Hector Rosekrans of Casa joins me on the show to talk about securing your Bitcoin and how early we are in terms of Bitcoin inheritance. We chat: 

• Securing your bitcoin
• Self custody vs custodial solutions
• How early bitcoin inheritance is
• Casa covenant
• Hardware wallets
• Multi sig and inheritance setups – will they standardise? 

Links:

• Twitter: @hectorr159
• Site: Keys.casa

Relevant episodes: 

• SLP182 Nick Neuman & Jameson Lopp – The Next 100 Million Bitcoin Users

Sponsors: 

• Swan Bitcoin
• Hodl Hodl Lend
• Compass Mining
• Unchained Capital (code LIVERA)
• CypherSafe (code LIVERA)
• CoinKite.com (code LIVERA)

Stephan Livera links:

• Show notes and website
• Follow me on Twitter @stephanlivera
• Subscribe to the podcast
• Patreon @stephanlivera

Podcast Transcript:

Stephan Livera:

Hector, welcome to the show.

Hector Rosekrans:

Hey, Stephan, how are you doing today?

Stephan Livera:

Doing well. I know you’ve been talking a lot about securing your keys and doing some of this stuff. And I know you’re keen to talk about inheritance and I know this is a big thing for a lot of us as Bitcoiners. We think we’re going to live forever. Don’t we?

Hector Rosekrans:

Yeah. That’s the plan at least, but it’s good to prepare for the contingency just in case.

Stephan Livera:

Yeah. So look just for listeners who don’t know, you tell us a little bit about yourself.

Hector Rosekrans:

So my name is Hector Rosekrans. I’m the director of client services at Casa. I’ve been in this role for two years now. A little bit of time in the industry before that I actually got started here in the blockchain things at JP Morgan. So I like to point out I went from blockchainer to shitcoiner to bitcoiner. Really happy with where I’ve landed on that spectrum. But yeah. And then I also have background in the military. I was in the US Navy for a while and that’s really kind of what kind of brought me to Casa is putting together the security side of things, the technology side of things, the economic side of things, like bringing all that together. [That] really kind of brought me to Bitcoin and yeah, helping people kind of solve the problem of self custody. It’s this technical challenge, but at the same time, it’s something that’s really important to us to get right into make it user-friendly. And so, yeah, that’s basically what I get to do all day is help people be better, more secure bitcoiners.

Stephan Livera:

Yeah. That’s great. And so I’m trying to keep the show accessible for new people, right. For newcoiners out there and a common thing I hear from people, even when I’m out at meetups and I’m talking to newcoiners out there. They’re a bit scared about taking their coins off the exchange, right? They’re like, I’ve got some coin and I’ll ask them, Hey, have you learned to self custody? And they’re like, oh no, I still got that on the exchange. Or I’ve still got it with the broker. And so it’s about trying to make it easy for them to sort of come off the exchange, at least starting small, right. And then slowly as you get more comfortable you do these things for yourself, but it obviously takes a bit of work and practice and it’s not just something that comes for free, right? You have to put in the time.

Hector Rosekrans:

Absolutely. You really do. And this is like one of those places where I think that like that you know, just, I lean on some of my military background is you learn to operate weapons systems. These are things that are incredibly important. It’s important to understand them it’s important to know how to use them right. But ultimately they are tools they’re tools that are incredibly powerful that I can grant you a lot of kind of capability and the ability to exist in a world in a certain way. But if you don’t understand how to use them, you can certainly hurt yourself. And I’ll also be the first person to admit, I got a ledger when I was getting into Bitcoin back in the day, I got a ledger. And that thing sat on my desk for months because I was terrified that I was going to do the wrong thing.

Hector Rosekrans:

It’s like I wrote down a seed phrase, but I was like, did it get on my camera, was it possible, someone will scan it do I have to reset it now? How do I reset it? Wait, I do like a small test transfer [to see] If I could get these funds off. It can really intimidating. And that’s really what one of my biggest goals is it as a bitcoiner is to make it more approachable and make it easier to do that. And try to solve someone’s problems from like a technical perspective, but also from like a user experience perspective to just make it easier to do that and make it feel a lot more comfortable to like, to take that step and take that leap into self custody.

Stephan Livera:

Yeah, of course. And so for new listeners, that’s definitely the ethos we encourage is that you take the time you learn, and there are some basic tools and basic competence that you’ll just have to do. And I think going with your analogy there of it’s a tool and you need to learn to use it and it’s like, you need to drill it, right. You need to be ready to use it. So that way, when the time comes, you know exactly how to do it, you’ve done this process, you know? So what would be some of the first level things people need to learn and know before they can become comfortable with doing self custody and then going down that track as well of thinking about inheritance?

Hector Rosekrans:

Yeah. it’s really important. I think to like have the right mental model on what a key is and how it works. And so, because once you kind of get that, everything else starts to fit into place, but you know, the thing that kind of drives me crazy sometimes is the terminology we use, we say, oh yeah, it’s my Trezor wallet, my coldcard wallet that I’m keeping my funds on. My Bitcoin is ‘on’ my cold card. My Bitcoin is on my Trezor. And that’s great for a single sig. It’s a pretty good mental model for a single sig because while your Bitcoin’s not really there, the Bitcoin’s really on the ledger on everyone’s node in the network. Your key is on that device. As long as you know, your keys, there needs to be really careful with your key you’re in pretty good shape.

Hector Rosekrans:

But what a lot of people don’t understand is then when you go to multisig that now, if you think that well, is my Bitcoin split up amongst all my different devices that are part of my multisig? How does this work? If I lose one, how much of my Bitcoin do I lose? The mental model kind of starts to break down. It’s like, no, the device is just holding your key, your Bitcoin’s in the cloud. And you know, these devices are designed to just hold that key in one place. And the other thing here is that keys are just pieces of data and they can be manipulated the same way any other device in the world can be manipulated. I love hardware devices. I love hardware wallets because they existed to do one thing. They exist to keep that key on that device and never leak it out to the outside world.

