The Wolf Of All Streets - Self Custody Wallets Will Play A Major Role In Digital Life | Pascal Gauthier, Ledger

Episode Date: May 16, 2023

In this episode of The Wolf Of All Streets podcast, Pascal Gauthier, CEO of Ledger, provides valuable insights into the role of custody wallets in digital life. From discussing the collapse of FTX to the correlation between Bitcoin and traditional banking collapses, Pascal dives into a range of topics related to the crypto industry. He also shares his thoughts on Ledger's innovative platform, Ledger Stax, and the importance of hardware-first approach to security. Don't miss out on this informative conversation! Follow Pascal: Twitter: https://twitter.com/_pgauthier ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ Follow Scott Melker: Twitter: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #trading Timestamps: 0:00 Intro 0:34 FTX collapse was our best day 2:05 Bitcoin correlation 3:20 Banking collapses 5:55 Liquidity problem 11:30 Working on regulation 15:00 Crypto is a real industry for the future 18:20 Ledger and self custody 22:25 Ledger Stax 26:00 Security of ledger 28:00 How Ledger saved Trust Wallet 33:00 Hardware first 40:15 CBDCs 45:00 Ledger is an open platform 47:30 Where to buy Stax? The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

I spoke to their CEO, Pascal Gauthier, for the second time, the first time being at Bitcoin Miami last year in person, about what they're doing to help the industry, how they're talking to regulators and legislators. He's literally in Washington right now, and what we can look forward to in the world of self-custody. Last time we sat down was in Miami, at Bitcoin Miami last year. I remember. Do you think things have changed? They have, yes. It's been quite a year.

How's it been for you? I would assume that there's actually been a bit of a push for self-custody after all that we've seen with these collapses and this contagion. Yeah, very much so. We've had the best day, best week, best months when FTX collapsed. Every time there is a big event like FTX or SVB, you know, our sales shoot through the roof because the combination of ledger and Bitcoin is considered a safe heaven. This is when our sales correlate the most to, if we take gold as an index,

our sales correlate 100% to gold as an index when these events happen. So yeah, I mean, what's been tough for the industry has been good for Ledger. That being said, the macro is sort is of pushing everything down so it is not like you know ledger is doing well but you know we we are like everyone and we hope that you know we we expect the market at some point to pick up you know whether it's 24 25 but um the markets are still relatively slow and And so in these markets,

ledger is sort of flat year on year in terms of revenue, in terms of valuation. Flat is the new up, so we're not complaining. Slightly down, I think, is the new up. Down less than 10% is probably the new up at this point. I've never thought to index hardware wallets and Bitcoin together to evaluate the asset as a store of value or for that correlation to gold. I mean, we've seen obviously that Bitcoin has become less

correlated to the Nasdaq and tech stocks and more correlated to gold, but bundling those two together makes so much sense. Yeah. This is what we've done recently because we're trying to figure out what's the best indicator, what's the best comparison and how do we correlate to, you know, some kind of, what kind of macro events, et cetera. And, you know, gold is one where in these moments of tension, you know, there are several like actually exchanges outflow is one thing that also correlates strongly with good business for us, etc. But the price of gold and the gold business in general, especially when there is a big tension. Yeah, and you also mentioned that you saw a huge spike on SVB. And I find that a bit surprising. I don't find it surprising at all that you would see a spike in ledger sales

with FTX or Celsius, BlockFi, Voyager, etc. But I am a bit surprised that you're seeing that flight to safety when a bank collapses. So that's interesting. How do you explain that? It's the same phenomenon. It's really like the fact that, you know, you can't trust central authorities. Nobody's too big to fail. And so, you know,

SVB collapsed, but also Credit Suisse. And you're like, if Swiss banks go under, like, you know, what's left out there? And so, so yeah, I mean, you know, people are concerned with their savings and, you know, and people usually in these times

sort of realize that, you know, their savings at the banks are not, you know, guaranteed. Like, you know, people usually in these times like sort of realize that you know they're saving at the banks and not you know guaranteed like you know people always go under the impression like it's cool if my money's at the bank then you know sort of whatever happened you know they'll pay me back and and they realize in these moments that actually it's not the case there's a cap at 250 000 and and that's it uh and also you know to to to retrieve your money is very difficult, etc. So not your keys, not your coins, but not your money, not your money. Yeah, I mean, literally, not your mattress, not your coins, I guess. I mean, not your cash, right? If you don't have it buried somewhere at this point, where are you even going to put it?

