Keeping Bitcoin Cypherpunk

Okay, welcome everyone. This is the Stephan Livera podcast. We're focused on Bitcoin and Austrian economics. Today we've got a fantastic interview, very special guest. We have Rodolfo Novak. I'm a big fan, Rodolfo. Welcome to the show.

Hey, thanks for having me.

Yeah, Rodolfo, man, I, I really like what you're doing with, you know, all the different products you're making, and I think really one theme that I think, I think of, when I think of you, I think of like trying to keep Bitcoin cypherpunk and really keep it like to its real roots. So I think today it'll be really great to kind of go into that theme, and I, I think it's the perfect, you, something you said recently was this idea of, okay, look, you were And to you, the next challenge is decentralizing Bitcoin's communication networks. So Bitcoin's resiliency is only as strong as its capability to be transmitted and out of band verified. So what were you getting at there, Rodolfo?

Yeah, I mean, you know, I don't consider myself a cypherpunk, I just do some software punks things.

so I, I think it's undeniable now that Bitcoin has succeeded, right? I mean, as, as a decentralized money system. You know, like, if you'll last forever, that's a different question, but it has succeeded. I, I, I mean, it is completely pervasive, right? Like, you can find it anywhere in the world. There is, there is very few people left that have not heard of it. They may not understand it, but people don't understand most things in general.

Yeah.

So, I mean, who understands money really, aside from a bunch of libertarians? so, y-y-you know, I, I think the sort of like the next challenge is, like, i-i-it's not that You know, Bitcoin will be made sort of like globally illegal, globally sort of taken out. I, I think that boat has sailed. I, I mean, you know, even if we lost half of the hash rate, it's not that big of a deal. It's still really secure. So I really think that, making sure that you can transact, from places that you're not allowed to transact is the challenge, right? Because You, you're always gonna have, you know, a country that gets a shitty government, right? I mean, yeah, all governments are shitty, but some are shittier than others. So, you know, maybe you're in Venezuela, maybe you're in Iran, maybe you are, you know, in New York. there's all kinds of very sort of dictatorial style systems out there, and they, they have a tendency to turn off the internet. it, it's really their MO. And one of the best ways to go around that is, is to sort of like find-- so y-y-you can, you know, use like mesh nets across the border, you can use like ham radio, you can use, LoRa networks, you can use SMS. You know, even if you just have your phone close to the border, oftentimes is enough to pick up the cell tower of a different country, right? So being able to, to send those transactions Actions out so they can get broadcasted on the internet and then again mine is very important. a-and I think like Blockstream, like maybe it's like, I don't know how long now, but is it almost two years old now that Blockstream's out there for you? Yeah,

something like that. At least, at least a year. Yeah,

yeah. It's been around for a while. I mean, i-i-it feels like it's been there forever. So what's really cool about that is that You can download the block data, right, without any like local network. So unlike, Francis Coppola, you know, like, you don't need electricity.

You know, she'll get there. I'm certain she'll get there. She, she's my favorite troll. Like, she can, like, trigger us Bitcoiners like there is no tomorrow. Yeah. Yeah. But, but, but the idea is, y-you can download without any pub-public utility, right? Like, you can use a, a, a battery and, you know, solar cell a-and a satellite dish, with zero, like RF footprint, so it can't be found, right? And you can download that, the block data and keep track of it so that you can steal the transactions. And then the challenge is getting those transactions out, so you can get them through, you know, these other means, like- Sneaker net, right? I mean, you can put it in an SD card, that's what coldcard does, a-and you can send those through the border, and then somebody can broadcast it for you, and even, you know, use the Blockstream API to send you a message saying, you know, something after, which is pretty neat. I, I think that's the challenge, is like, how can we make that stuff like dead simple? I, I think that's, that's sort of like, that one of the next things Aside from like all the privacy stuff that is being worked on, but that's more sort of like on a Bitcoin sort of consensus, sort of core level, right? Like that, like the privacy stuff is, is like inherent to Bitcoin as opposed to the communication, which is just Figuring out how to, to make Bitcoin go around.

Right, yeah, because one part of it is the transaction graph, and then the other part is the communication, that's the part you're talking about here. So maybe let's try and break down some of the methods a little bit, right? So you've got, the example you raised around, Blockstream Satellite, and, you know, Dr. Back himself said, "Look, even with Blockstream Satellite, you shouldn't necessarily trust the satellite data, you should verify..." By the block header out of band using SMS.

So here's the really cool thing about, compressed blocks, right? So compressed blocks is similar to what the fiber network uses for miners, right? You can use the block headers. Listen, it isn't perfect, right? Nothing is ever-- There's always gonna be compromise if you are in a compromising situation. So, you-- But you can get that very low bandwidth data, right? The block headers in, and check them. Just to keep a blockstream honest. But another cool thing too is, and the reason why I'm not too concerned about the blockstream satellite being evil is that it can also check the mining difficulty.

Yeah.

So if the difficulty is high, I mean, the chances that, you know, they can mess with that are pretty low too. So it's not that big of a deal.

right, right. And look, so I mean, that's one method, right? You've got multiple different methods, it, you could potentially send a Bitcoin transaction using these SMS gateways. That's another example of communications being done in an atypical fashion.

