Pascal Gauthier, President of Ledger: What is Cold Storage and Why Does it Matter?

Pascal Gauthier is the President of Ledger, one of the most well known crypto hardware wallets, and the creator of the Ledger Vault for institutions. In this conversation, Gauthier and Anthony Pompliano discuss his past experience building a data company that Yahoo bought for over 500 million dollars, his time in venture capital, and the importance of cold storage and why you should care about it. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- BlockFi BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

• 0:02Speaker 00

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:15Speaker 00

  Pascal Gauthier is the president of Ledger, one of the most well-known crypto hardware wallets, and the creator of the Ledger Vault for institutions. In this episode, we discuss his past experience building a data company that Yahoo bought for over $500 million, his time in venture capital, and of course, the importance of cold storage and why he should care about it. Aside from that, this is our last episode of 2018. We'll see you again in January for season two of Off the Chain. Before we get started, I want to talk about one of our sponsors, BlockFi. These guys are doing really interesting work in crypto lending. What they allow you to do is keep your crypto, put it up as collateral, and receive a US dollar loan funded directly to your bank account. They

• 0:58Speaker 00

  do loans ranging from 2,000 to $10 million, and they're perfect for helping you reach your financial goals of all sizes. You should visit blockfi.com/pomp. Again, that's blockfi.com/pomp. Again, one more time, type it in, blockfi.com/pomp, if you'd like to learn more about putting your crypto to work without having to sell it. Definitely do it. This podcast is presented by Blockworks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur, and want to attend exclusive events and dinners, visit them at blockworksgroup.io. I promise you won't be disappointed.

• 1:35Speaker 00

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:03Speaker 00

  All right, guys, we are here with Pascal. I'm super excited because I don't think a lot of people know the intricacies of what Ledger does and how it works. So, but before we get to that, why don't we just start with your background and kind of how you got into crypto?

• 2:19Speaker 01

  Yeah, hi, hi, everyone. So my background is actually in advertising technology. I started my career in 2000, just after the crash of the internet bubble. And I started by, you know, selling clicks and advertising and banners. And I built my career into this. My last company was called Credo. We listed Credo at the NASDAQ in 2013, and it was listed for a little above $2 billion in valuation. So that was an amazing ride, you know, starting from France and building company everywhere in the world, from 15 people to 1,000. And what I've learned from advertising technology is how to scale companies. Because it's one thing that ad tech companies do well is to scale and to become global

• 3:04Speaker 01

  very quickly. And after I left Credo in 2013, after the NASDAQ introduction, I was thinking of, you know, opening my shackles to business and see what's out there. And, you know, when you, when you start from France and you build a $2 billion company, there's, you know, advertising technology is pretty much done for you because the probability that you will build another successful business like that in the same space is very low. And also, I was getting frustrated by the GAFAS. Like, you know, in advertising technology, what's very difficult is to build a company where you have those big sharks swimming around you. And it's very tough to build competitive products when you have gigantic companies like this competing with you. And so, you know, I thought, where can I go that I don't have this GAFAS pressure?

• 3:49Speaker 01

  And, you know, what's new out there? And Bitcoin in 2014 for me was really like the hurrah moment or the eureka moment where suddenly you see that there are new protocols. That are very new, not many people working on these protocols yet, and a lot of potential. I think that everybody that's listening to this already agrees with the potential of crypto. But in 2014, maybe it wasn't as easy to see, and in 2008 even less. But I saw the potential and I thought, wow, this is a great potential to redefine so many things that we do in terms of transmitting values to one another and peer-to-peer type of system and all the good things that people like in crypto. But I also thought that it was a great business opportunity to build a company that could

• 4:34Speaker 01

  become really big, very global right away, because Bitcoin and crypto is a global phenomenon. From Paris, where we have great engineers and not competing with Google and Facebook right away. So this is why I'm here.

• 4:46Speaker 00

  Awesome. What's the first time that you ever heard about Bitcoin or crypto?

• 4:50Speaker 01

  So yeah, it was in 2014. I was actually doing, I was an entrepreneur in residence with Index Ventures in London. And we were doing these investment meetings and Bitcoin was a buzzword that started popping in into the meetings. And at the beginning, it was like, what is Bitcoin? And in the end, it's like, why not Bitcoin? And Index made a few investments way back when. And at the time, Bitcoin was skyrocketing to 1,000 and just before the Mungoks incident. And yeah, this is when I was first exposed and I met with an amazing guy, Vence Cesares, that a lot of people know, the CEO of Zappos. And he pitched me, or he pitched like a group of people at Index, like in five minutes Bitcoin. And I was like, okay, done. I believe

• 5:33Speaker 01

  that guy. And so he got me really excited about the space. And for me, it was a no-brainer. And the no-brainer, it was a no-brainer, but I saw a few gaps into Bitcoin. And the two gaps that I saw was data, the lack of data, the lack of knowledge. And for a guy like me, like I come from a non-technical background, I don't have a financial background as well. So for me, it was hard to understand at first. So I thought data and content was missing, and security was a big missing piece. And after the Mungoks incident, it was very clear the security governance was a critical piece, where I think this industry cannot go further if we don't fix it. And that's what Ledger is about. We are about to fix this.

