In this episode, Sunny Ray sits down with Alex Daskalov, founder of Knox, a Bitcoin custodian built around insured key management. Alex traces his path from a childhood in Bulgaria, where he witnessed the effects of hyperinflation before leaving in 1994, through a software heavy education at McGill University in Montreal. He recalls first encountering Bitcoin's source code in 2010 while building an unrelated payments project, and describes years of near misses before fully appreciating the technology. A debate with a roommate in 2013 sharpened his conviction that Bitcoin was real money, and an unexpected fascination with insurance in 2014 eventually merged with his Bitcoin interest. Alex explains the spectrum of custody options, from single signature self custody to collaborative multisig to fully centralized custodianship, and why Knox focuses on providing one to one insurance coverage against theft and loss for institutions unwilling or unable to self custody. The conversation offers insight into how institutional grade Bitcoin businesses are built and why insurance matters for a bearer asset.
Knox founder Alex Daskalov on Bulgarian hyperinflation, stumbling into Bitcoin, and why insured custody matters.
Where and when did you and Sunny first meet?
We met in a coffee shop in Yorkville in the fall of 2019, so a little over a year ago. I think I just emailed Sunny through the website around when we were formally announcing what we were up to. At the time I believe I was with Kraken, and we were in Toronto, so it was great to meet up.
Can you share your background before Bitcoin, including growing up in Bulgaria?
I've been programming since I was a kid and was always drawn to new languages and technology. I'm originally from Bulgaria and left in 1994, a period when inflation was starting to rise, later becoming true hyperinflation by 1997. I didn't live through the worst of it, but it shaped my appreciation for sound money.
Is there an actual threshold for what counts as hyperinflation versus regular inflation?
I'm not sure of an exact defined number, though I imagine someone has tried to set one. In Bulgaria in 1997 it hit multiple hundred percent per month, real insanity. Eventually a currency board was brought in and the currency was pegged to the Deutsche mark, effectively pegging it to the euro later.
When did you first come across Bitcoin?
It was around summer 2010, when I started seeing chatter about it in software circles in Montreal. I downloaded the source code like I did with many projects at the time, but didn't realize how important it would become. I was even building a pay what you want music site and briefly considered Bitcoin, but dismissed it as too complicated for users.
Was there a single aha moment when you knew you were sold on Bitcoin?
I don't think there was ever one single aha moment. It was really a gradual buildup of taking it more seriously over time. I attended my first halving party in 2016 in Montreal, which I use as a rough marker of how seriously I was starting to take it by then.
Can you give a brief summary of what Knox is?
Knox is a Bitcoin custodian, meaning we hold Bitcoin on behalf of other parties, with a really strong focus on insurance. I didn't originally like the idea of Bitcoin custodians, but came to accept that many scenarios require it since not everyone wants to be their own bank. We produce one to one insurance policies where Knox is the insured, covering theft and loss of Bitcoin held in our systems.
How did your interest in insurance connect to building Knox?
I got accidentally interested in insurance around late 2013 or early 2014, for reasons I can't fully explain. I came to appreciate that the ability to transfer risk is powerful and lubricates activities that risk averse people otherwise couldn't take on. Since Bitcoin is a bearer instrument, whoever controls the keys owns the funds regardless of what the legal system says, so insurance against theft and loss needs to be an available option.
How do you think about the spectrum of custody options, from self custody to full custodial services?
There's really a span of custodial activity in Bitcoin. It starts with single signature self custody using something like a cold card, then multisig schemes for extra redundancy, then collaborative custody where you hold some keys and another entity holds others without full signing authority. Knox sits at the far end as a fully centralized custodian holding all keys and signing authority for entities that specifically want that model.
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