Totally. Y-y-you know, people forget that originally cell phone networks were unencrypted and they were also sort of like, you know, pretty, mesh netty. you know, the, the old FDMA systems before the GSM stuff, y-y-you know, actually, you could hack a cell phone Phones and listen to other people's conversations just by jumping on their channels. This was the thing that people used to do in the nineties, right? Like, so, you can set up, you know, like, cell tower repeaters from a country that is friendlier, right? Like closer to the border and get people, you can point antennas. There's all kinds of stuff you can do to get information in and out with just cell phones, not even getting complicated, right? and then you can use, you know- close devices like, Gotenna to sort of do, like mesh nets or you, you can use the, the LoRaWAN to do more open mesh nets on Laura, there is a cool project called Snap on Air. it's like the guy, I, I don't know, like them personally or too much about their story, just their sort of gist. Seems to be like a medical doctor with an electronics degree, who, created this, it's like a mesh net pager system. So you can send information, right, wi-without any centralized point of failure and or point of control. And it's really not that hard with LoRa, like you can achieve a good three to five kilometers on LoRa, i-in an open setting, and if it's a more city-like, you can have better antennas and sort of still do quite a bit of distance. And Even on those, you know, even if you can just one get one kilometer, right? Like it's normally enough to jump a border.

yeah. So,

you know, you can do WiMAX, you can do like, you know, more high power Wi-Fi one of my favorites is Sneekernet. Y-you know, i-it's like one of the oldest and greatest. It's been being used since the, you know, medieval times. You know, you just have a tiny little piece of device of the information and you get it from point A to point B.

It's kinda how that guy snuck out the, the pictures of North Korea in, in his camera, right? Like he hid in, in the partition of his drive or something and got a bunch of pictures out. And then you can really go, full, full prepper and go like ham radio.

Yeah, let's, let's go into this. I think you, you, you know, you've recently done some work on this. Let's, let's hear it.

So, you know, for, for people who aren't into amateur radio, like it's not that big of a deal. They, they understand, like, the mechanics of this. It just seems like magic, mostly for people who don't understand how radio works, especially When you're doing, big waves, right? So, when you're doing like forty meters and twenty meters, like that's like very low megahertz, like seven megahertz, right? what's really cool about these bands is that they really don't require a lot of power So, y-you can use like five, ten watts, like it really is very little, and, and you can like get information across continents which is pretty fantastic. Now the bandwidth is the hard part, right? Like in these bands, you get almost no bandwidth. So, we're talking about like a hundred bits. A second. So, you know, it takes like ten minutes, fifteen minutes to send, a hundred, kilobytes. so a Bitcoin transaction will take fifteen minutes to, to go, but, but You're using essentially no power and you're getting that transaction across the globe, right? that's a big deal, and that's sort of what we did between me and Elaine and, Samo as well. we sent, one of the examples was sending a brain wallet And, so like I made a brain wallet that was very short, of course, it's clear text, we know nobody in those bands were watching for it, so, you know, risk it. And then, but we did send the salt for the brain wallet in a different band, so then you don't, you know, you can't really have the whole information in one simple, monitoring session. right. So let me just

break that down a little bit. So in this example, essentially, you had- Had like a twelve word seed or a twenty four word seed in, and you sent that through one kind of radio frequency, and then you sent, like, you--

It was a seventy five bits seed. So we're talking about like it was just two words together.

Oh, wow. Okay, so it's even less than that. Okay. And then, can you just break that down for us, like, how, how did you do that?

So, you know, most of the, like the, the modern nerds, the younger nerds, right? Like, we do mostly like, we, we don't actually use the, the handy, like, we don't talk on, on amateur radio. We, we just do computer to computer. So we essentially use our radios as a modem, like kind of like, you know, dial-up used to be way back in the day. But imagine your computer telling a radio with like a 15-foot antenna that I have on top of my house, sort of like, you know, Sending the signal all the way

across the planet. Wow. And so, like, then what's the, like, what's the range on this kind of thing? How much preparation does it take?

Well, I mean, I have my rig set up on my desk, so I mean, I'm ready to go anytime.

I,

you know, I could, hang on, let me send a signal here. Let's see if we can reach UK. we'll hear, ooo if they get it. So,

oh, sorry, I think we might have lost the range. Hello? Sorry, we lost you. I think you're back now. Yeah, I

think, I think my, my transmission interfered with the Wi-Fi. Alright, okay. So, anyways, oh, there you go. that guy, oh no, that guy is in California. so The, the range is quite incredible, right? Because these, these waves are very, very big, so they don't get absorbed by stuff, right? Like, by walls or, or trees. They bounce. And, and what they do is they, they're so big that when they reach the ionosphere, right? way above the clouds, they hit it And they bounce back down, and they keep on like skipping up and down, up and down across, like the planet, until they sort of, yeah, until they either dissipate or, or get out of phase or whatever. But, they can go quite far. and then, you know, some people do what's called moon bounces. You use a smaller wave that goes through the ionosphere, but it hits the moon, and then it kind of bounces back into the Earth. Wow. yeah, there's all kinds of cool stuff you can do with these things. And, but yeah, the, the, the challenge really is bandwidth on this stuff, right? Like, this is-- th-this waves are very big, so it's very hard for you to, like, you know- Jiggle them enough to, to get data through.

