The Future of Bitcoin Loans, Security, and Financial Freedom with Unchained CEO Joseph Kelly

Episode Overview

Joseph Kelly is the CEO and co-founder of Unchained Capital, a financial services company that specializes in Bitcoin. Founded in 2016, Unchained Capital focuses on providing secure, user-controlled solutions for Bitcoin storage and lending. As a dedicated advocate for Bitcoin, Joseph leads Unchained mission to empower clients through tools like multi-signature vaults, which enhance security by allowing users to hold their own private keys, and Bitcoin-backed loans, which provide liquidity while keeping Bitcoin holdings intact. His emphasis on security and self-custody has positioned Unchained as a trusted name in the industry, particularly among long-term Bitcoin holders​

Before founding Unchained, Joseph co-founded Info chimps, a big data analytics company acquired by CSC in 2013. At Info chimps, he held various leadership roles, including CEO and COO, which honed his skills in technology and entrepreneurship. His diverse career also includes ventures in the residential construction and adventure travel industries. This varied background has given him a unique perspective on building innovative, customer-focused businesses. His commitment to client service and security has guided Unchained approach to collaborative custody, allowing clients to take full control of their Bitcoin while mitigating the risks typically associated with centralized financial institutions​(

Joseph’s passion for Bitcoin is deeply personal. He first became interested in cryptocurrency after selling Infochimps, thanks to a former colleague who introduced him to Bitcoin. This led him to explore the potential of decentralized finance and ultimately inspired him to create Unchained. In addition to his work in fintech, he spent his early years working as a deckhand and first mate on his family’s sailboat, an experience he credits with shaping his entrepreneurial spirit. Today, he continues to focus on creating products that promote Bitcoin as a transformative tool for financial independence and long-term security​.

Bitcoin financial services – Unchained

Episode Transcript

 Kevin Rosenquist: Hey welcome to PayPod where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist. Thanks for listening. I’m excited for you to hear my interview with Joseph Kelly, CEO and co-founder of Unchained, a financial services company focused on Bitcoin. They provide loans to people who supply Bitcoin as collateral. They offer retirement accounts, multi-signature vaults for enhanced security and really are a one stop shop for managing your Bitcoin. He is passionate about the currency and helped educate me on a lot of different aspects of it as well. He also talks about his unique experience of spending two years working on a sailboat with his family, and he discusses what led him to entrepreneurship. So now please enjoy my conversation with Joseph Kelly. So Bitcoin is nothing if it’s not controversial. Some in the financial world think it’s the bee’s knees. Many are skeptical. Most of the general public still doesn’t know what the hell it is. I have no doubt you’ve spent plenty of time defending cryptocurrency, so I won’t make you do that. But I do want to ask. I’m curious what makes you more bullish on Bitcoin than Ethereum or any of the other coins? If you are like, I’m just curious about that.

Joseph Kelly: Yeah, well, I certainly am. I’ve dedicated most of my working career at this point to Bitcoin. I’ve been an entrepreneur for 15 years and working in Bitcoin for eight. So yeah, and I think a lot of how I think about it is, I mean, we’re each a part of a kind of crypto. And all these decentralized technologies do is they put the responsibility out at the edge with the person and the individual. And so it’s always a great opportunity when we individually can go out and put our own knowledge, seek and verify, you know, how certain things work. And one of the things that I think does really distinguish Bitcoin across a lot of the space spaces and even especially against our traditional financial system, is you can go out and discover and learn very satisfying answers to how the thing works, to makes it so someone like the US government can’t just co-opt and take over the whole network. What makes it so, you know, if you, you know, holding your own keys or how are you not then subject to counterparty risks or somebody, some other central actor making a choice or decision? I think there are lots of other things out there to learn about in crypto beyond Bitcoin, and many of which are also still very real, either their technical innovations or they’re in use by a community that has a legit use case and things like that.

Joseph Kelly: I’ve just found in my personal experience, coming to Bitcoin before starting a company and now working in it, that there are just way more satisfying, hard, grounded answers here that have to do with physics, physical things like energy and what it takes to harness energy and math and cryptography and very kind of hard, you know, quote, computer science, things that that live at the bitcoin network level. So yeah, that would be my biggest answer is just it’s the most feels, the most true, most real out of all of them. And then that that tends to breed more of a, I think a true real customer and user base inside of Bitcoin that in other cases, many times it’s still maybe dominated by speculators or more of like a hype based community versus people who are there really for for the long term.

Kevin Rosenquist: It was recently halved. Bitcoin. Can you kind of explain what that means? I have kind of a rudimentary understanding of what that means. But just just in case anybody else out there doesn’t know anything. Yeah.

