Bobby Lee on Ballet Cold Storage & Returning to the Real Bitcoin

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Bobby Lee has been around the Bitcoin space since 2011. And with the exception of a two-year exodus in the big blocker camp during which he supported SegWit2X and spoke in favor of BCH, his line of work has constantly sought to increase Bitcoin adoption.

Lee is responsible for popularizing BTC in China as the CEO of BTCChina (BTCC, which he co-founded) and running one of the oldest exchanges in the space. During his time at BTCC, he has also experimented with Casascius-style physical bitcoins which he called BTCC Mint.

After having had these experiences, Bobby Lee has decided to return to the real Bitcoin and launch a product which aims to be the Casascius of nocoiners – or a practical and elegant way of offering friends and family members some BTC without trusting in their ability to take care of mobile wallets. Be careful though, it’s only the PRO version of the Ballet wallet that this show recommends.

In this episode, Bobby Lee talks about returning to the real Bitcoin, how and why he designed the Ballet, why the PRO version respects the “don’t trust, verify” principle thanks to BIP38, and what it felt like to meet Bruce Willis and debate Nouriel Roubini.

Also, here’s a notable Bobby Lee quote for the Twitter haters: “If you already own BTC, then Ballet is not for you and you should keep managing your coins as well as you can. […] the most important thing is to have the private keys for your BTC. And then if you wanna give bitcoins to friends and family who don’t own any, I think Ballet is the best way to offer them a gift. So we hope people can take a look at that.”

Listen to Bobby Lee on iTunes and Spotify!

No iTunes or Spotify account? Don't want to ruin your opsec? No problem, use this player.

Time stamps:

00:50 – Introduction

2:00 – How Ballet was created

3:16 – Ballet REAL vs PRO

4:55 – BIP 38 in Ballet PRO

7:30 – How Charlie Lee gifted Bobby a Casascius physical coin

9:27 – Skewmorphisms for nocoiners (a physical card is easy to understand)

11:20 – How does the Ballet app work and how does it improve on the Casascius and BTC Mint model?

15:41 – Ballet is not for experienced bitcoiners, but nocoiners who had no previous exposure with BTC and need to learn how it works

19:37 – Ballet PRO as a gift where the giver is the trusted third party

21:00 – The Bruce Willis story (and how his daughters received BTC)

23:40 – How did Bruce Willis react?

24:40 – What Adam Back, Trace Mayer, and Tone Vays thought about the Ballet wallet

28:40 – What is the maximum amount that should be stored on a Ballet Wallet? After which threshold should users look into more sophisticated storage solutions?

30:53 – Can Ballet help incentivize more people to run Bitcoin nodes? 

34:30 – Which competitors does Ballet have?

36:55 – Bitcoin onboarding and full nodes

38:48 – Does Ballet compete with mobile wallets?

41:31 – Does the Ballet come in a 3-pack?

42:40 – How did Bobby Lee come up with the name “Ballet”?

45:10 – Bobby Lee’s comeback from the big blocker camp and why he returned to the real Bitcoin

46:37 – BTC actually has bigger blocks on average

47:05 – The network effect of Bitcoin

47:30 – Why the Ballet was created and Bitcoin’s use case

49:39 – Bobby Lee’s debate with Nouriel Roubini

50:40 – Nouriel Roubini is a Bitcoin maximalist

52:10 – Closing comments

Bobby Lee and Ballet Wallet

Ballet (named after the art form, but meant to be a juxtaposition of the words “Bitcoin” and “wallet”) is a cold storage device that’s shaped like a credit card and is made from stainless steel. Yet contrary to some erroneous claims made by Coindesk and Twitter users, the Ballet is not a hardware wallet. If anything, it’s a fancy paper wallet which comes in two versions.

First of all, there’s the Ballet REAL series which relies on a more trusted setup which is similar with BTCC Mint and Casascius. It costs $35 and it has the two halves of the private key printed in two different sides of the world: one in the USA and one in China.

Secondly, there’s the Ballet PRO version which fixes the trusted setup by making users generate their own BIP38 hash. This means that whoever orders the card is also the only person to ever see the seed phrase and private key, and Ballet only gets to see an encrypted code that gets printed on the card.

Surprisingly, the Ballet PRO is discounted 50% and sells for $65 for a 3-pack. It’s definitely the best version of them all, and the only one I’d personally recommend because it eliminates the need to trust in the issuer.

If you want to give away some BTC at birthday parties and don’t want to look cheap with your printed QR codes, you can get a Ballet and start someone’s journey down the rabbit hole. You can even save a backup of the passphrase for a year or two to make sure that they don’t lose the coins, then help them move to a Trezor when they’re ready. Essentially, you become the trusted third party. The scenario is very similar with the one Jameson Lopp described in this tweet.

Users can interact with it by using a mobile app, and the experience is meant to be as simple and basic as can be. Anyone who’s ever used a mobile banking platform and a credit card should know what to do, and this may be a great for newbies who need some time to learn how Bitcoin works.

