Protecting Your Ass(ets) – Vault12

Larissa:

Welcome to Seeking Alpha, the podcast where we’re diving deep into crypto, careers, and the chaos of modern dating. I’m Larissa Bundziak.

Lindsay:

And I’m Lindsay Poss. Together we’re two women who somehow found themselves at the intersection of crypto Twitter, Silicon Valley, and Tinder.

Larissa:

Let’s get into it.

Lindsay:

Okay. So we have kind of a little bit of a nerdy episode today because I’m the one leading it. You always bring really, really fun topics to the table, and I’m like, let’s talk about economics.

Larissa:

All right, I got the next one, guys. I got the next one. We’ll see who writes that one first.

Lindsay:

But anyways, okay, so I wanted to talk a little bit more about Bitcoin today. Also, because you’re secretly a Bitcoin maxi-

Larissa:

I’m not.

Lindsay:

No so secretly.

Larissa:

I’m not.

Lindsay:

You’re for sure a Bitcoin maxi. Anyways, Bitcoin has a weird feature to it in that when in 2009 when Satoshi Nakamoto wrote the white paper, he put a limited supply on the number of Bitcoin, so there’s only going to ever be 21 million Bitcoin. And so because of that, basic economics say supply and demand, that’s why we think that the price is going to go up, blah, blah, blah, all that stuff. One of the issues though with Bitcoin is that 20% of it, what’s been mined, which is I think around 20 million has been lost already. So there’s already over 3.7 million coins gone, and that was a 2020 estimate, so that’s been like five years. One of the problems that I didn’t think about when it comes to cryptocurrencies in general is that when you own your own money, you’re also responsible for keeping track of said money.

Larissa:

When you say lost, it’s because people lost their fucking passwords and-

Lindsay:

Or they died.

Larissa:

Or died.

Lindsay:

Or they lost the USB drive, like that one guy who’s trying to buy a garbage dump because he accidentally threw it away and it has $800 million worth of crypto on it.

Larissa:

Yeah. So it’s not like the Bitcoin itself got lost in ether, it was all human error.

Lindsay:

Yes, all of it, human error. But that’s why I want to talk about it because this is a weird feature of cryptocurrency. With real money, if you put it in a bank, it’s sort of virtual and you don’t ever really lose it unless the bank takes it or the government, which is a thing that you don’t have control of. When you have control of your own money-

Larissa:

It’s up to you and you’re fucked (inaudible 00:02:03)-

Lindsay:

Yeah, exactly. So that’s just a really strange feature of it. So I want to talk about that alongside of wealth creation because while there’s all this independent financial opportunity, and you have to keep track of it, that also means that there’s independent opportunities to build wealth. And so I know for you, one of your strategies for a long time, and you said this on the pod before, is to buy Bitcoin every week, which is why you’re a maxi to me.

Larissa:

Being a strong proponent of Bitcoin and understanding its value is not being a maxi. I think there’s space for other digital assets, and I don’t think it’s a Bitcoin only world. But I do think that it is the only truly… I mean, I know it’s the only truly decentralized currency, and that’s important to me. It’s an asset that’s scarce and digital.

Lindsay:

I joke about being a Bitcoin midi, by the way. I actually don’t think that you’re a true maxi. You’re not a toxic maxi, you’re just a maxi. You’re a regular maxi. Whether you want to admit it or not, I’m a midi.

Larissa:

You’re mid?

Lindsay:

I’m self-identifying as mid. One of the reasons I think it’s really cool is because it’s the only asset class that had availability to all incomes immediately. We’ve seen price go up, which first reflects that scarcity, but also because anyone can actually get in on that scarcity in a way that you cannot with any other asset class, which I think is really cool. So I hope that as we see more asset types get added, and more things get tokenized, and more access to investment tools, that we don’t lose the ethos of anyone being able to actually access these things.

Larissa:

It’s the tools on the other side that are needed. Once you actually access it, how do you manage it and not lose it?

Lindsay:

When we’re thinking about all of these different ways of investing and having it be open to everyone, obviously the power in that is that everyone gets to have their own individual wealth creation opportunities, their own individual portfolios, own individual management tools, all of that stuff. What we don’t have is all of the apps and other things that go along with how to actually, first of all, teach coach, and just straight up manage all of these things. And that is something that I hadn’t necessarily thought about, and it makes me nervous. When we’re power to the people, but then we don’t give the people the tools to manage the power. What does that mean?

