too. So you have the testes, you have the fixtures, which are essentially the transactions that you would be test signing and the xPubs that you would be expecting. And that way people can even test it if Caravan is doing it right as well. And so having all of this open is a really important part of this whole kind of vision where you know that it’s open for people to look at, it’s open for people to poke at. It’s open for people to use. And the more people that are using and poking and looking at it, the better off the whole community is because it makes us stronger, it makes us more resilient. It makes us just more aware of how things work and how what’s going on.
Stephan Livera:
And how about PSBT and the direction towards having Coldcard support?
Buck Perley:
Yeah. So the xPub it and kind of just coming up with the mental models around how, how that works in terms of wallets and user interfaces was a big part of that. And kind of the first step because PSBT is, creates this kind of unified, unified and more complex interface for managing wallets that are better basics around that. So xPub was step one and step two is going to be moving towards PSBT. And for those who are not familiar, it’s a partially signed Bitcoin transactions and it’s basically, it’s really just this standardized formats for how to pass around the information that’s involved in an actual transaction that you’re trying to sign between many different parties. So in the case of the multisig multi-sig transaction because it has to be partially signed because you’re waiting for the other signatures that are involved in the quorum.
Buck Perley:
So we have, we’re a good portion of the way there. We’re going to be building support first into Unchained-wallets itself. So before there’s even a UI, we’re building into this library that other people can use and interact with that we can use Unchained’s own vault system. And then also there would be support for it within Caravan directly. And so those are kind of the steps build it into Unchained wallets and other people can use it. It’ll be supported in Unchained as well. And then in Caravan you can use a Coldcard by a PSBT for that too.
Stephan Livera:
Awesome. And how should listeners be thinking about backups? Right. So let’s say they have created the wallet what do they need to be thinking about backing up? I mean, presumably that JSON file with the, you know, the xPubs and the derivation paths and then also they must be thinking about the backups on the seed for their hardware wallets and potentially if they’ve got a pin on that or a passphrase on that they need to what are the things they need to think about there?
Buck Perley:
Yeah. You know, that’s a really interesting question because you were talking about glacier before, which is the glacier protocol, which is thinking about this just like every step of the way has as hardened security as possible. And that’s important that it’s just important as like a mental model about how to think about things. But so what you’re describing, it’s interesting. So we have this JSON file that you know, whether you’re just working specifically with an address or you’re working with your wallet, both have files that can be downloaded as backups. Now that as a backup is very different from the seed phrase for example, that you know, write down after you’ve generated a while in a hardware wallet. And the reason it’s different is that even if somebody were to get this file they can’t spend any funds.
Buck Perley:
They know what your wallet looks like, so they can actually see balances. You lose some privacy, but you don’t actually lose any security. And so that’s important when you’re trying to think about you know, how to deal with your security and where things are. So, you know, backing up securely is always important because you don’t want to risk either security or your privacy. But in terms of how this is done, you know, it’s important. One kind of, one thing I think that some people overlook when planning out their security is that complexity itself is a vulnerability, right? The real fear when you’re setting these systems up is not that somebody else is going to get your money, it’s that you’re going to lose your money if you lose your keys or you lose access to your wallet. It’s no difference, right?
Buck Perley:
And so you don’t want to be overly complex. And so that’s also important when you’re, you know, part of security is, well, how many keys do you want to have? If you have a multisig that you need six of seven signatures, that means if just two people in that quorum lose their keys, you can’t sign anything. That also means that if one of those people lose their keys and the other person wants to hold the rest of their group hostage, they can. That’s important part of security too. So there’s lots of different ways and thoughts about, about how to manage security, but yeah, you want it each key should be, we believe should be backed up. You want to have a backup so that the seed phrase, you can split them up into different geographic locations.