Yeah, right, right. And then, I guess, here's the other thing, like, what sort of technical skills do you require to do this kind of thing?

I mean, y-y-you know, there, you can debate the licensing or non-licensing in the libertarian circles, but, I mean, I'm a licensed ham, right? what's cool about, I mean, y-y-you require a license in most countries to transmit in this band. That's a-a thing, right? And you can get in trouble for not but, I highly recommend doing the test anyways because the knowledge you need to do the test is gonna be the knowledge you need to know how to do this stuff. you need to learn the physics of the stuff. Like, you need to learn some electrical and electronics a little bit. Essentially, you need to understand how like radio waves work And how, you know, matching, you know, impedance on antennas and-- There is a bit of, like, this isn't like a hobby for everybody, let's put it this way.

Yeah, yeah.

But it's really not that hard. Yeah. And on the receiving side, you can have cheap SDRs, which is really cool. So you can have a cheap, very low skill, computer-driven radio that just listens And then you can actually decode the, the transactions or information.

Right, so that's the SDR, the Software Defined Radio, right? And that's like, that's one of the approaches that I believe Blockstream used to make the satellite, the actual equipment a bit cheaper, but then you need like a more, kind of powerful laptop to actually decode that. Message, is that right?

Yeah. So what happened? So essentially like everything that works on radio, like your phone, everything has, you know, essentially a, a receiver, right? A radio receiver. the thing is, what you try to do in better, better radios or more expensive radios is you have a DSP or an FPGA, right? It's like a, like a hardware-specific chip, right? That, that understand What you're trying to, to listen to and converts that to the bits of information you want, right? When you have a more general purpose chip thing, it knows how to listen for everything, but it doesn't really know how to decode anything, right? So you have to use the computer, which is not specialized, to, to demodulate, decode that information into the bits of data you want

Fantastic, okay. And then I think, so some of this stuff, like obviously, you need to be a bit of a hobbyist, you need to be into it to kind of understand it. I suppose the next level then is how can these things become kind of easier or accessible to the masses? Do you have any ideas around that?

Yeah, so I was actually talking to Adam. I, I've been trying to convince him to get a,

A dish box, right? Like, you know how you have a dish to watch TV from satellites? Y-you know, if they can find the right one and write the software for it, you can actually have a turnkey satellite receiver, right, on your living room that, like, is a full node.

Yeah. Not, you

know, out there. It's just, you know, the, the Bitcoin market, you know, for trading is massive, right? But the Bitcoin market for, like, you know, the people who are on the, on the ground floor, you know, doing the stuff, right? Really caring about nodes and, and it's still, it's big, but it's too small still for you to build some of these consumer solutions. But they're totally possible, and a lot of the stuff is, is- It's not like rocket science, it's just, we just need the scale.

Right. So it's, i-i-in your view then, it's kind of a question of, until this market gets big enough, that there are enough consumers out there who would be willing to buy kind of some of this, you know, like a dish, and maybe a, a pre-configured laptop, in the same way that, you know, we have things like the Kasa and the Noddle and so on, maybe they can have like pre-configured items or pre-configured, you know, Do it.

Exactly. Or, you know, like for example, the Casinoid is, it's only possible to be done at a price point because Raspberry Pis are cheap, right? It's just Raspberry Pis are too, like, slightly underpowered for what you want in terms of, like, so like decoding, right? So, you know, eventually either the, the markets, the, the economies of scale of general purpose hardware gets there and then you can do it, or your market gets big enough and then you can do it. It's sort of like, it's gonna happen.

Yeah. Yeah, right, right. So I guess if it's gonna happen, do you have a, an idea on timing? Like, would you say kind of five years until these sorts of products become available for the masses, or what do you think?

Two weeks

The classic, the classics, the BFL. I didn't know you, you were part of BFL, Rodolfo. Wow.

No, you can't, you can't time technology. It's, you know, I mean, even us with our products, right? I mean, you get all the stuff done, you have the factory working on it, you know, your product is done, right? And then, no, you know, like the some part, like say, like the ultrasonic welding, you know, like, the, the, the mold for the ultrasonic welding breaks, right? Yeah. And then you happen to be, you know, the Chinese haul- And then, boom, you're late four months.

Right, yeah. Yeah, I mean, the practice, yeah.

With hardware, you just never know. we've, we, we know that Personally, I've been, I've been the victim of the Chinese holiday.

Alright. And, and I suppose, okay, on this r- kind of radio wave transmission, what about doing, doing it under adverse weather conditions? Does that impact it or no?