Hector Rosekrans:

But when you get into multisig, you can start to use other approaches and other ways to keep those keys that have other trade-offs other benefits. And also other costs to them like with for instance, with Casa, with a number of multisig setups, you’ll use one or two hot keys as part of like your overall quorum. And that’s a really bad idea. If you have a lot of Bitcoin on your set, unlike your one key setup, because a hotkey can be stolen. We get to multisig what you lose in that security any hotkey even stored in the good secure encrypted storage could potentially be leaked. But if it’s only one key of your key set where you gain from that, as you gain that resilience that you gained that redundancy.

Hector Rosekrans:

And so it’s one of the reasons why I really think that more people should make the jump directly to multisig and not say like, oh, I want to go — single sig kind of in the middle. Single sig is a great way to go. It is a good way to get started, but if you go to multisig, there’s actually a lot more flexibility that you have, which ultimately means more security. It does take a little bit more work on the front end to kind of think about it and understand it and set it up. But if you’re willing to put in the work, you get yourself to a much better and much more knowledgeable position right off the bat.

Stephan Livera:

Yeah. Interesting point there. So I think for a long time in this industry, the common advice has been start on, say a phone wallet, small amount, and then maybe progress to a hardware wallet and then maybe get a hardware wallet with a passphrase and then go to multisignature. But I guess what you’re saying now is actually, maybe we’re starting to reach a point in this industry where people should just be going direct to multisignature. Is that basically the argument you’re sort of making for people who are buying a certain amount, like, I guess above a certain amount, you should just go straight to multisig?

Hector Rosekrans:

That’s pretty close. I mean, I wouldn’t say skip the phone wallet part. Because phone wallets are great. They’re hot wallets. They’re fast, they’re easy. You can kind of try a lot of different ones. You can play around with it. Phone wallets are a great tool for kind of learning about how it works and getting comfortable with starting to sort of play around with actual real Bitcoin on chain transactions. I think that’s always the best place to start with very small amounts. But then once you get to the level that like, okay, I do want to hold this for a long period of time. That’s where I think that like understanding how these different pieces kind of fit into the overall security model, it can be a really huge benefit and ultimately something that not only is safer, but also just helps you understand better what’s up, what’s really going on and what you’re really doing.

Stephan Livera:

Right. Yeah. And I think that is an interesting point as well, around the flexibility aspect, right? Because it’s allowing you to be able to arguably travel in a way without risking all your coins in one go, because if you have the keys split up and you’re traveling, then it kind of helps you in that aspect. But I guess probably one thing just before we get into that. So I guess just to talk through the idea around inheritance, right, as a calling back to what we were saying before, it’s like, we think we’re just going to live forever. Right? And so at the end of the day, then for a lot of people who are just sitting on say a single signature hardware wallet, they are trusting and relying on the idea that their family or their parents, or their daughter, or their son will find that 24 word seed. And ideally either know the passphrase or they have it written down somewhere and they know how to access it. And that’s basically what most people, if I had to guess, that’s probably what a lot of people are relying on, unless they’ve gone for say for you guys with Casa or with one of my sponsors, Unchained Capital or with an actual custodian. So I guess what’s your initial kind of take there on how we should be thinking about inheritance and how should we be looking to improve that?

Hector Rosekrans:

Yeah. And it’s a great question. it’s really kind of an under-explored area. There’s basically a lot of our family members are maybe not hardcore Bitcoiners. I mean, if my wife was as deep into this stuff, as I am she would know exactly what the setup looks like. She’d know exactly where to go and find the stuff she would be like, okay Hector where are the sovereign recovery instructions? Do you think I should be using Electrum or Specter when I’m running this up? Which node that you’re running, should we plug it into like, well, don’t run that one. But like most of our loved ones are not quite as deep down the rabbit hole as we are. And so there’s this point in which it’s like, if our family finds themselves in a situation where we’re not there to help them, they really can kind of be in a lot of trouble.

Hector Rosekrans:

It’s like you may have been living in life where you’re expecting to have a certain amount of wealth, certain amount of assets. But if you can’t find that 24 word seed phrase, if you can’t find that hardware device, if you know, you’ve got three shots on that ledger pin and you can’t find where the pin is written down you can be in a situation where all that wealth is potentially at risk, and it’s already a stressful time in anybody’s life when you lose a loved one. And so it’s really important to get this right, put a plan in place. And you also want to think about it from the other side there’s potential you know, if you make it too easy for anyone in your family to get access to the funds you’re potentially unintentionally introducing backdoors and introducing risk into your setup. And this is like where the cool, technical, exciting flexibility of multisig actually turns into a really important use case. One of one of many, but it all kind of fits into this category of like, how do you make Bitcoin management easier and more comfortable in a lot of different scenarios, in a lot of different cases and inheritance is really just kind of one of the most obvious and most important ones I think to get right here.

Stephan Livera:

Yeah. That’s a hard one because as you were saying, you want to make it — it depends on your situation. Obviously everyone’s situation is different, but you might be in a scenario where you don’t want to give access now while you’re still alive and you want it to only trigger when you die. And so maybe you need to use a lawyer or you need to — but some of us might also be in a scenario where, okay, you do trust fully your loved ones but you just need to make sure they have somebody they can call when they, when something happens. Right. And do you, have you assigned a person? So I guess for listeners out there, you’ve got to think about, well, if something happened to you, do your loved ones, know who to call? Because here’s the thing. If they are not savvy and they just post online, oh, Hey, can someone help me? And then guess what, all the scammers are going to come and come for them and say, oh yeah, I can help you out. Just tell me your 12 words. Right?