Joseph Kelly: When you’re talking about the halving. So that would be essentially the Bitcoin many people know has a hard supply cap of 21 million. That means there will only ever be 21 million Bitcoin. And thank goodness it’s very divisible. So you never kind of run out of bitcoin which you can kind of divide it up into for spending if you need to, but that halving says so basically all at the very beginning of Bitcoin’s time. You know the first block had 50 Bitcoin in it. So it really started at 50. And then all the way from there to now we have, I think about close to 20 million Bitcoin exists today. Those have been issued according to a schedule. And that schedule issued to the miners of a given block, which happens about every ten minutes, a subsidy of new Bitcoin and whatever transaction fees were involved in that block block. So the subsidy started at 50 Bitcoin after the first four years, Bitcoin being mined, that came down to 25. And then after the next four years that was halved to 12.5. And then the last epoch with that, these four years, the last epoch that wrapped up earlier this year, was 6.25 Bitcoin. And now just over three bitcoins are being issued every ten minutes since this most recent halving. So that will be the case now for the next four years until 2028. Um, at which time then only about one and a half or just over one and a half. Bitcoin will be issued every ten minutes. This is expected to go on up until all 21 billion Bitcoin are created or issued out in this process, which won’t occur for almost another hundred years. Wow. Let’s say based on how this is going to kind of continually have that way up until that time.

Kevin Rosenquist: So I would imagine then it’s less it’s a bit less motivating for miners to want to do it with the halving. Correct?

Joseph Kelly: Uh, potentially, yes, indeed it does. It does mean that like just economically right out the gate there, you, um, your earnings potential you might consider halved over time if you zoomed out, you would also say, though I mean it’s they’d much more would rather mine, you know, $60,000 bitcoin versus the $10 bitcoin they were mining back when they were getting 50 bitcoin per block. You know kind of a thing. So there’s a big, big difference for them there. And there are more transactions happening in the network. So there are more transaction fees. However it’s still kind of, you know, on that list of probably 2 or 3 top candidate, um, you know, most enduring critiques of Bitcoin that don’t have a good answer is, in the long run, will Well, mine are still enjoy mining and 100 years from now, due to just the transaction fees alone versus getting this kind of subsidy. So I think there’s still good reason to believe that, yes, there will be high transaction fees. We’re all working to make the Bitcoin network more valuable and have it be more valuable to those users to settle in Bitcoin. Um, so thus like ensuring there’s always transaction fees, but um, but there’s only ever always been a subsidy to the miners. And so we just don’t have that counterpoint or don’t have that example of washing at work without that.

Kevin Rosenquist:  right. Yeah. What happens when you reach the cap.

Joseph Kelly: What happens when it will reach?

Kevin Rosenquist: I mean is it just that’s all there is. And you trade the total amount and that’s that.

Joseph Kelly: That’s the open question. Yeah. Pretty much um I mean the, the part, the part that’s certain is like for the software that we all run in Bitcoin, that will be that in terms of any new coins being issued, some people have, you know, proposed, you know, for some would be scandalous, but like ideas would say take Bitcoin that had been lost or therefore haven’t been at that point, haven’t moved for ten years or more or whatever the criteria is, and then recycle them. And because there are by now, you know, probably as much as 1 or 2 million, um, bitcoin that have been lost. And so we’ll probably actually do more. I think the stats are closer to 4 million Bitcoin. Wow. Been lost. You’d say probably about 20% of the network. And so yeah whether that’s a coin that Recirculates or something like that. Again that would be very hard proposal. There could be an immense civil war in Bitcoin over a proposal like that. But part of what gives bitcoin its value is the scarce supply or that scarce limit to its creation. Yeah. So as long as we kind of all operate with those rules where we are creating the most potentially valuable system possible. Uh, and so that, you know, these consequences of no more new supply being issued or something, we’ll just have to rationalize it in our business models and how, you know, the system is expected to work and in 100 years.

Kevin Rosenquist: Yeah, When did you first become interested in crypto and bitcoin?

Joseph Kelly: So this is my second kind of real technology startup. I first started in 2009 and I had two co-founders of that business initially. We sold it in 2013. Along the way, I didn’t have any time for anything else or focus on anything, but one of my co-founders had heard about Bitcoin and not long after we sold it, he encouraged me to to buy some Bitcoin along with him. And he was one of the technical co-founders and more of the business operations guy. And so I got to pepper him with questions about how this thing works. It’s really great, really useful. A lot of people in their Bitcoin journeys would say there was a friend that helped them. There was a Sherpa that kind of they could like, depend on to get them up the mountain. Of all these questions and things there was to discover and a lot of your initial intuitions, often about something Bitcoin notes, it’s actually not the right, not the answer. It’s not the first thing you would think. There’s some counterintuitive way. It’s not always the way you think it was. And so yeah, just that opportunity to kind of work with a friend again and work with somebody who taught me so much about this was something I couldn’t pass up.

