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Rafael Casas: [00:00:04] Welcome to crypto with account CWA powered by big wave where we talk with technologists and crypto enthusiasts as we discuss current events in economy, politics, technology and digital assets with thought leaders from around the world. Hosted by yours truly, Pat White and Raphael Casas. Today, everyone, we have a really special guest as we dive deep into the topics of the institutional industry and digital assets. Nick Sanschagrin it in. If I hopefully I said that right. Is the head of institutions and Defi with Chain Starcom who are great partners of Big Wave. He's worked in the enterprise cybersecurity sector for over a decade, leading various sales teams for PKI and SSL, MFA at HHS, EMS and other cyber services. Prior to joining Jane's Tech, he was director of sales with Brain, a digital asset institutional custodian focused on providing cold storage and insured custody to the leading financial institutions from banks FIES funds, VCS, family offices, credit unions and asset managers. Today, Nick leads the sales efforts with chain Stack, providing blockchain and web3 infrastructure for nodes, RPC endpoints and APIs. In addition to focusing heavily on amazing partnerships with industry leaders such as BID with offering the most comprehensive tax and accounting capabilities, process workflows and digital assets and enterprise finance. So, Nick, thank you so much for joining us today. It's a pleasure to have you.

Nick Sanschagrin: [00:01:34] Likewise. Thanks, Rafael and Pat.

Pat White: [00:01:36] Hey, great to have you, buddy. Would you would you you want to you want to give the correct pronunciation of your your name there just so we don't have.

Nick Sanschagrin: [00:01:46] Rafael did a great job. So it's Nick, Sanschagrin. It's French-Canadian, and I appreciate it. You guys did a great job. And Rafael with the. Yeah, go.

Pat White: [00:01:54] Ahead. Rafael and I never had a chance.

Nick Sanschagrin: [00:01:57] Yes, that's okay.

Rafael Casas: [00:01:58] I try to bring in my my my Spanish flavor into it, but we really appreciate you being here. I know you have a ton of knowledge and you and Pat are just really an encyclopedia of knowledge. And when it comes to the institutional side of the digital assets world, one thing I actually wanted to dive into just to get to know you before we kind of dig into some of these really interesting topics, was that I noticed you studied in biology in college and kind of wanted to dive a little bit deeper, understand that what was your what did you get to to dive deep into there in college and university, and what made you transition into digital assets from that?

Nick Sanschagrin: [00:02:34] That's a great question. Sometimes I ask myself, you know, where I am today, I may have considered a position in engineering is something maybe had I had to do it again, I would have kind of taken another step at it, like software engineering, obviously a digital design, But no. So I got out of university, I was out of high school in Canada here, and my father being in the medical field, I was trying to focus on developing a career in the biosciences, in university, at least in Canada. When you join, you choose a major similar to how some of the platforms in the US go. And my major was biology. In terms of the sciences, biology is a pretty broad topic. It can be entomology, it could be, you know, we're talking medical sciences, you name it, right? It's a pretty broad topic. And I thought that it would be a good place to start, at least from covering what I thought was the pure sciences side of things, and then at least kind of scaling down. And I chose a business minor halfway through realizing that I kind of wanted to pivot from maybe more of a research and a scientific approach to something where I could apply and kind of make a living from and make a business out of it. I got to do some really cool stuff.

Nick Sanschagrin: [00:03:35] In biology, we're talking about, you know, six hour entomology labs, you know, some very interesting stuff in terms of dissections, you know, taking the heart out of a rat and checking out the pump rate and measuring things. So I thought it was a really good example of, you know, core learning rate. It taught me to essentially learn how to read books, how to write reports, how to do hypothesis, how to do research, and then reanalyze and kind of work towards where I think the foundational learning was where I'm at today. Like I said earlier, I may have, you know, now that I'm a bit later on in my life, choosing something like software engineering would have been really cool knowing that we're in Web3 and crypto. Having a bit of a background in coding in platform engineering would have been really neat. But throughout my career in biology, I kind of had a gap where I didn't really see the career path post post school. You either go to grad school or you kind of get into research and lab work. Not that lab works any difficult, but I felt that was more of a people person I always wanted. I also wanted to kind of create a good business for myself and earn a good living. And so I pivoted to major in business, and I thought business were easy classes, obviously coming out of biology, no organic chemistry, no physics, you know, basic mathematics.

Nick Sanschagrin: [00:04:40] But it was a lot of fun, you know, seeing how business operated, the economics, the financial side of things. And again, you know, there's another aspect of knowing what I'm at today, maybe getting into economics in macro and that kind of stuff would have been really cool to get a foundation there. So I'm still a believer that there is a benefit to continued learning. And I love to to stay involved and kind of learn as much as I can. I find I get a lot of my knowledge from like Twitter spaces these days, at least in the crypto. Crypto Twitter world, but there's a lot of availability online. You can sort of self teach and self learn really just depends on your appetite for it. So long answer to a question. But you know, science is with a starting point. I really didn't know any different. I got into university, I was still six years old, which is crazy, just based on where my, my, my birthday falls in. So I was not very mature, didn't quite know what I was getting involved in. I just figured, shoot for the stars. And then, you know, what kind of work our way back.

Pat White: [00:05:27] It was.

Nick Sanschagrin: [00:05:27] Super was a fun. Yeah, go with that.

Pat White: [00:05:29] No, that's super. That's super fun. I actually always liked biology. I was never a big lab person, though. It's it's just it's the it's incredible amount of discipline in time to do it, which is probably not a bad it's not a bad skill to have developed, honestly. I mean the discipline that it takes to really to really get a degree in biology is actually pretty spectacular. Any of the any of those kind of like hard sciences like that. So but yes, I'm a I was a computer engineering degree, so I liked that a little bit more. I never I didn't do any college biology classes, sadly.

Rafael Casas: [00:06:01] It's really interesting you brought up entomology because I do have a friend that that studied that and now works for NGO because that's like the path you take to be on, on like NatGeo shows and stuff like that. So it's really interesting. Wow. I did want to, you know, kind of to quick start to this as far as like discussing institutions I have. Pat, if you wanted to kind of really just set the stage for our audience of, you know, institution and financial on the digital asset side of what what's the definition? How is that defined? What does that look like?

Pat White: [00:06:30] Yeah, it's it is it's it's a great topic to talk about and it's and I noticed for your background it's interesting. I'm actually almost like somewhat surprised that you and I have never come across each other before because I was in cybersecurity for a very long time as well. I worked for a company called Fortify. We even have we have a few friends that worked that you worked with that were at Fortify. Fortify was a was an early soft security company that did static code analysis. And so they were focused on, you know, basically like you give it some code and then it sort of like tells you there's any bugs in it or anything like that. So there was a big it got bought by HP, there was a big diaspora and there's 4 to 5 people everywhere. And a lot of fortified people did end up actually in crypto because there is this natural draw for those of us that were in cybersecurity, there actually is this really natural draw to digital assets because, you know, first and foremost, we already understood a lot about the cryptography behind all this stuff. And we weren't, you know, that all of that was was fun. There's a great I mean, everything in crypto is like everything that I ever learned about about software security is relevant to crypto, which is it's crazy. And that goes from OPSEC and everything down. When you're when you're sort of doing crypto. Seriously, you have to be you really do have to be thinking holistically about security. It's the only way to do it. You have to be thinking about that when you're when you're writing any sort of smart contract, when you're writing the dapp itself, like the web app that goes along with it, when you're working with with any of the teams out there, when you have your your ledger or your trezor like security is such an important part of it. So what was your so what were you doing back in your security days? And then how did that segway into into crypto?