Hector Rosekrans:

Yeah. And I’ve seen this myself, like I’ve seen people posting things like this on online, on different on Twitter, on different forums and all I’ll DM, someone I’ll say like, look, I really know what I’m talking about. I get paid to do this, you know? But I’m sure their dams are full of people saying exactly that like, no, no, no, but really, but be like, I work for this company and like, we do this for a living, but there’s no good way to know who to trust without kind of having the cultural knowledge that we’ve all developed across this industry. And that’s another real risk is that you find the wrong person. They could really steer you in the wrong direction here. And that’s why you have to think about this stuff ahead of time.

Hector Rosekrans:

You have to put a plan in place and make sure that they know what to do. Keep that as simple as possible in terms of managing your relationships with your loved ones. Again, my wife is she’s on a password manager now. But begrudgingly, it was not her favorite project, our marriage survived, I have to say. But you know these are the kinds of issues that like these day-to-day issues that long-term Bitcoin management is going to require us to address.

Stephan Livera:

Yeah. And it’s a very good point there around long-term management, right. Because as we speak today, Bitcoin prices, whatever $30,000 US per Bitcoin. But if we’re right about this thing, and it’s literally millions of dollars, like $10 million per coin in 10 years time or whatever, that’s a lot of money. And when you’re gone, you want to make sure that your family can still access that stuff. So, yeah, difficult conversation and difficult thing to think about and talk about, but it’s a necessary conversation for many of us. So let’s talk a little bit about the aspects there of using a lawyer and then using maybe a technical expert. Like how should we think about that aspect of it? Like we might have to have a lawyer hold some way of accessing one of our keys, but then you might have somebody else who’s like a technical expert for your family to go to. How do you think about that?

Hector Rosekrans:

It’s a great question. And I spent a lot of time talking to a lot of lawyers about about this whole approach. You know, Casa’s kind of original conception of how we going to do this was going to involve a lawyer in that process, essentially as a key holder. I only this idea that there’s be a bunch of lawyers out there they’re going, gonna want to hold keys. We get business for them. And it’ll be kind of just a normal part of the estate planning process. They have a whole slew of regulatory requirements. They do not want that liability. And I have found a few lawyers who are willing to do that, but they tend to be lawyers who are working for one client because that client is providing them so much business that they’re like a family attorney at that point.

Hector Rosekrans:

And so if you have a lawyer who’s interested in holding a key, that’s great. Lawyers are great when it comes to estate planning and making sure all the legal stuff is exactly the way that you want it. But what they’re not going to be able to do is they’re not going to be able to give you the guidance to make sure that the actual custody, the actual control of those assets matches what you want to have happen. For that you’re going to have to either do it yourself with your key management, or you’re going to have to work with an expert, work with a consultant, work with a trusted friend who kind of help you the technical and the actual control side of it into place. And that’s can be a pain. But the cool thing about that is if you get it right and you do this right, and you put in the work, it’s actually a much better solution than even what you have with the stock, with a brokerage, that’s gonna, you’re going to have to go through a third party to transfer those assets over.

Hector Rosekrans:

You do it the right way with a self custody setup. And these assets are actually theirs. They’re directly in control of your family. They can never be taken. No one else outside of that can ever take control of them. So it’s a much better end point that you can get to by thinking through some of this stuff ahead of time.

Stephan Livera:

Yeah. And so it strikes me as using services, like what Casa have, it’s occupying something of a middle position because it’s like a hybrid, right. You’re trying to get the best of both worlds in that sense of giving you and maybe your family or your heirs, some ability to control and spend those Bitcoins without relying so much on someone else. Right. You’re not relying on a custodian to be able to do that. If everything goes right, you’ve kind of got it all within your family. And if something goes wrong, I guess in the Casa case, Casa holds one of the keys. Right. So that’s also where Casa can help out there. And I think that’s actually a good direction that the industry should go. Because as we mentioned before it’s self custody is so important to maintaining the decentralization of Bitcoin. And so if a lot of Bitcoin ends up in these big custodians, well, then it kind of goes against the point of Bitcoin, as we would like to see it ideally. Of course, there’ll be some people who use custodians and okay, fine. But we want to have a good number of people who are able to be self-sovereign. Right?

Hector Rosekrans:

Yeah, absolutely. And again, this is where, what I really like about like the inheritance use case is that it’s easier to transfer assets like to your family when they’re in self custody. Even if you’re going to go through someone like Casa who will, A) kind of provide that obviously holds a key and kind of manages the system. That’ll help you know, help you kind of permission this, but also just is somebody at the other in line who you’ve developed a relationship with as a company over the years who is then there and able to kind of walk your loved ones through this scenario. To me, that’s like that’s one of the ways that I can have a client for life is if they trust that like, that our company is going to be able to help out their family and kind of knows that and is able to make sure that they can walk through that process to me, that is such good business and the kind of business that we want to build.

Hector Rosekrans:

And I think that the kind of business that a lot of people that are Bitcoiner only want to build. I want to see more people doing this more people kind of taking on this, like hold your hand, not your keys type approach to building within this industry.

Stephan Livera:

Yeah. Sure. I’m curious as well. Do you know of any common mistakes people make when they are doing this inheritance planning and the transition over aspect after somebody has passed?