Joseph Kelly: And so when we were looking at starting Unchained, we were really clear with ourselves too. We wanted to know who our customer was at the beginning, that first startup I mentioned. We went through a painful pivot. We changed our customer, changed our products. The only thing that remained the same with our technology. So in this case, we want to start knowing who we’re serving from day one and hopefully keep that true. And so far that that has maintained our customer here unchanged is the long term Bitcoin holder. And so I also kind of enjoyed, I think the intellectually finding domains and places that are a little more contrarian or because you kind of witness, you know, how many people are against it or how much fear and uncertainty there is around a thing that, you know, there might be some positive ROI or that that’s what creates the the asymmetry or the potentially, you know, bigger outcome than just doing the same that everyone else is doing. So I saw that with Bitcoin, you know, back in 2016 or 17. It’s just a it was kind of an era of blockchain not Bitcoin or you know Bitcoin may be okay. But like the real the real innovation is the the blockchain.

Kevin Rosenquist: Yeah yeah yeah.

Joseph Kelly: Apply that everywhere. And so kind of the blockchain watching was for me classic uh you know bringing solution or solution around in search of a problem. When we wanted to start with who our customer was first and then what are the problems we can solve for them?

Kevin Rosenquist: So I want to talk about Unchained, but before we do, I’d love to talk about your first job. You were a first mate on the s v gene, a sailboat you lived and worked on with your family in the Caribbean for almost two years. Yes. I’ve never met anybody who had a first job like that. Tell me about that. How did that come to be?

Joseph Kelly: Yeah, I was really fortunate. I mean, it came off as a little bit of a family tragedy. So my mom died of cancer when I was 13, and my dad, we were living in Anchorage, Alaska at the time. He’d always wanted to go sailing, and he’d always dreamt of cruising and taking a sailboat around the world, kind of a thing. And so in the weeks after her death, he’d pulled my sister and I aside and was like, you know, I think I want to go do this, this sailing thing. And for not having any other answer, how could we tell him? No. It’s like, uh, sure, dad. So yeah, we left. I was I finished my sophomore year of high school. And then that summer we drove to Florida. We bought a sailboat named it after my mom. That’s why it’s called SVG. And we lived on that for about two and a half years, and took it all through the Caribbean and went through the Panama Canal. Really interesting. You know, homeschool experience and way to kind of see the world and meet a lot of different people. It’s part of what reaffirmed for me or stoked the desire to become an entrepreneur. And it was such an incredible experience for me, especially as a teenager, that I hope to repeat it with my own family someday. I’ve got two young girls, and I look forward to doing some kind of cruising adventure with them in the coming years.

Kevin Rosenquist: That’s really cool, because you were then. You were also a deckhand for a transportation company for a year after that. So to some degree, you had a bit of a bug there, huh?

Joseph Kelly: Well, and yeah, and it was also part practical. I turned 18, I was keen to kind of get out on my own somewhat. And the merchant Marines were I knew some people that worked there that we met cruising. And so that was a nice transition. I did learn working on a tugboat for a year, that I didn’t want to make money necessarily with my body, that I’d like to do it with my brain, but that was a great experience. That was. Yeah. A tugboat company in and around New York. So I enjoy visiting New York for work now, usually in some tall office buildings. But I’m often, yeah, like looking out, watching tugboats go up the Hudson or go in and around the harbor. That that’s where I used to be, you know, looking out at the office buildings. So.

Kevin Rosenquist: That’s funny. That’s good , that’s cool. That’s really cool. And you said that that kind of fueled your desire to be an entrepreneur. How so?

Joseph Kelly: A combination of seeing how diverse other people live out there, that a lot of the default assumptions we have as Americans are growing up in American society, um, aren’t how they have to be. Aren’t like the global settings are always just the most optimal or ideal settings for your daily life. So it’s kind of appreciating what could be different and not wanting to fall into two traditional trap. And secondly, I think recognition was important. I can recall one of our longer ocean passages being days away from any body of land, days away or so far. Not just not seeing at night on watch like any other boats or any other lights at sea, and then acknowledging that I had my dad and my sister around me, and those were all the only people that mattered. So kind of being able to make choices in life that may be in line with those people who are most important, while not being interfered with by like a boss or like other people. I did kind of have the fantasy, I’d say early on that, like I want to work for myself, so that’s why I want to be an entrepreneur. But I found that like, no, I was like the CEO and co-founder. I work for everybody, you know, all our employees, our investors, our customers. So it’s I’m not definitely not without a boss here. But yeah, those were kind of the mixture of things that set me on this path.