Nick Sanschagrin: [00:08:07] I hear you. You know, what's funny is I'll go back in time, but I met somebody from a project just recently called Calibra, and he had actually built the certificate lifecycle management platform for Global Sign, which was when I one of my competitors. So it's interesting that you mentioned that we hadn't run across each other. You know, kind of going back through the history. Chances are there some people that cross paths on both sides. But my history started at a company called Konica Minolta, if we go way back in time. Wow. So Konica, was it Photocopier company? It's super old school, right? And I think in terms of developing a sales acumen, they say if you can survive a year in photocopier sales, you can kind of take on anything. And so I had a small French Canadian territory, so I was going door to door to like coffee shops, you know, whatever. I'm trying to think like corner stores, you know, car dealerships. And they had one big MFP multi functional printer. And I was sitting there trying to flip them to a new printer from Konica or trying to displace their Pitney Bowes or something else. So it was obviously a bit of a dinosaur type of technology that I was selling, moving away from the copy machine to something more digital. And then, you know, it was it was tricky, right? I think a lot of these folks would have a machine in the back of the room that never got touched or it was covered in dust.

Nick Sanschagrin: [00:09:11] They'd say, Look, we're not touching this thing, you know, try to knock on the next door. So it was really interesting to get face to face, urn, you know, the doorway in. Right, knock on the door, come in and introduce myself to the business manager. Come with a proposal, talk about how to displace this unit. My biggest experience really went for a company called Entrust. So Entrust, I was headhunted out of there. So I've had good and bad experiences in my career with headhunters. This one was a great one. So I landed in Entrust. They do sell certificates, which to me I think matters a lot still today when it comes to digital security. I am kind of disappointed. Most recently there was a transition from I don't if you guys remember what an easy sell was, you used to hit a Google website. I've used to be the Green Adjust bar that lit up. It used to click the certificate. You could really see who the owner was, and we sold a lot of what was called extended validation. I feel like that transition once Google and the case, which is the browser form, they killed that off because they thought it was too difficult for people. Both understand what the Green Party meant.

Pat White: [00:10:05] And it was expensive. I mean, like we did that a couple of times. My last business, it was like $500 a year for like exactly a pretty marginal. I mean, what really changed about all that, though, was that sstl and it was inevitable look like I hope you don't you don't take this too personally. Like the demise of the Sstl industry was inevitable because it was always like grossly overpriced for what was sort of happening. And so, like I say, this is a guy like I one of the guys I worked with at Cisco was the guy who designed Let's Encrypt or was one of the two main people behind Let's Encrypt. So I had I tend to be very, very biased towards towards that. But but I've also I have paid for a lot of cell search in my life. And boy, oh boy, was I was I was not sad when that industry started to go away because it is it's a it was a bit a it was it's a it's an expensive hobby to buy as a cell search.

Nick Sanschagrin: [00:10:57] No, I totally get what you're saying. And I remember the transition from going to a free service, like let's encrypt to encrypt the internet. The gap was in my point with that was when they killed off EV. To me that was a barrier to entry and it was a barrier to what was called phishing, right? So somebody could go get PayPal on, let's encrypt, but they could not come to interest and get PayPal dot com because we would not verify their certificate. So from the point that that fell off and I find that that could have been applied in web three hypothetically where somebody can go to a website and actually check the certificate and try to remove some of the risk with phishing. So we talk about security and Web three, but a lot of it comes from the Web two, front end, the Web app. I digress. But that was the history with SSL from the company. I sold a lot of different services, so PKI was a big one. When we're talking about public key infrastructure, we're talking about like replacing a microsoft Certificate Authority, digital identity certificates, device certificates, kind of managing the whole backbone of an enterprise. I sold multifactor authentication, which is still quite familiar to everybody in the space here and then HSM. So hardware security modules, which were amazing, very expensive pieces of Kit high like FIPS, level one and two compliant, those kinds of things. And they essentially were the backbone of how banking infrastructure work. They'd have these homes and they store their private key securely there. And I think there's still a lot of that cryptography that again translates to crypto 100%.

Pat White: [00:12:09] I was just going to say that it was a very, very natural progression from that kind of work into a custodian, right? Because I assume that most custodians at this point have some sort of physical, physical exam. You know, I mean, it might be a little bit different than that because it's just sort of a different threat vector. But I assume that that was that that ended up being a very, very useful set of skills.

Nick Sanschagrin: [00:12:30] No, you're totally right. And, you know, it was really cool is when I was working with Brain is they actually worked with a company called crypto for a to build a key ceremony machine as a service. So the problem with key ceremonies is you had to ship all these very expensive people to a location. It's all videoed, it's a Faraday cage, no mobile phones, it's all videoed it. It's an expensive ordeal. Right. So with this with the custodian was with they were working with an HSM company to come up with a digital kind of version of this whole ceremony. And they're still working on it as we speak. But I agree with you, the transition from, you know, kind of crypto security to the custodianship was very interesting and custody was amazing. I mean, at the time, I think I was maybe a little bit too early in the cycle for what we were specifically doing. So in the custody space, there's qualified custodians or QCs, and then there's maybe more of what we call non QC custodians. So things like Fireblocks, like some of the other ones that do just custody as a service, when you want to have a qualified custodian, specifically in Canada, it allowed us to go to custody for ETFs, exchange traded funds and for big exchanges.

Nick Sanschagrin: [00:13:31] So anything that was regulated by the Securities commissions. So it was a pretty big goal you were trying to reach and the custodian was still fighting with the regulator at that time. So my transition to custody was very interesting, but I think that's where the fit into a lot of discussion with river with Big Wave here is, you know, the institutional adoption in crypto has gone through ebbs and flows. We saw last year's impact with some of the stuff with FTC's slow things down personally, for example, the Ontario teachers pension plan, which is a gigantic, you know, it's a big, important thing for the head of the province of Ontario. They had a big stake in it. So chances are the next time they get involved in crypto, they're going to want things to be a little bit cleaner. And that was a bit of a painful realization last year, right?

Pat White: [00:14:10] Yeah, that was it's actually it's interesting how many pensions and teachers unions and things like that were were attached to FDX. And I always sort of thought, you know, it's one of those the failings of FTC's really was that FTC's was essentially a traditional financial institution. They just sort of pretended to be in crypto, but like they were really this like hard core, you know, weird derivatives and all this different stuff that had absolutely very little to do with actual crypto. And so but but it was very palatable that everybody because they're like, hey, this is a real financial institution. Yeah. So that's okay. So you, you ended up being a custodian for a while. So do you, do you have a lot of opinions about and it's okay if you don't, but do you have a lot of opinions about about some of the stuff that's happened recently with custodians about how they should be representing their holdings, how they should be reporting their holdings out. I mean, you know. What are your what are your thoughts on all that kind of stuff? And, you know, there's there's a really technical piece here which is called SAB 121, which applies in the US and has to do with custodians essentially putting their liabilities, their holdings on as liabilities on the balance sheet. We don't have to go that technical, but I would be curious how you sort of think about that in general.