Hector Rosekrans:

The common pitfalls are really kind of embarrassing, honestly. Lawyers have come to me that I’ve talked to who say, like, we don’t do this because we have this one situation where we had a seed phrase, it was just like bouncing around our emails and we’re emailing it back and forth to each other. Like, we don’t know what to do with this. Seriously, this is what we’re talking about because no one wants to think about this and no one has really put in place a process. I think there’s some people that do it. But yeah, as far as I know, Casa is the only kind of productised like solution. And it took us a really long time to get to we felt was a very scalable and actually usable approach for the vast majority of people who aren’t paying lawyers however much money it costs to keep a single lawyer on retainer for all your business dealings. It’s just a really hard problem. And I think it’s going to be a big learning curve for the legal industry. I think you see a big learning curve for our industry, but frankly, like from what I’ve seen, it’s still very early days in terms of having a good approach to this.

Stephan Livera:

Yeah. That’s really rough. And the thing is there will be some people who let’s say maybe they’re like a big trader and they’re like an alt coiner, they’re like a shitcoiner and they held, like, they would just have like everything on a ledger. And it’s just like a, probably just a seed and a passphrase kind of set up. But those of us in the Bitcoin world are thinking very long-term and so that’s why it’s gonna to more likely to be on a multisignature set up if you’ve got a large amount of coin. And so then that necessitates really thinking through and being careful about it. But as you said, it is extremely early. And so I can imagine maybe people with a lot of coin are just sitting on custodians or some kind of multisig setup, right?

Hector Rosekrans:

Yeah, absolutely. But again flexibility of multisig really gives you a lot of tools to play around with here. And I’ll kind of get into a little bit of the specifics about how we manage this. So with Casa, these are all are we only offer this at our premium tier, so it’s going to be a three of five account. Now, on a three of five, that’s going to be three hardware wallets, different vendors so that we make sure there’s no — we never want a quorum of keys to be exposed to the same risk. So yeah, we used different vendors within that three and we also have a mobile key. This was, I was mentioning earlier, this is a hot key. It lives on your phone it’s back to the cloud storage.

Hector Rosekrans:

Obviously that’s never something you’d want to do with a lot of funds in a single sig setup, but because it’s only one key out of the quorum, the resiliency and the redundancy and the backups and the availability anywhere you can get access to. You can land in a new country with the clothes on her, back, buy a new iPhone sign to iCloud signed to Casa, you have that key with you. That’s an incredibly powerful and flexible tool just in terms of your overall key management. So that’s the mobile key basically a hot key that’s highly available, and then you have the Casa recovery key. So the way we think about it is when you actually want to go do an inheritance process, the beneficiary is going to need to have a minimum of one hardware device.

Hector Rosekrans:

And we’d like to say if they have more, that’s great, but let’s make a plan to make sure they have access to that hardware device, and they have access to the seed phrase backup for it as well. And then let’s work with them to figure out how to permission them and get them that mobile key, but only get it to them when the client has passed away and Casa can basically permission access. We don’t hold that key. We hold the decryption key for the encrypted key that’s then held on the server that was and I said that, so that kind of fast, but the backup is encrypted on iCloud, and then Casa holds the decryption key for it. So we’re able to basically transfer control of the account over to the beneficiary. That lets them get the mobile key as well.

Hector Rosekrans:

They basically either download it from cloud storage or they scan it from a QR code. They print out ahead of time that gets them to Casa recovery keys number three, and now they can move funds to wherever the next steps going to be. But it’s that flexibility that you get by being able to have the mobile key, being able to have the hardware key, and being able to have the Casa key. Three very different security models, all coming together in the scenario. And again we’re kind of there to act as a check, make sure that you really have passed away. So you’re not introducing potential theft, potential backdoors, potential phishing attacks and there’s also plenty of ways in which any of our clients can do this themselves with more self-sovereign approach where you’re working through, you’re working through a sovereign recovery thing where you’re going to have more direct access to the seed phrases, but the approach that we want to take, we want to make sure it was well-managed that we were using all the capabilities that we have as a company to the best of our ability to make it as smooth and seamless as possible.

Stephan Livera:

I see. Yeah. And so in that approach then, does it still stay a three of five set up, but one of the keys now is held by your trusted beneficiary or your heir in that case?

Hector Rosekrans:

So and there’s a ton of different ways you can do it. We have a bunch of different kind of approaches. Typically yes, it will stay a three of five, but what I like to for most people, their most immediate beneficiary is most likely going to be their spouse or someone that they live with someone they’re very close to. And so you don’t even necessarily need to kind of turn over key to them. That’s just, Hey babe, it’s in the safe, here’s the combination for the safe, this is the one key we keep in our house and that’s the one that’s going to be kind of designated for recovery. And that they also are able to get access to the one in the safe deposit box, on the other side of town, or the one up in the bunker in Saskatchewan, got to take the helicopter up there to get into it, all that good stuff.

Hector Rosekrans:

The safe look location key. But we really only want to make the plan around that one key that’s most accessible, most easy to get access to just to keep the problem as constrained as possible. That’s not the only way to do it. There’s a bunch of other ways to go here usually requires thinking about a lot kind of consulting with us, thinking through what makes the most sense for you and your family. But I’d like to kind of provide like the easiest pathway as the most common kind of default approach of just saying, Hey, it’s the key that’s we already have in our house, it’s easy and it’s accessible.

Stephan Livera:

Yeah. That’s an interesting way to put it. And yeah, as you said, it’s that flexibility of having one of the keys be the hot encrypted key, mobile key that is able to be transitioned over to the heir or the beneficiary or the spouse or whoever, and then the combo of that three of five. And so I guess just for listeners as well, if you’re new part of this whole idea is the idea is we are trying to eliminate single points of failure. So the idea being you don’t have enough of a quorum on you at any one given time. So that way someone can’t just go gun to the head, Hey, pay me all your Bitcoins right now. You’re going to have to say, well, no, you’re going to have to take me to this security vault, or you’re gonna have to take me overseas cause I’ve got a key over there or something like that to make it, I guess, an extremely expensive attack. And so that’s the general idea we’re going with here. And then I’m actually curious as well, like with that whole idea of geographically, distributing keys, what’s been the Casa approach and thought around that right now in the kind of this age of COVID hysteria restrictions, has that been difficult for Casa customers or have they kind of found a way around or managed around this?