Kevin Rosenquist: Yeah. It’s interesting. I’ve talked to people before here on the show about just the perception when you go to other countries or when you travel like you did, and how much of a bubble, so much of so many of us are in here in the US. Oh, yeah.

Joseph Kelly: You don’t yeah. Don’t even realize it until some places like that kind of can wake you up out of it. Yeah.

Kevin Rosenquist: All right. Well, that’s awesome. Thank you for sharing that I appreciate it. Let’s get on to Unchained now. One of one of the biggest features you guys have is the Multi-signature vaults, Which involves storing the keys offline and requiring two keys in order to make any transactions. So talk a bit about how that works and why it’s why it’s such a great way of doing things.

Joseph Kelly: Cool. Yeah, there’s definitely several things involved here. And when you in decision to own Bitcoin it could be part like I was early on you know or personal curiosity. You want to understand what is this new thing you want to buy and buy a little thing people are talking about or your friends are mentioning. And so there’s kind of an investment side and investment case to Bitcoin that have to do with its price, its relevance in the global financial landscape. And, and a lot of that, I’d say has not been crystallized like there’s an ETF. And so if anybody’s thinking about bitcoin as an investment asset and you know should they hold some they have that option now inside their brokerage account to go hold an ETF. But you know Bitcoin is still a technology. It’s something that’s you know I quote use physical because it’s kind of physically realizable even though it’s a digital good but it’s physical because you can kind of make contact with it. And you can use you can utilize the Bitcoin network just like you utilize the internet or Gmail. So in that sense, that’s kind of this, this other side of the coin from this financial asset and part of what gives it value as a financial asset.

Joseph Kelly: More or less is your ability to, when you are interacting with the network, directly, send Bitcoin to one another without an intermediary. So I could send you a Bitcoin. Wherever you are out in the world, as long as you’re using the network natively. And I’m using that word natively. No one has to check an ID. No one can say yes or no to us transacting as long as I have the keys. And that’s what we’ll get to in a sec. I can manipulate the bitcoin, I can create the transaction to move it to the address that you told me. So that’s a really remarkable feature. There’s really nothing else we get to experience in our financial system that looks like that other than cash, especially when we have the physically proximate, I can hand you a dollar bill and that, you know, settle the transaction or move funds to you that no one had to knot. It didn’t have to be anybody else’s business, right? Yeah, yeah. And there’s sometimes it’s looked at as illicit, you know, but there’s a lot of very reasonable. I mean, refugees, like a lot of other scenarios, are just like, really good people need to get their wealth out from under a regime or out of, uh, someone else’s grasp or purview, and that Bitcoin is something that can solve that based on how it works as an asset.

Joseph Kelly: And so how that works and how that works with Unchained or unchained plays a role is what makes that possible is these private keys. And so Bitcoin uses cryptography at multiple layers multiple areas of how it works. But one area that’s relevant for any holder is you can hold a private key, which is like all kinds of analogies, I guess. What are some ways to look at this? There’s a private key is something private. So it’s a unique string. It’s, you know, password or things like that are kind of closed. It’s a secret you want to hold and not give to anyone else. But from a private key, you can derive a public key. And then a public key is kind of then that can be more shared around. Or I can give you my public key and it doesn’t cause a posit security harm necessarily, and that’s from where addresses and more public details on the blockchain are derived. But it’s only really my public or, I’m sorry, my private key that can unlock those addresses, not anyone else’s private keys. So it’s that private key ownership that creates the scenario that lets me transact with my Bitcoin directly on the network.

Joseph Kelly: And we’ve seen over the last ten years, thankfully, a great proliferation of more consumer devices that make that kind of private key experience both more tactile, like actually physical, like you’re storing it on a USB device and just user friendly. So, you know, there’s ways like encryption and private keys and these things have been around for decades, or they’re still, you know, encrypted mail services you can use, but it’s still enough. It’s still enough of a problem. It’s still a mental model that’s kind of difficult to grasp. And like, then there’s hard to use software that’s pretty clunky still around a lot of this stuff, but I’d say thanks to crypto and thanks to like, the need and desire for people to want to hold their own keys, there has been a lot of advancement in the user experience around this in the last ten years. And so there are devices like a ledger, a Trezor cold card. These are portable hardware wallets. And these take that private key, um, and they store it basically outside of your computer and in a device that isn’t always connected to the internet, because anything that’s connected to the internet might be hackable or susceptible.