No, well, yes and no. So the, the feed, I think it's like ten gigahertz, for the Ku band that, Blockstream uses. y-y'know, like very, very, like bad weather will definitely interfere. they are working on having a possible second feed that's delayed so you can catch up after, which solves all of that problem. So, so yeah, that is a problem. for ham radio, weather is not a problem. Sun weather is a problem for ham radio. So like, like low megahertz, i-it's like more like electromagnetic issues from the Earth and the sun. now when you get into higher bands, right? So like gigahertz, what, like- Molecules in the air start to sort of cause interference.

Wow, okay. Yeah, that's, I mean, 'cause for me, this is like totally new. I don't really understand some of this stuff very well, but, it is kind of, it is interesting as well, just to see what the possibilities of it are. let's talk then. I think you were touching there a little bit around kind of some of the difficulties of kind of making some of this hardware and making some of these products. Let's talk a little bit about CoinKite and, you know, Making some of the different, you know, the open dime and then the, cold card. Do you wanna tell us a little bit of inside there?

Yeah. I mean, we, we started way back, right? We used to have the CoinKite payment terminals and, and Bitcoin debit cards that we made. Yeah. That was like, wait, like twenty thirteen, I think. that was a little bit of, a few years ahead of its time.

Yeah, perhaps.

it was a fun project. But, so for, for a long time, I've been wanting to make a, a, a paper wallet, right? That was sort of like Dignified of the, of the cryptography, right? And the problem with paper is that, one is you have to trust the device that generates the wallet, right? So your computer is already a no-go. even if your computer is all clean and safe, it's still a very sort of like, it's a complex device, right? Complex devices are inherently unsecure. 'Cause there's more stuff going on there, it just, you know, it, it, it's a lost, it's hopeless. so, and then you have to print the paper wallet, now the printer was not designed to do that safely, you know, it gets tricky, right? so we were looking into like, how can we generate, you know, a private key? And, sorry, and then there is the issue that if me, the, the creator of the paper wallet, gives you a paper wallet You can't trust it because I know the private key, I can redeem the funds after you leave my office, right? that sort of misses the whole point. So But, but that becomes a conundrum, right? Like somebody has to create the private key, it has to be safe, sort of like a, like a sound, uncheated private key. So, w-we, we tried experimenting, you know, maybe what's going to be a provably, verifiable laser etching machine, making it on like, like aluminum plates that would get folded and sort of close down. But that just became too convoluted, and then we were trying to think like, okay, what if we used a, what if we created a electronic device with like a general purpose chip? That you had to like physically alter it, so that, you know, if I created the, the private key and only the device knew the private key I didn't know, you don't know, then I can give it to you, right? It's like a bearer bond So we experimented with a few different things, and we came up with OpenDime, where the, the private key is inside the chip, right? And, and it generates with your entropy, so CoinKite has no way of ever figuring out how, like, w-which keys that, even if we had a rainbow table or anything like that, we just can't. We provably can't show it to you that we used your nonce, right? We used your, your entropy. So, essentially, so you get this little device, stick it in the computer, it asks you for some entropy, you give it to it, and then it, it gives you a Bitcoin address to deposit That's it, you deposit money in it. You as the, the sender or the, the originator don't know the private key at all, so there is no backup. so, you know, be mindful of that in the amount you do. I've- heard some interesting stories. anyway, so be mindful the amounts and mindful of the device, right? It's a bear bond, whoever has it. Has the money. So, so yeah, so once you give it to the next person, they can, either, they can check, they can cryptographically verify the device. Samurai wallet, for example, does that on a phone, and then you can give it to the next person, the next person and have zero tra-

Oh, sorry, I think we lost you there for a second. You're just saying you can give it to the next person?

Yes. So essentially, when I give it to you, there is no Bitcoin transaction between us on the blockchain, right? There's only a verified transaction inside the device. So there's no trace between us. Now, if you give it to somebody else, there's, there's no trace between the two of you, and so on, right? So you can keep on passing this thing on, hundreds of people, zero trace between each other. Now the person that wants to, to redeem that Bitcoin and sell it for US dollars on an exchange, for example, they just, poke it through literally physically poke it, like there is a, like a place for you to put a pushpin, and it's gonna break off apart, so it's like physically visible. And once you stick it in a computer, we change an address in the memory of the chip, so you can't, you can't just solder back the part or anything like that. It's fairly safe. And, and that's it. Let me display the private key.

Yeah. Fascinating. And so it's kind of like, because it never touches, right? It, each time it gets handed over, it's not actually touching the blockchain, right? It's literally just, you know, handed over.

Yeah, the way I like to say it's like the real Bitcoin cash.

Yeah, it's not Big Cash, it's actually Bitcoin Cash. That's right. You know, like you put money in it and you give it to somebody and they have it. Like, it, it, it's, I don't know, if you ever bought something in person with Bitcoin, you know, you understand the pain of waiting. like, you know, if you're buying a computer off of somebody or something that's like a bit more money, you know, with this, like, there is no wait. It, it just Take the money and go.

Yeah, that's right. And, look, we've just gotta confirm for the listeners, there was some chatter on, Marty Bent and Matt O'Dell's podcast about the shape of the open dime.

hah

Up with the idea of the prison wallet. And this was years ago, OpenIMI think is like now four years old. And, and it was squared, right? like very hard edges on it. So, I mean, you know, we of course wanted to make the product more pleasing to the eye. We have a certain, aesthetics to our products. you know, very, you know, bare PCB and we, we love that. But, we figured, you know, why not incorporate his desire, of, smoothness.