Larissa:

What do you think about Coinbase?

Lindsay:

Well, it’s centralized.

Larissa:

Right. So you want a decentralized solution for people being able to manage their own assets safely?

Lindsay:

Well, they go hand in hand. A lot of wealth opportunities for me start with Coinbase, they just don’t end there. And so I think that there’s a role that centralized servers play, particularly in interoperability with TradFi, I think that it makes it a lot easier. You can move past that and you should move past that as you put more and more assets and resources into crypto, right? Does that make sense to you?

Larissa:

Yeah. Yeah, totally. I have my assets on a ledger, on a cold wallet. But I know how important that is and not to lose the password to it.

Lindsay:

Well, how did you learn how important that was?

Larissa:

Because I’m not an idiot. No, I’m kidding.

Lindsay:

Okay. Rude.

Larissa:

I’m kidding. I lose my fucking passwords all the time. When it comes to the password, singular password that nobody else has to your money… There are other important things that people have that they know not to lose, and they don’t lose them like your birth certificate, death certificates, whatever. You just don’t lose that shit.

Lindsay:

I just can’t wait for all of that to be put on chain, so I don’t have to worry about losing that shit. That’s more rhyme. Where I’m like, “Why is the onus so much on one person to keep up? Why isn’t there better solutions?”

Larissa:

It’s a hard problem to solve. I mean, the solutions are centralized.

Lindsay:

It sucks.

Larissa:

How can you have it both ways?

Lindsay:

But that’s a shit system for wealth management, I would say.

Larissa:

I suppose there is an opportunity for a technology company to build the solution.

Lindsay:

So as we alluded to, the second half of this episode is an interview with Wasim Ahmad, who is co-founder of Vault 12. Vault 12 is pioneering crypto inheritance management, which was the exact problem that we just discussed. They help users secure and pass on their digital wealth to future generations using social custody with decentralized quantum safe encryption. If you don’t know what those words mean, don’t worry about it. We totally explain the user experience, and what it’s like to be on Vault 12.

Their main app, Vault 12 Guard, makes security simple and user-friendly while keeping you in control. It works on any phone, it can be put on any device, super easy to access and use. It’s free to start and protects, not just Bitcoin, but other cryptos as well, and personal files such as financial and medical records. The idea of Vault 12 is that you can make your own personal vault to store key information that can be passed on to loved ones or shared across devices to allow you to access all of your most important information. You can pick trusted people or devices as your guardians who together protect your assets in your vault.

The social recovery approach makes recovering or inheriting assets straightforward and without sacrificing privacy. As you listen to this interview, I hope that you learn a little bit more about how to actually manage your digital assets, and how to protect them in any case of emergency or otherwise, but also just strong safety guards for privacy and protection of what you own. So enjoy the interview.

Wasim:

Hi, I’m Wasim Ahmad. I’m one of the co-founders of Vault 12. Vault 12 is a company that does crypto inheritance, and hopefully we’ll get to talk about that. My background is in cryptography, commercializing cryptographic solutions including public key cryptography and other things like that. I’ve been a serial entrepreneur, and I’ve been in the US for about 30 years, but these days I spend half my time in London.

Lindsay:

I know you split between London and New York. And I’m so, so excited to have you in studio today in New York. You’re our first in-studio guest, which is so much fun for me. I’m really happy to have you here. I would love to start with just walking through kind of the inception story for Vault 12 because I know that there’s been some interesting crossovers with other crypto companies and other things that were out there. And also that you all are an OG in the space, you’ve been around for years. So can you just walk me through how Vault 12 came about?

Wasim:

Yes, absolutely. Well, yes. We’ve been around since 2014, 2015. CEO, Max Skibinsky was part of the blockchain team at Andreessen Horowitz, and he was one of the ones that worked with the Coinbase team to usher in that deal. He was very much around thought leaders in the crypto space in 2012, 2013, that kind of timeframe. They talked about how security, because the blockchain disintermediates institutions and activities that are not needed. Security is now the responsibility of the individual investor. They thought about what happens when there’s millions of new investors coming in, and they’re going to have to deal with security. What happens if they lose their crypto keys, seed phrases, private keys? And also what happens if they pass away, or if they’re incapacitated? Of course, at that time, there really hadn’t been these scenarios. You fast-forward 10 years, 10 years of Vault 12 this year we’ve had-

Lindsay:

So exciting congratulations.