It's crazy. You also mentioned that... You know, history repeats itself. 2008, Diamond Brothers, etc. put it it's crazy you also mentioned that you know history repeats itself you know 2008 lemon brothers etc you know and every time there is a reminder it's like oh it's true and this is what bitcoin was created etc like so you don't have to trust the central authority and you'll see that in five years you know people will have you know forgotten a little bit and but but also probably in five years ten years the, especially centralized authorities,

central authorities, will do a better job at security and governance, which they have not done in the past. And especially now I'm talking about crypto only, but they've not done in the past. And FTX is a case of fraud, but also it's a good case to see that if an actor doesn't have very good answers in terms of how they run their security and how they run their process and how they run their governance probably means that you know they they they bound to fail and so i think this would be um it's a valid question today to all the actors that are sort of out there it's like you know how do you run

security how do you run governance and all these things? And I can tell you that there are a bunch of actors that are not investing enough in that. You know, everybody is focused on the top line, which is fair. Like, you know, businesses are for profit and they need to survive. And, you know, it's a cold winter. But yeah, businesses should invest more into their security layer for sure. You said there's also an obvious correlation when there's outflows from centralized exchanges, but we're at a point where maybe we need to see some inflows because even our market makers are leaving those no liquidity, the books are thin and there's effectively almost no Bitcoin left on exchanges.

I mean, this is becoming, I think, a major problem for the market, at least in the United States, especially. Yeah, but because it's the wrong way to trade on an exchange anyway. It's like, you know, the coin shouldn't be on an exchange. This is an anomaly. In the normal world, you have a segregation of duties. You know, custodians are custodians. The exchange does the exchange.

And, you know, they're sort of market makers prime brokers etc like you have a i i don't see why a crypto exchange will have uh features that are extremely different from from a normal exchange in the sense that they're all central authorities like there's nothing bitcoin about like an exchange you know there's nothing about absolutely freedom it's a central authority it's very opaque you don't know what's going on you don't know where the coins are and so the reason why there was a segregation of duty and there should be a segregation of duty is exactly this and the reason why nobody wants to leave their coins on an exchange is because nobody wants to take the counterparty risk like you know who's the next exchange that's going to blow up

and with how many hundreds of millions but what's happening in the market is actually good, which is actors like us, but not just us. We're trying to figure out, okay, so how can you now trade from custody? So the custodian will actually keep the coins and trade from there with smart technology that allows you to actually do that. And so I think this is where the market is going. And so until this is in place and actors like us, sort of Fireblocks, Copper, et cetera, do more of this,

I think you won't see many coins on an exchange because right now it's just, yes, you could trade and make some money trading, but you could also lose everything. So who's going to take that risk? I mean, what you just described is already quite popular with Metamask, Uniswap, etc., holding the actual coins, certainly ERC-20 coins on your ledger, then signing the transaction to trade and doing the trade on a decentralized exchange and still

maintaining self-custody. So I don't see why that wouldn't become sort of the norm in the future. I mean, I think people maybe like the order book and, you know, being able to visualize and place stop losses. But all those things are coming, I think, to DeFi or already here to some degree. Yeah, no, completely. I mean, you know, DeFi was designed for this, like, you know, DeFi was designed so, you know, you need to secure the endpoint. And typically you secure the endpoint with a ledger or with ledger enterprise or with some form of security for the endpoint. But the coins are never on the exchange in a way i think this is where the market is going so whether uh it's going there

because of uh because of the with d5 or it's you know c5 still has a role to play uh in the in the future but only if it does only what it's supposed to do which is sort of the trade and before and after the coins are never left on the platform. This is also what we're seeing with the retail offering that we have in Ledger Live. You see people that are using Ledger Live more and more to trade actually. We've seen triple digit growth in terms of the volume of trades that happen on Ledger Live, which is very counter cyclical. The market was down, I think 40%.

Right. And we've seen like a triple digit growth for us in that regard. And on numbers that are good, like, you know, we didn't, it wasn't like zero and suddenly we do one, like, you know, it was already quite strong and we're seeing real growth into this. And, you know, that's the second phenomenon

that we see in terms of people understanding two things. People understand, you know, self-custody is important and to trade from and, you know, from and back to self-custody is also very important. So we see more and more of that behavior. And honestly, before FTX, I mean, it worked for sure, but still people were wondering, but why should I do that? You know, I prefer to trade directly from the exchange. I think we're hearing less and less of that now where people are like, well, actually, this is a cool feature and I prefer to trade from my ledger and more and more, we see more and more also participants,

like a lot of exchanges are getting plugged into our system. And so that's, you know, I think that's good for everyone. Well, you see that on actual centralized exchanges or is it going to stay strictly in DeFi? I mean, do you think that's good for everyone. Will you see that on actual centralized exchanges or is it going to stay strictly in DeFi? I mean, do you think that the exchanges themselves are cognizant of the fact that they should not be custodians and that they should be adding these features? I know there are centralized exchanges

that have DeFi aspects and are building, they'll call it Web3, to be able to do things like this. No, but we have a product that brings that brings whether you're a C5 or defy doesn't really matter. Like we bring, um, we bring everyone into some kind of a sky scanner for, uh, buying and swapping, et cetera. Well, buying and buying and selling is like, is it, is it like purely, purely C5 right now?