Hector Rosekrans:

It was definitely kind of an unexpected challenge that that came up for us and typically it just means more use of the Casa recovery key because you know, anyone who’s looking to move to move funds around is going to basically they need one — at minimum, one hardware device to sign with themselves. Plus the mobile key that gets you to two and most people have fairly ready access to that mobile key, obviously on your phone and then that one hardware device that you keep relatively close at hand. And so it’s just about getting that third signature typically you might have another key, like within your Metro area, but if you have the banks are closed and there’s all kinds of other travel restrictions that can definitely be a challenge. That’s where Casa comes in, we hold the recovery key, give us a call.

Hector Rosekrans:

We’ll do all our security checks make you wait for a security delay. But then after that we’ll sign a transaction on your behalf and you can move funds. You know, we did have some people who I think rethought their setup a little bit and had us ship them another hardware wallet. So because they knew they weren’t going to get access to something that was in another country for a very long time. And so then they just rotated that key out, rotated a new key in with the new hardware that we shipped them; did that transfer using their other mobile key, that key they had access to and the Casa recovery key. And then that new key they added in, they kept it a bit closer at hand, so they would be able to sign on their own.

Stephan Livera:

Yeah, it’s a tricky one, but I think, yeah, you’re right. it’s just about thinking through carefully, what am I going to be able to access? And hopefully over time, if the restrictions come down and people can move and travel around a bit more easily, then it kind of gets back to a more ideal scenario where you can move around more freely and put the keys in harder to reach locations. So that way it’s better from a security point of view. Right?

Hector Rosekrans:

Yeah. One of the interesting things that we’ve also seen is a lot more people kind of living a more nomadic lifestyle and moving around a lot. And that’s definitely been an interesting challenge to help people deal with, but a pretty cool one as well, because there’s just ways in which with multi-sig, if you’re moving around, you can make sure that generally speaking, you always have access to your funds, but you can also do things to make sure that while you’re traveling you’re never gonna run into a problem where some sketchy border guard is going to give you a hard time or you get mugged or something like that. So one thing that we do for instance is we have this emergency lockdown feature, that’ll lock down the account until you can get in touch with Casa.

Hector Rosekrans:

And so something that some people will do is they’ll say, Hey, can I do an emergency lockdown while I’m traveling? We said, yeah, sure, absolutely. And that way you can actually travel with two keys, but you also know that you’re not going to be able to log in to your Casa account. You’re not going to be able to get access to that mobile key. It was totally shut down until you call up and you go through myself or someone on my team, who’s going to verify it. Yes, it’s really you, you’re safe in your new country. And now we can go ahead and unlock that account for you. So just a lot of flexibility that you get with multisig. And that’s really like, that’s the biggest thing that I think that people miss is like, yes, this is all about security.

Hector Rosekrans:

It’s all about the keeping your funds in the most secure way possible, but it also opens up a whole world. So it’s not just like I put that ledger in the drawer and forget about it and pray that the maid never knows, never knows look for a seed phrase, but opens up flexibility for inheritance, for travel for all these different kinds of challenges that in life situations that that apply to everybody. Yeah. Anyways, I just want to see more approaches to it. I want to see more people kind of taking advantage of some of this stuff.

Stephan Livera:

Yeah. That’s really cool about the nomadic people aspect and being able to lock down the account for a little while and then reopen it back up. And I’m curious as well, maybe obviously with that doxing, any particular customers or whatever, but have there been any customers who’ve or at least in the industry, have you heard of people who’ve had trouble, let’s say moving through the airport how you’ve got to put your thing, your bag through and you know, whether they would, I don’t know, look at your hardware wallets and say, oh, is that something dodgy or another one people have is that concern about if, let’s say they had to take like a seed plate through and would that be visible like that x-ray machine that you have to go through when you’re flying? I don’t know if you’ve got any experiences or kind of things you’ve heard.

Hector Rosekrans:

Yeah. It’s a great question. So first of all, on a personal level, I fly with so much hardware devices and Faraday bags. It’s all Casa stuff. It’s nothing, none of my personal stuff, which I lost in a boating accident… So my wife work so hard at Casa to keep just to stack that Bitcoin, but yeah I’ve never personally had had an issue. Generally, my recommendation is if you’re gonna take a faraday bag with a hardware device, throw a bunch of other like USB sticks and other kind of just electronic junk in there and most guards or most security agents are gonna say, ah, just a bunch of stuff, I’m not too worried about this.

Hector Rosekrans:

You definitely want to be very careful if you are traveling with, if you need to travel with like a quorum, if you need to travel with like two keys plus a mobile phone, I’m gonna be extremely careful about how you do that. And that’s when like pin codes become important. That’s when features like locked out, like actually lock in and countdown. And then also on top of that, deleting the app off your phone. Things like that become become really important. But generally speaking, if you’re just traveling with a single hardware device, just make it look like it’s not a big deal. If it seems like you’re trying to hide it or seem like you’re trying to do some weird with it, it’s a lot more likely to draw someone’s attention unlike if it just looks like it’s kind of a mess in your backpack, which isn’t hard for a lot of us do in the first place anyways.

Stephan Livera:

Yeah, of course. And I’m curious, one other thing that came to my mind is the seedless approach that Casa take, but you also mentioned that your beneficiary might have a seed as well. So how does that part work? Are you saying for that specific key, in the inheritance case where you’re having one party held one key, they should also hold like the 24 words on a seed plate or some kind of metal backup for it, or what’s the difference there?