Buck Perley:
Again, with just backing up the wallet, if you hide if you’re doing this as kind of a cold storage solution where you don’t need to be spending very much, but you’re doing it for like dollar cost averaging your spending to your addresses, you don’t actually need access to your seedphrase, or even your hardware wallets, you just need that JSON file that has your xPubs and you can generate the wallet and check your balances. It’s known as a watch only wallet. So you can check your balances without having to expose your private keys to any sort of security risks. And I think that’s, a really interesting aspect. I mean, the fact that Caravan makes that so easy to do, to create a watch only wallet with a multisig and you can keep your seed phrase, your hardware wallet buried in a safe somewhere, another one on the other side of the planet because you don’t plan to spend it at any time soon. I think that’s, that’s really key and that’s, that’s why multi-six really should be a part of any kind of serious security plan.
Stephan Livera:
Great. And also we’ve got Coin selection as well. I think we didn’t really touch on that. It might be all of us. I’ll just share the screen here and just go back to Will’s post and we’ve got use of UTXO maybe you just want to talk to that a little bit around you know, wallet management, change management, these kinds of things.
Buck Perley:
Yeah. So this is a nice thing that that’s now available because we have the wallet we’re still in a place where you have to spend all the UTXOs associated with a single address. But the fact that you can now pick which addresses you want to spend from, we have these two views. What you’re seeing here is in the screen there’s a view of the spend, the spend view and there’s a little switch in the top right of that that says manual and you can switch manual on and off. When you’re in auto mode, it basically operates the same way as most other Bitcoin wallets that you might be familiar with. You basically you know, you put in the address that you want to send to how much you want to send to them. And then we do some coin selection in the background.
Buck Perley:
We pick some funds until it’s the transaction is we pick some inputs until the transaction is funded in manual mode though you kind of mix things up a bit and choose which inputs you want to send. So this is really good for it’s a very minimal amount of privacy, but it’s kind of like a step above just doing auto select because one of the things that you know, some analytics companies will do chain analytics companies will do they can, they can identify spends and where they’re going to based off of coin selection. So coin selection is essentially which inputs you’re using to fund a transaction where they’re going to or from. So you can use something like this manual mode to pick certain inputs, even send to yourself. Like that adds a certain amount.
Buck Perley:
Again, it’s not privacy, it’s not full anonymity but it does offer you a certain amount of deniability, which is an interesting concept when thinking about privacy and also allows for let’s say, you know your wallet is getting pretty heavy with a lot of kind of small transactions. You know you’re adding, a few thousand sats every day, every week or something and, and you want to consolidate some of those. Now that’s not great for privacy, but having a lot of UTXO’s in your wallet can be very cumbersome. Yeah, it’s a lot of just data to keep track of, but it also can be expensive to send to fund a transaction that’s large. You need to gather all of those inputs together. And let’s say you have an urgent transaction that you want to send right at a time when fees are high and now you have to collect all of these inputs.
Buck Perley:
You have a huge transaction now that’s going to be very expensive. So what you can do with something like manual mode is you’ll say you’ve noticed that fees has gone down in a couple of weeks and like, all right, I’m going to consolidate some of my UTXOs you pick a bunch of your, of the kind of smaller UTXOs in that manual view you send back to yourself and it’s a bigger transaction. But because inaudible you don’t have to send as high fees and you can even we have the ability to set the fee rate manually as well. And so you can use that to, you know, it’s not urgent, so I can wait a little bit, but I know the mempool’s not full. I’m going to save on fees and send this out. And so that’s, that’s, those are kind of like the real main things that I think are useful about that. Yep.
Stephan Livera:
Also we were speaking earlier just around this idea of connecting up with your own node. Do you want to just touch on what, people have to think about with that? I mean, there’s a URL, username, password how do you connect with your own node?
Buck Perley:
Sure. So right now we’re, it’s supporting Bitcoin d so the kind of like defaulted to the Bitcoin GitHub repo. And this just uses the RPC interface to interact with the Bitcoin node. Now, the default that we have in Caravan right now is the public client, which you can see in the sidebar that just talks to blockstream.info. Not great for privacy, but super convenient. You don’t have to spend any time setting up any sort of node or anything. But you know, you could run this.I haven’t tried it yet and you could run it in a Tor browser and be making your balance requests there now, but still it’s better if you’re doing against your own node. And it’s pretty simple really when you’re setting up, when you should have a RPC username and password for when you set up your node.