So we have a sky scanner for that. So if you want to buy Bitcoin, then we give you the choice. Uh, we filter actually for you and we use the choice on the choice on like the the best value prop that we find for you in the market but it's the same for swap and we compare actually uh c5 to d5 and then you choose what's the best offer for you and you know everybody's uh everybody's game for two reasons one everybody needs traffic right now and everybody needs traders and so you know they're happy to get it from from wherever uh but also you know, they're happy to get it from wherever. But also, you know, for some exchanges,

it's the right thing to do. If you take an actor like Kraken, Kraken has always said, if you go onto their homepage, they've always said, don't leave the coins on the exchange, you know. Yeah, self-custody. Yeah, and withdraw to a hardware wallet. So, you know, Kraken is the poster child of what needs to be done, I think. Yeah, I think everyone can definitely agree with that.

Interestingly, I asked you right before we started actually recording, I said, so where are you right now? And you said, I'm in Washington, which I expected maybe like I would see tears or your hair falling out or something like that. And you used a very surprising word for your experience there. You said, it's pleasant. I wouldn't expect it to be pleasant.

Well, first of all, I have to say that Washington is a great city. It is beautiful. The city is beautiful. The city itself is very pleasant. I'm here with a few colleagues and in the morning we go for a run. I mean, it's a great city. It's a very impressive city. I mean, it's the center of, like, federal power

for the United States of America. So it is very impressive. And, you know, the institutions, the democratic institutions that the United States have are, you know, whether, you know, people can be criticizing, of course, and nothing is perfect, but it still functions very well. You know, the simple fact that you can access the buildings very easily.

You don't even need to flash an ID, et cetera. I mean, you know, there are, you know, people that represent the people. And most of the people, I mean, all of the people that I've met so far, they're very conscious of that. I think, you know, everybody is doing as far as I could see. I mean, I didn't meet with everyone and I didn't see everything, but my experience tells me that you have representatives that actually do care about their constituency, trying to do the best they can to run the US. So, no, it is a pleasant experience. And I've met with very, very smart people. I'm very impressed by the quality of your

representative I mean you know there are quite exceptional people most of the all the people that have met in the past few days were actually very smart and understand you know crypto deeply so that was I wouldn't say a surprise because I was brief but you know it brief, but it's pleasant. I think it's surprising. I think you look from the outside and that's not the impression that you would get. Although we know obviously that what happens in a meeting behind closed doors is probably very different than the public persona of quite a few of them. But it's encouraging to hear that that's the case. It is the case, but also, you know, maybe I'm slightly biased because I meet with a lot of people that are in certain pockets of the Congress, etc. And that take care of like banking and regulation and crypto, etc.

So they are in the know and they're sort of specialized into this. But the people that are working on this and specializing into this, they know what they're talking about like deeply not on the surface not a little bit like deeply so i think you guys are lucky to have such uh such people to represent you i'll take it i mean did you ever think that you'd be sitting in washington taking meetings with legislators you're i mean you're effectively becoming a lobbyist for the crypto industry without being donned with that title right uh no no no but you know what like you know what i also what i feel that when i'm in washington is like the friendship between the french and the americans like you know it's really real uh uh you know people are very um nice to me uh in in general and you know I think there is a deep friendship in the way that the United States was built and the French helped at the beginning.

And you can feel that. But no, I mean, I had no concept of me being in meeting people to actually do something meaningful for the industry. But it also shows that the industry that we've chosen and sort of Bitcoin and crypto in general is a real industry for the future. I mean, there are two trends right now. It's AI and this and AI is digital abundance versus the other side of the coin is crypto for digital scarcity. And there are two sides of the same coin. And so these are the two sort of burning issues of technology going forward. And I just feel very blessed that I'm able to represent Ledger, but more broadly, the

crypto community here. So and for a French guy, it's all good. I've never heard AI described as digital abundance and crypto described as digital scarcity. That's brilliant. Is that yours? No, I wish it was from someone I'm sorry I stole it from Ian Rogers who stole it from someone else and so but he's really good so whoever came up with that first I mean thank you and uh but I think it's uh I think it's true if they're the two sides of the same coin where do you see them meeting because I think that I mean inevitably If they're the two sides of the same coin, where do you see them meeting?