Nick Sanschagrin: [00:15:20] Yeah, and keep me on the right chords here. So when I was at the custodian, what we really stood behind was segregation of duties, this whole debacle, hypothetically, had there been a strong custodian in play, like a Bitgo or a Gemini potentially may not have happened the way that it fell apart, right? So the idea of having a segregation from the custodian and the exchange, as opposed to if you compare that to the Nasdaq to the TSX Trust, the Toronto Stock Exchange, they would never have custody over the assets and do all the trading at the same time. That would just never fly. And so the problem with that is I think with crypto is because the regulation isn't up to spec, there's no real rules and guidelines. It wasn't mandatory for them to go through a third party custodian. So when it comes to to your question specifically in terms of reporting, my belief is having a custodian in play is quite important. Having a firm segregation of duties, maybe having a back office that's taking phone calls, doing verification video, making sure that there's a lot of checks and balances around these different movement of funds. Again, it's really easy to go back in time and say, oh, bit, go look at how you know, because now Bitgo is involved, right? They're a big custodian. They're doing a lot of the I guess how could you say the post mortem analysis going through the, you know, repatriation of funds. So they've been in play potentially. This would have never happen. Now, it's hard to judge. You know, obviously hindsight is 2020, but if I look at a lot of the exchanges that I was working with, with with brain, they were all on the cusp of going from their custody internally.

Nick Sanschagrin: [00:16:38] A lot of them were looking for work with, let's say, Fireblocks, for example, which is not a qualified custodian. It's a technology based provider. They use MPC, which is know multiparty, computational charting of the private keys that have a different methodology. We firmly believe that the other custodian that multisig was the way to go. Multisig was the closest thing to what traditional finance goes through multiple checks and balances, everything on chain. And that made people feel that it was a lot safer. It was always to do with insurance as well. So our insurance provider, which was backed by Lloyd's of London, would not accept at the time the understanding of MPC, at least through the guise of what we were working with. They believe strongly in Multisig and that's what they wanted us to see and play. And it was a quorum and of GN and we could customize that per account. So back to your point. I mean, I do believe there is a strong position for custodians in the space. They're expensive, similar to that whole Sstl debacle, right? It's not a cheap service. It's 50 bips or whatever that may be on assets under management. That being said, it provided a bit of security because there was insurance, there was that segregation of duties, there was a back office as a service. But again, that's another centralized entity to some extent in the middle of kind of stifling innovation. Slowing things down. Settlement was another problem in terms of how quickly we could settle. Could you transact out of cold storage? So I don't want to get too far away from your point, but I think you were. Yeah. Good.

Pat White: [00:17:54] It's well, it's a good point. I mean, it's something that I tend to think a lot about is custodianship as a as a the commoditization of custodianship. And we're already starting to see it like there's already enough competition in the space that it is really, really, really pushing it down. I remember when the first time I ever saw a custodial quote, I think it was an Anchorage quote. This is this was years ago at this point, and they were doing ten bips a month, which is so much money. Like, I mean, it's almost and I don't know if that's still industry norm or not. I think it's I think it's driven down quite a bit off of that. But that is that was definitely if you look at a stack of all of the different things that were keeping institutions from getting into crypto and there's a lot of them, right? There's, there's things like, you know, regulatory ambiguity, there's your audit committee on your board, all these different things. But one of those is that there's this if you're going to use a custodian, you suddenly are sitting on a constant tick out of 1% of or whatever it is. It's a little bit more than that. The bips out of your account every single year, which is also very unpalatable to, you know, treasurers and CFOs and things like that. So that's I've been I think even Fireblocks has done quite a bit to commoditize the prices around around this kind of stuff. Bitgo certainly has driven the prices down. All these guys really have been working pretty hard to actually drive prices down on this stuff.

Rafael Casas: [00:19:19] Yeah, there was there.

Nick Sanschagrin: [00:19:20] Was a good point and I think. Go ahead. Rafael.

Rafael Casas: [00:19:23] Yeah, Powers making a good point as far as like some of the trends that I've seen, I know you and I, Nick, we had a discussion maybe a month ago and you had some interesting, you know, introspective thoughts of what are you seeing from your client base, your customer base, and on the institutional side and like to kind of dive into that a little bit because it was really interesting. You had a lot of really cool thoughts and what you're seeing in the marketplace. I'd love to get your insight.

Nick Sanschagrin: [00:19:46] Yeah, I think it's a sure, that's a great pivot. So let's say, you know, here we are, February 6th of 2023, when I was with the custodian. The goal with the big banks that we're speaking with was about an 18 month process. So they had this six step engagement from ideation to socialization. To research to then internal board approvals, a proof of concept, a waiting list. And then finally, let's say phase one of project one, which was essentially Bitcoin stored in your savior, you know, checking savings, Bitcoin. So that was phase one. So we'll unlock kind of the next stages. So a lot of these institutions that we worked with, step one was socialization. You know, at that time it was very difficult to get out of the fact that you had maybe this core group of crypto friendly individuals that were pushing the envelope, trying to help the banks stay relevant, irrelevant, and trying to take on maybe another consumer base or protect their own base. And so they were doing a little bit of socialization internally to help kind of teach and educate some of the executive leaderships to what is crypto, what are the risks, what does it mean, why are people asking for it? And really, we'd step with we'd start with research, so we'd say, look, let's grab a cohort of individuals. Let's say it's, you know, us folks in the 20 to 35 age category within this kind of income brackets. And let's figure out what they're into, what they're involved. So we'd send out research studies. The research came back fairly strong that it was between 20 and 38 year old individuals, mostly males, that were in a semi high end, you know, kind of an income kind of department.

Nick Sanschagrin: [00:21:10] And that has changed over time. I think the age is getting a bit broader from earlier starters into later individuals. And also it's getting into women and other, you know, I guess different different groups that are representing the population, especially with Nfts and Art. I think that's opened the doors a fair bit there. But they were on 18 month process. Now whether if I look back in time, I do believe that the FTC's debacle and obviously we're waiting for some of the regulation to us around Stablecoin bills, things have kind of delayed a little bit. You've got the you know, without getting political things are kind of in gridlock. So I think that that trend kind of stretches out a little bit. And I haven't seen a ton of motion since. I'm trying to think US Bank was one of the first ones to get into all with Nydig. There's been a few ETFs that have been on the cusp or just about to be regulated in Canada. I haven't seen a bunch of traction. The ETFs that were there are still there. There's not a ton of new entrants into this space. And when I remember, the big deal was they started with Project one was let's get a waitlist. So the waitlist was after the research is done, we're getting so much traction from our different investment communities. They want to know about crypto, they want to get educated. So how do we do it? Let's get a waitlist set up. People would sign up and you'd have, let's say, a million subscribers. Now, the research group, this core fundamental crypto team could come to the executives and say, Look, we've done the research.

Nick Sanschagrin: [00:22:21] It's a demographic we like. We need to either protect that or grow that group. And we now have a research bed that we can say this is a million users that are interested. The next step was what is the actual product? And they would say, okay, well now there's 18 pages of ideation, right? So you'd have people in rooms spending time doing brainstorming, kind of understanding how things go. And it usually came down to the two things they wanted Bitcoin or Etherium. Etherium was kind of out of It was a little bit out of wraps because it wasn't it was still under proof of work. Now that proof of stake has opened up. I think the environmental component opens up a little bit. Bitcoin is the granddaddy. It was kind of the standard, so people still wanted a piece of that. And then the goal was really checking savings in Bitcoin, right? And then from there it was, okay, so that's your first step. Then how do we unlock yield? How do we unlock a bit of the defi componentry there? And that was where the real excitement started to get to. And I think we're still just on the cusp of when that institutional defi starts getting involved lending, staking yield, farming generation. And if you kind of get into the gen world of the web through the crypto natives, you know, people are playing quite significantly in defi. The yields are outrageous. Sometimes they're unmatched, but they're not very sustainable. Right? So I think getting back to some regular.