• 6:16Speaker 00

  When you decide, hey, I'm going to go into crypto, did you know exactly what you wanted to build? Were there a couple of different ideas you explored? Like, walk me through the process from, you know, once this comes in, say, okay, I got it. I understand Bitcoin, that's interesting. You start looking at different opportunities. You identify these two areas. How do you get from there to starting Ledger?

• 6:35Speaker 01

  Yeah, so, no, that's a great question. So first, I was lucky enough to have liquidity from my previous company. So when you have liquidity, you have time to be a thinker. And so I built my company called Challenger Deep. And Challenger Deep is the lowest point on Earth. It's in the Mariner Trenches, it's under the ocean, and it's mainly unexplored. And for me, it was like, the name of my company was because I wanted to explore that world, like not knowing what was under there and knowing not much. And so I built the company before, knowing what to do. And the first thing that I did was data, because coming from the advertising world, data is something that we manipulate a lot. So we know the value of data. And so my first play was to build data. And the company actually now is called CAICO. So if I'm Challenger, you call it CAICO.

• 7:20Speaker 01

  And I've got Amor Subirin, who is the CEO and running a team of 12 people and doing great things in the market right now, and basically selling data, like market data to hedge funds and so on and so forth. So that was my first idea. But, you know, when you build a company, you actually, chances of success are very low. And so I projected myself into this business, thinking that I just wanted to invest and be part of this revolution, and thinking that I would sort of buy coins, you know, that was part of my investment, build my company, that was the second part, but also invest in other people's company, because the, you know, the possibility of me succeeding with my own company was very slim. And so I thought, like, you know, let's not put all my eggs in the same basket, and let's also bet on other people that better know what they do.

• 8:04Speaker 01

  And so that was at the end of 2014, when I met Eric Larchevék, Nicolas Bacca, and the founding team of Ledger. And this guy pitched me security, which I thought was a big gap. And they they were doing something around the SIM card. Because, you know, I don't know if you know, but the SIM card industry was invented in France. So actually, in France, we have all these developers and people that are very strong at building, you know, security that is a combination of hardware and software. And that brings that is protecting the banking secrets for the past 20 years and the telecommunications secrets as well. And so when they pitched me the simple idea of like, taking that SIM card technology and applying it to crypto, I thought, you know, this sounds like a great idea. And also, this sounds like an idea of, you know, this is why a company based in France

• 8:46Speaker 01

  got an edge and have something to say to the market that is very different and probably really good. So, you know, it took me five minutes to make an investment decision. And I told Eric, it's okay, man, here is like 200,000 euros. It was a seed investment, so it's my biggest seed investment ever. I said, I give you 200,000 euros, but I want a board seat because, you know, I want to be with you guys and I want also want to help you and I want to know what's going on. And and at the time, lucky me, the team was desperate for money. So they gave me the board seat without thinking about it. But but then I was the first investor. I was I triggered the round, so everyone followed me. So the first round was 1.4 million or something like that.

• 9:25Speaker 01

  Apparently, other investors like saw me investing like crazy, like a signal that Ledger was good. But but Ledger was good because technology was good, the team was good. And being at the board seat has been amazing. So I've been three years at the company as an independent board member and last year and a half as the president of company. So really helping with operations, scaling and going to market.

• 9:46Speaker 00

  Got it. And when they first pitched you, what was the kind of product or the idea? Was it what they ended up building or was it something else?

• 9:53Speaker 01

  No, the product and the idea was exactly the same that we have right now. So what you the Nano S that you see was the original idea. They they showed me a prototype at the time that looks nothing like the Nano S. And they were like, this is what we're going to do. I'm like. Okay, it's ugly as hell, but you know, whatever, like, you know, people want to protect value. So I thought that having another device would make sense. When a lot of people say like, but why would you have another device? You have your phone or you have your computer is good enough. Like, you know, software only is good, like, nobody's gonna go for another device. But actually, what we found, but I believed in that vision and in this theory. But we found that for now, another device is cool. What I also know now, which I didn't know at the time when invested is the core technology at Ledger is not so much a device, it's not the hardware.

• 10:38Speaker 01

  It is the operating system that sits at the heart. And this operating system has been beautifully designed, so it can operate in any kind of hardware. So I think that the massive innovation of Ledger is to have built a security platform that is partially closed, because you want to protect the secret, but also partially open. So any third-party developer can actually code now on Ledger platform. And the Ledger operating system can go in any kind of hardware. Which is why we're able to secure individuals. That's what we do with Ledger Nano S product. Which is why we're able to secure enterprises and B two B. This is why we do with Ledger Vault for hedge funds, family offices, law enforcement agencies, like anyone that holds coins and need governance on top of security and easy of, you know, to make it easy to use.

• 11:23Speaker 01

  These are the three things that we do. And finally, we will secure objects, because objects will be connected, connected to blockchains. And objects in the future have critical digital assets that need protection. And you can use Ledger technology in order to do that.

• 11:38Speaker 00

  What's your take on the current security landscape, right? And the reason why I ask this is, I think, most people who aren't overly familiar with the crypto industry, they read these headlines that are, you know, there's exchange hacks, there's people who are, you know, they get hacked, they lose Bitcoins, that, you know, they do all this stuff. What's actually going on on the ground, right? What are like the threats on the security side? And then we can get into kind of how you guys actually use cold storage and different things to kind of mitigate those. But what are those threats and what's kind of that security landscape today?