Oh, fantastic. Well, look, I mean, so look, if you ever-- and I think coming back to, the Bitcoiners' kind of favorite no-coiner, Francis Capola, right? This opendoim is a great example of enabling a, a one hundred percent offline transaction that required no power.

No, you don't, because, see, what she, what, I, I think she said, she didn't say "electricity," did she say "electricity"? She did say "electricity," but "electric" or "utilities."

Yeah, it could be. I can't remember the specific wording. But there's

a difference, right? And, and the reality is that, y-y-you know, there's plenty of places where you can get decentralized power, even in a, in a, developed country, right? I mean, you go to

Or, you know, some solar cells because it's just the reality of, you know, living in cottage country, but that's still Canada, and you can still get, five bars or 4G. In the places you may not certainly get electricity. So, y-y-you know, this is just somebody, you know, like old man screaming at the paper, you know, like, it, it's just I, I, I mean, you know, I get the desire of trolling Bitcoiners, but, you know, i-it's very intellectually dishonest to say in twenty nineteen that you can't get electricity somewhere. Y- you know, I mean, y-y-y- The, even just like batteries, I mean, you can take power anywhere. Y-you can take an Iridium cell phone, like to the end of Earth, and, and have a conversation with somebody while you're going to the end of Earth. It's, it's really not that big of a deal.

Yeah. And I think, a lot of people were sharing back Grubel's article, so I think you've probably seen Grubel's article where he essentially talks about like kind of the maximum approach where he's basically using blockstream satellite mesh networking, fully offline, no kind of power or internet himself, but using things like, I think it was, battery power and then mesh networking to send the transaction.

My radio's Running off of battery and a solar cell to keep them up, to keep the charge just for the fun of it. I mean, I still have like an extra line to charge the batteries, just because I had a ton of snow on top of the, the solar cells, but I mean I can run them for like a month on my, on my, life Po, like big power cell, like it's not that big of a deal. I mean, maybe it's just, you know, in her life, you know, after understanding how to use the microwave and, you know, the fridge, you know, she'll figure out batteries. That's right.

Oh, okay. Yeah. What about, mesh networking then? So have you, played around much with things like GoTenna transactions or TXTenna or anything like that?

So I, I did play with GoTennas. they're interesting. I, I personally don't have a lot of, like- It's like, I wanna like them, but like, y-you know, I get no satisfaction. So, y-you know, I, I've even like, I've even, you know, broke this one apart and installed an SMA connector so I can use my roof antennas with it. And You know, I, I just can't get anybody in the third largest city in North America to connect with me.

so, an-another problem too is that, you know, they're closed source, they're closed network. there is some people, sort of like hacking them and creating solutions. That, that's pretty cool. I, you know, I don't wanna diminish that product. It's a cool product, and, and it serves a purpose. I just don't- I don't think that that's the future. I, I think something more like, Snap on Air and the people making Laura Wem, but not the Laura Wem that some people claim is HeavenSpoke, the Laura Wem that does P2P relays as well. that stuff is way more interesting, because it's fully open, right? A-a-and that means, you know, this, like, this radios I'm playing with, like You, you know, like this ESP thirty-two, like devices, they can, they can talk to other devices, you know, provided we're all speaking the same, the same protocol, a-and then you can just keep on hopping, right? and you can create your own solutions for it I, I find that pretty interesting, especially because, you know, with this devices I can have, micro SD slot So that I can, broadcast a cold card transaction.

Right. Yeah.

So that, that to me is killer, right? I mean, you know, I, I use my cold card to, to, to, to sign a transaction, save it to the microSD card, stick it on the radio, and then poof. It goes.

Yeah, right. And I think that's part of the power, I guess, of keeping things in kind of this sort of standardized, interoperable kind of way, as opposed to everyone coming up with their own standard, right? can you talk a little bit about how, how, like, what approaches are being made there to kind, to kind of make a protocol that works across? different devices.

protocols are a funny thing. X-K-C-D has a great, protocol cartoon that I recommend. Yes. You know, there's ten protocols that don't do what I want. I'm gonna create the fifteenth, or something like that. Yeah. So, there, there is, there's a few, I-- Goldene has their own, proprietary sort of thing. apparently they do, clear text for the, the public chat I, I don't know exactly how their system works, so I'm not gonna go there. But, LoRaWAN is neat. it's the, the things network. It was actually designed for sensors to talk to each other it is encryption by default, which is really neat. you can't encrypt on ham radio, like you can't send covert communication, it's against the rules, not to say that people don't. but, so yeah, so, so Elora Wan, y-y-you know, you, you can use this, this is a cheap M5 stack device from China now that's sort of new, cool little hacking thing for the ESP32 module. And, i-it's just a cheap hacking module with like a general-purpose chip that does a lot, and it has a lot of the radios for you, and so you, you can mess around a lot with something that doesn't require a lot of upfront investment.

and, and there is a lot of, like, there's hats for Raspberry Pi, there's, you know, like, there's essentially modules that you can put for LoRaWAN Right? In most hacking sort of devices, right? So it's not as professional and robust yet as something like LoRa, sorry, as something like, Gotenna. it seems like their devices have quite a bit of work in them already. They've been fairly optimized, but it's open and anyone can get there. I wouldn't be too concerned about that.