Buck Perley:
If you’re running this on local host, there’s a couple other steps, but in the, there’s some instructions actually right there in the UI of Caravan about how to determine and set up the URI and you need to set up a proxy server that can be done again pretty simply. And once you have that and put in the username and password and there’s a button to test the connection, you test the connection that to make sure you’re communicating properly and then you’re good to go. That’s only step one though that allows you to kind of like get information about the blockchain. But again, I was talking about this a little bit earlier. This is a stateless thing. You’re creating a wallet right there in your browser on the fly. So even if you’ve done it before, there’s no knowledge anywhere about it, including of your node, unless you’ve gone through explicit steps to make it aware.
Buck Perley:
Before this update, you actually had to go into your node and you had to tell it what addresses to keep an eye on. You have to do that one by one. Now what we have for both the wallet and the address is when an address is generated and you’re in the private mode, there’s an option to import the addresses and this will just use the RPC interface to send these addresses to your Bitcoin nodes. And this basically just tells a note like, Hey, I’m interested in what’s going on on these addresses. So can you keep an eye on them and if you see an address come in or do you see funds come into this address? I would like you to a store that information locally and it’ll do that. You can do this even if you’re running on pruned node as well.
Buck Perley:
So you don’t have, you don’t need to have the full blockchain history of all address balances for, you know, going back all the way to 2009 you will have to rescan if you’re importing addresses that have received funds older than this current moment, if that makes sense. So when you send an address to your node, it’s basically just saying from now on, keep an eye on this address. But if that address has funds from earlier your node probably isn’t aware of it. So you just ask it to do a rescan and that can be done pretty quickly in about I think that the full IBD time for a Bitcoin core now is about an hour. So within an hour you’ll have all those balances, but you’ll just need to do a rescan and it won’t reflect immediately. But that’s nice. You now have this added benefit of privacy against the normal old Bitcoin node. No special set up server that you need to really set up aside from the proxy and it could be running anywhere. It doesn’t have to be running locally on your own computer either.
Stephan Livera:
Right. And how about thinking about periodic key checking and firmware updates on the Trezor and the ledger and let’s say the Coldcard, is there anything that listeners should be thinking about there?
Buck Perley:
Yeah, so firmware updates is always something to be aware of. You know, sometimes there are changes that come up pretty quickly and they could break compatibility with with software or certain setups that you might have. So this is another advantage of having that test suite that we were talking about, what you can do is if you’re nervous about that is well if you have another device, you can upgrade that to the new firmware, load up the test seed phrase and make sure that signing and xPub management still works properly. And that way it’ll still work, you know, at least with Caravan. So that’s, that’s one thing to be aware of. And then, sorry, what was the other question?
Stephan Livera:
Yeah, I was just asking about, yeah, firmware updates and periodic key checking as well. So just, it’s idea of every, as I know on the private, on the Unchained Capital platform, there is a periodic reminder to say, Hey, get go and check this key.
Buck Perley:
So, Trezor does support this idea of, I think Parker was talking about this earlier. This give that you can actually confirm addresses as well on the device. And so we, we confirm tools for that with your own keys. You can also, so you know, you’ll plug in the Trezor and then you look at your full, your wallet, you’ll see the balances and then you’ll see that it does match up with the address that’s on the device. And so that, that’s an important aspect of that. And then it just in terms of your balances to make sure that everything is up to date, you know, you have all the xPubs and for that you don’t even need to plug into the devices. But you know, you can see that your xPubs that hopefully imagine that you can do with, with the confirm on device and, or just loading it up fresh. Because again, this is all stateless. So if you just plug in the device and you put, you set the configs up correctly, you export the xPubs from the device and make sure that everything is still there as expected. Yeah.