Hector Rosekrans:

Yeah, absolutely. I love this because I get to get into the nitty gritty of how we think about this stuff again. Because we actually changed our approach a little bit and we say we are partially seedless. So the way I think about it is we have two of our keys are highly resilient. They’re not going to be lost. They’re recoverable in a bunch of different situations. That’s that mobile key we talked about and that’s at Casa recovery key available to you anywhere you go in the world. And then from there, we want to make sure the rest of our keys are very secure because you know, resilient, accessible around the world means potentially able to be stolen. So then we have the three hardware wallets, which are very secure and two out of the three of those are gonna be so secure, we’re not even gonna back them up.

Hector Rosekrans:

And the assumption is if you lose one of those hardware devices, we are not going to restore that same key on new hardware device. We’re just going to replace the key entirely. Replace the device, obviously, but also just get a brand new key. And what we’re going to do is we’re going to use three of the remaining four keys in your setup to do a key rotation, which is basically a transfer of funds from the old accounts to the new account. So that’s what we do with those two hardware devices if we’re to lose them, the ones that we don’t have, the seed phase for. We are now encouraging people to hold onto one of their seed phrases in part for inheritance reasons, because this is going to give you kind of an additional backup that your loved one could can recover, but also just as kind of an additional piece of resiliency, [we] want that key to be basically instead of 100% single location, very secure but not recoverable, we want it to be like 98% super secure single location.

Hector Rosekrans:

But we also like to have a little bit of that backup, a little bit of that recoverability on that one is as well to kind of get us to get us a little bit more, more flexibility. There’s also some other fun things you can do if you want to get to like your 301 level multisig with cloning the device and having different copies of the same key on different hardware devices in different locations, you can get super fancy with all this stuff. But bottom line is that we do like having one seed phrase for one of the hardware devices available, and that’s a pretty subtle shift, but a pretty important one when it comes to when it comes to kind of thinking about the holistic picture of recoverability versus security of your keys.

Stephan Livera:

Gotcha. Yeah. So to put, in other words then it’s like your Casa mobile key can be recovered. The Casa recovery key, you guys have got that covered and you’ve got that obviously able to be recovered. And then now you want to have of those three remaining hardware wallets. You want to have the seed plate or seed phrase backed up for at least one of those for just one of those three.

Hector Rosekrans:

Exactly. So three keys are recoverable. Three keys are single location and we’re very careful with how you manage that seed phrase. It’s going to go in a temporary bag, or I should recommend that you store it in the same location that the key itself is. So it’s, again, that same assumption, like if your house burns down and the key and the seed phrase are in your house, that’s fine because you have the other ones that are not there they’re able to recover it, but we don’t want to kind of start to increase more complexity by moving that seed phrase somewhere else or combining with another key. So still, we basically assume that it’s in the same single location model. So that those, that key is never in multiple places, but it does give us a lot more flexibility and a lot more recoverability also in some different scenarios.

Stephan Livera:

Right? Yeah. And then that can give us a little bit more, let’s say someone who’s really paranoid about bit rot or something happening. Then this is one thing that helps you, that you know, that you can always recover it because you’ve at least got that one hardware wallet with the seed phrase written down, or ideally on a metal backup that’s stored with the hardware wallet and then mobile key plus Casa recovery key, which means you will be able to spend, even if you lost the other two hardware wallets. And I guess there can be a lot of complexity in this as well, because for people who are doing, let’s say the DIY method, then they have to make sure even if they lost one of their hardware wallets, they’ve still got the public keys for all of them. And that’s like a common thing that people don’t necessarily understand if they, unless they’re kind of really deep into the technical details of how this stuff works. So that’s one point there. Also wondering what your thoughts are on the various different hardware wallets. I know they have, I guess, different levels of multisignature support. Like I know for example, cold card and Trezor tend to be very multisig friendly. Whereas I think as I understand the ledger is perhaps a bit less multisig friendly than the others. What’s been your experience with that. And is that shifting over time and changing?

Hector Rosekrans:

Yeah. I mean I worked with Trezor and Ledger and Coldcard most directly, they’re all good devices. They all have different, different trade-offs. I would say my personal favorite is the cold card. And what I like about that as I really liked their approach to UX it’s a little more complicated. It takes a little bit more doing, but it’s like pop up in the hood, the hood of a car a new car, all you’re gonna see is like a box. And then like there’s gonna be like chips and boards in there and no like at home do it yourself’er si going to be able to do anything on a new car. On old car, and you can see how everything is working inside. See the timing belt.

Hector Rosekrans:

You can see the piston, you can see the oil and take all the different parts of it. You can see it’s all right out there in front of you. And to me, that’s how a cold card is. You see everything that its doing, everything’s kind of laid out there and you understand, clearly what’s going on under the hood. Trezor is great for people that are a lot newer because it’s not going to give you all that complexity right off the bat. And I think that’s a great device. Ledger is kind of in the middle. I think it’s pretty user-friendly frankly, the way the UX works with the buttons is not my favorite in the world, but yeah, I like all the hardware devices for different reasons, but I’m most excited about QR code signing.

Hector Rosekrans:

This is going to make multisig so much easier. This is going to make all the stuff that we do so much easier because you no longer have to deal with all the complexity of like the USB hub and the different USB drivers and the different operating systems, different browsers, all of these pieces that kind of get between you and the device that have nothing to do with Bitcoin, have nothing to do with you know, that really couldn’t care less about what you’re trying to do with it. All those pieces go away. It’s directly from device to device. Camera to camera just makes life a lot easier. So I’m really excited about all the new QR code signing that’s coming online soon.

