In Conversation with Pascal Gauthier, CEO, Ledger

Since its creation in 2014, Ledger (in which FirstMark is a very proud investor) has rapidly evolved to become one of the key global players in the entire crypto and web3 ecosystem.

Ledger is mostly known as the world’s top provider of hardware wallets. Over 15% of the world’s crypto assets are secured through Ledger Nanos, with more than 4 millions units already sold in 180 countries. 

But Ledger goes much beyond hardware, providing apps and services through Ledger Live, enterprise solutions, and more.

It was great to get a chance to chat with Ledger’s CEO, Pascal Gauthier, in the context of Crypto Driven.

We had a wide ranging conversation, covering in particular:

  • the fundamental benefits of hardware to secure digital assets
  • what core technology exists within a Ledger device
  • Ledger Live, the company’s app and software platform for buying, selling, swaping and staking crypto
  • Ledger Enterprise, the company’s B2B offering
  • Some of the new products announced at Ledger’s bi-annual flagship event, Ledger Op3n, including Ledger Market, a new secure NFT Platform,  and Ledger Enterprise Create, a secure platform for brands to scale their Web3 operations with a key focus on NFTs, giving them the treasury management, NFT creation and ownership capabilities they need.

Below is the video and full transcript.

(Crypto Driven is a team effort – many thanks to my FirstMark colleagues Dan Kozikowski, Katie Mills and Diego Guttierez)



Matt Turck (00:04):

Ledger is many things, but it’s mostly known as the world’s number one hardware wallet. What is thee fundamental benefit of having a hardware wallet?

Pascal Gauthier (00:15):

There are what hardware wallets are today, and what they will be tomorrow. On what they are today, the problem is very simple, I would say if you. If you own a Bitcoin, Ethereum, an NFT, to own that Bitcoin, you own a cryptographic private key. And that private key is a secret. And so you under everybody understands that if you share your secret with someone, or if someone takes you secret, then it’s no longer a secret. And therefore with the private key, you can access the Bitcoin that is in the blockchain and move it to an address that you wouldn’t know. So taking your private key or taking control of your private key, copying your private key is the way to steal your crypto. And so, very simply, I guess, what you have on your credit card here, the chip and pin technology, this is what we use to protect your secrets.

Pascal Gauthier (01:11):

And so right now, hardware wallet and Ledger is the best form of security that there is in the market to protect secrets. We do the same for enterprise, by the way, with a slightly different hardware. It’s called a hardware security model. It looks like it’s a secure server, but it’s the same problem. So secure hardware and firmware inside is the best way to protect your secrets today and to interact with your secrets. Because the hardware, what it does, of course, when you don’t touch it, it protects your secrets at rest. But also, now when you want to engage with the blockchain and make a transaction, it protects your secrets when you do the connectivity. And so it’s often mistaken for cold storage, which it is when it’s not connected.

Pascal Gauthier (01:58):

But as soon as you connect your hardware online, it is actually online, but the hardware actually protects you from online intrusion. And so you can actually do transactions with your hardware wallet with the same level of security than when you’re not using your crypto, basically. So it’s very different from cold storage, where if you put something in cold storage, meaning you put your phone disconnected from the web in a dark room, the problem becomes, okay, now I need to make a transaction. I need to connect that phone again to the internet. This is when the problem happens. So hardware wallet, it gives you the same security, whether it’s in cold or hot, whether you want it becomes cold or hot. So that’s what we do.

Pascal Gauthier (02:35):

If you think about the future, the problem that we’re trying to solve is a very difficult problem. If you understand crypto and Web 3 and tokenization of everything is basically, there are many things that will become token, should become token and will be your digital self. The Bitcoin was an invention of having, it’s the first time that you could own something digital. It’s a big invention. And so from that invention derives many other things, and you can think even your ID, at some point you could own your ID. Right now, your ID is a passport, and tomorrow your ID could be, or the hash of your ID could be in the Ledger. And what you flash when you go through borders is actually that hash to prove your identity and share your identity with the authorities. Think about ID, think about medical records, think about everything that is very important to you that could be in the digital form and that you want to protect.

Pascal Gauthier (03:36):

Or if you think about that phones today or computers have not been designed for security. We’ve all used phones and computers, and we know that they’re being hacked all the time. And if you doubt what I’m saying right now, this is too short moment to demonstrate it, but document yourself and you’ll see that your phone and your computers are being hacked all the time. And it’s very easy to hack them today. And especially it’s going to get easier and easier if you put a lot of value on them. So if you put a lot of value, there is even a higher incentive for the hackers to come and hack it. And so the whole industry is not just Ledger, it’s not just hardware wallets, it’s not just Bitcoin, it’s for everything that is coming, the whole industry has to redesign hardware with security at first.

Pascal Gauthier (04:22):

Web revolutions are always driven by hardware. Web 1 was PC, Web 2 was the iPhone, and Web 3 will be Ledger. Web 3 is a revolution of value, it’s the web of value. And so web of value relies on private keys and private keys need to be secure. And so Ledger will be the new preferred hardware to secure this. So right now it looks like a sticks, tomorrow it looks something very different. But fundamentally, this is the hard problem that Ledger is trying to solve, because you need to do this at scale.

Matt Turck (04:51):

Yep. Awesome. So going back to what it is today, do you want to dive in into what happens beyond the scenes, in terms of what actually happens in a Ledger from a core technology perspective?