Pat White: [00:23:31] Even, that's that's like kind of settled down over time here. I think we're to a much more reasonable, sustainable place in most of defi if not for the very simple fact that I think people there's there's people have certainly picked up a caveat emptor kind of mindset. So no one is just like blanketly trusting, you know, 15,000% yields anymore. That's and that's good that was that was a very necessary and very inevitable and necessary part of the evolution of crypto was for somebody to be like, wait a second, this doesn't seem right. Like, where are we really? This doesn't seem like the right amount of yields here.

Nick Sanschagrin: [00:24:05] And 90 to close off. I think the biggest component and that's why I think Big Wave is going to do great and has already is how do you account for this stuff? Right. So it's great to have a product. It's great to have that. But what's, you know, are you holding number one, are you holding crypto assets on your balance sheet? Are you allowing your clients to hold assets on their balance sheet? You know, so the whole accounting, the taxation componentry, which I think is still a gigantic nut to crack, but you guys are making some amazing progress. So I'm thrilled to be partnering with you folks. And the ability, like what you're saying is it starts with education, it starts with enabling, it starts with connecting in the tools that they're familiar with. Obviously, in five years, it will be a bit of a different story. We'll probably have university based courses and CPA type courses specifically for crypto based accounting. And I think, you know, the topic of the podcast here is crypto with accountants, but I think that's also the biggest the biggest fallback was there wasn't any platforms like yourselves really ready and geared up at the time, and there was still a bit of that friction in terms of, you know, the first phases that I was talking about, the ideation and then actually. Delivering this as a service and then accounting for it, which is, you know, any CFO with with the right mind was thinking, Whoa, whoa, whoa, I'm not touching this until we're pretty solid here and I can actually stick with the regulator.

Pat White: [00:25:12] Well, even for us, it's not this is not simple. I mean, at the end of the day, you know, big wave is is designed for businesses and enterprises. There's a much higher threshold for a business to be able to do this stuff. And Defi is still hard. We work with we work with a lot of customers that have Defi and it is still very difficult to to do accounting for it. You end up in some cases, depending on the protocols you're working with, you end up doing more like NAV or kind of almost like you almost feel like a fun based accountant or something like that versus like a traditional bookkeeper. That's book and revenue and interest and things like that. It is it is a whole different ballgame. And that's for professional bookkeepers. This is where it really gets interesting. Is it like, you know, in order for Defi to really go full, you know, to really, really get to deep market penetration and and just, you know, change the world in the way that we all think it will. It can't just be businesses that can do defi You have to be able to do this as an individual and that's hard like it is not easy to do this as an individual, even for myself, like I have like I have trouble because there are so many open questions and there still are open questions about how you deal with certain like liquidity pools and uni v three. You have to, you know, you want to be separately tracking your fees as revenue versus your actual impermanent loss. When do you recognize impermanent loss? All this stuff is just their hard questions that honestly like we're just not really fully, you know, retail at the retail level, no one's really being able to answer them very, very well. So what else? What are the other kind of like partnership stuff that you do? And like, I know you guys have a great partnership program, you're building out a marketplace. What do you how do you like to think about the world from a market, a market place or a partnership perspective?

Nick Sanschagrin: [00:26:53] Yeah, it's a great question. I mean, I've got a pretty strong stance on it, looking at how some of the two successful businesses that I've been watching and learning from very a fair bit. So before jumping into custody, I work for a company called Verify. Then if I was a certificate lifecycle management platform, you may have worked with them. Patty may have known about them. They were essentially the Cadillac in the space. They were half a million dollars a year. It allowed you to agglomerate all your certificates managed in one single pane of glass. It was pretty simple stuff, but at the end of the day, it was just the consolidation of it. And then they built what was believed to be the best integration ecosystem in the business. They had thousands of different people. They became the standard. They became essentially people were learning to build on vena fi, they had grant programs. They'd somebody they'd sometimes buy companies that were developing on identify. And I think building out a very healthy ecosystem was also done by Fireblocks. So I look to them very significantly. Anybody on Fireblocks that's a client can also become a partner and trade within themselves, whether it's OTC, whether it's offering different services and they offer this, I guess you could call like a semi walled garden type of concept. And walled garden is, you know, you either like it or you don't.

Nick Sanschagrin: [00:27:58] It doesn't have to be that personal way. But I think the concept that chain stack is we'd like to be the boring baseline infrastructure. As crazy as that sounds, you know, you're going to need nodes and RPC endpoints. It's not jazzy, it's not sexy. It's really just the foundational infrastructure. It needs to be quick, reliable, cost effective and competitive. Right? Then you're going to have all these other tools that build on top, whether it's auditing, whether it's smart contract engineering, development insurance, you know, obviously accounting software, we do API based indexing, all sorts of different things like companies, let's say like Zyrtec or Holborn for, you know, a different smart contract, engineering and auditing those kinds of things. Right? Big wave for accounting would be fantastic. We have different oracles and VRF platforms that are involved. I resell a company called API Vision, which does something interestingly, you know, not exactly similar to bit with, but they give you the ability to essentially consolidate your, your different, you know, activities in Defi and actually have it in kind of one central consolidated place. So I think there's a lot of future with the ecosystem build out. I'm a strong believer that we will either build it ourselves or partner with the best. And I think it's crazy to think that, you know, we're just going to new nodes and that's going to be enough.

Nick Sanschagrin: [00:29:04] That's not going to be enough to keep us surviving. If we look at the future, we need to have hundreds of great partners to build out, and you need to be able to come to a marketplace and say, Great, I'm going to have my baseline infrastructure, similar to, let's say, an Amazon S3 type concept and then all these other great platforms build on top of you. And same thing for, you know, the ability for us to work together, right? We're talking to the same clients. We're trying to solve the same issues. I can solve X, Y, Z, you guys cover the rest. How about working together on some of these things? And especially and Rafael, when we start talking about some of the biggest banks in the world, when I was working with, I'd say like visas and MasterCards, those types of people, they have a strong I think they want to build it themselves to some extent. Sometimes they don't realize how many millions of dollars in time can go into it. And I imagine you guys have those same discussions to in-house it or do you outsource it? And I'm sure hopefully you're winning the battle in most of those cases that it depends on.

Pat White: [00:29:51] Very normal build versus buy discussions happening in the space, but with a very abnormal amount. Like people really don't understand how hard it is to build this stuff. Very, very fundamental level. No one at a company has any real deep concept of how just very, very, very difficult it is to actually build this stuff. So it's it's kind of a fun part of it is like we have a lot of clients that like decide to build themselves and come back X months later. I mean, it is a really interesting. It is. It's an interesting space. There's no other real way to sort of put it there, but it is a lot of fun. How do you think, you know, if you're interested, I'd be interested in your in your thoughts. I mean, the node, the node provider space is a competitive pretty pretty competitive space, not just with node providers, but then you see people like Google getting into it. You know, that's because Google Google has been really funny in this whole Web three thing that they they they go to the conferences like we're going to Paris Nifty and Google is one of the sponsors. I think it was maybe it was the Paris blockchain week and which just kind of blows my mind because I just don't know why. But, you know, Google starting to get into this. How do you think about competing with someone like Google or like, you know, the other the other node providers? How do you how do you think about the competitive landscape?