Kevin Rosenquist: Some sort of risk there. Yeah. To intrusion.

Joseph Kelly: So yeah, it all to say that we support our clients them holding their own keys on these hardware wallets. We work with the major ones ledger treasure and Coast Guard that I mentioned. And we do it in a way that’s a 2 or 3 vault. So Bitcoin has some core functionality part of its native code and how you can program with it. So you can create addresses that work like a lockbox, kind of like a your safe deposit box at a bank. You have an experienced safety deposit box. You usually get a key and the banker has a key. And when you want to unlock your lockbox, the banker presents their key, puts it in you put in your key, and it’s the two of your keys that unlock it. Um, that’s multisig at work in Bitcoin. So when there are 2 or 3 type address that we created Unchained. The the client actually tends to hold two keys and we hold one. And so they have effective control with those two keys. They can unlock their bitcoin at any time. But a lot of our clients might choose to store one key or both sometimes, but at least one in an inconvenient place, maybe a summer home or in an actual in a bank safety deposit box, or in some way that they’re not. It’s not readily accessible. And then they use that, that key that might be more accessible and unchained as the as the other signer when they need to move their Bitcoin. But most clients will use unchained or using us for their long term holdings. It’s not that they’re transacting on a daily basis. And so it’s kind of, you know, more cold stored, slower transaction time kind of mechanism is suitable for for their needs. Okay.

Kevin Rosenquist: When you were on the SVG, did you ever imagine you would be explaining cryptocurrency. And yeah, to a guy on a podcast.

Joseph Kelly: How could I have any clue? Yeah. No. Life like lifestyle took me totally different direction than I could have imagined. But, um. But I’m here for it.

Kevin Rosenquist: Yeah, yeah, yeah. I mean, because you said that you’re not, like, the techie guy. You’re the business guy. So, I mean, like, it’s not like you’ve had these things wandering around in your head forever, so it’s. It’s funny what life. What life throws at you, huh? Correct. So you guys also do something that I thought was kind of cool is that you provide loans to people using their Bitcoin as collateral. Yeah. Which is really cool. Obviously there’s there’s risk involved with the volatility of cryptocurrency and stuff. How do you manage that risk.

Joseph Kelly: Yeah. So this is actually the first product we launched at Unchained as we were you know, working out as in our original business plan was like okay, we’re we’re here to serve the long term bitcoin holder. Well, what do we do for them. And when we looked at the market we saw this big gap. There wasn’t any secured lending against Bitcoin back in 2016. Wasn’t until mid mid year 2017 or so that like the first other shop or two started to to launch. We launched that year. In the summer BlockFi launched like six months later. And so the idea was kind of in the air as an idea whose time had come. And yeah, we just thought in the traditional world between, you know, your experience with Schwab and these brokerage platforms, you know, your portfolio, you can get a margin loan against it pretty easily. We looked at Bitcoin as a reasonable enough asset to lend against in context of the types of lending and securities that happens, but there was a lot we need to learn, a lot we didn’t quite understand. We also saw that it was a product that would necessitate secure custody for lending dollars against the Bitcoin, and it’s the collateral. We want to make sure it’s held there securely that whole time.

Joseph Kelly: And so it has been a journey for us, the lending product I think I mean, US dollar lending is still subject to a lot of regulations in the US, especially consumer lending. And more recent years, we’ve kind of distanced from doing direct consumer lending, mostly because of that and how much heat there is in that ecosystem that those that live at that nexus of consumer lending and, and Bitcoin might, might have to face. But at least for us, yeah, we’ve always managed the volatility aspects by first lending at an LTV of 40 to 50%. We start at 50% early on. Now we’re at 40%, and we do margin calls at. One of the cool things about Bitcoin is you do know what it’s you know, price is almost every second, you know, based on a global exchange network of exchanges that are trading it all the time. And so we use those price feeds to understand if the prices collapsed and collapsed beyond what we would then issue as a margin call with a price decline, or have the exact ratios right now but handy. But like you can look at it like a, you know, a price decline between about 30 and 35% issues of margin call, at which time the client has two days to post more Bitcoin.

Joseph Kelly: And there’s a further price decline than that margin call window shrinks to four hours. And then we only, you know, liquidate them fully if like the price declines such that the value of the collateral is maybe just over, you know, the loan amount kind of a thing. So kind of have those mechanisms built in to work with that. And you know, thankfully we’ve never lost any lending dollars. All the Bitcoin we’ve taken as collateral has always stayed as collateral. We’ve never rented out, so there’s always been an effective amount of collateral backing our loan book. It’s unfortunate what we’ve had to at times liquidate clients when they enter into this kind of product. They understand and we try and disclaim very well upfront, like what are the scenarios that can happen and for you to lose Bitcoin for us to sell. But yeah, overall I’d say for a lot of purposes and most of the loans that get taken out from us are for investment purposes. Buying real estate or investing in a business. And that’s been a great way for people to hang on to their Bitcoin, while at the same time, you know, getting some utility or getting some liquidity out of it to make those investments.