Parker Lewis:
One thing to add Stephan. So well one of the things within our private application something that we have set on as a default is to require every 90 days our clients just, verify both for themselves and to us that they have access to their keys. And one of the, you know, we really view that as just a best practice and operational security. Again, especially and it would apply to, you know, someone who wasn’t working with Unchained. But just explaining our rationale is that ultimately we are collaborating with our clients even though they hold two out of three keys, we are contributing to their security but we are collaborating with them to secure their Bitcoin and we want to be ensured that they have, they actually have access to the keys and by putting in a 90 day key check.
Parker Lewis:
And again, every time a customer creates the transaction, we count that as a key check. All that is designed to do is ensure that keys do not go stale. And one of the things that Buck was talking about earlier is, you know, in our two or three setup, within our private application, we do generally recommend that clients hold backups. And again, we recognize that there is no one size fits all but you really, we’re working with clients. They can be in a position where they could actually lose access to three different pieces of information and still be able to recover their funds. They essentially have two keys and two backups, but we will, what we want them to do and what we train them to do using kind of periodic key checks is it’s okay, potentially for you to lose access to one key.
Parker Lewis:
But we don’t want someone to be in a situation where they potentially go a year or two years not knowing that they’ve lost access to one key. And that could just mean that they don’t have access to a safe deposit box. Not that someone’s necessarily maliciously stolen a key. And then in that intermittent period, unbeknownst to them, they then lose access to a second piece of information or a third piece of information. And just by doing that periodically they’re ensuring the keys don’t go stale such that if they ever do multisig is designed to allow to protect against that. But there’s, there’s a certain threshold there and by periodically verifying that yes, you do have access to the keys, those keys still do work. Then ultimately the long term security of your Bitcoin is preserved.
Buck Perley:
This again highlights another important aspect of, multi-sig, right? It’s like if you’re in a single signature situation having that taking your keys out essentially to prove that you still have access to them is actually leaving you somewhat exposed if you’re in a single sig situation, right? Like, but in this situation where your multi-sig is that you show that one key, nothing really happens and you have that redundancy. So if you find out that, okay, you had lost your key, that key, you still have another one somewhere else and they’re just like, as Parker was explaining, it kinda like brings that to the front of mine. It doesn’t let you just kind of forget about what’s going on and hopefully recover. And then once you find that other one, you can sweep the funds, to another new multisig and kind of reestablish that two of three security that you had before.
Parker Lewis:
Right? Yeah. Really what we’ve noticed too is you know, we’ve been onboarding customers to our multisig vault who in certain cases have never had Bitcoin before. In other cases are coming off of Coinbase and you know, having those protections in place, not just in terms of the key checks in terms of training them on the behavior. Because we also do recognize that as Buck mentioned, like when you do take your keys or when you access your keys, there is some degradation maybe to the security of those key locations. So we do give people the opportunity to disable those key checks. Again, in most instances, our clients really value it because it trains their behavior and they are more assured that they’ll have access to the keys when they need them. But that just being in that world where there are guard rails, there are instructions as to best practices.
Parker Lewis:
But then also knowing that, you know, and if we think about this in a world relative to single keys versus multisig and multisig with a collaborative custody partner like Unchained or even like a Casa, that one of the principle benefits of that is, knowing that you could potentially lose three access to three pieces of information, but as long as you have that fourth, your funds aren’t lost. And that actually promotes people holding private keys that otherwise might not. And so, you know, being able to provide people not only the ability to maintain sovereignty over their money, but to provide the security that, you know, again, your partner doesn’t have to be a company like Unchained. It could be a family member, a brother, a sister, a parent that, that those types of protections and diversities in key management actually allows for greater adoption of, you know, self custody of private key ownership. Whereas many of those people who wouldn’t otherwise, you know, opt for those solutions would just have their coins sitting on Coinbase and you know, living under the false pretense that they’re safe. When in reality they’re just protecting a form of authentication that’s inherently harder to protect.