Wasim:

Yeah, thank you. And we’ve had a pandemic where people could not get to their safety deposit boxes, and we’ve had many, many cases of people losing their crypto keys, or passing away and their families not being able to access the assets.

Lindsay:

Yes. I actually wrote down that point about individuals being in charge of their own security. In saying that, you’re pointing out both an issue and a feature of decentralization. So one of the things that I hadn’t thought about previously was just the amount of individual power that’s given in blockchain spaces, and through decentralized systems is obviously full power to the individual. And we talk about that a lot on the show, and we talk about that a lot in the industry with your data is your own, your keys are your own, all of this stuff. But you’re totally right that I never thought about, well, then you are also responsible for your own backups.

Wasim:

That’s right.

Lindsay:

And for protecting your own assets and all of that, which is somewhat of a newer responsibility than traditional wealth management, of course.

Wasim:

There’s a nuance though, which is that many people coming into crypto for the first time, they’re coming in through Gemini, or Coinbase, or some well-known centralized exchange-

Lindsay:

Entity.

Wasim:

… and so they have accounts, and they have password resets. And actually they don’t have their own keys, so they’re in a bubble and they’re protected, and that’s fine, that’s great. That is what is needed in the crypto economy as these people come in. But what happens when they hear about some new DeFi token, or some new meme coin, or some new blockchain that they want to access, and it’s not on Coinbase, it’s not on Gemini, and they have to go somewhere else to go get that? That’s when immediately their assets are at risk because unless they backed it up, they’re not protected.

Lindsay:

Right. Do you think innovations like passkeys and all of that are going to make this easier eventually? And especially given that you’re a security expert, this is kind of more of a security question on my end. And just for the listeners out there, passkeys are kind of biometric identifiers, so either your face, or your thumbprint, or things like that. I’ve noticed more and more wallets switching to that for logons and whatnot. Do you think that, that is going to help solve any issues in this apace?

Wasim:

Yeah, absolutely. I’m going to call it biometrics, but yeah, however that biometric is kind of delivered, or interacted with I think is key. I mean, that’s exactly how we do our kind of basic tier of security, is through biometric access.

Lindsay:

Well, and speaking of, let’s actually talk about the product, that’s one thing that I would love to do. I talked a bit about this in the intro, but you all use a system of guardianship. And there’s just a couple other key features that you have with Vault 12. Can you tell me about how you built out the product, what the key features are, how people actually are using it?

Wasim:

Yeah, absolutely. Let me just set some context just before we jump into the product features. There’s many ways to back up your crypto keys. You can engrave it on a steel plate, you can write it down on a piece of paper, which is a very, very bad idea. And you can put it-

Lindsay:

Before we jump into that, I hear you have a story about someone who wrote it on a piece of paper.

Wasim:

There was that Galaxy Digital Trader who created a new crypto wallet, wrote it down a piece of paper while he was eating. And his dog jumped up and ate the ketchup, covered a post-it note-

Lindsay:

Crazy.

Wasim:

So that wallet was useless.

Lindsay:

Yes.

Wasim:

We had the fires in LA, and the people that engraved their crypto keys onto steel plates or steel rods, they weren’t allowed to go into that area. Other ways that people back things up is in the cloud, on their computers, on USB drives, or in hardware wallets. All of these scenarios have trade-offs between convenience, and then kind of the risks around security. We’ve had situations where people change the business relationship with a cloud provider, and suddenly cloud data is not accessible. We saw that with Gemini and Genesis fallout from the FTX.

I had crypto there and it was lost for 18 months. We got every single penny back thanks to the Winklevoss’. This happens and individual devices get lost or they get stolen. There’s kind of not a great solution out there for any of these scenarios. And so we set out to build something that didn’t expose any of your private details, didn’t have a single point of failure like, oh, you lose your device or someone steals it. These are all concepts that are kind of part of decentralization and decentralized apps. So that was the goal, and so that’s what we built.