Kevin Rosenquist: Yeah, that’s really cool. And you guys also provide financial advice related to Bitcoin strategies. Clients can open up bitcoin based retirement accounts. You’re like a complete financial planner for all things Bitcoin.

Joseph Kelly: Yeah. No. So yeah definitely backing up from that idea that these long term bitcoin holders are our clients. And so there is a menu. There’s a whole suite of services you could want to deliver for them. We’ve talked about custody, the lending and the trading. You know, we have a trading desk out of which people can buy and sell into their. Their vaults with us IRA accounts. Yeah, those came online about two years ago. And so now people can hold their own keys to a Bitcoin that’s in an IRA investment advice that’s provided through our affiliate sound advisory. So that is a registered investment advisor and it works with clients on their overall financial plan. I mean, there’s that challenge for I think a lot of people, these clients that have been coming to us over the years have, you know, that because they just deal with that. Either the advisor couldn’t because of compliance reasons or their hands were tied by their firm or just, you know, ideologically, they saw no value in the thing. And so they would, you know, chide their client anytime they were buying more or weren’t selling and rebalancing their portfolio. But yeah, I think the clients that, you know, want to hold Bitcoin for the long run and you want to have a professional that you can work with on tax strategies and planning on when and how they’ll sell, you know, but that’s what that’s where sound advisory comes in and what role it can play for people.

Kevin Rosenquist: What do you think the biggest resistance is? Is it lack of knowledge? Is it not wanting to change? Not wanting to accept? Moving on from the old guard, so to speak? What is the resistance?

Joseph Kelly: Or the resistance to bitcoin kind of thing? Yeah. Oh yeah. I mean it’s such fun. I mean, it’s a great study in psychology. And just like how we all work. Right. And I think um, because it’s all the above. And yeah, there’s a lot to unlearn. And in the journey of kind of learning about bitcoin and I mentioned that idea about it giving useful answers. I mean, I do think and I think from your seat in your podcast and in the industry, you see, I think there’s such complexity to the US financial system to just how payments work, to how lending works, to how many government agencies are involved. When you are talking about banking or any of these services. And then just the kind of the moment of creation of a dollar and how that works, and is that is that truly known or is it. It’s kind of it’s vaguely known, or it lives at the margin of, you know, the bank lending process. And then now, in more recent years, these adventures between quantitative easing or these kind of new advanced tools that the Federal Reserve has been able to bring to bear in times of crises, and that open the question of like, you know, the medicine, you know, making creating the need for more medicine later, you know, kinds of things, like all that stuff is hard. And when it’s at these, it’s not like at a physical chemical level, it’s hard to reason about in a way that you can experiment with and get to like true and false conclusions.

Joseph Kelly: So we are left swimming with a lot of best guess understandings and trusts, and we’re kind of implicitly just trusting that those in charge will make good decisions for us or good representative, representative decisions of, you know, the interests of their political body, if you will, so like that. But then we have a lot of modern examples of that not not being well founded, trust or like, not, not deserve a trust. So the idea that like money and something that essentially, you know, is so essential or daily lives such a you know, it’s like the water we swim in kind of analogy, you know, we’re all fish and like money. Is this this layer or this thing that we don’t have to think about? We just, you know, breathe in and gather as much as we can and, you know, spend it wisely. Have to rethink those things is a hard problem and that you’re compatible with Bitcoin. And so a lot of people have reasons they don’t want to learn or they don’t. They’d rather not learn. Why can’t I trust this stuff. Because some of the conclusions and the, the later feelings are too painful. That’s true.

Kevin Rosenquist: Yeah. That’s true. Yeah. I mean, it’s confusing too. I mean, I, you know, admittedly, I mean, I had to like, educate myself on how the blockchain and Web3 and all that stuff works. And I still am just at the tip of the iceberg, you know, I mean, it’s it’s complicated. It really really is. And, and and there’s also I think like, you know, people that are like, oh, well it’s not backed by anything. It’s like, well, you know, currencies aren’t backed by gold the way they used to be. So you know, it’s there’s like some nice naivety there and, and just some confusion and all that. So it’s got to make your job hard or does most people come to you kind of. They, they get it.