Nick Sanschagrin: [00:31:04] Yeah. And I'd say just going back to my time at Sstl, this type of situation had happened. So for example, I used to sell when somebody was on us. I used to sell entrust to Dot AB, like, let's say company XYZ, dot news.com. I used to sell a lot of those certificates. It was great business. Iwc approached me in my time there and they said, Look, guys, we don't want to build our own certificate authority and take your business, but we can't. So they were like, Why don't you partner with us, cross certify the routes, and then we'll work together and build this amazing multi-million dollar partnership. I brought that up to our executive team. They said, There's no way we're doing this. They're going to put us out of business. And I said, Well, let's just take some money while we're at it. And the funny thing is, a year or two later, they entirely shut off that side of the business. When you went to AWP, you got your own free certificate. So I see that happening. Interestingly enough, with AWP specifically, they just announced avalanche subnets as a service.

Nick Sanschagrin: [00:31:53] So this is on avalanche blockchain. Specifically, subnets are now chains, which we can maybe spend a few minutes on is a very, very exciting and interesting component, especially in the institutional space. They're now kind of encroaching on that marketplace a little bit. So my ears are piqued. I'm interested in seeing how the partnerships of all at the end of the day, we are partners with AWS, GCP, XR, Virtuoso, Digital Ocean, any of the cloud providers, right. So the big deal in Web three that I think wins the day is decentralization. So even if Google is there, Google can't run all the nodes for a secure consensus and proof of stake mechanism type of blockchain infrastructure, they need to have other players in place. And that's the beauty of decentralization. And I think that's what's going to power The rest of the competitiveness in the market in the US did encroach with with avalanche, and now they're going to offer their own subnet marketplace. It may be very bare bones. You may not be able to get much support.

Pat White: [00:32:42] Yeah. Someone like you think it's weird that they are. And this is like not to bag on us, but let me let's harken this a little bit back to FTC's, which is that they are not really crypto like they're not they're approaching this from a host team perspective. They're not it's not like they're accepting crypto for payments. It's not like they're using Nfts. It's not like they're it's not like they actually really care believe about the, the like the the Web3 world is just another bit of bytes that they can host somewhere. And it kind of strikes me is a lot like FTC's in that way. There was just this it is what they want like there's good reasons for them to be getting into it and make sense. But at the end of the day, is that really are they really going to be able to compete in the in the marketplace if they're not actually if they don't really believe in this stuff, I guess, and believe is a weird word, but it's it's probably the best word for this.

Nick Sanschagrin: [00:33:35] No, I totally and I mean, I don't know if you saw Porsche's NFT launch, it got hit with a lot of flack. Right. They're saying, here's a big brand, getting it in nfts and it and sell. But some people are now buying it. So I mean that's interesting. So I get what you're saying from my perspective is it's it's a statement. So when you look at let's say Etherium staking, most of that's run through a right. So a lot of this stuff that they've already been doing, whether it was publicized or not, it was happening behind the scenes. Even all I hate to say, like Unchain Stack, we have our own cloud. We work with all the providers. I would say 70 to 80% of the nodes we run are on us. So I think it's an interesting stance for them to come out publicly and say it's not like there's anything changing. People are still going to run nodes on IWC to some extent. At the end of the day, people may now move away from IWC because of this fear of centralization. The big gorilla coming kind of coming in, but I think it was already happening. They're now just making a statement to say we are here. We sort of believe we're opening the community. Maybe we'll accept crypto in the future. So maybe it's this kind of version of an evolution for them to say that we are present in the web3 space. I see it as a signal that this is a legit marketplace and that it's a legit thing. You know, crypto is not disappearing all of a sudden. If you look at IWC or Amazons revenue, it's mostly based on cloud hosting, right? So I think for them it's how do we defend our market share, How do we take a bit more market share and how do we kind of set ourselves up as the leaders in the space, the web3 purists, the decentralized, focused folks would say, Hey, great, let's run our own nodes and we'll set up our own bare metal cloud servers. Let's let's beat the big guy. Whether that's feasible.

Pat White: [00:35:03] Even stepping away from the pure like hosting side. I mean, at the end of the day with something like avalanche, especially with with avalanche sidechains the way they do, those like you could very reasonably have a us could start very reasonably looking at at micro-transactions on the blockchain for, for paying for services like this has been a vision for a very, very long time, is like, hey, can we, can we actually monetize APIs on an API level call with, with actual crypto? There's there's been a few different companies have kind of looked at this. It could do that but like it's hard to imagine ahead of us ever actually kind of doing that whereas you absolutely can imagine Pocket or any of the guys that work on this decentralized, I mean that's sort of how they are kind of working in that way. So I you know, it's it's a really interesting I, I spend time myself thinking about this, which is like, can you can you be a super effective Web three company without leaning into, you know, taking crypto, paying people with crypto, having, you know. Smart contracts around keeping a diversified treasury that includes some crypto. Like, can you be a real web3 company without those things? I don't know. It's a it's an interesting question that I think I think about a lot.

Nick Sanschagrin: [00:36:15] Know, I hear you and I think, you know, just to add on that point, when it comes to an outsider perspective, somebody like a financial institution getting involved, I think that just adds some solidity and security. The fact that a big player like IWC. Believes, quote unquote in this that has a stance on this or even just to take on it. That could be enough to help socialize. The executives say, look, the big guys are working on this. It's going to be run on IWC, you know, and we even do a lot of different hosting options ourselves. But yeah, it's a very interesting take. I'm a sales person. I'd like to continue selling. I would hate to be, you know, blown up and everybody kind of panics when a big IWC player gets involved or like Google gets involved, they may bias at some point. Who knows, right? That could be a good sale for us. But, you know, I think decentralization is going to push this into a way that is outside of their control to some extent, and it's going to push more competitors to get involved and more bespoke blockchain type infrastructure. And like you're saying, the Web3 natives want to transact in crypto, they want to have rewards. They don't want to be dorks, they want to be anonymous. They want to work in this kind of new web3 economy. And I agree with you. I don't know if the other guys can actually adapt. And if you look at, let's say, portability, a good use case to see if they ever do sell out of those nfts and and what actually comes out of it. Was it just a marketing stunt? Right. Just one more one more point. So when I was speaking with some of the banks, because we do a lot of work in Europe and Turkey, for example, and the gentleman, Ava Labs, actually told me that the Turkish banks just want to do blockchain. They don't.

Pat White: [00:37:34] Know what they.

Nick Sanschagrin: [00:37:35] Want to do.

Pat White: [00:37:36] When you have 86% inflation, anything that's anything that smells like deflationary is is the best thing in the entire world, right?

Nick Sanschagrin: [00:37:43] And that's it. They come to them and they come to Ava Labs, for example. They come the chains that and say, I want to do blockchain. And we're saying, why, What's the project? And it's not that blockchain really makes things 100% better, that you can't do it on the traditional methodologies. It's just they feel they have to absolutely do it. Whether it's a marketing stunt, PR, a market grab, they just feel that it's the natural progression and evolution. And so as some of those bigger players, like I don't know if you saw, but KKR got involved Entain now launch their summit on Avalanche. I bring up.

Pat White: [00:38:09] Quite a bit because they, you know, for me that was the ultimate you know, there's there's only so many different ways that a company like KKR monetizes their activity. I mean, it's interesting. It is again, it's interesting question because they are obviously I mean, I love I love Barbarians at the Gate. Great book. Great movie. It's you know, there's only so many ways you can take a company, whatever you're kind of whether you're doing hostile takeovers or some sort of private equity another way, there's only so many different ways you can kind of monetize that. Tokenization is a new way to monetize private equity, which is a really interesting All of this stuff is interesting. I mean, we're we're pushing all these boundaries left and right. So I got I got really excited when KKR came out with their tokenization. I don't know if it's actually I don't know if anything's really come of it yet. It's I think it's still a little bit nascent, but it should be really exciting to to watch as this kind of I mean, it should be really exciting to watch.