We were in beta in 2018 and 2019, it’s been in the app stores, and on Mac Os and Windows. So you download the app, you create a digital vault, and then you put in your crypto key. So it could be your seed phrase, it could be your private key. You could record a video of you with riddles of each of the words. It can be any type of file really, it doesn’t really matter. But that is then encrypted, it’s split into pieces, and then those pieces go anonymously to what we call guardians. And the guardians can be people, so it could be three friends of yours, three family members, three business partners, or it can be three devices that you have. So I have kind of my spare iPad, and my spare iPhone are also, and my Mac is a guardian for me. And that just means that when I need something really quickly, I can just use my devices and I get hold of it, but everything’s still secure.

The benefit of splitting this information up into pieces is that if I lose my phone, or I change my phone every year, I’m on that subscriber plan. When I get my new phone, everything gets recreated. If I lost my phone, I could recreate my vault with all the information on a new brand new phone. So that’s the benefit of having guardians, it’s distributed backup, so you never lose your information as long as you can get hold of 3 out of 9, or 5 out of 20 or whatever combination you decide.

Lindsay:

I actually was going to ask about that, so I’m glad that you clarified. You can recreate your vault without needing full access to every single shard.

Wasim:

Absolutely. That’s right. That’s a feature of the underlying cryptography, which is Shamir’s secret sharing. This isn’t like multi-sig, which everyone knows what assets you’re storing, and you’re restricted to three shards or five shards, so it’s not very flexible. Our solution was designed for that flexibility, and you get to set how many and all of those kind of settings. Once we had that foundation, we were able to say one of those guardians is going to be your technical beneficiary. And the technical beneficiary is the person who is going to receive all of the information about what the crypto key is, or the pin code, or whatever it is, or the passwords that you stored up there. They’ll be able to do whatever you wrote in your will, which is a kind of separate thing. That person may or may not be the executor of your will, but it’s kind of the technical person that you’ve trusted to get hold of the assets and distribute them.

Lindsay:

I am newer to learning about cryptography and how it works, so I’m glad to be sitting with an expert. One other kind of question I have just before we move on from how the shards work is, say you do switch over a device, are you able to make an old device obsolete? Does that information then get transferred to the new one? How does that work when a device goes offline?

Wasim:

Yeah, so this idea of sharding has been around for a very long time. And the innovation that we did was not in the cryptography, it was just in the user interface of what you have to worry about and what you don’t have to worry about. So you don’t have to worry about that, there’s actually no information stored on your phone. You can change phones, delete the vault on your phone, or the app and download it again and set up a new vault. You’re not going to leak information, that’s one thing. And then the second thing, which is more your question, if you decide that you don’t want that guardian, you want a different guardian, you fought with your partner, you can just change it in the app. Just change it from one person to another, and behind the scenes it recalculates everything, grabs the shards, redistributes them, and it just takes care of all of that behind the scenes. And that is really the thing that we’re doing that is the nerdy stuff that people have done manually for several years, but we kind of just do it in one slot.

Lindsay:

Oh, I love a simplified user experience too. I mean, with all of these issues, and I’m finding it in my conversation with you, you can become so out of your depth so quickly in crypto. It is impossible to understand every single facet of this industry and what happens with it. And so making a solution where I don’t need to necessarily fully understand exactly how sharding works, or cryptography, or some of the more complicated privacy concepts, even though I would love to understand those things. Not necessarily needing to, is so critical to just bringing more people in and just making products that are good.

Wasim:

And we’re not done with the evolution of cryptocurrency. There’ll be another blockchain that is better than what we have. We have a new number one blockchain, Solana. That wasn’t the case three years ago. Our solution is completely blockchain independent, it doesn’t matter what the asset is on.

Lindsay:

Well, and I love too that it still fully relies on the principles of decentralization, that’s the underlying thing that I think makes it so cool. You’re keeping the core tenets of blockchain distributed that just without-

Wasim:

We don’t know who you are, there’s no account. We don’t know anything about what you’re storing. I mean, there’s no servers, it’s all peer to peer. That just reduces any risks of leakage of private information, and I think we’re living in a world where we’re realizing that, yeah, all of that information that we uploaded into social media-

Lindsay:

I know.