Ballet is an instrument to onboard nocoiners, not a cold storage solution for seasoned Bitcoiners

During this interview, Bobby Lee says it himself: you shouldn’t HODL more than $5000 on a Ballet Wallet. If you get to that point, you should probably start looking into more sophisticated ways of securing your bitcoins (with a full nodehardware wallet, and other advanced setups).

Also, the best way to avoid the trusted setup (which received hostile reviews on Twitter) of the REAL model is to go for the PRO version. It offers all the convenience and ease of use, but in an environment where you control every aspect of key generation. However, the BIP38 passphrase creation process (described above in the video) is overkill for a newbie.

So it’s better that you do it for someone else and either hand them the keys or hold a backup just in case they mess up. It’s still more cautious than making them install a mobile wallet, and classier than using paper wallets or improvised systems. The skewmorphic form factor also helps nocoiners understand how the device functions.

Why not go directly for a hardware wallet? Because it’s more expensive (around $100) and it’s an electronic device which requires an extra learning curve. Just giving them a card and the passphrase is nicer at birthdays or family events. If anything, the Ballet is the more practical and secure way of saying “install his wallet on your phone so I can send you some bitcoins, and write these 24 words on the napkin”.

On a personal note, if you’re a fan of the “don’t trust, verify” motto, stay away from the Ballet REAL model and use the PRO. It will help everyone sleep better at night.

The Bruce Willis story

There are four major figures who got a hands-on experience with the Ballet: Bruce Willis, Adam Back, Trace Mayer, and Tone Vays. They all get mentioned and Bobby Lee offers some details behind the Twitter stories, but it’s the “Die Hard” action hero who steals the spotlight.

The Ballet founder explains how he encountered Bruce Willis, how the movie star reacted, and how his two daughters ended up receiving their first bitcoins. He also offers insights on why Willis looked grumpy in the picture and we never got any kind of response afterwards to further consolidate Bitcoin’s takeover.

However, Bruce Willis’ daughters might come out later to express their gratitude. If they HODL until they’re 18 or 21, they should be able to support themselves through college or start a business without needing money from their movie star father.

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Partial Transcript

Hi there, and welcome to season 5 episode 1 of the Bitcoin Takeover Podcast. I am Vlad and the topic of this season is Bitcoin security. Since in season 4 we have talked mostly about hardware wallets, I feel like it’s only natural to explore more of this exciting field of keeping your bitcoins in cold storage or mobile wallets. 

This episode’s guest is Bobby Lee, who is the CEO and founder of Ballet Crypto. He is designing, promoting and selling a wallet which contrary to common criticism, is not a hardware wallet but a cold storage solution. And sir, I’m gonna allow you to talk more about it. 

So I know that you have two versions of the wallet: one of them is called the Real Ballet series and it relies on a more trusted setup in which the private key gets printed in two separate geographic regions of the world. And then you have the PRO version which allows you to generate your own private key with the BIP38 standard. 

All you have to do is generate an encrypted hash from your seed phrase, send it to Ballet, and from there it gets printed on your card. You’re going to be in charge of your own seed phrase. Did I get that right?

Yes, actually I find the PRO version more interesting because it’s truly trustless and there is no way anyone can decrypt that hash that you’re generating and gets printed on your card. Now let me ask your about the REAL version’s trusted setup: is there any way to associate the two pieces of the private key that get printed in the United States and in China?

Right. So to which extent is the Ballet wallet inspired by the coin that Charlie Lee gave you many years ago?

So did you ever think that you’re applying the principles of skewmorphism onto Bitcoin devices? Because you are replicating regular financial devices that people know and use in their daily lives: something like coins and credit cards. So when they put their hands on a device, they understand how it should work. 

Right. And could you please tell the audience how it works with the Ballet wallet when you scan the code with your phone camera after you download an app? Also, it is a watch-only wallet or can you also move your coins?

Yeah. And I think you have mentioned something important there, as when people on Twitter hear about Ballet or they read about it, they say “Why should I get this instead of a hardware wallet which generates the private key on the device? Because it’s unique and the manufacturer will never know it”. But the product is really not for them. Ballet is not for seasoned bitcoiners who have been around for a few years and know how to properly secure their private keys. It’s for gifting to new bitcoiners and onboarding nocoiners.

Right, so here’s a thought that I had while looking at the specs of the Ballet PRO. It’s the kind of gift that I would give to my father if I wanted to simplify his understanding of Bitcoin. It would probably be a bad idea because he seems to be against the concept of non-governmental money, but if I were to give him his first satoshis I would get the PRO version, generate the BIP 38 cryptographic hash from the seed phrase, and then keep a backup for myself just in case he goes something stupid. A year later I’d check on him to see if he has learned how to handle his own coins, and if he didn’t I still have the backup to make sure nothing was lost. 

I think doing this setup where I am the trusted third party of my friends and family is less risky than setting up a mobile wallet for them. It’s likely that they will lose everything. 

20:20 – I think I have a few questions about the famous picture who got their hands on the Ballet wallet, because you have posted a lot of pictures on social media. So I gotta ask you: what is the Bruce Willis story?

22:58 – So how did Bruce Willis react? Because in that picture he did not seem happy. Or did you just take the picture at the wrong time?