Joseph Kelly: At the point they’re coming to us as a client, they get it. I mean, ours is the kind of service we’re not a consumer like retail bitcoin onboarding platform, right? You know, some exist. Coinbase invests a lot in that. And you know getting their marginal million next million clients Mainchain has clients you know number you know, still less than 10,000. So that gives us just a different profile. We’re usually working with people a little bit later in their Bitcoin journey. They maybe already own some. They might already self-custody or own a hardware wallet and want something next level. And again, a lot of our clients are people too, you know, for now, I mean, they have $1 million or more of worth in Bitcoin and they want to be able to plan for their estate better. They want to they want to have more of a plan they can hand to their spouse or significant other or their other family members, like, hey, here’s how if I die, here’s how you recover my bitcoin, here’s how you recover our Bitcoin. If it’s, you know, maybe they’re more conservative their household wealth.

Joseph Kelly: So that’s kind of the niche the chain operates in. And yeah I mean I, I kind of went into this bit back to one of the points we made about like Knowingly committing to more contrarian ideas or things that are out there. So I was prepared for a lot of this. I don’t know. I could never be as prepared for how much and for how long you have to face a lot of that scrutiny. But when I’m asked what was most painful of my journey here at Unchained, it was still those first two years of just trying to get a bank account. And just like just what frustration is there when you can’t something you just by default so depend on you just consider kind of a right or just an ability like Americans, both business friendly kind of start a business and, you know, have a checking account and just deal with every other problem I have to deal with as a business owner. But then if you add to that list that you, you know, also getting a checking account is hard. That was really, really frustrating.

Kevin Rosenquist: I’ll bet. Yeah. Especially doing what you do, you know, like it’s like you’re trying to do kind of like an alternative to the classic financial model. And here is the classic financial model. Just putting up a roadblock for you. Totally ironic. Oh the irony. Yeah.

Joseph Kelly: Delicious.

Joseph Kelly: Delicious.

Kevin Rosenquist: Do you think you guys will branch out into Ethereum or anything else? Or do you think you’re just gonna stick with Bitcoin?

Joseph Kelly: Not anytime soon. You know, and a point of fact on history for us, we did actually support Ethereum, you know, not long after we launched in 2017. We started getting we launched the bitcoin backbone and started getting queries from clients like, hey, what about my ETH? Can I get a loan against my ETH also? And my co-founder and I were customer centric entrepreneurs. So here’s client feedback. Let’s prioritize ETH on the roadmap also. But in that process I discovered quite a few things. Again, back to like just the grounding and the technicality of these things. Bitcoin and Ethereum are very different software systems. They made different design choices early on as to how those systems will achieve the ends that you want at the blockchain. Eth try to be early on and still as someone tries to be more expressive, like do way more things, build applications of Ethereum that are more complex, metaverse.

Kevin Rosenquist: And all the other stuff that they. Yeah.

Joseph Kelly: Yeah. And as you’ve seen, that complexity breeds more of a porous like security surface or more ways, attacks and loopholes and vulnerabilities can be found and exploited. And so that is risky. Also, at least at the time, we had a lot of difficulty just running stable Ethereum infrastructure like it. You know, we ran that would, you know, be our participating node in the blockchain to get blocks and communicate with the rest of the network. It constantly had to be running at like the latest bleeding edge version of Ethereum and and and honestly restarted like every week. So yeah. And then this 2017 2018 time frame. So I can imagine maybe things are bigger then. But I know a lot of the answers that were there because there’s a common frustration. All the answers looked at like, oh, let’s build more in these infrastructure service providers that kind of do that for you to kind of work like an AWS. And so then that kind of hampers or that also works then against this kind of decentralized blockchain thing, it’s like, oh wait, I can’t, I can’t actually run the blockchain myself. I got to go trust somebody else to run it for me. And then, you know. So even though I haven’t seen a lot of negative outcomes come out of that choice, it just it does kind of invalidate a little bit of the decentralized promise of these things. So that aside, and accepting two at the time when we’re still less than 20 people, as a startup, we needed to focus our our people and our time and resources.

Joseph Kelly: And so here’s something that was costing quite a bit, um, measured against Bitcoin. And then when we looked at our business results and the clients that would use us for Ethereum, it was only about 5%, maybe at its peak of our of our loan volume or the actual loans we did. So, um, also, yeah, definitely been one of those 80 over 20 things of 80% problem, but less than 2,020% of your benefits. And yeah. And I think then by then also my co-founder and I kind of had learned enough about Bitcoin and the difference between these. And so we’re kind of more willing to believe and just kind of commit ourselves to like Bitcoin being you have to look at it like a winner or Bitcoin being the long run horse that you would, you know, where are the bet on. And if we can’t make them succeed with Bitcoin, there is no hope or no reason to consider other things We need to get something, you know, working here for our clients here and there. And there’s plenty of I mean, we can’t even get done everything we want to get done this year in the back half, and there’s plenty more to do next year. There’s going to I think that’s going to be a perennial problem for us. And just we’re like in a Garden of Eden of like things we can do for our clients just here and just on Bitcoin without needing to think about those other options.