Yeah. Okay. And I think another concept that might be interesting for you to touch on, just, you know, to help us understand, Just around open hardware, open source hardware, because I know that's a big factor for you as well, and like why is that important?

so, you know, a bit of background, I guess. So when we started CoinKite way, way back, right? CoinKite was centralized wallet. We did multi-sig so people didn't have to trust us and all that good stuff, right? But it was closed source system, right? Because it was centralized. Now, when we closed it You know, the challenge was, okay, where do I store my coins? And, and, and, you know, and then I ordered available sort of like wallets. You, you know, I had a few already and sort of ordered the newest ones, and, you know, it's just- You, you know, you ask, you know, each other company what they think, and they're all gonna come up with different answers, right? So like, i-i-my personal view preference, y-y-you know, I needed a hardware wallet that was, The, the used, they had a secure, chip in it, right? So it had a secure element in it so that I could store, secrets in it. But I also wanted it to be open, open source, because, I'm okay with closed source stuff, you know, my phone is closed source, I don't really care. I, it's like my computer, i-i-i, you know, honestly, like I find it hopeless, right, to, to try to, because even if the phone is open source, the chips are still gonna be closed. Sources, it's just like an endless,

it's endless pain there trying to make that stuff that's very complex work, but in the, in the place where you actually do key generation, signatures, and things like that for your actual bitcoins. It has to be open source because otherwise you can't trust the device. So if you buy a device that isn't open source to generate and maintain your seed, you, you just don't know if they're doing what they claim they're doing.

Yeah.

Like, you know, that, it, it, it's a lot easier to make something closed source, right? Because you also don't have to worry about security i-in a way as much you do, but it's a lot harder for security researchers also to go poke through, so there is an advantage there. Now, you know, I just can't trust it. I, I don't know if you have a rainbow table. I don't know if you have an accidental rainbow table. You know, I don't like to accident. It, it's just You know, it's just something I can't trust, especially for, for Bitcoin wallets because they are so simple, right? Bitcoin hardware wallets are fairly simple. Yeah. but, you know, you need a secure element too, a-and it's, it's been a, it's, it's always a challenge to find a secure element that you are allowed by the manufacturer to make the source of it public. Because all the IP for the secure element is often very closed down and they don't want that stuff public because it also invites more people poking through. Yeah.

Yeah.

But we did manage to, to, to find a, a chip and talk to the manufacturer and get that stuff. Done with the 508 from, from, Microchip. So that's the story of Coldcard. I, it's like, you know, it's a secure element with And, and with open source.

Yeah, right. actually, just one quick question, just for the listeners who aren't aware, can you just help explain what is a rainbow table?

Oh, it's just sort of like, there's a couple, it's essentially you could pre-calculate what the device is gonna calculate. In terms of, so, say, essentially, you know that the device is gonna create a seed with those words. I, I'm actually, I'm super oversimplifying right,

yeah, yeah,

right here. But, so essentially, you, you, you as the manufacturer or the attacker, you know the device is gonna create those numbers, right? I-if that's the entropy, if that's the seeds, if that's whatever it is, but you essentially pre-know what's gonna be generated. So you just use that table to, to generate and steal the money or steal the, the, the keys or the password. Exactly.

So I suppose then if the manufacturer, let's say they're really evil, right? And they use this, they, they set up their hardware and they tell the customers, "Oh, hey guys, you're generating your own seed, but actually in reality, they've set it up such that they know the keys or they can regenerate all the private keys associated, and then they'll maybe put it out for six months, let all the customers..." Store their bitcoins on this product and then like do a kind of long con and-

It could be ten years, right? I mean, that's one of the biggest challenges with this stuff, right? I mean, people get cozy in their cold storage, a-a-and they should, right? Like, you don't wanna be redoing that stuff all the time. So- You need to trust the stuff that generates it for you. that's, that's a very big deal.

Yeah. And now let's talk through how kind of the, the workflow for a cold card works. So let's say I bought a cold card and I wanna, you know, I wanna go through that process of, you know, talk through how you set one up and then how you would like send the transaction by putting the SD card and so on.

So, we did it so that you can do, you can do USB or You can do the, the SD card, right? You don't have to use cold, cold. But for me was paramount to create a wallet, a hardware wallet that could operate without touching a computer ever, right? That to me was very important. So With Coldcard, you can just use a battery, like a USB battery, a-and, and, y-y-you know, you, you turn it on and you're gonna create, it's gonna walk you through creating the seed, right? And then it's gonna make you backup the seed and all the good stuff like all the other ones. And then it's gonna ask you for a first PIN. so you, you know, you, you take down, you know, it's up to six digits, so you, you, you know, you, you make your six digit PIN. And then it's gonna give you two random words that only the secure element of the device knows. So you write those down, and then it's gonna ask you to create the secondary PIN, and that's up to six digits as well. So why did we do that?