• 12:15Speaker 01

  Look, it's a great question. I think, uh, number one,

• 12:20Speaker 01

  crypto and those blockchains, um, this is very new. This is the first time that we've created a digital asset that is unique. And because this digital asset is unique, it can be stolen very easily.

• 12:36Speaker 01

  So I think what makes the technology absolutely great makes it also very fragile. If you think about digital assets before, like, nobody can steal you, nobody can steal an MP3 from you, like, it doesn't really matter.

• 12:49Speaker 01

  To steal a Bitcoin is a big problem, uh, and to steal like 10,000 Bitcoin or 100,000 Bitcoin, that's also, that's a much bigger problem. And you can, you can steal that in one transaction. And if you think about like assets and commodities, like anything, you want cash, gold, to steal anything at scale, at this type of scale, is very difficult. Like, you know, when was the last time a bank was hacked, like, $2 billion in cash that they never recovered? Like, it doesn't really exist. How do you steal $2 billion worth of gold, of oil? The only way of actually doing this at scale is to have an army and to invade a country. That's, that's how you do it. But with crypto, you can be a hacker in your living room and, uh, you know, somewhere, anywhere in the world, and, you know, you hack exchanges every day.

• 13:32Speaker 01

  So the stats that we have is exchanges every day lose 2.7 million dollars. So it's a big number, we feel, and they've lost so far 1.8 billion dollars. Wow. And we think, we believe that it's because in the old world, and the new world being crypto, but in the old world, security is taken for granted, because you cannot really lose value that much. You cannot really use money again. You cannot lose gold. Like, if you give your gold to UBS, like, you know, nothing is going to happen. Again, because it's difficult to, to steal gold, like, how are you gonna do that? You bring trucks, like, you know, guys with guns, like, it's very difficult.

• 14:08Speaker 01

  But with Bitcoin and crypto in general, it's very easy to steal, so, but, but because we're coming from this world where everything is secure, I don't think that, there has not been a mentality shift yet. From most of the players in the space and you would think, you know, people should take security seriously because we're being hacked every day. But actually, no. And when I read stuff about the new technology that is being deployed today and everyone talks about cold storage, like it's a great technology. I mean, cold storage is not a technology. It's nothing. Like, you know, you, you can put your keys on a piece of paper.

• 14:39Speaker 00

  Let's talk about it, right? So let's describe, um, what is cold storage, right? To start with.

• 14:45Speaker 01

  And a very simple, I can explain your cold storage in one sentence. You, you write your private keys on a piece of paper, you put it in the book and you put it in your library at home. Okay, that's cold storage.

• 14:55Speaker 00

  Because it's the actual private key that is not in any, you know, form or shape connected to the internet.

• 15:02Speaker 01

  Yes.

• 15:03Speaker 00

  Okay. And so what are the different ways right now that people are doing cold storage, right? There's what I would consider, um, there's custodians, right? So basically you give your private keys to somebody else and they hold them for you. There is a self, uh, cold storage where you put your crypto on a device and you're doing this yourself. What's the pros and cons between those two things? This, the self cold storage or custody versus the use of a custodian service?

• 15:34Speaker 01

  I don't think I would, uh, I would put it like that. I think the main difference right now in the market is the technology difference. Uh, and I'm sorry that I will advertise for, for ledger, but, uh, but I think that we have a technology approach that is very different from what the market is doing. So most of the markets, so whether it's a custodianship or self custodianship, like that doesn't really matter, but like the technology to protect the private keys, like most of the market says, we cannot be connected online because we don't have enough security. And so we're going to put everything offline and the day that we need to do a transaction, we're gonna, you know, send someone to check what is offline and actually to bring it back online. And, uh, which is why it's very inefficient, which is why every solution that uses this

• 16:18Speaker 01

  type of technology is, well, again, it's not really technology. It's just like, you know, putting a computer in a dark room is not technology for me, but You need to go from cold to hot. This is why you have a 48 hours delay if you want to have your money. Like you cannot do a transaction in real time, which which is silly. With us, we bring this technology to the market. That is not a new technology, actually. It's a technology that's been used by the banking industry for a long time. So typically, if we think about the enterprise industry, we've developed everything. Our operating system is ported onto an HSM, a hardware security module.

• 16:50Speaker 00

  Okay.

• 16:51Speaker 01

  The HSM protects the private keys and through the devices that we have, the Ledger Blue, you can actually sign on the HSM and the communication between the Ledger Blue and the HSM is secured. The HSMs have been designed to be online all the time. You actually don't need to bring them offline. So the HSM acts as a protection of the private key.

• 17:11Speaker 00

  So hold on, before I keep going, I want to make sure that I clarify this so people understand. The cold storage is secure based on what it does, right? But there's some downsides to it, right? The ability to go from cold storage to hot can take a while, right? Because of the nature of that's why it's secure and just slow, etc. What you guys have developed is something that is secure, but also doesn't have some of those downsides that true cold storage provides.