23:27 – I’m actually curious to see if any of his children pop up on Twitter a few years from now and say “Hey, I’m that person who received some bitcoins on an airplane 5 years ago, and now I can pay off my college tuition with this money”.

23:51 – Some well-known bitcoiners who have received the Ballet wallet from you are Adam Back, Trace Mayer and Tone Vays. How did they react?

28:00 – What is the maximum amount that you would recommend users to store on Ballet wallets? is there an amount from where they should learn more about key management?

29:34 – Yeah, I agree with you to this extent because most people who are already into Bitcoin don’t really need to get a Ballet. They most likely have more complicated setups. But when it comes to giving a nocoiner a small amount of Bitcoin, it’s safer to give them something that is held in cold storage, allows access to the private keys, and is very simple to use and understand. It’s tangible, it’s easy to check your balance… and by the way, I’m thinking about ways of incentivising new bitcoiners to run a node. Do you think that Ballet can do anything about it? Even having an “advanced user” button in the app which redirects Ballet users to the Bitcoin Core website can help more people run a node.

33:40 – Right, so which companies or products do you think are the competitors for Ballet and what do you think about their products?

“I challenge every wallet maker out there to make a wallet that’s easier to use than Ballet. So far I haven’t seen one” 

36:05 – Yes, I did mention something about full nodes and how Ballet would encourage users to become more advanced and run a full node. Have you thought about ways of doing this?

37:06 – I think I agree to some extent, even though running a full node only requires downloading Bitcoin Core and installing it on your computer. And you can make a guide that’s 1-page long with all the steps, which has explanations with every detail of what you have to do to make it work. I don’t think Bitcoin Core is hard to use, even if it has some advanced features that you need to understand, such as UTXO management or generating different types of addresses that are either legacy or native SegWit. But even if they are advanced features, you don’t have to understand how they work to use them in your full node. 

37:57 – But back to my earlier point that I made about competition, I think one could argue that Ballet is competing with all the mobile wallets that don’t necessarily let you hold your keys. And I think of blockchain.com right now, as it has been around for a long time and if you look for a BTC wallet in the app store, blockchain.com is going to be in the top 3. And I would argue that there is this niche of new bitcoiners who look for a very simple to use wallet and I think Ballet is more secure than a hot wallet on your mobile phone.

40:42 – Right, so I have another question because you offered to send me some wallets before this interview and I noticed that I got a batch of 3. Is this a regular practice to encourage storing and spreading around multiple copies of the private key, or was it just a nice gift?

41:21 – Yeah, and right now I am much more interested in the Ballet Pro version. I’m in contact with Jessie who works for Ballet. I’ve generated my own BIP 38 hash and sent it to him, and I’ve also posted a video on YouTube to show people how to do it. I might also do some unboxing videos after this interview gets published. But anyway, I feel like I’ve missed the most obvious of questions: how did you come up with the name Ballet? It’s not very Bitcoiny.

43:56 – So right now I know that it’s supposed to be pronounced “Ba-let”, so it sounds like “Bitcoin Wallet”.

44:21 – Okay, so I think I’m pleased with what I’m hearing. Considering that a couple of years ago you were a big blocker on the BCH side, I think that you’ve made quite an interesting comeback.

44:41 – So do you have any reason why you decided that 1MB blocks can scale?

45:49 – Yeah, it’s also interesting that, on average, the blocks on the BCH and BSV blockchains are smaller than the BTC ones. There is just more demand for real Bitcoin blocks.

46:18 – Oh yeah, so you acknowledge the network effect of BTC.

46:26 – Oh man, I wish Roger was listening to this… even though I suppose he’s aware that he’s running a sinking ship.

48:51 – Right, so I feel like I put you on the spot there because you did not expect me to mention your past as a big blocker. So to make up for that, I just want to let you know that I have watched your debate with Nouriel Roubini and I think you were the only person I have ever seen who silenced him when you asked him “Would you rather have the kind of economy that’s based on assets, or an economy that is based on debt?”. And his answer was “That’s nonsense, it’s crazy, I’m not going to answer that!”

49:31 – I feel like of all the people who have debated him over the years, and some of the most prolific bitcoiners have tried to put him in his place and present to him an impactful argument, that was the best of them all. He was made to question the values that he’s promoting, but I’m pretty sure that Nouriel is a “bitcoiner in the closer” or something. He’s sort of a Bitcoin maximalist, but he doesn’t want to acknowledge it because he gets paid by the other side. I think he gets it, but he’s not allowed to say anything about it.

50:30 – Yeah, but he gets paid to play his role. And he has gotten better over the years, I think. Since he started going to conferences, every bitcoiner he has debated against has taught him something new. His arguments got better over time. In the beginning it was all about “it’s a Ponzi, it’s a scam, it’s the mother of all bubbles”. But right now Nouriel can acknowledge that Bitcoin is innovative and has some value, but he doesn’t want to acknowledge that it can be good money for the future.

51:12 – Yes you should debate him again in the future. That was entertaining, I would watch a reprise.

51:22 – I’m not sure that I have anything more to say at this time, is there anything else that you want to mention?

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