Because I think that inevitably there's going to be some major use cases and integrations between the two industries. Well, first of all, it's like, how do you decipher AI boats from humans going forward? Only crypto can do that. Only because you can prove with crypto that you're human, you will be able to say, I'm human, I'm not a boat, or I'm not artificial intelligence. And or whatever I'm going to write now, and even if it's enhanced by artificial intelligence, I'm going to sign cryptographically to say that,

this is me and this is what I want to say. So I think this is where I want to say. So, you know, I think this is where I see the coin. It's like, you know, you're going to need crypto to prove many things going forward. Otherwise, you won't be able to believe anything that you read or you see, you know, deep fakes, etc., etc. So crypto is a way to prove something. I can prove I own a Bitcoin.

I can prove my identity. I can prove I'm human. I can prove I own a Bitcoin I can prove my identity I can prove I'm human I can prove I'm 18 Etc uh and so in the in the in the world of digital abundance is going to be very important to decipher who is who and what is what so I think I think this is the main thing now AI is a great tool and you know as you know there are some dangers attached to AI but also some great opportunities so for any company whether crypto or not, it's a great tool to do many things to help developers, you know, develop faster to review code, to do level one customer success,

et cetera, et cetera. And so all these things, you know, as a CEO in a company like Ledger, you have to look at and, you know, see how this can impact your business. And there are, you know, many of other things that you can do with AI. And this is only the beginning. Like, you know, chat GPT-4, I think it is. Maybe tomorrow is going to be five and there's going to be other players, et cetera.

So it's going to deeply transform the way that we work. But again, just to make sure that we stay human and that we can decipher humans from machines, you're going to need crypto to prove that it's you. So there's been a lot of challenges, I would say, for self-custody as it's evolved, right? I think still to this day, a lot of people are just terrified of being their own bank. They don't want to deal with their seed phrases. They're afraid they'll fall on their head or the piece of paper will go down in flames. But it seems like you guys are making a lot of significant

steps towards somewhat abstracting away that complexity. Can you talk a bit about Ledger Recover? It sounds a bit like sort of the two of three multi-sigs, but running in the background. I would love to hear more about it. Yeah, you're right. I mean, there are a few pain points, but I would say a few things. First, I think it's now a misconception to say that self-custody is hard. I mean, it is not hard. And actually I've talked to, I've been in the US for a month and a half

and I've talked to many people and many people that have sort of switched from sort of custody to self-custody that told me actually, you know, ledger is easier to use than my custody before. And if you think about it, it's true. Like, you know, there are many things that you could consider harder to use,

but get this. Once you have a ledger and it's set up, you have a PIN code, you have access to your phones, you can do whatever you want with them. When you're in custody, how many phone calls you need to make, how many 2FAs you need to have, et cetera, et cetera. It is not true that using Web2 even or your bank, et cetera, is that easy. You need to do several steps you need to click on emails etc it's not very easy actually to do a transaction with your Ledger it is pretty

easy you just go to there you buy you do the parameters of transaction press enter you double click on your on your Ledger you just verify that the address is a correct double click on your Ledger boom it's gone and so that's easy uh but you're right there are certain things but but having said that you know uh we're not gonna sit there and look at this and say okay we're very happy with ourselves and now this is all that we're going to do you need to sort of push forward my prediction is actually that self-custody is going to be much easier to use than any form of custody in the next five years and without risk too because the the problem is uh you have a few problems you have an onboarding problem it's like how easy do you make it to onboard and to understand etc and so launching stacks uh mid-june uh this is

one of the problems that we're tackling you know stacks is a much easier uh product to use in general but especially for the onboarding part. And in the onboarding process, you're right, there is always this problem of like, what am I doing with my 24 words? Like finally, et cetera. It's very stressful. I have this little story that it's about me.

It's like one day I set up a nano, I do my 24 words and then I'm very clever and I hide them somewhere etc and one day i still have my nano i still have my pin code and i'm like but where and so i don't remember where the 24 i was so clever in hiding them that i could never find them again and so so it was fine because i still had my nano my pin code is what i did is i re-transferred the coin into a different address where this time i had 24 words. So the 24 words, that's a real concern. And when you talk to people around you or talk to people around me, you know,

people say exactly what you say, which is, you know, I don't trust myself with this. So ledger recovery is a way in the onboarding process where you're going to be able, you're always going to be able to keep your 24 words for yourself if you want. And that's a recommendation in general that we have for people is like, keep your 24 words and never share them with anyone. There is no reason why you should give your 24 words to anyone. Even if it's ledger, ledger will never ask you 24 words.

If ledger asks you something like this is probably because you're being hacked or phished. But in the process, you'll be able to shard your 24 words with three different custodians that are in three different regions of the world. And so three different regulations. And those custodians have no way of connecting together to share the shard that they have. And so nobody apart from you will be able to recreate the full 24 words. And so that's a great product because that's one of the biggest pain points of the industry.