Wasim:

… has been used, and in many cases in an unauthorized way.

Lindsay:

I want to switch gears a little bit. And one of the things that we initially connected on was we’re talking about what happens when people die? Storing your assets safely from having access to those assets, even just appointing guardians, and building out a plan for those assets. And what we connected on a couple of months ago now, was women and getting women to invest in crypto. And so we had spoken about that from a couple of different perspectives. One was just education in general and getting more women to actually invest. What you’re doing is sort of the next step in that as well, which I think you do a great job with the first part too. But Vault 12 is that next step too of okay, so now you’ve invested. Now, how do you think about protecting your wealth, and protecting your family in any emergency event? And I would love to talk to you about kind of why women are a good target market for Vault 12? And why you’re passionate about getting women into crypto, which is a thing that I’m a huge fan of about you?

Wasim:

I want to paint this as they’re a target market and we’re going to hit that one and then move on to the next target market. I think the reality is when we look at sort of society and who in society takes care of things like making sure there’s a will. 65% is women, 35% of guys. They’re already thinking about how can we lower the risk of losing everything, losing what we have, keeping our wealth secure and safe for when we need it? I think the opportunity here is something that has been overlooked by the media across the board. If you say crypto to someone, you immediately start thinking about crypto bros, billionaires, millionaires, Lamborghinis, those kinds of things. The big promise of the blockchain and cryptocurrency is, it’s not the price of Bitcoin 100,000 or going to 200,000, it’s that you can buy a dollar of Bitcoin.

Lindsay:

Yes, absolutely.

Wasim:

You can buy $20 a month and when that goes up, your $20 goes up too. And that I think is a concept that many, many people can work with, but not a lot of education about it. I know there are some politicians who’ve talked about it like Cory Booker, but it doesn’t make the big news. And I think one of the killer use cases of blockchain has definitely been remittances and sending money back. But I think women in general, in any society who are safeguarding assets and resources for their families, this is a key thing. This is a way to preserve what you have, make a little automatic investment every week, every month, and then just make sure that it’s backed up.

Lindsay:

Yes. I wrote a piece about this earlier in the year, but you’re totally right that women tend to make the purchasing decisions within a household. Women hold estimates range, but hold something like 60 to 85% of the purchasing power in general. They tend to be the ones making the decisions on healthcare, on groceries, on kind of the more practical matters of everyday life. When it comes to now having DeFi and getting more access to regular investing tools, I think you’re totally right that we’ll see more of a shift in more women in particular coming on board as there’s much easier access to less risky investment opportunities. So I think Bitcoin is definitely still seen as somewhat risky, although I think we’re getting over that hump slowly but surely as it reaches its, what? 15th year. But I think that just having access to more tools that have the $20 buy-in, the $1 buy-in or whatever it may be, wealth management tools, DeFi, all of that, I do firmly think that more women will start making those purchasing decisions to moving towards that. And so something like Vault 12, and thinking about how to protect that or encourage that in a safe way is very important.

Wasim:

Absolutely. Absolutely. And there was an article in the Wall Street Journal about banks, and traditional finance institutions who have been the biggest blocker to the crypto economy, now knocking on the door and trying to get in through the door and at some point offer different ways that their retail customers can expose themselves to cryptocurrency. And we need the market structure bill in August to be signed. And then I think that will be a sea change because then we will see TradFi organizations bring real kind of consumer-centric offerings. And that’s where I think we’ll see a lot more people-

Lindsay:

Definitely.

Wasim:

… kind of coming into crypto.

Lindsay:

Well, and so that actually ties back to one of the things that I really like in your ethos about making an easy consumer experience. A lot of crypto has talked about onboarding the next billion, and how do we get all these people, all this stuff? The reality is you have to have a good and interesting tool that is easy to use and access. I don’t think that it’s a major mystery how we get people in. A lot of it has to do with education policy for sure, and then the third kind of prong of that is just having cool stuff that people want to use.