Nick Sanschagrin: [00:38:56] No, totally. And there was two more. So Entain just launched a few days ago. If somebody is interested in seeing what Entain kind of platform is going to be doing, I entain decks a lot is another one that's more on the defi space just launched this week in subnet, so without cracking the code here at Chains to me are quite exciting. If you guys want to take a step on that. When Gene Stack was created in 2017, we built consortium networks, which was Hyperledger Fabric, Corda and Core. These are private blockchains, institutional grade blockchains, where a lot of the JPMorgan's the BlackRock's they were living in that space. That kind of time frame fell off. In 2019, 2020. We pivoted to developer based blockchains, and I think this new advent of app chains gives people the ability to have their own private blockchains keeping access to the liquidity on, let's say, Avalanche C chain and actually giving them the ability to have gas lists, permission to permissionless chains. So I think that's the next big evolution. So as a salesperson myself, I am selling a ton of traction in the subnet space. Polygon does it with their super nuts and edge, Avalanche does it with their subnet with their subnets. You'll see Binance get involved with their call. It's called BnB app Chain and then Stark where Stark X is going to launch a little bit later this summer. So you're going to see a big push. And I think that's going to challenge the standing of these Hyperledger, IBM type private blockchains. And I think a lot of institutions are now getting involved with this concept of an app chain. I spoke with somebody in Mexico.

Pat White: [00:40:13] I don't think I mean, if it was worth I don't think the I don't think the Hyperledger blockchain's ever really particularly took off. I mean, the biggest notable one was the Maersk one that they got killed when when IBM killed their own blockchain group. So I think it's the problem with the Hyperledger, the big difference between these two, it's not it's not a philosophical difference. It is it is a very, very real difference of that. You absolutely have to have a connection to an LL one, you know, moving, moving bits around for fun in Hyperledger was just that. It was it was it was a different kind of slightly harder to work with database versus if you can move bits around decks decks lots a bit wave customer We love those guys. They are a maker taker market on the blockchain. You really only could do that on a high throughput block, side side chain like the app chains on Avalanche. But the important part about that is. Is that you have access to real money. That's the important. There is real tokens that are moving around with tangible value.

Pat White: [00:41:10] And so the idea that what always got me about Hyperledger, like I never gone to Hyperledger because the idea of divorcing blockchain from value based tokens, tokens that have value was always incredibly folly. That just never made any sense because that is really the hard problem that blockchain solves is how you move items around a value with people that don't trust each other. So if you all trust each other and you're already going to send invoices and do all that kind of stuff, you just use a database. Save yourself the effort. So it is it's it's I hadn't it's funny that you said this because I hadn't personally thought of of the app chains or sidechains or even the square L4 chains as direct competitors to Hyperledger because they're not I mean, it's like it's like if I were to go play the, you know, men's the US men's Olympic basketball team, like that's not real competition. You're playing different, you playing different games. So that's that's a really it's really interesting insight right there.

Nick Sanschagrin: [00:42:06] Yeah. And the reason why like I said, I'm learning as I go, right? So I can't claim to have been in this space for for ten years. Right. I'm kind of still new to it, but I get feedback from a lot of great clients and I get to work with them face to face and just the volume of projects they get to meet. And the conversations are happening where they were once considering going with the Hyperledger type of setup, and now they're pivoting to sort of what's this idea of an app chain and also this privacy of the brands. If you look at how Polygon's done it, they're going with a lot of the brands, right? The Nike's, the Starbucks is the Gucci's, the Prada's. Those individuals want to be able to have the branding, the marketing, the energy, the liquidity of Polygon, for example. But they can't have all their transactions public because they want to have some of that private. It's a lot of their client base. They don't want to give that out to the public so much. And the downside of having these these public L ones or L twos, right, is that everything from an explorer can be tracked and people are real smart at doing a lot of that versus a private blockchain like a subnet or a super net.

Nick Sanschagrin: [00:42:56] You can actually keep that semblance of privacy, You can eliminate gas fees, you can control your own tokens. So there's a lot of cool things happening there. Gaming, whether that you guys have that is a segment or not. Gaming is another big one that's going to be using the app chain concept, right? High throughput, low transaction fees. A lot of you know, again, very like you can't you can't congest the network, right? You have your own private network there. But again, I'm seeing a lot of institutional adoption from from supply chains to institutions to like anything from manufacturers, automotive, retail that are going into the supply chain concept. So I think if we have another chat in six or 12 months, I'll have probably closed ten or 15 of them and I'll have to let you know where they end up fitting in. And I think Bitwage has an awesome opportunity there to help people, you know, do some of that indexing and do some of the tracking as well for the accounting side of things when it comes to app chains. Right.

Pat White: [00:43:42] So I think you have success with Yeah, yeah. You have all the same issues with accounting because I mean at the end of the day it is it's real money. So it's you are, you are having to do real asset tracking even if it is on an app chain or a side chain or an elf or whatever it is. So it is, it is real money that you are having to deal with. So it requires real accounting and tax. And some of it's really hard to me at the end of the day, the you know, we built a lot of our tech to be able to handle billions transactions. I mean, the craziest part about crypto continues to be that you have companies that are 12 months old that are doing a billion transactions, that all have some sort of financial component to them, which is unbelievable. I mean, it took Walmart, it probably took Walmart, what, 40 years to get to that point, took, you know, took Amazon less. Maybe it took Amazon ten years, but it certainly wasn't like over the course of eight months and they doing a billion transactions. And it's just really hard to deal with that. I mean, it really it is from a technical perspective, it is very difficult to deal with a billion financial transactions, especially in crypto, where you have to track the lot, lot level details of all of those makes it a really tough world.

Pat White: [00:44:46] We gaming is one of our major verticals. We love gaming. We're in the Blockchain Gaming Alliance. We we work with a very big stack of gaming companies. I am very, very bullish, immutable. Lex is one of our clients I love there everything about immutable X I love. I love their marketplace. I love I love the idea of trading card games because I used to play magic and I played Hearthstone and Hearthstone always killed me. Like Hearthstone was this really funny thing where it's just a it's a card game you play, but the idea that you can't trade that was like half of what was fun about about magic was like, you know, opening the packs and trading and like buying the individual card you want. Like the idea to get rid of that was was insane to me. And so that's why, like I'm a big fan of, of what they're doing with Gods Unchained and I think I think we're going to see all of those types of games, any sort of collectible games up through kind of World of Warcraft type games, the collectible card games. All of those will end up as blockchain based over the next 5 to 10 years. It's going to take a while. It's not an overnight kind of thing, but over the next five, ten years, all of those will end up end up there.

Nick Sanschagrin: [00:45:50] Yeah, I always go back to Pokemon is as crazy as that sounds like. When does Pokémon going to get into.

Pat White: [00:45:55] The guys working on Pokemon Go have a blockchain project going? Yeah, I.