And we're happy to come with this. And there is a launch date now that is sometimes in May, anytime soon. You mentioned, obviously, another huge thing that you have releasing, which is stacks. And that thing looks awesome, right? And I know the way you'll be able to display nfts and the sort of rounded corners on the screen i mean is this it is this the product is this the thing that helps us go mainstream where it just becomes so easy that people love it and we're done with all this conversation or do you think it's still a part of the evolution oh man it's going to be an evolution

for the next 30 years i mean yeah so i don't think stacks is the uh it's neither the beginning nor the end it's just like uh you know it's on the way to to mass adoption um i think we designed this or tony fidel in the inventor of the iPod, designed this. And so it looks very Apple. But it's really like Tony from Apple and Ledger with our security background. And we just had a baby together, and the name of the baby is Dax. And you can see that he has very Apple-like features in terms of design, in curved screen, et cetera. And the way that Tony thinks about a product

is really amazing to see. But he had to work with the security team, and sometimes even Tony has a way of doing things, and he's like, well, this is what I would like the product to do, and the security team would say it's not possible because security-wise not. And so they had to find compromise, and it was beautiful to see this tension at work,

positive tension, constructive tension in order to build the product. So Stacks has exactly the same features and some security as the X, the S and a ledger in general, but has sort of beautiful design. But the beautiful design is to enhance UX and UI. And again, back to this idea of making it easy to onboard and making it much easier to use. And when we discussed this with Tony at the beginning, this project started two years ago, Tony made a comment.

We said, hey, you guys, because we kept on saying that we have a B2C business, like business to consumer. He's like, no, no, no. You guys are business to geeks, and like, you know, business to consumer. He's like, no, no, no. You guys are business to geeks and you have to make it business to consumer. And, you know, no disrespect to us geeks, like, you know, we're part of the geeks

and the geeks are amazing. And the geeks are, you know, the first people that start forming an industry and a product. But for the consumers to come, come you know the less geeky and the less technical you have to make it much easier to use so you have to dumb it down and you have to build an interface a product that is a people desire and b that that is super easy to use so this is definitely one step in that direction and so far all the reviews and everyone that has you

know sort of engaged and touched the product, the feedbacks are extremely good. And exactly saying that, it's like, oh my God, this is much easier to use. And so I can see now why we switched to ledger and self-custody. But you need to have a combination of the two, right? You need to desire the product. Like, okay, I want one. And some people just say to us, I want one. I don't know what I will do Like, okay, I want one. And some people just say to us,

I want one. I don't know what I will do with it, but I want one. And then ease of use, which is as soon as you engage with the product, it feels very natural. So we believe it's the iPod moment of the industry. MP3 players pre-existed the iPod.

And suddenly there was the iPod. And so, you know, we like to think that it's going to be that moment for the crypto industry. Is it a challenge at all that you're creating this incredible consumer product, but you also want people to kind of every once in a while just put it in a safe and not always have it on them? Or is this a product that you feel someone can always have it on them and still be safe and secure? Yeah, 100%. But, you know, it's stacked so you can stack them together.

So first of all, you know, we think that people should think about, you know, how they do their security. And, you know, to each person, maybe different ways of doing their security. We feel that you have a magnet in the stacks and it's very clever. You can stack them. And, you know, the fact that you have this incurved screen and you can make the spine, you can personalize the full screen

and the spine differently. And so you can stack them together and you can have different things in them. So, you know, we believe that you shouldn't have to walk uh in the street with everything that you own on you i mean you know but you can have a couple cool nfts that you want to show off to your friends correct and you know and maybe uh a few thousand dollars that you can have in another stacks if you want your wallet yeah yeah you want it etc you know different things like that and in the future we'll come with you know even um you

know software clever ways of doing this like you know sort of through sort of multi-sig and you know governance that we're going to put on top of stacks like meaning that you know if you're going to do a transaction over like five thousand dollars maybe you need to you know two out of three to sign versus under five thousand dollars where it's just like your credit card i mean you know some some of us are have credit cards with uh where you can spend twenty thousand dollars a day and it's just a pin in the u.s sometimes you don't even need the pin you just swipe the card and and you can spend twenty thousand dollars in uh in a car never ask us for our pin literally ever exactly so you know there are things that already exist like this in in the current world. And what we're doing with Ledger is just more secure

than what exists today. And so if you have too much, keep some, put it on different Ledger. This is how Stacks has been designed. So you can have several and know what is in each. So I heard a really cool story about you guys and Trust Wallet that I was surprised about. I think it's called Ledger Donjon. But actually, I think a lot of people heard about the potential Trust

Wallet exploit that they had that put $30 million at risk. But I had no idea that you guys had white hat hackers on staff that identified that and effectively saved Trust Wallet and Binance until I read the story today. And this was a while ago. So could you talk a bit about that? I just didn't know that was a service you offered or something you guys were doing. Yeah, no, we're a security company.