Stephan Livera:

Right? Yeah. So that might be useful then in the case of something like foundation device or specter DIY, which is out nowadays I know Cobo also has QR code scanning, but I know Cobo has just recently gone through a little bit of a kerfuffle there. And it looks like Lixin has split away out to kind of do that. But yeah, hopefully the overall ecosystem expands in terms of options as you’re saying around QR codes. And so for listeners who are unfamiliar, basically it passes that transaction back and forth using QR code scanning. So the wallet will scan the QR. And then on the other side, you’ll flip it back. And then the device let’s say the laptop or the phone that you’re using will then scan and ingest that signed transaction from the physical hardware wallet or signing device. Maybe that’s a more correct term or whatever you want to call it.

Hector Rosekrans:

It’s great. It’s literally passing the raw transaction data across in just this visual kind of code format. And it takes like nine different QR codes to kind of get the whole payload across every time. But I mean, it was just a, it’s one of the — I think all these improvements that we do on nodes, on hardware wallets and all the kind of hard pieces of a Bitcoin tech, they feel like you’re grinding the edge out those like 5% improvements, like 7% improvements, which are great and necessary, but it’s always feels like so much work for like a little bit of gain. I feel like the QR code signing is a 10x improvement in terms of the user experience. It has the potential to totally just change the approachability of multisig, of using Bitcoin securely using hardware wallets and I’m really excited about it.

Stephan Livera:

Yeah, that’s cool to see, I’ll tell you what though. I mean, maybe not to be too much of a downer on it, but sometimes I’ve played around obviously with different setups and sometimes I get weird results depending on which software you’re using and like, depending on the lighting in the room and things like that. But I definitely agree with you though. It is a big improvement overall that you get from having the QR set up. And I mean, for me, I have multiple setups going and I’m testing things and trying different things out and so on. So that’s kind of my experience with it. So yeah, I guess kind of, where do you think this industry is going? Like, do you think we’re going to be able to get multisig to the masses?

Hector Rosekrans:

Yeah, it’s a great question. Yes is the answer. Absolutely. We’re gonna be able to get multisig to the masses, but I’m not sure they’re going to know that it’s multisig. I’m not sure that they’re going to be thinking about like, oh yeah, well this person holds public key one, this person holds public key two. This is how it works. I have like these sort of signing devices where I think we’re going to go with it, is I think it’s going to go to — I think that what I do is going to be very professionalized. I think there’s going to be a lot of people doing what I do right now. And essentially there’s some freelancers out there there’s us, there’s there’s Unchained, there’s maybe a dozen people in the US who at least work for a company and get paid to basically like be a kind of professional Bitcoin consultant and help people with their security.

Hector Rosekrans:

I think that in order for this to scale or in order for Bitcoin to scale, I think you’re going to need to see us. This role basically become as common as someone like a lawyer or an accountant. You know, just the professional expert who can help guide anybody through this world and show them how to do it the right way. A lawyer is your agent. They’re basically acting on your behalf in the legal system is very different from a banker who, while they kind of say, they’re acting on your behalf, they actually control the keys. They actually control the funds directly, they’re standing between you and your money. And so to me, I think that that’s really what I want to see happen. I want to see more people, more Bitcoiners kind of saying, in what way can I be uncle Jim for my community, how can I be uncle Jim for our family?

Hector Rosekrans:

How can I run a node? How can I hold a key in their multi-sig? How can I help them recover all this stuff? And ultimately, like, I want to see that professionalize. I want to see people getting paid for this. I want to build models that allow Bitcoiners to like, just be Bitcoiners and help everyone else in the world, kind of tap into this network in an open permissionless way, ultimately a way that supports the network. We have a decentralized network, but we have to actually build the human decentralization on top of it, because if we don’t do it that way, you’re right. all the bitcoins are going to end up in the hands of custodians, all the miners are gonna end up in giant pools that are that then become these honeypots for governments or these honeypots for other attackers to start chipping away the network.

Hector Rosekrans:

So that’s, I want to see, I think it’s definitely happening. There’s more interest in the stuff that we’re doing. You’re starting to see other companies coming online to think about this. I don’t know, Compass Mining is a really interesting one where they’re kind of taking that same approach on the mining side. I need to kind of dig in on what’s going on with some of the lightning stuff. I see a lot of that as a potential future for growth, like the lightning network obviously what Strike that and those guys are doing it I think a little bit different. But this is where I see the industry going. If we’re going to be decentralized is that Bitcoiners are gonna build businesses, but not giant hyperscale tech business, build person to person businesses, where you have clients, you’re helping them out out with this stuff. Maybe you have a couple of partners, maybe have a couple of people working for you, but that’s how we kind of build the decentralization into the human layer that is going to match up the decentralization of the network. That’s where I really want to see the industry going.

Stephan Livera:

Yeah. So as an example, we’ve seen Bitcoin beach with their community bank kind of wallet, and they’ve got like a multisig for the on chain aspect of it. And then Lightning, which is like a custodial Lightning wallet shared by the thousands of users. So maybe we see that as a model for various communities around the world where they have some kind of multisig bank operated by different people in the community. And that also brings up the question then as well, because do you think the industry will standardize around certain approaches and a certain standard ways of storing most of your coin, right? So maybe let’s say most people have Muun wallet or Phoenix or Breez just as their little day-to-day lightning wallet. And most people are not going to be running a routing node.

Stephan Livera:

Right. Let’s be honest. Although many of my listeners are the kind of person who would, but the average day-to-day user just have a Lightning wallet. And then for their stack — for their HODL stack, their life savings, that’s where they get the multisig. And I wonder whether that will standardize into certain approaches and we’ll have like a standardized two of three approach or a standardized three of five approach. Do you see that kind of thing happening or do you kind of see it more, just like, there’ll just be a multitude of various options with passphrases this and seed phrase stored here, that kind of thing.