Nick Sanschagrin: [00:45:59] Bet. No. And I mean, that's when you reach a that's when you reach the mass. Is right. Like that's yeah, that's mass adoption. And one of the big things that we talk about generally, Pat, is how do you break that barrier to entry? I mean, that's maybe another discussion, but it's, you know, people touch a wallet, then the wallet touches the chain. You have to get ramps and fiat rails. All that needs to also evolve and the usability needs to get much cleaner. I work with a lot of the different wallet companies talking about session keys and limits that you can put. Like for example, in a game. You don't want to have to have 100 transactions every time you make a move or talk to it and you know a person, you have to transact and approve a transaction. So there's a lot of technology being built around wallets because that is the first point of entry. And then depending on where you are in the world, rails, So on wrapping and off wrapping your money, that's also a bit of a tricky thing. Even myself in Ontario, working with the different exchanges, different platforms, I can't buy with my credit card because Visa doesn't like it or RBC doesn't like it. So it's just a bit of a zoo. So I don't know what your take on is like breaking that barrier to entry. People say gaming is that next big billion users? Some people say it's tokenization and sort of like, you know, real world use case of nfts. But what's your take on that in terms of how do we help get that next multi million users on board in an easy way?

Pat White: [00:47:07] Well, you know, I tend to have a few philosophies here. One, I tend to believe that the first time the majority of people will touch blockchain, they won't realize it. So that would be some sort of I it's hard to imagine this doesn't end up being some sort of payments app where basically you have usdc behind it and you're just moving usdc around and like at some point you drive the price to zero for the, for the payments apps. You know, that's, that's like, that is a market that is ripe for disruption is is is payment apps in general. So I tend to believe that you won't you know the first time most people touch they won't they won't realize they're touching it. I like to pick off some of the use cases like I do think that Usdc will be the major coin that the vast majority of people hold. I don't think people will hold a lot of ETH themselves. They'll have it around, but I think that usdc will will become very prevalent. So the answer to your question directly is that like because I even we deal with this like, I don't I think there's a not too distant future where the ecosystem will start to pop up. That is a full usdc ecosystem. You know, we get paid, you know, you pay for bit wave with usdc, we pay our employees the usdc you know, we pay our suppliers like everyone up and down the stack except Google. We're on GCP gets paid in Usdc and that just saves an incredible amount of money. It changes the nature of finance, it changes the nature of how fast you're settling. You are earning yields on that in in different defi protocols. So that's the world I look forward to. To. I don't know. What are your thoughts?

Nick Sanschagrin: [00:48:37] No, I tend to agree. I mean, I was going to add another little complex side to you. So what about So we're talking usdc. But what about Cbdcs and all these different, you know, central bank digital currencies? Like how do they feel like they're playing in? I was told from a birdie this year that there's going to be 50 or 60 big Cbdcs launched in Eastern Europe and Nigeria and African countries. Apparently in the next six months you're going to see an out like an outpouring of these types of new digital currencies being launched. I don't know what your take is on that. Do you see a world where every single bank now has their own digital currency and they're doing cross bank transfers and trades and that kind of stuff, or is that just a bit moot?

Pat White: [00:49:14] No, I do think that's inevitable. I mean, that was that was the US monetary system before the standard came into place. I mean, there was, you know, back in the day, banks themselves issued banknotes. So we're, you know, in the same way there is there's there are these natural cycles that you always see. And so this is a natural decentralization cycle. It makes sense. I mean, cycles happen because something swings so far. One way that people get upset about and that's the Fed is swung so far one way that people are a bit upset about it. So now we're going to swing back the other way and you will see banks issuing these. I think the government will crack down on this. The government does not like competition when it comes to money. So I do think that you'll see the government crack down on Cbdcs and essentially probably just say you have to use theirs. You know, it's really hard to make those kinds of stipulations in the US, but the government could make could put circle out of business. You know, it's one of those things like there could be a law passed that makes circle illegal and it's not the craziest thing in the entire world to think about. No one on this call wants that to happen.

Pat White: [00:50:13] But like, it is a reason there is a reasonable world where that could possibly happen if there's enough backlash against crypto, like from something like FTX and then the US could come out with their own Cbdc and then that would be the canonical US dollar Cbdc. So I think it's interesting. It's hard to imagine that the place where it would change those, it's hard to imagine them because like Circle's been really good about when, you know, the avalanche pops up. Suddenly there's avalanche usdc. It's hard to imagine the government getting like having their Bank of Genz and like launching the launching the Cbdc on on Avalanche or whatever, whatever nutty, you know, new chain pops up. So that's there always be that that that natural competition against it the natural draw because the speed of innovation just doesn't fit with government very well. But yeah, I think we'll go through a period of seeing a lot of them. There's someone just announced who was it? Russia announced the ruble, right? And so there was just a big announcement today. Yeah, there was just a big announcement today about the about a cbdc coming out. It was the it was the the pound. They said the Great Britain said that they're going to have a digital pound by by 2030.

Nick Sanschagrin: [00:51:21] Hmm.

Pat White: [00:51:22] Which is the hardest reading as well that anyone has said.

Nick Sanschagrin: [00:51:25] Bank of Israel as well, which is obviously very, very crypto and tech focused. I hear you. And then, yeah, you're saying Bank of England and Treasury think UK is likely to need a CBDC. So I hear what you're saying, right? It's kind of inevitable that that, that movement, it's going to be really interesting to see because I sell in the Americas, I get a lot more kind of momentum in, you know, kind of, I guess, aggressiveness from the Latin American communities. Us folks are kind of sometimes at a standstill. And I mean, I'm not sure you guys how you how you've seen that in different economies, but obviously the US regulation is stymieing innovation. It's slowing people down, you know, whether they're taking their time on purpose or it's just really trying to get the expertise in play. I don't know if you have a thought on that. Is it on purpose or do you think it's just they don't have the right knowledge, information, kind of and technology there?

Pat White: [00:52:08] You know, if there was one institution, it's the US. Us Financial services to me is a really interesting industry in general because they are the most cutthroat competitors you will ever see in the entire world. Like these are people that understand what capitalism is like. And I know like more so than anyone else, the entire world, like the US financial services industry, they get capitalism. That's why that's I feel like that's why so many scams and, you know, Bernie Madoff's come out of that world. But maybe that's me projecting. So I look at them and like they understand competition, they understand it, but they have this natural predilection towards conservatorship because the US financial services industry has had this this rent capture on the US for so long, it really is hard for them to conceptualize a world where they are cut out as middlemen and, you know, even if they are terrified of it and even if they are, you know, actively aware of competition and moving away from it like they still, that doesn't mean you can actually do something. It's the ultimate innovator's dilemma, is that in order for them to truly attack crypto, they would have to literally blow up their own, like they would have to take all their own services offerings and drive them all to zero. That would kill crypto would be if, like suddenly every bank decides to offer 5% interest and 0% fee like, like loans and stuff like that. But they just that's it's this innovator's dilemma is this thing that like inside of companies you cannot you can't kill your golden goose even if you see someone else coming to kill your golden goose like you can't, you can never kill it yourself. And so I think most banks in America fall under that circumstance, which is that they really can't actually do what needs to be done to to take advantage of this new world.

Nick Sanschagrin: [00:53:52] Yeah, it's it's a great take. I hear It's like, why would you kill your main line of business, right? Whether it's happening or not, you don't want to be the person having shot yourself in the foot to some extent, right?

Pat White: [00:54:01] 100%.

Nick Sanschagrin: [00:54:01] I appreciate the take on it. I mean, I think you guys also have an important role in helping break those barriers down. And so I guess I'm not sure if you had other other questions on the set. I've got a few for you around bit waving. You know what you guys are focusing on, but let's let's maybe throw it back to you if you had a few more on your docket.

