ETFs Changed Bitcoin’s Narrative Overnight – Ledger CEO ScrgruppEn

Over the past 12 months, some investors have learned the hard way why they need to take their cryptocurrencies offline. Those who held Bitcoin (BTC) and altcoins on cryptocurrency exchanges like FTX lost control of their assets, sometimes forever. Events have drawn a red line under the popular cryptocurrency saying: “Not your keys, not your coins“.

However, FTX’s loss was a gain for hardware wallet maker Ledger. The Bahamas-based exchange’s November 2022 bankruptcy filing delivered to Ledger “our biggest sales day ever,” and “November turned out to be our biggest sales month on record,” Ian Rogers, the company’s chief experience officer, told Cointelegraph. “Launching.”

Paris-based Ledger has seen a strong growth curve recently, although the past year has not been without controversy. In May, for example, the company sparked industry ire when it launched a new service for storing secret recovery phrases called Ledger Recover. However, it is still one of the most popular and widely used cryptocurrency wallet makers in the world.

Cointelegraph recently I met with Rogers and Ledger CEO Pascal Gauthier in New York City to discuss the new cryptocurrency climate in the US, the latest trends in cryptocurrency storage and the differences in doing business in the US and Europe, among other topics.

Cointelegraph: Many believe that the cryptocurrency/blockchain sector is still stagnant or moving sideways at best, but do you see reasons to cheer even here in the US?

Pascal GauthierWhat happened in 2023 – and almost no one noticed – is a change in tone regarding Bitcoin. When the SEC [Securities and Exchange Commission] It implied that Bitcoin was an instrument and/or commodity – not a security [like other altcoins] -This led to two things: Large companies like BlackRock started creating their own ETFs [exchange-traded fund] The application process, then the media narrative around Bitcoin changed almost overnight.

Come 2023, Bitcoin was for drug dealers, terrorists, bad for the planet, etc. – and suddenly it was completely kosher. Suddenly the largest financial institutions in the United States were dealing in Bitcoin.

CT: Was BlackRock’s implementation of a Bitcoin ETF in the spot market a turning point?

s: Big money is coming to cryptocurrencies; It has been announced. It may take a few years to finally arrive, but if you look at Fidelity, BlackRock, Vanguard…

CT: What about US regulations? Are they still an obstacle?

PG: The next administration will decide the fate of cryptocurrencies in the United States. If Biden remains in power, this administration may continue its aggressive policies towards cryptocurrencies. If it’s someone else, we’ll see what happens.

CT: Let’s talk about offline storage devices. Mark Cuban said in 2022 that cryptocurrency wallets were “terrible.” Did he have a point?

PG: Many of our early customers used our products [cold wallet] “Buy and hold” product. You will buy a ledger [device]You put your bitcoin in it, then you put it somewhere and forget about it. But that’s not what we recommend now.

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Today, you can connect your wallet to Web3 and use your private keys to do many things, including buying, selling, swapping, and staking cryptocurrencies, as well as transacting with decentralized applications. [decentralized applications] And even declare your taxes.

CT: On a scale of 1 to 10, where would you place cold wallets today in terms of user experience (UX)?

s: For industry, it is three. For Ledger, it’s probably number four – and we’re striving to be number 10. The industry has a lot to do in terms of user experience and UI [user interface].

Ian Rogers: Your hardware and software stack today isn’t just about hardware and software. It’s a comprehensive experience.

When you buy an Apple iPhone, for example, you’re not buying a piece of hardware; You’re buying the Apple experience. We would eventually like it to be the same with Ledger. Our approach is to provide the absolute best possible user experience without compromising security or self-protection.

CT: There are still user experience issues like the 24 keywords you need to recover your private key if you lose your Ledger device. Some users go to great lengths to protect these words, even engraving them on steel in case their house burns down. Doesn’t this seem kind of extreme?

s: It’s a little backwards to have something like a metal plate in your house. It’s not the 21st century. But we came up with a solution to this.

When you use a Ledger product, you will end up with your own Ledger device and a PIN. And you’ll also have those 24 words that will essentially become your master password. You need to keep those 24 words safe, and this He is A huge barrier to entry for many people. They don’t trust themselves with these 24 words. They don’t trust themselves not to lose them.

So, we came up with a service called Ledger Recover [i.e., an optional paid subscription service provided by Coincover that is expected to launch in October] To deal with that. It allows you to split your private key into three encrypted parts and then send it to Three different trustees. They can’t do anything with [single] Encrypted fragment. Only you can put the 24 words back together if necessary.

CT: Don’t we already have something like that with “social recovery,” where are you? let Redeem your cold wallet to several friends or “guardians?”

s: Social recovery doesn’t really work. We’ve done something like social recovery – but with businesses [i.e., Ledger, Coincover and EscrowTech]. You will have to provide your ID if you want to start the process of redeeming the item.

CT: You were criticized when you first announced Ledger Recover in May. then, The launch has been postponed Amid “backlash.” There were security concerns. These three holding companies can rebuild your private key, people said.

PG: There is still a lot of education to be done so that people really understand how security works. People said [at that time] That it might be a good product if it were more transparent and easier to adopt. Therefore, we did not go live in May, as planned, in order to make the product “open source,” which adds something in terms of transparency but not security.

CT: But couldn’t three subcustodians, at least in theory, cooperate and rebuild your privacy key?

s: it’s not possible. They do not have the tools to decrypt and reconstruct.

CT: Moving on to Ledger’s business model, do you sometimes worry that as large institutions like Fidelity Investments or banks like BNY Mellon enter the cryptocurrency space, users might simply park their crypto with them? If they were breached, those giant detention facilities would make them whole again. Or at least that’s the thinking sometimes.

PG: We are a pure technology company. So when Fidelity decides to become… [retail] Cryptocurators, they will potentially come to us and buy some of our technology to build their own technology stack.

CT: Your work spans several continents. You are based in France, but sell many of your devices in the United States. You have first-hand experience in these two business climates – the US and Europe. Are there major differences when it comes to cryptocurrencies?

s: Europe tends to over-regulate or regulate too quickly, in general. Sometimes people say, well, you know, Europe has clarity because it has Mica [Markets in Crypto-Assets, the EU’s new crypto legislation]While in the United States there is a lack of clarity and a lot of lawsuits.

But in the United States, the way the law is designed is slow and bumpy. It takes time for laws to change in the United States, but when change finally comes, it is often for the better.

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If you look at the world’s biggest tech champions, they’re mostly American or Chinese. Zero is European.

CT: Do you associate strict regulation with a lack of innovation?

PG: It is difficult to say whether they are directly related, but Europe has always had a heavy hand when it comes to taxation and regulation.

Ian Rogers: To me, there is no doubt that they are related. In LVMH [the French luxury goods conglomerate where Rogers served as chief digital officer for five years]We have worked with a lot of startups. Every European startup wanted to get to the US or China to “scale up” before returning to Europe. Europe is not a good market if you are a startup.

CT: But Ledger is still positive about the future of cryptocurrencies and blockchain technology in general?

s:Things are not necessarily what they seem. We’ve had [late] French President François Mitterrand, who He said: “Give time to time.” Something is happening now, and only the future can explain what is happening.