Hector Rosekrans:

That’s a good question. I tend to think that there’s going to be some kind of standard approaches that make a lot of sense to most people, but I don’t think it’s going to be totally standardized because there’s just so many kind of cultural differences. And this is just one of those things that I love about Bitcoin is that it’s so simple and like the ideas are we want to have this base layer. That’s like the minimum amount that we can agree on. It’s like the minimum viable consensus is like the whole thing that Bitcoin is about. Like, and that’s what money is just like, what’s the least that we can all agree on given all our differences across humanity. What’s the least that we can agree on?

Hector Rosekrans:

So we can do business with each other and we can go from there. And so I think you’re going to have all kinds of different setups because for me, what makes the most sense for my client base is going to be wildly different than someone who’s trying to create a Bitcoin beach type community. So wildly different from someone from like a Swiss private banker who like only serves like the highest and most like ultra high net worth types who want nothing to do with the technical side or has little to do with that as possible is gonna be totally different from like a family in India or a family in China that has to like avoid the authoritarian regimes that’s cracking down. There’s just, there’s so many, you know, Bitcoin will be as diverse as kind of the human experience is.

Hector Rosekrans:

And ultimately you’re going to have all kinds of different approaches to custody that will match up the way that people kind of map their relationships across the people that matter to them. So, yeah, I think there’s definitely gonna be kind of some primitives that just make sense from a technical standpoint, but I think that also there’s just so many different ways to do it, and multi-sig really introduces that potential to kind of like create different approaches that make sense for different, like small, tight, intimate groups of people.

Stephan Livera:

Yeah. So maybe one way to think of it is like, in the early years there were different approaches tried. And I think people have sort of found which of those were quote unquote dead ends, right? So one would be having everything on a single signature wallet that for a large amount of coin, that’s basically a dead end. No one really does that. Shamir’s secret sharing, kind of a dead end, right? Like, unless you’re doing it in like a very special context, and it’s only one part of your overall setup, that kind of thing. Whereas in the past that used to be seen as like, oh, maybe this is how it will be done in the future. You know? So maybe it will be certain standardized approaches around multisig for large amounts of coins and then configurations that are popular, but people might have all of their own little flavors and spins on it.

Hector Rosekrans:

Yeah, definitely. And you know, to me, this is like, this is the beat. Again, it’s the great thing about Bitcoin is technology can scale out to the world and this is what — this is like the whole idea of of the internet. And like you build a product with like one guy Satoshi built Bitcoin and then it scaled to the whole world and that’s beautiful, but you know, the layers that you build on top of it have to kind of account for that different human context and the different experiences of people. Otherwise, it’s just like, you’re kind of flattening everything if it’s like, okay, well, yeah, now the same Facebook platform is going to serve everybody in the world it’s going to serve everyone kind of the same way.

Hector Rosekrans:

So Bitcoin’s like social scalability aspect to it. And just the way in which it doesn’t requires kind of minimum level of input. And then lets lets the users kind of do the rest and add the context to it. That to me, is like the future that really kind of bright future that brings the best of technology in with and leaves aside some of the baggage that it brought with it in the kind of the first iteration, the web you know, the web 1.0, 2.0 versions that I think are going to be left behind.

Stephan Livera:

Yeah. So look, let’s bring it back then. So let’s summarize some of the key points. So if you had to leave some tips for listeners who are thinking about Bitcoin and inheritance, what would you tell them and maybe split it up and maybe some of the listeners who are not Casa customers and then any tips for those who are Casa customers.

Hector Rosekrans:

Yeah, of course. So if you’re thinking about inheritance, the most important thing to do is take the time, sit down, think about it and go through it and then take the time and sit down with your loved ones and take them through it as well. You want to make sure that they’re going to be able to get access to whatever the quorum is. If it’s a single sig, you may want to make sure they have access to the device, you’re going to make sure they have access to the seed phrase. If you use a passphrase, it’s critically important that they have access to that too, because you know, without the passphrase, they do not have the private key and they will not have access to the funds. So it’s important that you have a plan in place for them to access whatever it’s going to take to move those funds.

Hector Rosekrans:

And the other really important thing is that they know someone who you trust, who they can get in touch with to help them because they’re going to have questions. It’s going to be complicated. It’s going to be a hard thing for them to navigate. And you don’t want them to be in a position where they don’t know who to go to for that help. They don’t know who to get in touch with or how to get in touch with someone that they should trust. So that’s the most important thing and for, I don’t think I have any like specific advice for Casa clients other than email me and we’ll get you onboarded and all that kind of stuff. The other thing that I would just leave for anybody is keep it simple as much as you can.

Hector Rosekrans:

We spend a lot of time thinking about like, what is the one thing that a beneficiary ask you is to like an envelope that the beneficial is like, go and open up the envelope. And here’s where all the stuff is. And so if you’re doing it yourself, it’s like, what’s the one place they can go to get all this stuff, but then make sure you’re also thinking about the security of that, which can certainly get complicated. Bottom line is get help if you need it. But there’s definitely a lot of ways to do this. And there’s going to be a lot of people in the industry who are going to come up with all kinds of solutions on how to tackle exactly this problem.

Stephan Livera:

Excellent. And Hector for listeners to want to find you online, where can they find you and where can they find Casa?

Hector Rosekrans:

You can find me on Twitter. I am @hectorr159. And then we’re at Keys.casa. Pretty simple there. And yeah, my DMs are open, always happy to talk Bitcoin inheritance, whatever else. And that’s where you’d get in touch.

Stephan Livera:

Thank you, Hector.

Hector Rosekrans:

Alright, Stephan. Have a good one.