How a French startup became the gold standard of crypto security
The recent unicorn has leveraged its pragmatism, a rare trait in the crypto world, to make its way to the top.
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Crypto’s return to reality
The recent FTX debacle vindicated crypto’s original vision. There should be a peer-to-peer transaction system, where people themselves have full custody over the money they own. Third parties, whether they be FTX, the Lebanese Central Bank, or Lehman Brothers, all contain the inherent risk of losing the money they are supposed to safeguard. While the examples cited above are extreme, the point remains: people should at least have the option for self-custody of their assets.
The rapid development of crypto, and the technical complexities of buying it, have led to the emergence of a myriad of exchanges built to facilitate the process. These exchanges often enable their customers to store the crypto they own directly on the exchange itself. The process is simple, can be done through one’s computer, and isn’t far removed from the way you would access your online bank account.
Storing crypto directly on an exchange makes it vulnerable to a plethora of issues the customer has no power over. Cyberattacks against the exchange or straight-up theft carried out by the exchange’s owner put crypto stored on an exchange at risk. Theft is shocking, as it severely thwarts the development of a genuinely interesting sector. SBF’s (FTX’s founder) sentence and subsequent legislative actions will determine the judiciary’s resolve to sensibly regulate crypto.
A more secure solution to storing one’s crypto exists in the form of “cold wallets”, which are not connected to the internet and shield users from the two issues described above. Cyberattacks are rendered useless if the wallet is offline, and the crypto is in your custody, making you the only person responsible if you misuse it. These cold wallets generally take the form of hardware devices resembling USB keys, which enable a user to access their crypto’s private keys through a pin and a 24-word-seed phrase. This is what Ledger does.