• 17:37Speaker 01

  Exactly.

• 17:37Speaker 00

  Right? And so today you have two separate pieces of hardware, if I understand this correctly.

• 17:43Speaker 01

  Correct.

• 17:44Speaker 00

  Let's talk about the actual ledger itself. What is that?

• 17:48Speaker 01

  What do you mean ledger itself?

• 17:49Speaker 00

  The like the USB.

• 17:52Speaker 01

  The USB, I'm not sure I'm following you.

• 17:55Speaker 00

  Not the HSM, the other hardware device.

• 17:57Speaker 01

  The Ledger Blue. Yes, yes, yes, yes. It's a it's an authentication device, okay? It acts as an authentication device in the sense the private key is not in the Ledger Blue. The private key.

• 18:08Speaker 00

  What is on Ledger Blue?

• 18:10Speaker 01

  It's just a part of the private key because, okay, let me take a step back. So basically what happened is we are four in the room right now and we all run a hedge fund.

• 18:20Speaker 00

  Okay.

• 18:20Speaker 01

  And we have $100 million in Bitcoins.

• 18:22Speaker 00

  Okay.

• 18:23Speaker 01

  Who has access to the private key? I don't trust you enough, so only you has access to the 100 million. And actually, your LPs, everyone is going to ask you, you know, what's the governance on these on these coins? So actually, what you want is a set of rules. So we know how we're going to operate this 100 million and who's going to have access to the coins.

• 18:41Speaker 00

  Yep.

• 18:42Speaker 01

  And so typically, if we need to make a transaction above 10 million, we have agreed administratively that all of us four need to sign the transaction, for example.

• 18:51Speaker 00

  Okay.

• 18:52Speaker 01

  If it's below 1 million, then only you can sign, etc., etc. All these rules are coded and enforced by the hardware. So basically, we can now sort of have any coin in our hedge fund and any coin, all the governance rule will be run by the hardware. So some coins, as you know, support multi-signature at the protocol level. Other coins don't. But actually, in our technology, it doesn't really matter because all the multi-signature and all the rules are enforced by the HSM and by the technology.

• 19:20Speaker 00

  Hmm.

• 19:22Speaker 01

  But I'll give you another example of why being online sort of all the time, why still being secure is very important. And why cold storage, in many cases, won't work in the future. How do you stake coins? When you're in cold storage? You can't. It's a big limitation of cold storage. So typically, all these companies that are doing cold storage on one side and then they go hot, the day that you want to stake your coins, they're going to have to come up with a different solution. Because cold storage is not going to work for this. Our technology sort of adapts to whatever evolution of the market is coming because as all the rules and the security is provided by, it's actually the combination of the hardware and the software. Every layer on top, you can bring onto the platform.

• 20:04Speaker 01

  So typically, right now, we're developing, you know, proof of stake and delegated proof of stake as new protocols that will be implemented both in our hardware wallet and in the vault solution. So if you work with us, you'll be able to stake your coins or delegate the staking of your coins to a third party.

• 20:23Speaker 00

  All right, before we continue with this conversation, I want to mention our sponsor again, BlockFi. Remember, they do crypto lending. So you posted your crypto as collateral, they give you a US dollar loan, and you can use the US dollars to do whatever you want. You should visit blockfi.com/pomp and then tweet at me that you went. If you tweet at me after you went to blockfi.com/pomp, maybe I'll throw you a like, a smiley face, or the fire emoji. The fire emoji is the best. Remember, go to blockfi.com/pomp and I'll see you on Twitter.

• 20:54Speaker 00

  And so how does the HSM, right? Let's say, go back to your example with four people at a hedge fund with $100 million in Bitcoin that's sitting on the ledger blue. How does that piece of technology actually? When all four people say, okay, I want to sign off on this. What was the user experience for signing off to get those private keys to actually move some percentage of the crypto?

• 21:18Speaker 01

  The experience, I mean, like, what would we experience as you're being?

• 21:21Speaker 00

  So we all say, okay, let's do it. You know, we get HSM and what do we do?

• 21:25Speaker 01

  Yeah, so it's a SaaS product right now. So you wouldn't be getting the HSM. What you'd be getting is a part of our team coming to your office showcasing your product, explaining to you how the platform works, and you will do the key ceremony. So what is very important, that you do the management of the keys. The HSM you will never see unless you want it on premise, but that's a different discussion. But let's say that you use our SaaS product. We take care of the HSM, we take care of the technology, and we just come to help you set up your authentication devices. And there are different types of authentication devices. There are some for the administrators and some for the operators. So typically, what's happening is you cannot operate the fund and administrate the fund at the same time.

• 22:07Speaker 01

  Your CFO and, you know, some people in your company or in our hedge funds will be the one setting the rules, and then traders will be the one sort of spending the money, if you know what I mean. And so, and again, all these rules are enforced by the hardware, and the hardware provide many other good things like segregation of accounts, audit trails, et cetera, et cetera, that you cannot really get with software only.

• 22:31Speaker 00

  Okay. And then who's buying these, right? Are these mostly retail, individual investors? Or are they, you know, larger organizations, enterprises, a mix? Like, where are you seeing most of the interest today in the hardware products?