Buck Perley:
It’s like so much else, so much else in Bitcoin that just makes you more aware of all these other things that you kind of took for granted.
Stephan Livera:
Yup. Also Parker, I’m curious what’s your experience been in terms of getting customers to be familiar and using multisignature right? Because I can imagine most people are coming from this world where they’re just used to having it, you know, well on say on some exchange somewhere or just in a single signature scenario. Have you found that recently you’re seeing more customers get familiar with this idea of multisignature?
Parker Lewis:
Yeah, definitely. And I think that it is important to recognize and it’s also one of those benefits of a tool like Caravan that we recognize that we’re in this phase where you have multisig as a standard has been used by most institutions that are helping secure Bitcoin on behalf of other individuals. But most individuals that are using or that are securing their Bitcoin through self custody are relying on single keys historically and realistically to this point today, but having a tool like Caravan available to people as well as services like Unchained or services like Casa its starting to expose people to how it works. And realistically, even for people who’ve been securing their Bitcoin for a long time, there are knowledge gaps into what’s actually happening. And you know, getting people in and having them see demos and having people then start to use multisig and educate their friends is important because one of the things that we’re working on is, you know, I think most people that rely on a single hardware device facilitate self custody.
Parker Lewis:
It creates some confusion as to actually what’s happening because they associate as an example, the Bitcoin being on the device rather than there being a key on the device. And that key being required to create a signature to then move Bitcoin. And so one of the harder things for people to understand when they come over to the world of multisig is where are the actual bitcoins, and realistically the Bitcoin are always where they were. Yeah, associated with addresses and protected by keys. But you know, one of the benefits of multisig is it is really, you know, taking something and people thinking of a single hardware device as both a key and a wallet too. It really just being a key. And it creates not necessarily even a layer of abstraction, but additional layers of security where you’re being educated not only on how Bitcoin works and how Bitcoin addresses works, but that if someone was actually to get a hold of a key and say it was a Trezor and they load it up, there is no linkage between that device and a Bitcoin address.
Parker Lewis:
And so somebody could load that device up. Even if they were able to access the device and someone hadn’t used it in a single sig mechanism, then they’d load it up and there’d be zero Bitcoin on there and they have no way of knowing what other keys or where those keys were. And so I do think that we are helping to, you know, through this early phase bridge that bridge the knowledge gap educate. But now it is becoming more intuitive Caravan as part of that story. But, getting in and interacting and uploading keys and creating signatures and broadcasting signatures. You know we are still recognizing that we’re in this very early phase, but we’re getting to that point where the early adopters are getting comfortable and there’s certainly things and again in Caravan is a key part of that process where even though we believe Caravan and multisig in general, again it’s not something, you know, we view the service that we offer through Unchained is extremely valuable.
Parker Lewis:
But you know, the team at Casa is working similarly on interesting things and interesting applications to improve people’s security that when we’re in that process and we’re in, we’re thinking about advancements, we know that there still are some challenges of being able to really make multisig as secure as it ultimately can be. And you know, having device, being able to use multiple different devices, being able to reliably not have, you know, updates to firmwares potentially break signing capabilities coalescing around standards. But there still are things that we can actually do on the development side to increase security. But having client, the first wave of clients come in, the first wave of people that are using multisig in an individual capacity to come through and understand how it works to then be able to communicate it to friends and family. We are seeing that and we do think that we have incremental steps to take what we’ve already broken down a significant amount of.
Stephan Livera:
Awesome. so look also, while I’ve got you guys here, also wanted to talk a little bit about what we’ve done recently with Bitcoiner Ventures. So for listeners who aren’t aware, I’m one of the partners with Bitcoiner Ventures. And we have just recently completed an allocation. Unchained gave Bitcoin adventures and allocation to invest in the company. And those of you who are interested, if you are anywhere in the world, if you are an accredited investor, you are able to invest as part of our syndicate. And so I’ll put a link in the description later for those of you who are interested. But our first deal was actually with Unchained. So I think from our perspective, those of us who are involved with Bitcoiner Ventures, see a lot of potential and see, think, you know, Unchained Capital is a great business in the space.