So if, if an, evil maid attack, right, manages to, you know, go through deep lengths to, you know, replace the device with some weird stuff there or radio or something to try to steal your PIN, right? Once you put your first half of the PIN If you don't recognize the words, it's like a two-factor authentication, right? if you don't recognize the words, you don't get the second part of the PIN. So if they, they have the real device in hand They can't steal your money.

Right. So it's, it's one way of like an early warning system of if you were to try, it would then say, "Oh, these are the two words." And at that point, it's like the, it's like the warrant canary, that's like the warning that now, okay. But then, how would you, would you then have to go find your backup seed or how would you- Yeah,

you know, if you know you're compromised, you know, you run to your backup seed and you re- and you would sweep those into Take the funds out, recreate your whole setup, right? I mean, if you're compromised, you have to redo all your stuff. so that's one way, that we did that. Another thing is the, the first thing actually I should say is, when you get an open diamond, do I have one here? No. It comes in a tamper-evident bag. So the same bag that banks use to put cash in, they're very hard to reseal or to, you know, they're not perfect, but they're a big deal. And they have a serial number on the bag, and before each card is bagged The serial number of the bag is burnt into the secure element of the device. Oh, wow. So, yeah. So when you take it out of the bag and you turn it on, it's gonna say, "Does the bag match the serial number? " If it doesn't, destroy, rethink your life choices. Haha. So, and then you do the PIN stuff, right? now it's gonna ask you to, to do the seed. And then let's say you have a seed. Now, Coldcard doesn't have an app, it doesn't do anything related to the internet, it doesn't need a computer. So what it does is, if you want, we'll create for you a Electrum skeleton wallet. So just the public part of the wallet, right? Your public- Right, like an

xPub, right?

Exactly. And you save it to the SD card. And then, you, you know, you, you put your, your, your cold card back into your, you know, your, your, underground, a-and then you go a-and, you know, you put your public stuff into Electrum, and boom, you're ready to, to operate. Now, let's say you wanna send a transaction out, right? you go in Electrum and- And you, you create your transaction, and then you save it to the SD card, and then you take it to the, to the cold card, you sign the transaction And then you take it back and you broadcast it. Or, you know, if you don't care if this is your warm cold card, you plug it in the USB and it's gonna do like all the other hardware wallets do it, it just Make it signed connected to a computer, but you don't have to. and that to me is so important. you have to do, you wanna do your hardware wallet signing in an environment where there's no cameras, no radio. You know, like there is no risk of, of being sort of captured or, or, compromised.

yeah, right. And I suppose it's, it's interesting, right? If you look at the Glacia protocol, one of the things even the Glacia protocol does is they go to the level of saying, "You might wanna look at having a fan to generate some noise to try and stop side channel attacks of trying to identify what's going on from the noise of the device."

E-exactly. I mean, and not having the computer close to your device is a big deal, right? So, y-y-you know, like this is one of the biggest problems with the, the other wallets is that they need to be plugged via USB to your computer, right? And- You know, if your computer's compromised or, you know, they're using your computer to try to, to listen to the, to the radio on the device, I mean, there's all kinds of crazy stuff that happens, right? So, you know, one of the best ways to deal with it is just have nothing. Just grab the device, put your cell-- your, your tinfoil hat on, you know, like, you know, go into the bank vault and, and do your signing there with just the battery. You, you know, and never be concerned about these problems.

Yeah.

So, so that's on the signing side. and then we created a few tricky, cool pin things for the, the, all the, the five dollar range attacks. so, there's a, you can have two wallets, so you can have a your wallet and then a decoy wallet. The device doesn't tell you which one is what. It's, depending which pin you- Input, it displays with something else. And, and my favorite is the BrickMe pin. So, i-if you, you can set up this pin so that if you type this pin, the device is paperweight.

Wow, yeah. So it'll just totally nix the whole- Yeah, because we

have a secure element in it. Secure elements have this capability of writing once. Right? So, unlike the, one of the, the competitions is just a MCU, right? So, you know, you can't trust an MCU to forget things either. So w-with the, the secure element, you know, if you, if you say, you know, write this on top of that, it's over. And the device is back. Now, you know, keep on beating me, do what you want, but, there is no money. There's no more

bitcoins to steal, right? Yeah. And unless they know kind of where your backup seed and that kind of thing. But obviously, you've got to think about this in advance and have backup plans, that kind of aspect as well. one other area I think is in,

It's kind of clear for the listeners in terms of what's going on. So let's say you've set up with the cold card and you've put the xPub into your Electrum on your main desktop, right? And that's like your watching only wallet. And essentially what you would do when you want to craft that transaction is you're telling Electrum, hey, craft this transaction, but it is an unsigned transaction, right? And then that saves to that SD card, and then you can put that in your cold card, that signs it, and then you put it back to the online computer to

Yeah, and, the person responsible for that standard now is Andrew Chow. He created BIP point seventy four and the PSBT files, right? partially signed Bitcoin, transactions. i-i-is really cool because once the rest of the, the wallets sort of adopt this, now Bitcoin Core does in the latest release, Electrum Does, I think Samurai Wallet does, Green Address is gonna have at some point soon. so once This standard, it's been adopted by most, the wallets won't even know which hardware wallet you have.