I think I’ve told this story on this podcast before, but I actually was very upset when ChatGPT came out, and they had 100 million users within a month, and I thought, “I have been in crypto for five years now, and we can’t reach any type of kind of market mass adoption movement, and here’s generative AI, another concept that’s difficult to grasp on a technological level, that was able to do this in a month just because they had a product that was easily accessible on any device and easy to use.” So that was a real eyeopening moment for me of like, wow, we have got to do a better job for consumers. But I like your point about banks kind of working on that as well because as much as I’m a big believer in decentralization and in cryptocurrencies, we live in a world that hasn’t moved away from traditional banking systems, and isn’t going to anytime soon. And so allowing the tools that are available there to a very, very small percentage of those customers to actually be available to a lot more customers, I think is something that, hopefully, is what actually unlocks people getting comfortable using crypto.

Wasim:

Yeah. And I think Fidelity has done a good job of that. I mean, they’re not a bank, so they’ve had more leeway to do things. But you can buy ETFs where you’re not really buying cryptocurrency, but you are getting the upside and (inaudible 00:25:50)-

Lindsay:

Exposure. Yeah.

Wasim:

Yeah. You’re getting the exposure, but you can also buy crypto. So expect all of the high street banks to do the same thing. And then going back to ChatGPT, once people are getting very, very familiar and comfortable with AI… Well, once you have your AI doing your shopping for you, they’re going to pay for it With crypto, that is going to be the currency of AI, that is also going to be an accelerator for cryptocurrency.

Lindsay:

You and I both fall into this category of being excited technologists, for sure. Time-wise, what do you think is going to be the tipping point to where we actually get to wake up and use this technology in our daily lives? We’re going to play this back when the sea change does happen, and we’re going to see how right you were, so it’s okay to be totally wrong. But I just keep wondering, is it 1 year, is it 10 years, is it seven?

Wasim:

I think a year from August when the law goes in, within that year, we’ll start to see the first retail consumer products coming out from traditional financial institutions. It’ll be trading, right? It’s not going to be anything more exciting. These people have not spent a lot of time thinking about crypto in the last few years, but then after that, when they are all competing on the same kind of products, you’ll see insurance, you’ll see life insurance, you’ll start to see products that are kind of similar to products that exist today, but have some advantages because they’re blockchain-based. I think inheritance is also one of those categories, so I’m expecting within the next year to see people think seriously about this.

And then I think then the next wave, the exciting wave is with AI. And as you said, the user interfaces of crypto products are terrible. I’m not sure that there’s enough coders in the world to code themselves or UX designers in the world to design ourselves out of this. I think we need AI to be the layer on top of these crypto apps, kind of deal with consumers so that they don’t have to think through all these complicated options. I think that is a moment, maybe for all apps, but certainly crypto apps that is waiting around the corner.

Lindsay:

I want to end with just one final question about kind of you and your philosophy. We have spent a lot of time just today and in general covering all of this possibility, and promise, and excitement in this industry, and that is something that I certainly hold onto in the dark times of the industry. How do you ride the ups and downs of crypto and remain positive?

Wasim:

There’s no question that there’s been troubles and challenges in the last five, six years. But we’re at a moment where we’re getting the right kinds of regulations in place, put in place by smart people who’ve spent a lot of time thinking about this. And I think once those are in place, then market forces will dictate how far and wide that goes. But this isn’t going away, it’s out of Pandora’s box and it’s going to be part of how we do business just like tapping your phone to pay for stuff is relatively normal. It’s maybe not normal for my parents, but it’s normal for a lot of people. This evolution is happening, so yeah.

Lindsay:

Yes. And it’s exciting. Sometimes it’s sad, but mostly it’s exciting for me. I genuinely love working in this industry every day, I think it’s a lot of fun. Thank you so, so much for coming on today. I had so much fun in this discussion.

Wasim:

Thank you. My pleasure.

Lindsay:

Yeah. Where can people find you, follow you, find the work of Vault 12?

Wasim:

Yeah. So our website-

Lindsay:

Give all links.

Wasim:

… vault12.com, you can download the app Vault 12 Guard, it’s on the App store, Google Play Store, that’s kind of the best way. And if you want to see our meme tweets, you can see them on X.

Lindsay:

There you go. I like that. I still call it Twitter secretly. Thank you, this was lovely.

Wasim:

Great.

Lindsay:

Yay.