Stephan Livera:
And see that really it’s really building towards that vision that we have going forward. And so I thought I’d just put that comment out there. And perhaps Parker you could just tell us a little bit about the vision that you’ve got a and what Unchained are trying to build out in terms of you know, Bitcoin financial services and potentially. I particularly like that it’s building out in a way that’s sort of really respecting the ethos of Bitcoin. So that for me is something important that I really like about Unchained. But curious to get your thoughts as well, Parker and sort of where you see it going.
Buck Perley:
Yeah. Well first I just want to say thank you. You know we are humbled to have, you know, Bitcoiner ventures as a partner. And really, when we think about Unchained, you know, me personally and you know, having the, there is just this culture within the company that it’s really by Bitcoiners for Bitcoiners. And you know, I think that, you know, not even specific to Unchained within the Bitcoin space, you know, while we’re right in a big way about Bitcoin, we recognize that we are still very much in the minority of the world. And even within the, and these are trigger words for me, but even within the crypto and blockchain world, having a view of developing applications specifically for Bitcoin and Bitcoiners is the minority. And for us it is important. We do want to have, you know, both have our clients have the ability to invest in Unchained as well as others that may not be clients unchain, but like what it is we’re building and how we’re building it.
Buck Perley:
And you’re partnering with Bitcoin ventures and having Bitcoin ventures through Angel List allocate to to Unchained is a great way to further connect us with, with the community and our clients. And so it’s really important to us. And we really value it a lot and we’re extremely thankful for Cory, Yan, Louis, yourself, all the work that you guys do. And realistically, it’s not something that is specific to Unchained. It may be the first allocation, but there are many interesting projects and important projects within the Bitcoin space. And given the dynamics with a lot of the traditional VC’s that may not have as clear a view as to what Bitcoin is and the right projects to fund, having an entity and a fund like Bitcoiner Ventures really is important. In our view. We’re incredibly grateful to have Bitcoiner Ventures as a partner, but then we’re excited to see the many other companies that will be funded through that platform.
Buck Perley:
So you know, first and foremost, we’re thankful for it, you know, in terms of Unchained and in our vision, you know, really thinking about it as building the private bank and the financial services for Bitcoin the right way. And there, you know, when I say the right way, there is no true right way. It’s, yeah, it’s an output of a lot of Bitcoiners coming together and recognizing what are the most acute problems that we have today and then how would we best solve them. And our solution at Unchained isn’t going to be necessarily the same as somebody at Casa, at River, at Coldcard, but, but in aggregate, we’re all complimenting each other in some way. And so today it Unchained, we really think about it as having that core nucleus around vaults, around multisig, around Caravan. Because if a few number of people own Bitcoin today, a hundred percent of people are going to need it.
Parker Lewis:
And in order, not necessarily for Bitcoin to be viable, but just to accelerate that curve, we need ways for people to securely store their Bitcoin in a sovereign way. And in the way that we think about Unchained and our vision, it really is one Bitcoin of ubiquity. And we’re working to build out a Bitcoin native ecosystem so that people can not only support, securely store their Bitcoin, but then maximize the value of that Bitcoin. So today alongside the the vault products and multisig we issue Bitcoin backed loans for people that are looking to preserve their Bitcoins for the long term, but need access to the dollar liquidity today. But really, you know, in terms of the services suite, yeah, it is going to be much broader than that. You know, one thing that, you know, I’ll announce here we are, we have just launched a pilot that’s only in Texas to be able to buy Bitcoin through unchained.