• 22:47Speaker 01

  Family offices, hedge funds, big institutional players, like everyone needs technology at the heart. What you have to understand is right now, when we say Ledger Vault, we are showcasing a product and it's a SaaS product. However, you can sort of strip down our technology right down to the operating system. So in theory, anyone in the industry can work with us and work from like sort of the bare HSM with the operating system sitting on top and you could code everything on top of that. So we have various discussions in the marketplace. Some people just need the products, like the SaaS product, because they want the end-to-end product that does everything for them. And other people have like more complex security schemes and they want just the hardware and the software of Ledger running at the heart

• 23:30Speaker 01

  of everything that they do in terms of their security, but then they build their own applications on top. So in reality, you could use the operating system and rebuild everything on top, including your blockchain explorers, et cetera, et cetera. And/or you can start using different bricks that Ledger provide to you.

• 23:47Speaker 00

  Got it. And then what can you tell me about the company in terms of number of customers, revenue, units sold? What data points can you share with us?

• 23:56Speaker 01

  We have many data points.

• 23:57Speaker 00

  Better. The more you share, the happier I'll be.

• 24:00Speaker 01

  Exactly. Look, we sold 1.4 million units of our Ledger NOS.

• 24:06Speaker 00

  Wait, in what time period?

• 24:08Speaker 01

  Since we started.

• 24:09Speaker 00

  Since start, okay, got it.

• 24:10Speaker 01

  Yeah.

• 24:11Speaker 00

  That's a lot.

• 24:12Speaker 01

  That's a lot. We had a killer Black Friday. So interestingly, as the price was plunging down, you know, our sales remained very strong. So we believe that the price is not everything and that there's still a lot of interest in the communities and a lot of people still joining the crypto market. So

• 24:30Speaker 00

  Do you know what the numbers were for Black Friday?

• 24:32Speaker 01

  What the numbers?

• 24:33Speaker 00

  Like the number of units you sold?

• 24:35Speaker 01

  I know, but I won't disclose.

• 24:37Speaker 00

  Okay, that's fine.

• 24:37Speaker 01

  No worries. But good. And now actually, I can give you a referential, quite similar to 2017 Black Friday, which says a lot. Yeah.

• 24:47Speaker 00

  Wow, that is pretty impressive. Okay.

• 24:49Speaker 01

  So a little less, to be fair, but but close, like not to a factor of like five times less, actually on par, like, you know, sort of on par. So that's one number. We ship those products in more than 165 countries, which is also a cool number, meaning like everyone on the planet is doing crypto.

• 25:09Speaker 01

  There's not one dark country for us, like where nobody orders our products.

• 25:12Speaker 00

  Yep. It is a very global business.

• 25:15Speaker 01

  Yeah, yeah, a very global business. When it comes to the Volt product, we've already signed and or onboarded 30 clients. So that's good.

• 25:23Speaker 00

  Congratulations.

• 25:24Speaker 01

  And counting. We have more than 500 prospects. And again, it's a very global business. We've, we have this week opened our office in New York, or I mean, announced that we are opening the office in New York. Demetrios is now our global head, global head of Volt, based out of New York, and we have a strong team here. But we equally opened an office in Hong Kong to cover APAC. So for us, it's all about, you know, being a global tech provider for this industry. And interestingly enough, like we have great conversations in Europe, in the US, in APAC, everywhere, same discussions. So, you know, to, to, you know, to testify that the crypto market, whether it's retail or B2B, is truly global.

• 26:07Speaker 00

  Got it. And where do you guys want to go next? Right? So you've got a product that I think people like. They are buying, obviously. They feel like it secures their crypto assets. Today, it is mostly focused on support of cryptocurrencies. How many do you guys support?

• 26:28Speaker 01

  That's a great question. We have a live page to say how many we support. I don't know, like a lot.

• 26:32Speaker 00

  A lot, okay. And do you support all like ERC20 tokens? So when these tokenized securities and stuff come out, you also be able to do that? Or is it more specific around each individual token?

• 26:45Speaker 01

  No, I mean, the idea is to support everything, but the bigger idea, I think, is for us, it's a, it's an open platform. I mean, part of the platform is open. So the latest tokens that, that we are supporting have actually, like the applications have actually been coded by third-party developers that code on top of our platform. And then, of course, we, we vet and we approve. The application, just to make sure it's running smoothly on our operating system. But technically, anyone can develop their own app. So any community that has a new coin and that want that new coin to be supported by Ledger, today can actually do it. They join our Slack for developer and you have a team there that is helping them design the code.

• 27:25Speaker 00

  Got it. And then, you know, five years from now, what is your hope for Ledger in terms of what does it look like? Is it still a security company? And you guys have just gotten bigger and more global. Do you envision adding other business lines or kind of other areas to expand into? What's that look like, you know, kind of five years out?

• 27:42Speaker 01

  Yeah, so there is another business line that we're already doing, which is machines, IOT. So we call it IOT right now. We didn't find a better name. But, you know, I think the world, because of crypto, the world, we just shifted into a new world. And this is the world of critical digital assets. There are many digital assets that you don't want to lose now. I give you one example that has nothing to do with crypto. But if you're, if you have a pacemaker and that pacemaker becomes a connected object and is connected online for many good reasons, like, you know, your doctor gets a live feed of your heart, et cetera, et cetera. You really don't want that pacemaker to be hacked and stopped because then you die. And until very recently, this was not even a problem.

