Institutional Custody, Multisig & the War on Cash | Mike Belshe SLP773

Stephan Livera (0:00)

Hi, everyone, welcome back to Stephan Livera Podcast.

Rejoining me on the show today is Mike Belshe, CEO and founder of BitGo. Mike, I think it's been maybe six or seven years since your last appearance on the show, so welcome back.

Mike Belshe (0:14)

Well, thanks for having me back. I guess you probably took a pause for the last five years or something, huh?

Stephan Livera (0:20)

That's right. Well, who knows? But obviously, I thought there's lots of things going on in the world of Bitcoin and security and AI. I thought it would be a good time to get you on to talk about it. Obviously, hearing a range of views across the industry, whether that's relating to people who are doing full self-custody stuff or obviously, like yourself, running one of the largest Bitcoin custodians.

So let's just start there. I mean, obviously, this recent round of hacks and attacks in the Bitcoin world has got a lot of people concerned. Do you have any initial reaction on that?

Mike Belshe (0:59)

I have a lot of things to say.

So let's see, for anybody who doesn't know who BitGo is, we've been around since 2013, started as a technology play for how do you secure Bitcoin better. That was like the original thing. And we helped pioneer the use of multi-sig into Bitcoin wallets. We didn't invent it. It was built into the Bitcoin protocol as part of P2SH way back when. But basically made a usable form of what's now known today as multi-sig. We do a 2 out of 3 variant and help push that forward.

I think what's going on right now is actually we're at a transition, which frankly, I think we talked about all the way 10 plus years ago as a community, as an ecosystem, which is how much of this belongs in banks and how much of it belongs in self-custody.

And before anybody thinks I'm going to just go pitch the bank thing, look, I am a huge, huge fan of self-custody. And I think that if we ultimately lose self-custody, and by the way, it's not a guarantee that regulators won't come and ban it. But if we lose self-custody, we lose the power. We will end up with a system where there's a set of gatekeepers that control the banks, and they get to decide whether you're in or you're out. And most of the time that probably works more or less okay. And sometimes it really doesn't work okay. And then you're really sad that you didn't have self-custody. So BitGo offers a full compliment, although we're known for custody, we're licensed, we're a US regulated, federally regulated bank here. I think we're the largest independent bank in crypto of any other player. Although we're known for that, everything we do we offer in custody and self-custody modes. And in fact, you can come to BitGo, you can come right now, you get full free access for individual users of all the self-custody. You can upgrade to custody if you want, etc. All right, so the transition I think that's happening is the asset class has gotten big enough and the security requirements to secure assets of that value has now reached a level where people are like, wait a minute, can I secure this myself? So first off on the thesis and the premise, a lot of people are really excited about self-sovereignty, the ability to hold it on your own, have your own control, nobody can take it from you. It's a really important thing. But then that's got a trade-off of like, well wait, what lengths am I willing to go to to secure my assets? And then also, who can I trust? Now 10 years ago, there was nobody you could trust because none of the banks were touching it, none of the traditional players that had built up all these layers from regulatory to security, et cetera, were there.

These days, I think that part has definitely changed. But you still have the issue of like, what goes into securing your own money? How much are you comfortable with? And I think here's an interesting question for you, for me, for anybody. You know, what percentage of your net worth would you be comfortable having responsibility to secure yourself? And it's an important question you're going to have to grapple with, even if you're the biggest believer in Bitcoin. At some point, you know, Bitcoin, way bigger than every other market, maybe it's 98% of your net worth. How much are you comfortable holding on to yourself?

Stephan Livera (4:14)

I mean, for me, I am one of those dice roll, multi-vendor, multi-sig guys. But even for me, I certainly do believe that you can spread it around, like in earlier year. And don't forget, I think many of us have grown up in this, like at the time many of us first got into Bitcoin, especially like I'm 38 and a lot of other Bitcoiners are kind of similar bracket. When we first got into it, we were single, no kids. It's like now, you know, married with children, like your life, you know, your risk profile changes. Yeah, like what the risks you're willing to take when you're, you know, 25 or 24 or whatever, like versus now. I get a call every month.