Buck Perley:
We just launched it last week. We onboarded a client who had never owned Bitcoin before. And when we think about really blurring those lines, of an on ramp where you have traditionally, or how people may have thought about punching up until this point. It is, you know, multisig and vaults and lending. But realistically, if you wanted to be an Unchained client today, you would have had to acquire your Bitcoin somewhere else. And you know, again, it is just a pilot. We are testing it out. We are operating more in an OTC capacity, but it is really a powerful idea that you can go from zero to cold stored multisig and be able to allocate to Bitcoin. And we’re trying to really tear down all of those barriers such that you never have to go to an exchange but recognize that there still is value.
Buck Perley:
So that, that’s a big project that they’re working on and that as we expand, it’s just really thinking about as Bitcoin is commercialized and as Bitcoin evolves, what are the needs that need solve? And us as Bitcoiners, where do we need them solved, you know, most pressing? And so really as we think about Bitcoin, we view it as money. And then, you know, as we think about money, what do we need alongside of that? It’s financial services and in the right way, at least in our view is to build that is create the custody solution that ensures people’s security for the longterm, but that doesn’t compromise their sovereignty should sovereignty be a goal. And so we want to be that preferred place where you know, maybe if you’re a company sovereignty isn’t the goal and the financial control is. And so you may want to live in a collaborative custody suite where you only have one key and unchained holds one key and the third party holds the third.
Buck Perley:
But really thinking about, you know, reinvisioning the Bitcoin on-ramp reinvisioning how companies and individuals will be custodying their Bitcoin in the future and then layering on additional financial services as we go. Kind of starting with that ethos that the keys are important and that keys do matter and that each one of the financial services that comes from here out on after and again today it’s custody. You know, lending beginning to help people buy directly to cold storage vaults and cold stored multisig thinking about the future of payments. But really just that the very clear focus on Bitcoin and what the applications are that individuals and businesses, and we already have a number of businesses that are on our platform from family offices to on ramps based in Australia, investment funds, operating businesses that that holds Bitcoin in treasury. And then in recognizing that individuals have businesses and businesses have individuals and helping solve all of those needs.
Buck Perley:
So you know, there are, you know, incrementally as Bitcoin is commercialized, there will be, you know, different applications again today in the world where you can still still spend your depreciating Fiat, that the core focus is on preserving your Bitcoin and storing it for the long term and then acquiring it. So that’s really where we’re focused today. But, but we do kind of view over the long term Bitcoin as a global transactional currency and it Unchained will help its clients facilitate not only the security of their Bitcoin, but then also the movement in the facilitation of transactions, however, and wherever that may be.
Stephan Livera:
Yeah, that’s really great. Yeah. Really aligned with that vision. I think it’s a really great step as well, that idea of helping people buy and directly have it already in cold storage and so already in a multisignature cold storage, which would just be a huge step forward in terms of the ecosystem and the ability for people to keep it secure. And another really cool thing with that is also if it is known that multisignature is really easy to do and it’s commonplace, then we might actually see less kind of efforts of like armed robbery or less efforts of like people trying to steal and attack because they know it’s already a hard target, right? Whereas if you kind of know Oh multisignature is really hard, then you know, someone might be thinking, Oh Hey, he’s probably got single signature, you know, whereas now in this kind of multisignature world, it’s actually helping make it more secure for everyone. And so it’s a really big ecosystem benefit there.
Parker Lewis:
It really is for, you know, I never disclose the identity of clients, but just having that idea of a client and he may even even made the reference that, yeah, I’m probably the first person that bought Bitcoin straight into multisig cold storage. And didn’t ever have to go to a Coinbase. And that idea of being able to, you know, educate users and have them feel comfortable. Cause that is another element of it that that user may not have felt comfortable if it was just going to a singlesig in certain applications and others, and especially for sophisticated users, they would. But being able to make that jump that the application of multisig but then also in our instance by having unchained be key holder, feeling extra protected that I know now I have these pieces of information, I know how I’m supposed to secure them.