• 28:25Speaker 01

  And so there is a big joke in IOT to say there is no S. The S of security doesn't exist in IOT because we've all seen like the Silicon Valley episode where, you know, IOT gets hacked, et cetera. But this is reality. Many IOTs objects have been hacked. And so it's not just IOTs to say that those critical, those critical digital objects are coming to life now. You know, crypto is one, but like your heart being hacked. Imagine like autonomous cars driving in New York and suddenly someone hacks into the system and gets all the cars to crash, you know, in a world and kill everyone. You know, there is that. And so the vision of Ledger is we're going to be the company to secure those critical digital assets.

• 29:07Speaker 01

  So if you work in a company and you have that problem and you're a sane paranoid, like you're going to come to us and make sure that you secure. Security scheme is actually the best that it can be. And today, we believe that for today and for the next five years, we probably have the best technology that is sort of reliable, always online, protected by hardware and software, and that can be integrated in any kind of, any kind of device. Because the hard thing with security, you know, we come from that industry and we have strong security engineers within the company. The difficulty with security and the way it's been done in the past is you secure object by object. So every object is going to have one security scheme and sort of one software and one operating system running into it. And we are sort of building the platform to secure it all. So that's going to be interesting.

• 29:51Speaker 01

  And the interesting thing is third-party developers will be able to code on top. And so that's very new in security as well. Usually, security, I don't tell you what I do. You trust me that I'm good and it will work. Trust me. In our case, and it's not exactly true, but then you go through certification, etc. In our case, we will go through certification, but also part of the platform will be open for third parties to develop on top with the certification that is going to be secure. So that opens many very exciting opportunities and possibilities for the future, where anything will be able to be secured with the ledger operating system and applications will be whatever the coders make them.

• 30:31Speaker 00

  Yeah, it's fascinating that you guys are going outside of crypto, right? Because of all these other kind of, you know, critical digital devices. The Pacemaker makes a lot of sense. What other types of products fall in that category? You may not even be addressing them yet, but just like, what are the other types of products in that mission, critical digital devices?

• 30:50Speaker 01

  Yeah, I mean, the Pacemaker example is to say that it doesn't need to be crypto. Like, whatever has value and however you define value has to be protected very securely in the future. But I can give you another example that has more to do with crypto and is also very interesting and shows why crypto is going to have a strong impact on our societies. The tokenization of energy, whether it's a molecule of, you know, of oil, electricity, water, like, all of this is very interesting because energy is being traded every day. And yet, the way that we account for that trading is Is very light, like the technologies are not great. So typically, we started the partnership with a utility company in France where Ledger is building the technology to

• 31:34Speaker 01

  to to be a certificate of origin of of the energy. So the way it works is like every windmill, I'm gonna make it simple. Every windmill in Europe, at some point, will have a ledger element on it. And when the windmill will produce one megawatt of green energy, it will go through the ledger device that will authenticate the fact that it's one megawatt of green energy and send that information onto a blockchain to produce a green token. Then then we'll be able to be traded by traders. So if you want to make sure to buy green energy, you will buy those tokens.

• 32:04Speaker 00

  It's really what you're doing there is you're not only validating the amount of energy, but you're validating the quality or the type of energy that is being being created. And I'm guessing that you can do things like geography, time of day, you know, I don't know what type of regulation, carbon credit, you know, all kinds of things that you can actually code into that token based on your kind of point of generation device that's generating that data.

• 32:29Speaker 01

  Yeah, completely.

• 32:30Speaker 00

  Yeah, very, very cool. Okay. And then what's the areas of crypto specifically that you think are really interesting, but maybe people aren't building companies in, right? So so obviously you got involved in Ledger because somebody pitched you on an idea. You got excited about it. You you invest in eventually join the company. What are those areas today that you're like, man, if somebody pitched me on X, Y, or Z, I think that would be really interesting to to see somebody build a huge company there.

• 32:58Speaker 01

  So I think that still lots need to be done in data, like, you know, with all the

• 33:02Speaker 00

  You love data. I love it.

• 33:04Speaker 01

  Data is cool because, and especially in the crypto world, all this data is available, like, so you can really do a lot of cool things with it. I don't think, you know, companies are doing enough, you know, my company, KaiCo, I think is doing good right now, but I think we could definitely do better. I think there's a big play in data and when you see where the data companies are at right now, I think it's good but could do better. So if someone would came with a grand vision of building this big data company, I think it would make a lot of sense for the industry because there are so many products. That you can build indexes, you know, you know, how to forecast the price, like, you know, a lot of intelligence on on the data that you should, that the industry should build. So so I'm working hard on that matter also with Kyco, but but if someone has a

• 33:47Speaker 01

  super cool ideas, I'm willing to to to look at it and to to invest. But I think data is is going to be key for this industry. I think there are cool projects coming. I think, you know, delegated proof of stake, proof of stake, like, you know, we're gonna watch this very closely because it's an intriguing intriguing part of the space. Everything is side chains. We, I don't know, Lightning Liquid, all of this is is very cool. So companies that are working on Lightning, you know, we look at them a lot because we believe it's important for the future of this industry. And I'm curious about atomic swaps, you know.