Ledger is a security company. And so what we do is we build the defense for the industry. And every security company always has what's called an attack lab uh and so it's a bunch of white hats uh as we say in french um and what they do every day is like they hack systems they hack hardware they hack software they hack everything that they can hack um they hack our products first just to make sure that they're extremely secure because you want to, you know, you want the dungeon to attack a Ledger product before someone else finds a way in and so you want to attack and patch. We have a bounty program where you can

contact the dungeon if you find something really on any product but on ledger products and, you know, and help us enhance the security for ledger products and for the industry. And so when we hack another system, of course, our intention is to help this other company or the system to upgrade their security and to be more secure because there is, you know, this is our mission. Like we need to make crypto secure and easy to use but like for everyone and everywhere like you know this doesn't scale this game doesn't scale if you only secure with ledger for example you have to sort of be secure everywhere this is why we

power financial institution and exchanges with ledger technology also via ledger enterprise because why would you compromise on security if you're very secure with your ledger technology also via ledger enterprise because why would you compromise on security if you're very secure with your ledger nano or stacks why would you compromise on security once you send a coin to an exchange in the future i mean in reality exchanges should run all on some form of ledger technology that guarantees a security of the private key and b security of the governance like who has access to what etc can the ceo of the exchange walk away with with the coins if the answer is yes then it's a terrible terrible way of doing things you should have segregations between administrators of the funds and operators of the funds uh and you know that's that's true for any phone exchange etc etc so that that's our job and so when we find

something we just contact um the people in question and we have them fix it and then there is a process that's called responsible disclosure where we uh where we show what we found and the reason why we do it is not because we're arrogant or cocky uh is because we then help other uh researchers to see how we could break the system and eventually fix theirs that was built the same way with the same architecture or find other ways break the system and eventually fix theirs that was built the same way with the same architecture or find other ways of breaking system and so therefore continuously improving the security of the industry. So that's what happened and we will keep on doing it and we will help everyone to you know increase their security sometimes you find bugs that can't be patched so that's that's when a system fails and so usually the only

option that the vendor has at this moment or that the company has this moment is just to change completely completely architecture etc but if it fails it fails and people should know that it's a failed system. So security is not kind. If it's broken, it's broken. Security by obscurity is not the way that we win. Yeah, but I don't... Go ahead.

Yeah, I just don't think that every company would help their competitor in that way. I mean, they are a competitor technically. Yeah, but I think it would be worse for everyone if TrustWrite got hacked. It's not a good... It's not great for the industry, because... Yeah, it's terrible.

It's terrible. If TrustWrite gets hacked, if others get hacked, etc., then the trust goes away, and then people start... It is not true that you can win on your own, so this theory to say, well, everybody else fails and only Ledger survives, that's not a great industry. Yeah, that absolutely makes perfect sense. So you're obviously, since you're building these security systems and

you're building these devices, you're probably looking far ahead versus other people in the industry in what's coming, right? You need to be able to secure things that we might have evolved two, three, four, five years from now. So what are you seeing in the industry that's exciting to you that might be coming that's not on everyone's radar that you guys are already working on? Yeah.

I think, you know, the way that we design our security platform is sort of the low beta for the industry. And what we see coming, there are two things. Like the way that we design security, first of all, start with hardware. And so people usually think that hardware is like a bad word, but it is the gravity of security. Like every security system has some form of secure hardware into it and people usually say i've got a very clever investor the other day they say yes but npc as if mpc was only software it is not like you know mpc runs in secure enclaves and so that's hardware and so the question is a real online security system has hardware operating system and software. It's a combination of these three technologies.

And so you can do research and you can work on these three layers going forward. And MPC is great, and a lot of people are working on that, and it's very, but it's very complimentary to hardware and to various other security layers that you can put around sort of private keys and a system. So I don't believe in competition. I believe in cooperation of different type of technologies to build like the best possible secure system.

But we are very focused on hardware. And so therefore we are thinking about like how to design secure elements and HSMssms hardware security modules so secure servers for the next five to ten years because the problem of hardware is like it's it's a very long time if you decide something today it's not going to happen tomorrow it will take a few years to get there and depending on the complexity of what you're trying to achieve maybe it's two years maybe it's three could be five and so if you think about like what you want to do in five years and how the systems will evolve like you need to start making decisions today and this is this is the way we work and this is this is this is what we're doing basically we're trying to to see what's

what's coming what's coming in a way it's very simple i think it's everything that has value everything every secret will go on to a blockchain and so blockchains would not be just carrying like you know cryptocurrencies but also you know other forms of valuable items uh and identity is uh is probably the most important one going forward i mean in terms of mass adoption um identity theft online is starting to be a huge problem. And so crypto will be a way to protect your identity. And so therefore on your Ledger wallet in the future, you'll probably have your money, your identity, your health data, a bunch of things that is in your wallet today.