Kevin Rosenquist: That makes sense. If you don’t if you don’t need to, why? Why bother? Yeah. Muddy the waters. How big of a. I know this is probably a really loaded question, but you mentioned something about the decentralization and the risk of losing that. How big of a risk is that you think with I mean, there’s a lot of powerful people out there who are not going to be happy with a decentralized system. So do you see it becoming a legitimate problem of of decentralization going away?

Joseph Kelly: I think at least most of all my comments, I, you know, can only be limited to sort of Bitcoin. And even then, you know what things I’ve been knowledge about. But I think Bitcoin is very, very resistant to that kind of, you know, either attack or those type of scenarios. And it’s been kept that way through a lot of, you know, choices at the protocol level made by software engineers and the people who run that software. And so, yeah, the the game theory of, you know, Bitcoin as it’s a network of miners, for instance, that like to now, you know, mining is such a big business, many billions of dollars a year in revenues and, and expenses that for any actor to want to be significant, there need to look at, you know, investing tens of millions of dollars, if not hundreds of millions into equipment, and then the ongoing expense of running that equipment and the power generation for it. And so the kind of I know a lot of.

Kevin Rosenquist: People who’ve tried and said, I don’t have the electric bill, but it’s too big of an electric bill for it. Like they’re like, yeah, not not going to bother. Yeah.

Joseph Kelly: It’s hard. And so that marginal choice and that marginal difficulty is happening all the time. And yet there are people, you know, cutting a good living out of operating miners. And the game theory is such that like for any, you know, interested enough actor to go about and want to co-opt that network or, you know, put their foot down all by 10 million, $10 billion worth of miners and go run those. And then, you know, we’ll take over the network. Well, now, if you actually succeed in that, you actually, you know, then you did something like, you know, unfortunate for all of us, Bitcoin is no longer decentralized. It’s now worthless. So what did you spend that $10 billion for? You know like you didn’t it wouldn’t let you go acquire something really valuable. And actually, you know it’s like it’s zero. So in the game theory of people and the kinds of like the idea that if you have the Federal Reserve or, you know, the US in its last ditch, you know, Hail Mary to like, save the dollar has to, you know, throw this kind of attack. I mean, wouldn’t we have just already won at that point and just such an incredible level or like to be that big and important that now the US government, it’s worth their time to throw, you know, to buy $50 billion worth of hardware and operating like have a, you know, world war level like mobilization or something. I don’t know, it’s just insane. It’s just. So. It’s just. It’s a really hard system to attack based on both the game theory and its scale.

Joseph Kelly: Any attacks like that you could have only gotten away with in the first few years, and then, you know, by about 2013 and 14, I mean, the mining network alone was already bigger than any single, uh, like, data center operator, like Google or these other places. Like they’re just enough miners running worldwide that it already eclipsed those kinds of operations. And it’s only grown since. So it’s just, uh, that’s that’s again, back to like one of your opening questions about the difference between Bitcoin and these other things is I can’t give you any anywhere near as like confident or, I think, reasoned or rational answer on any of those other networks, even though that’s like some of the considerations are these proof of stake type mechanisms versus the proof of work that Bitcoin depends on, but that at least here we can kind of reason out, you know, the rational, you know, decision trees for for people around Bitcoin. And yeah I think that there have been I do feel like there are these things that hurt or and are hard. I mean going after the banking system or the way banks Thinks that banks and crypto companies in the last few years have been treated was really unfortunate, and it did hurt. Thankfully, Unchained was mostly unscathed, but it hurt a lot of people in the space, the ability to operate. So that was one attack that, you know, like succeeded or won some battles there. But that’s because we’re using a very centralized financial system while we’re still, you know, we’re kind of bridging both these worlds.

Kevin Rosenquist: That’s a good point. You are bridging both worlds. So yeah, you kind of have to play nice on both sides. Yeah, yeah. And deal with the fallout on both sides too. Yeah. Well, Joe, thanks for being here, man. I really appreciate you kind of talking about unchained bitcoin and crypto and all that. I think a lot of people probably got some useful tips out of that.

Joseph Kelly: Thanks, Kevin. It’s really great to be here. Nice chatting with you.