• 34:22Speaker 00

  Why?

• 34:23Speaker 01

  Personally. I don't know, it just, right now, it doesn't work so well, but it feels that.

• 34:29Speaker 00

  If it did, it'd be important?

• 34:31Speaker 01

  It could be important, you know, because finally, you know, the, you know, swapping those coins, like, you know, with that, having to go through an exchange, a centralized exchange, etc., etc. Everything that is going towards the centralization, I think, is interesting. Everything that goes towards centralization and rebuilding the old economy with with these new tokens, I think is less interesting personally, but.

• 34:51Speaker 00

  I think that's fair. All right. Before I end, I usually do a like a rapid fire round of questions, and then I end with letting you ask me a question. So think about that while I fire some of these off.

• 35:02Speaker 01

  Oh, man.

• 35:02Speaker 00

  What uh, what do you think the most important company in crypto is other than Ledger?

• 35:07Speaker 01

  Another great company in crypto?

• 35:10Speaker 00

  The most important?

• 35:11Speaker 01

  The most important company in crypto other than Ledger. Wow. So, man, that's a very tough question. And now I'm gonna sound like, you know, I'm Ledger maniac and Ledger only, but.

• 35:25Speaker 00

  You can't say Ledger.

• 35:26Speaker 01

  I can't say Ledger. I won't say Ledger. I want to say, can I ask you the question before, you know, while I think about this one?

• 35:31Speaker 00

  Okay.

• 35:32Speaker 01

  So.

• 35:33Speaker 00

  Oh, you want to ask? Okay, all right. You ask me the question while you're thinking.

• 35:36Speaker 01

  Yeah. So the question is, you know, what is very exciting, like, because you interview a lot of people, etc. So what seems to be like 2019 trend, like, if you had to say one trend, what do you think it is?

• 35:50Speaker 00

  It's hard to say what the trend is. So I'm not going to try to call the trend. I'm going to tell you what I'm personally interested in based on conversations I've had with people and what I think it more and more people are shifting towards or looking at, right? I think it's fair. I think the timing's hard. That's why that's why I'm kind of answering it this way. The state-backed digital currencies, I think, are going to come. I don't know if they will be successful or not, but I think most people are either oblivious or they're kind of writing them off as, oh, those aren't going to work. I don't think we've yet seen a well-capitalized, well-coordinated nation-state say, ah, blockchain thing's actually pretty interesting. I'm going to create a digital currency that

• 36:33Speaker 00

  looks similar to those digital decentralized currencies you guys have, but we're going to kind of back it and use it for, you know, monetary policy and things like that in the way that we're used to central banks doing. So I think we'll see more of that on a 12, 24, 36 months, but that'll be an interesting thing to look at. Another area that I'm personally interested in, I see more and more people looking at is blockchain bonds or smart bonds. So the idea of taking, you know, kind of traditional fixed income type assets, but creating digitally native bonds, right? So that they're actually issued on the blockchain and all the things that you can do with that and around making faster, cheaper, more global, more secure, etc. And then the third thing, and this sounds, you know, pretty stupid, but but I actually think

• 37:19Speaker 00

  the trend of 2019 is just going to be building sustainable businesses. Right? And so if you think of 17 was like the year of the ICO, everyone, it was fundraising. And then that was like the the finish line for a lot of these projects was let's make this big announcement about fundraising. Then 2018, it was the like retraction back to not even sanity, but like a true bear market, right? And I think, you know, we're starting, we're recording this bitcoins at like $4,000. So we're like, we're around the capitulation point for many people. And I think, you know, a lot of tourists got washed out, etc. But I think what happens through the second half of 18 and going into 19 is the real entrepreneurs,

• 37:58Speaker 00

  they're not shaken by any of this. They're still building. They're going to focus on building companies that have cash flow, profitability. They're going to get monetized doing going public or acquired and and you're going to see some really big kind of behemoths emerge. We probably can't tell who they are until, you know. Twenty one, twenty two, twenty three, but they're getting built today, right into two thousand nineteen. And so I think that's going to be a trend in hindsight. We're going to look back and say, oh, two thousand nineteen is really the year that a lot of those companies got built, which I think is a good thing and needed by the industry.

• 38:31Speaker 01

  Yeah, so I agree with everything you said, and actually, it's a great segue to, so I can give you my answer on your question. So I think right now I don't sort of rate anyone, including Ledger. So your question is hard because you're like, oh, who do you think is great? Like, I think we're all average right now, and I include Ledger into this. I think there is so much that we can do. I mean, what service did you open recently that is doing crypto where you were like, oh, my God, like, you know, this is going to change my life? Not many, like, you know, most services are very clunky. I have a list of improvements on our own services that is, you know, so long and we keep adding things, etc. So, like you say, I think the bar market is an exceptional moment for this industry.

• 39:16Speaker 01

  And because it forces you to do the right things and to actually build great products that make a difference. And when you can look at them and actually be proud. And so I think no one is doing an A plus job right now. Like, you know, there are a lot of B companies and we are thriving to become A's. So I think a few teams are doing some really good, solid things in the market, but we're not quite where the market needs to be and no one has a killer product right now. And again, you know, we think Ledger has cool technology, but we also realize the amount of work that we still need to do in order to become the company that we want to become. And so I think that everyone is sort of like that.