Rafael Casas: [00:54:18] Yeah, I bet. Raphael Yeah. As we kind of, you know, kind of get close to wrapping up here, that one thing that I did want to ask you, can you talk to so many of your clients who have a lot of really amazing intelligence around what your clients are feeling and partners are feeling it? I wanted to kind of just understand from the discussions that you're having, what is what's coming from that that's inspiring you in this institutional side of the industry?

Nick Sanschagrin: [00:54:44] Yeah. I mean, inspiring you. So I think if I if I consider myself a retail user and I think, you know, we, we all kind of fall into that that category. Right Right now, you know, the interest rates are super high. The yields on on interest in high interest savings are quite low. I was not, you know, I guess lucky, intelligent, knowledgeable enough to really early on in my life understand how to make my money work for itself. And so I think that this new evolution of getting into Defi and allowing people's money to actually build and earn, that's quite exciting. And it may be not great. Like like Pat was saying, for the big institutions that are saying, Oh shit, I now have to give up my 10% yield and I have to share it, you know? But for me it's like the many should win to some extent. I think that's kind of the whole goal. And the big community of crypto is this decentralized nature of ownership and ability to actually work in a space that, you know, other people have been taking advantage of for many, many years and just most aren't even knowledgeable that it's happening behind the scenes. When you go in and deposit your money at the bank, they're giving you 0.1%, one 2% even, let's say at Costco, for example, and they're yesterday.

Nick Sanschagrin: [00:55:46] And the guy's like, get my credit card, you'll get 2% cash back on your stuff. And I'm like, Wait a minute, I'm from a defi mindset. 2% ain't bad, but it's nothing going to it's not going to write the bills if inflation's at seven or 8%. So to me, that's the most exciting part. Raphael, is the concept that these institutions are realizing that they're going to have to share. It doesn't mean it's negative because they're going to share with with, I think, better earnings and better abilities to transact because they're not going to be paying fees to 100 different middlemen. And there's a lot more efficiencies out of it. So I think they win. We win, hopefully, and that'll help bring people to a place where they can actually make earnings and make a bit of passive income based on their money. And I think that's something that maybe some of the really rich people in the world have been able to do for many years is have these self repaying loans or investible loans that are actually, you know, they never have to give any money back after they pull money out. So I work with a lot of neat defi projects like, you know, invest in borrow like billionaires.

Nick Sanschagrin: [00:56:37] So this whole concept of borrowing and lending is quite exciting. And I think for the retail investor, the masses, myself, my parents, you know, an ability for more economic freedom, I think that's what gets me the most excited. It's a long journey. Like we said, it's it's how do you get them comfortable with the seed phrase and wallet management and security and not getting hacked. So that's step one is like, how do you help them get involved? But then from there, showing them how their money can be used to do good things and how savings, you know, having a little, you know, let's say a pot of money under the mattress like that is doing absolutely nothing for you. So this concept of like getting it out of there and putting it to work I think is the coolest thing. So interesting seeing your guys's take. But that that's what gets me up in the morning is this this future of financial freedom and economic kind of, you know, happiness for people that you know, and I'd like to see everybody win to some extent. I'm an ethical guy. I think everybody should have a chance to win. And I feel like we're the little man We have not had that opportunity for for decades, if not forever. Right?

Pat White: [00:57:30] Yeah. Yeah. It's but but to your point, though, it's interesting that right now is, you know, Defi really had like no competition because the banks really were doing 0%. Right now interest rates are up a little bit. So the banks actually like we just got a money market that's I don't know, 3% or something like that. So there are there finally is like some competition of defi. So it's kind of it kind of actually is now finally, Defi is time to step up and say like, look at you know, you can get 3% here, but we can give you 5% because we cut out the middleman that is there. It is. It is defies moment. And because of defi something is so compelling. It is kind of defies moment right now. Whether Defi can take advantage of it or not is unclear, but it certainly is sort of defies moment right now.

Nick Sanschagrin: [00:58:14] No. And you'll see a lot of new dexs and a lot of defi protocols. And like I said, I speak to I think it was like 350 clients in eight months and you name it, Right. What's, what's your flavor of the month? So every new protocol has their own defi thing and it's all these outrageous yields for a few weeks and then things crash and it gets rogue. So I think, you know, Defi needs to mature a bit like you're saying. I think it is now to take advantage of that because the banks are starting to lose some of that market share. Right. The money is coming out. And I remember doing the research with the banks as they were saying, we're seeing an outflow of money from people's savings accounts and it's not coming back. They follow it, they track it. They're trying to figure out where it's going. But and maybe with this FDX debacle, it's self-custody. People have kind of been rethinking their strategies. But there is an opportunity here for and I'd love to see like, you know, I'm a crypto native and etc., I just, you know, I want to see good earnings and good yield for myself, whether it is in Web3, whether it is in a traditional bank. And I think they just have to traditionally adapt to this new methodology. But competition is good, right? So somebody offering 1,000% yield in defi that sounds like a sweet deal, but if you get robbed in 2 minutes and there's impermanent loss and you know it's impossible to account for, you're ended up getting you know, my CRV in Canada is terrible to work with in crypto. So I think a big part of that is like, you know, education from the bitwage side of things. And crypto accounting is like, you know, here we are in tax season not to pivot to another topic, but you know, April I think is the end of the tax season. Like here I am like, wow, I got to go back and seeing everything that I've done in the last year, all the sales, all the little emotion, all the movements, all the losses.

Pat White: [00:59:35] All the data, the last year, that's a particularly tough one to be to be doing some some time travel on. It's not the most not the most enjoyable.

Nick Sanschagrin: [00:59:44] It's a lot of read. You know, also usually it's news. Right. But I mean to you guys, you know, to your point, I would assume there's a heck of a lot of. So it's not just, you know, tax season that means a lot for you. I think you guys are establishing good business practice for institutions beyond just this tax season. But like, are you seeing a huge amount of influx, a huge amount of questions and interest from institutions at this time and even just the retail people that are like concerned with, oh my God, how am I going to declare this? How is the the the SEC and the IRA going to figure this stuff out?

Pat White: [01:00:12] Right, 100%. Well, this has been just the most delightful chat. This has been absolutely so much fun. I think we are just just approaching the top of the the hour. I think actually, I think we even went over an hour here.

Rafael Casas: [01:00:27] Which is amazing. Yes, absolutely. Nick. So any folks that want to get to hold of you and reach you, how can they get hold of you?

Nick Sanschagrin: [01:00:34] Absolutely. So I try to be as dorks as I can in this space. I know it's kind of pros or cons, but I believe in kind of transparency and trust. So you can find me on LinkedIn. Nick Should I do Twitter as well? Nick Sanschagrin Telegram, email. Nick Dot saturate ask.com. That's my self personally. But also please give chain a follow. We do a lot of Twitter community spaces, which I think is a good way to learn. We work with great partners like Wave Audio. You guys are fully listed on our website. We are officially partners, which is fantastic. So they come through you guys or come through us directly and we can connect the dots to each other. And we're all about building community and we believe in web3 for all democratizing it to some extent. So happy to help at any point in time and really appreciate the conversation, gentlemen.

Pat White: [01:01:13] Amazing.

Rafael Casas: [01:01:14] Billy, thank you so much, both of you. It's fascinating conversation. And I think everyone's going to really get a lot out of this. So thank you, everyone, and thank you for tuning in and have a great day.

Pat White: [01:01:22] All right. Have a good one, folks.

Nick Sanschagrin: [01:01:24] Thanks, everybody.