Parker Lewis:
I know how they work and I know that should, you know, any individual or even multiple points of these pieces of information, whether it’s hardware devices or backups, should I lose access to them? I have Unchained, they’re to help me move funds. And I’m also not then having to grab an address to send it over to my you know, multisig wallet and Unchained I can just have it deposited directly there. So it really was a powerful experience that something that we want to do more. But it is really, it speaks to the vision that we have for unchained that is more than just custody and it’s more than just lending. It’s also more than just highly sophisticated and technical users. It is kind of blurring the gap between, you know, kind of onboarding and onramping to, you know, getting people in a world where they’re comfortable holding keys and that they can be in that world without having and bypassing a world, of full custody.
Stephan Livera:
Excellent. And so I guess just from a Caravan standpoint is that was our focus for most of this episode. Is there anything else that listeners to the, should look out for coming up or potentially, are there any areas that you’d be interested in say pool requests or contributions?
Parker Lewis:
Well, one thing that I, you know, an honorable mention or maybe it deserves even more of an honorable mention. And I’ll screw up his last name so I’ll just go with Kevin. But you know, it was an example where you know, now a friend of our companies kind of looked at Caravan and built out a what he dubbed a Coldcard kitchen and just took the initiative to develop an application on top of or relying on utilizing Caravan. And so, you know, we do want Caravan to be a tool to elicit kind of contributions from outside developers to come up with ideas. We’ve been talking with Christopher Allen with Fully Noded and they’d been working to try to make fully noted compatible with Caravan. So that is an important element. I think, you know, Buck mentioned it before.
Parker Lewis:
If there’s a single probably next thing coming to Caravan, it is Coldcard support. But then also, you know, for Unchained Capital vault clients, what you’ll start to see is a lot of this functionality that’s been pushed in the upgrade to Caravan coming into Unchained vaults. And having the benefit of that, that new expo architecture that the confirm on device in the future kind of, you know, having that UTXO management. And realistically from here with Caravan, you know, kind of increasing the ability to verify addresses on device coldcard support PSBT but then, but then, you know, kind of bigger, bigger improvements then coming as we kind of fit, merge that functionality into the Unchained vault.
Stephan Livera:
Fantastic. Guys. Well look, I think that’s probably the key points I was interested to touch on. So let’s just leave it with where listeners who want to find you guys online, where can they find you?
Buck Perley:
Yeah, sure. I’m on Twitter at, @Buckperley and github. You can find me on that the Caravan and Unchained open source projects as well as, as well as some of the LSAT stuff. I maintained with Tierion so yeah, github and Twitter are probably the two best places for me.
Parker Lewis:
Yeah. And you can find me @parkeralewis on Twitter and you can also check out a lot of the updates on Caravan on our blog at unchained-capital.com. My DMs are open on Twitter. Our team’s based in Austin, Texas. So as the, as the global shutdown falls, if you’re in Austin, definitely look us up. You know, not only is the team of at Unchained here in Austin, but then we’ve got an awesome folks in the Bitcoin community around town. So if you’re ever in town, definitely look us up. And you can find us online and please do reach out with questions and if you’re interested in contributing to Caravan, whether you work with a the hardware wallet or you’re just a developer looking to contribute. We are looking for active involvement.
Buck Perley:
Yeah. We have a lot of issues if anybody’s interested in contributing or looking to get used to the code a little bit there. They’re all labeled, you know, there’s some easier ones to kind of get your feet wet. And if you did want to play around with stuff like coldcard, PSBT bug fixing or extra features, I think there’s a lot there and we’re pretty active on GitHub as well. So if you had any questions about where to start just reach out to us cause we love contributors and we love working in the open source community,
Stephan Livera:
That’s great. Thanks very much guys. I’m a big fan. I love the work you guys are doing, so thank you for the work you’re doing on Caravan and on Unchained Capital. I think that’s pretty much going to do it for this episode. So thanks for joining me and for everyone else. We’ll see you out in the citadels.
Buck Perley & Parker Lewis:
All right. Thanks Stephan.