Yeah, that's a powerful factor as well.

Y-y-you know, it's a nice thing because now an attacker doesn't know if the, you know, maybe you have a bucket of the competition wallets on your desk and You know, they don't know which one has what, and, you know, i-it's very hard now to link the hardware wallet to the wallet. I, I find that one of the, the, the best features, of this, the, the standard.

Yeah, and it does remind me a little, people like to talk about this concept of using, where they can, general purpose hardware, right? Rather than specific hardware. And I know Trace Mayer is big on this whole idea of using Purellism laptop and Glacia protocol, because he knows that other people can't surmise exactly what that Purellism laptop is being used for, whereas if I know that you hold, you know, this spe-specific device that only holds Bitcoin, well, then I know you're probably holding Bitcoin with it.

I mean, I've been through the, the, the, you know, the cycles of trying to think this through, and, you know, honestly, like, I just, like modern operating systems And modern computers, they're just the, the level of complexity, like it's just the sheer amount of lines of code that are in there, right? Like, it, it's just, it's literally impossible to know, right? Why all

this

purpose device, you know? I, I, there really isn't, you know, like it's on GitHub, you can load the source yourself into the device, you know? A-and that's it, like, y-y- You know, you lose the plausible deniability of the device, but you know, getting a hardware wallet these days, I mean, it's not that hard, right? I mean, it, you know Half airports now sell them. It's, it's not, you know, you can go buy cash somewhere and be done with it. and another nice thing too that you get with, a secure element is a true random, true random number generator, a TRNG. So, that's a very powerful random number generator. better than that only the dice.

Yeah, right. Yeah, a-and that it's, it's just such a difficult area, and there's so many different, I guess, if you're a newbie coming into this space, you would hear this person telling you that and that other person telling you this, and it's very difficult, but I think ultimately you just kinda have to pick who you think is kinda trustworthy to kinda give you good advice if you're a newbie, a-and just hope that they've kinda put, put you down Right pathway.

You know, being your own bank has a cost.

Yeah.

Right? I, I mean, you know, nobody can take what's yours, but you can also screw yourself.

Yeah, yeah.

It's, Bitcoin really takes us back to the, to the, you know, the early days of Fedor Express, you know? It's like, "Chariot, you know, the gold is there, shotgun, and sort of like, you know?" Go cross America now.

Yeah, yeah. I mean, to some extent, it's like, I think this is a common thing many Bitcoiners say is, you know, the first investment you have to make is education. You just have to go out and try and learn as much as you can to at least figure out who you think is solid and who you think is maybe not as solid.

Yeah, I, I mean, and we've, we've done a lot, right? I mean, like this, this essentially ten years now of Bitcoin, right? I mean, like things have gotten a lot easier to use. a-and we're still fairly early, right? I mean, you know, things will still get much better. I mean, it took thirty years to order groceries on the internet properly. You know, like, it, it's just, i-it takes, it takes time, and, and if you wanna be an early adopter, you know, you, you get, you get to be an early adopter, you get to, you know, register, you know, Microsoft dot com and then sell to them. Or, you know, you get to buy Bitcoin early, and but you, you have risks with that, and, and sort of like it's important for people to sort of gauge how much risk they're willing to do, and education really is the only, the only salvation.

Yeah. look, excellent comments there. look, Rodolfo, I think we're getting to time, so maybe just tell the listeners where they can find you, where they can find, you know, CoinKite, where, what, you know, what the, why they should look into Coin

Yeah, so, I mean, w-we make, devices, you know, because we wanna make devices.

we, we wanna have some fun in Bitcoin and make different things. you can find, most of the stuff we make on coinkite.com, and then there is a cold card OpenDime, The Block Clock now, and, you can find me on Twitter at, at n v k. And, I mean, that's it really.

Fantastic. Well, look, I think, yeah, it's been really great discussing with you. listeners, make sure you, press subscribe and give me a thumbs up, share this stuff out. but otherwise, Rodolfo, thank you so much. I've really enjoyed, discussing with you and hope to chat with you again soon.

It was, it was my pleasure. Thank you so much for having me.

Alright, let me know what you guys thought of that. I have a contact page on my website, Stephan Livera, or otherwise come and find me on Twitter, my handle is at Stephan Livera, my direct messages are open so you can message me, I pretty much respond to anyone, anyone reasonable, so yeah, feel free to message me there. Also, just wanted to give a quick shout out and thank you to the people who left me a five star rating and review recently, so I got some really nice reviews, some saying things like deep and fast dives on Bitcoin, great guests, learning about Bitcoin, Bitcoin through the lens of Austrian economics. Thank you to those of you who left me the review on the iTunes store. I'd really appreciate any support you guys can give me with that. Lastly, if you wanna find the show notes for this site, they're on my website, stephanlivera dot com. That's it from me. Thanks guys, see you next time.