I mean, if you open your Ledger wallet that you probably have on you still today, and you see what's inside, everything that's inside that wallet you know coupon you know uh starbucks points etc and you know that starbucks is already doing this right nfc sure and so that tomorrow will be in your in your wallet but the thing is your wallet will be you should be able now to process a lot more information a lot more coins like have more space uh uh run like several applications at the same time etc so you know the future of this we need to work on secure elements hsm etc so they're sort of bigger faster and you know stronger basically yeah the identity element is huge even beyond i think the theft side of it there's also just your right to privacy and to your own data and to securing that and not giving that away to every company and everyone you purchase something from.

So I think that part of it is going to end up probably compelling even more people to secure their identity once as we've come to realize what big tech and the government are doing with all of our data and our information. Correct. But sometimes the governments are sort of conflicted. They want to do many things. Interestingly, identity on crypto is a way, and with additional technologies like zero knowledge proof, is a way to share your identity, but without revealing necessarily everything. So I can prove to you that i'm uh that i'm legally uh in the united states which sometimes you need to know but that's all i'll

share i don't need to tell you uh who i am my name uh where i live etc but i can prove to you that i'm uh legal um which is not the case for me today but you know so i wouldn't be able to prove that but but i'm not allowed to be in the united states wouldn't be able to prove that but I'm allowed to be in the United States or I can prove to you that I'm a US citizen or I can prove to you that I'm 18 and this opens so many use cases the one that I use frequently is I don't think that online porn is okay

free online porn I don't think it's okay for young people. If you're 14, I don't think you should look at that. I think everyone agrees there, yeah. And so I think it should be accessible to adults, but however I also don't think that you should

have to flash your ID to access the content. I don't think that's cool. But with crypto, you could definitely and with your led but with crypto you could definitely uh and with your ledger what you could do to and this is not science fiction this is like maybe 2024 um you could log on with your ledger you could connect with your wallets prove that you're 18 and that will give you access to content whether porn or whatever uh but you see my example. Yeah, I think that that could really trigger mainstream adoption when people realize how important of an issue that is and how much

they're losing their data and how much you're giving away for things like that. Like you said, imagine literally having to show your ID to your screen to be able to access something like that. Now everybody knows exactly what you're looking at on your computer. I mean, that's horrifying. Yeah, but we're slightly going there. And so I think, you know, crypto is the safety net. Uh, you know, in French we say, uh, life is well designed in a way. Uh, it is interesting when all of this is happening, like sort of AI and people wondering

about like boats and who is a credible actor on the internet and spam and all these things. It's interesting that crypto will come as a savior right now. And I think so. I think crypto in general and cryptocurrency and public blockchains are coming at a very good time to solve some of these issues. At first, when I got into crypto in 2014, it was a meme to say Bitcoin fixes this and Bitcoin can fix everything. So it probably cannot fix everything, but it can fix a lot. And it's going to be front and center in everybody's life going forward. We will have more digital stuff going forward.

That's clear. And whether it's an NFT, whether it's a coin, whether it's your ID, et cetera, there will be more crypto stuff that we'll be able to own and decide then where and with whom we want to engage and participate. So a lot of people believe that central bank digital currencies are inevitable, certainly in a number of countries. And obviously there's quite a fear over what that would mean. But I would imagine if we get central bank digital currencies, then they'll need companies like yours to secure them, right?

I mean, do you think that if everything goes digital in that manner, if all money goes digital, that we're going to see it largely on blockchains and being secured by the same technology? Do you think that it would be completely something else developed by the government, you know, a closed system? Well, I mean, from a pure technology standpoint, I think I would want to see if any government outside of China that is very sort of verticalized and the decision comes from the top is very

top down. So this is what we do and everybody does what the party decides, which is one way of doing things. But in a country like the United States of America, where you have sort of check and balances and a constitution that makes it sometimes hard to do things, but for good reasons, which is a feature, it's not a bug. I don't exactly see how any government that runs like that, so even Europe, can go sort of top-down

and build a technology and let alone an industry. You know, A, it has never happened in the past. You know, governments are not able to do that. And again, I'm not talking about, like, the philosophy behind the CBDCs, etc. I'm just talking about pure execution. How do you go from nothing to suddenly something that everybody uses? Who does the wallet? Who does the tech?