• 39:57Speaker 01

  I mean, other big companies are sort of like in that game, like, you know, they're doing okay, but they're not doing amazing. Or I don't think anyone is doing amazing. But that's a cheap way of answering your question. So now I'm going to tell you like who I like apart from Ledger, but I thought CryptoKitties was really cool. I think it was an amazing moment, you know, broke the Ethereum, you know, protocol and having like this CryptoKitties remind me of my childhood with the Tamagotchi, etc. I thought that was a cool crypto experience.

• 40:29Speaker 00

  I love it. What's the most important book you've ever read?

• 40:33Speaker 01

  The Lord of the Rings.

• 40:34Speaker 00

  Why?

• 40:35Speaker 01

  Why? Because.

• 40:38Speaker 01

  Because it's a fantastic book to travel. Actually, two books, Lord of the Rings and Foundation by Asimov. Foundation by Asimov actually is a book that helps me every day. So Lord of the Rings, because I like to go into evade in different countries, etc. You know, I think an entrepreneur needs that. Not that I'm the best entrepreneur on the planet, but like, you know, I think like to be able to protect yourself in a new world and that's what Lord of the Rings does really well. But equally, Asimov's Foundation is an amazing book and it's something that helps me every day because they have this thing of, and I read it in French, I'm sorry, but psychohistory, where there are mathematicians that do these equations to predict the future. And I think it's a very interesting idea. And so they predict the future and sometimes the future doesn't

• 41:23Speaker 01

  quite happen the way they predicted it. So they start the equation again and predict another future. And so for me, I always look at my life in the next five years, next 10 years. I always have a plan for five years, 10 years. After that, it's too long because you have a lot of accidents that are happening. And so Asimov, actually in Tolkien, were strong readings as a kid.

• 41:44Speaker 00

  I love it. Let's admit that there's aliens. So there's a non-crypto question, right? So aliens exist somewhere out there in the world. Most of the times, they are presented as human comparables, right? But you never really see alien animals or alien pets. Do you think that those exist? Or do you think it's all just one homogeneous species out there as aliens?

• 42:10Speaker 01

  So interestingly, I read recently that octopuses were actually not from this planet. There's actually a real theory that's going on.

• 42:18Speaker 00

  Wait, what?

• 42:19Speaker 01

  You know, the octopus.

• 42:20Speaker 00

  Yeah, the octopus in the ocean, yep.

• 42:21Speaker 01

  Octopus in the ocean. There's actually very strong and academic research has been done on the octopus. And, you know, some people have the theory that the octopus could be an alien form. Because of the way, it's like, I don't have the, I don't remember the details, but because of the way like octopuses are, which is very different from any other species living creature on the planet.

• 42:42Speaker 00

  You know what you just made me think of, and I've never thought about this before. A lot of times people say, you know, are the aliens already here, right? Meaning, are they here on Earth? I've never thought about, are the aliens here, but they just live under the sea?

• 42:55Speaker 01

  Yeah. And so, but apparently there's someone that has this theory of the, you know, octopus being like a creature from the space that was actually dropped on Earth because they have such a structure that they believe it's, it's, it's too different to be actually from here. So yeah, maybe, you know.

• 43:11Speaker 00

  That's the wildest answer anyone's said. I love that answer.

• 43:15Speaker 01

  And my wife hates octopus. So like she, when I told her that, she was like, told you so. She's like, this disgusting animal, like you can't be from this planet. She's got a, like she got a deep fear.

• 43:26Speaker 00

  Do they, do they serve octopus for food in France?

• 43:30Speaker 01

  They do. I actually own a restaurant in Paris and we do serve octopus. It's my wife's there.

• 43:37Speaker 00

  Oh, okay. She doesn't like it, hasn't tried it?

• 43:39Speaker 01

  No, no, no.

• 43:39Speaker 00

  All right. Maybe we'll all come to Paris and we'll, we'll go and we'll eat some octopus.

• 43:43Speaker 01

  You're invited.

• 43:44Speaker 00

  Yeah. I'd love to tell people I ate alien. That'd be great.

• 43:49Speaker 00

  All right, man. No, thank you so much for coming. This is awesome. I'm a big fan of what you guys are doing at Ledger and so we'll have to do this again as you guys keep growing.

• 43:55Speaker 01

  Sure. Thank you for having me.

• 43:57Speaker 00

  Absolutely.

• 43:59Speaker 00

  All right. You reached the end of the podcast. Congratulations. I appreciate you listening all the way to the end. You deserve a trophy. But before I hand out the virtual trophies, remember to go visit blockfi.com/pomp. They're the crypto lending leader in the U.S. They do it in 45 states, interest rates as low as 8%. And you can use the U.S. dollar funded directly to your bank account to do whatever you want. You should definitely go visit blockfi.com/pomp. You know you want to do it, so just do it. Blockfi.com/pomp.

• 44:30Speaker 00

  Hey, everyone. Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify and other podcast charts, please do us a favor and rate, review and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.