How do you coordinate governmental effort with banks, etc.? Who runs the network? What kind of network it is, etc. It seems stretched in terms of what is the go-to market of this. So, me, this is where I'm very unclear. Now, you can talk a lot about CBDCs, etc., and why they're good or bad and who's going to do what with them, but I would be very surprised.

And, you know, in Europe and in France, we are the specialist of, you know, having like at some point governments and or someone at the European Parliament that has a big idea on, you know, what we should do. But, you know, the execution is always extremely poor, and especially when it comes to technology. I mean, you know, look at any online service that is provided by any governments in the free world and, you know, and tell me how do they compare to your Google account? I mean, Google has far superior technology, so I don't know who's going to build the technology

for any governments to be sort of robust, scaling, et cetera, et cetera. You know, I think there is people look at Bitcoin and other cryptocurrency and look at it very quickly and say, OK, fine, we're going to do the same. It is very difficult. I mean, right now to run a global network like Bitcoin is very, very difficult. And what Bitcoin has achieved over the years is fantastic. It's not a small thing. It is extraordinary. And so for anyone to think that they're going to be able to replicate that because they just want to, I think it's a mistake. So from

a pure operational standpoint, I wish good luck to anyone who wants to have a global money transmission network where users, enterprise, industries can access freely, open, etc. Or even if you want to close it, whatever you want to do. To run something like this is very, very, very, very difficult. We have seen now a lot of other things needing to be secured on the Bitcoin network, like Ordinals and BRC20 tokens. Is that all built in already to what Ledger has because of the nature with Bitcoin? Or is that something you now have to build for?

We have to build for some of the stuff that we know that, you know, is sort of interesting and we will other stuff like debatable. So, you know, Ledger will never be first. But we'll always be right. Security is not, security doesn't react to the news. Like if there is a new cool kid in town, like the Pepe token or whatever, it's like, it's cool, but like, you know, we can't react like this and, you know, secure it, et cetera. It takes time. It's a security technology.

It's usually, you know, a little longer to, it takes a little longer to call on it, but because you want it to be extremely secure. So the market is happening. And, you know, if it's strong and if it stays, then of course we'll support it. I think it's going to stick around, to be quite honest. I didn't think so at first, but it seems to be growing at such a tremendous rate

that I think you're going to have a new job on your hands. Yeah, we'll support it. I mean, you know, know and again like ledger has been designed as an open platform so any third party can go to developers.ledger.com and code their own app onto our systems and even an integration all the way to ledger live and we have a big team that is here to support those kind of integrations so i mean mean, you know, really there is a, there is no problem. Uh, and so if it's here to stay and if it's good, then of course we'll support it. Well, I hope you, uh, convinced those, those, uh, fine people in Washington to, uh, give us some sensible regulation and legislation in this country. You're maybe more hopeful being there than I am. Maybe I need to fly up to Washington and take a few meetings to get a little more

optimistic. No, you should. I mean, it's, you know, debates. You have to put yourself in the shoes of sort of legislators and regulators. This is very hard, like, you know, technology is exponential. So you have at the same time that you have crypto happening, you have AI happening, et cetera. How do you how do you think about that you have crypto happening, you have AI happening, etc. How do you think about that if you're in their shoes? I mean, it is very difficult.

So, you know, I think our approach is to try and be helpful. And the same that we do with security, you know, we help other companies. We try to help as much as we can and explain what we do. And we do it from a place of trying to secure the industry and secure the governance of the industry and self-custody. So we're really about freedom and we think it's important. There are some people that are strongly against crypto. It's very hard to talk to these people

because they just don't want it. And usually it's because they don't like freedom. They would prefer to have control over people. We're not for that. I think freedom to the people is an important concept in democracy. And the ability to be able to own what is yours also i think it's a fundamental right so we're here to help and and educate but

we also know that you know some people are against what we stand for and we are also happy to disagree well then we need to win i can't wait to get my hands on a couple of those stacks, man. Where can everybody else go, I guess, pre-order them now in advance of the release or check them out? Look, I think Best Buy still takes pre-orders. So I would go on Best Buy and pre-order. Awesome. And where can people follow you after this conversation? You can follow me on Twitter. And thanks to Elon. Actually, it's easy to follow the real me and not a fake me.

Because me is underscore P Gautier, G-A-U-T-H-I-E-R. And I have a little blue check and also a little ledger logo next to my head. I need one of those cool second logos, man. That seems to be the thing right now. Pretty awesome. I don't know why I would need one but you know, why not? Yeah, it's cool. That's a good that's a great reason man. Well, thank you so much for taking the time. Like I said, I can't wait to see the products and I can't wait to see you convince those people up in Washington to help us out

man. Thank you very much. Merci Scott.