Pascal Gauthier (05:04):

So what Ledger is right now is a validator. So actually what happened is the usability and the way that you’re going to make your transactions buy, sell, swap, stake, all this is going to happen on Ledger Live, which is an application that is going to [inaudible 00:05:16]

Matt Turck (05:16):

Yeah. We’ll talk about it in a second. Yeah.

Pascal Gauthier (05:18):

… on your phone. What your Ledger hardware, what it is the way to connect to your Ledger Live, to connect your private keys to your Ledger Live and validate the transaction. So what a Ledger is really a validator. And so it has a couple of functionalities that are very important. It has a screen, so what you see is what you sign. You cannot trust the screen of your computer or of your phone. So you can only trust the screen of your Ledger. And it has two buttons to validate your transaction. So basically what you see is what you sign and Validation, that’s what a Ledger does. In order to do it, then it gets more complex because it has the secure elements, it’s a chip that has been designed specifically for security.

Pascal Gauthier (05:56):

If you actually look at it with a microscope, you’ll see that it looks like a little city. And it’s actually real hardware defenses against any form of attack that could come on the secure elements. The different type of attacks that you can place on the secure elements are sort of online attacks like software attacks, but also laser attacks and various different kind of attacks. Actually, if you go on our YouTube channel, there is really good content called “Enter the Dungeon”, where we explain every possible attack that you can do on hardware. And the secure element is the best way to defend yourself from all of these attacks. Inside the hardware you have firmware, you have an operating system, and it’s the combination of the operating system and the hardware that makes the whole security.

Pascal Gauthier (06:46):

The operating system is something that manages the different blockchain protocols, because the different blockchain protocols have different crypto elliptic curves. And so our operating system is the only one in the world that actually manages most, if not all blockchain elliptic curves, crypto elective curves right now. And so that’s actually quite a thing if you think about it. If you think about operating systems, not many companies in the world actually master the ability to have their own operating system and connect it to many public protocols the way that we do.

Pascal Gauthier (07:27):

And so that security piece, the hardware and the firmware combined, has to do two things really well. First, it needs to have space, more space, and you need to store important information and the important pieces of the code within the hardware security. And so when it was Bitcoin only, you can understand that you only need a certain amount of space. And now it’s Bitcoin, Ethereum, and every other blockchain. And every blockchain is getting sort of bigger by the day or everything that you would ask the elliptic curve to do, before it was Bitcoin send and receive, and now it’s sort of – okay, let’s send, receive, stake and dedication and all of these things. And so you need more and more space within the secure element just to cater to every blockchain and every feature that the blockchain trigger. And there are more and more. Also, you need speed because you need a secure element to process more and more information and go fast because you need to connect very quickly to these blockchains, preferably. And so these are the two things that the security element in the operating system are trying to do very well. The rest is in the software.

Matt Turck (08:54):

Great. So Ledger offers several devices. What are those devices, and which one would you recommend for what kind of user?

Pascal Gauthier (09:06):

Look, right now, we get the Nano S Plus and the Nano X. First of all, I recommend every user to get two. So get a Nano X and a Nano S Plus, one as your primary and the other as a backup. Because usually, if you want to access your crypto, the last thing that you want is to realize that you’ve sort of… The Nano products and the Ledger product have been designed so technically you can leave them on the table, walk away and nothing will happen. No one has ever broke one of our products. And physical access to a Ledger doesn’t give you access to the private keys.

Matt Turck (09:42):

Yeah. Do you want to to dispel that myth once and forever? Because even within the crypto world there are still people that think that if you lose your Ledger, you lose your keys. So just as an aside, do you want to squash that once and for all?

Pascal Gauthier (09:59):

Sure. So when you set up your Ledger, what you end up with is a device with a pin code, and then you end up with 24 words. If you lose the two, we’re sorry for you loss. You cannot lose the two. And you’re responsible for the safe keeping of these two items. If you lose one or the other, you can always recover. The one that you really don’t want to lose is the 24 words, because the 24 words is your master password to access your funds. And so if you lose the device, it’s okay. You can always reorder one device and reenter the 24 words in the new device. And you just sort of like restart your account type of thing. And so that’s perfectly okay. And the product has been designed exactly for this.

Pascal Gauthier (10:44):

I will remember everyone that you never enter your 24 words anywhere else but in your Ledger. You would never type your 24 words on a computer or on the phone, that’s completely insecure. So only on your Ledger. You can re-enter your 24 words and voila, you have access back to your funds. By the way, those 24 words can be also used to regenerate your account with other devices of other manufacturers, or even on the software web, should you want to do that, which will be a mistake. And that means that your 24 words, that’s what gives you access to your money. Actually, you’re not dependent on Ledger. Ledger can go bankrupt tomorrow. First of all, the Nanos will keep on working and you’ll be accessed to connect your Nano to any other software, even if Ledger Live is not working. But also you can use the 24 words to move your money to another wallet provider, I would say.

Matt Turck (11:41):

And what do you say to people who feel that they cannot trust themselves with such important information?

Pascal Gauthier (11:49):

Well, first of all, I would say that if you don’t think you can trust yourself, yes, don’t use a Ledger. That’s one thing, and that’s perfectly okay. There is no problem, there is no shame. What’s good for you is good for you, and what’s not good for you is not good for you. So we certainly don’t want to force anyone into anything. Once you decide that it’s important for you to have access to your funds and to hold your funds, then we think Ledger is your best option. And there we will help you. There is a lot of educational content that we’ve prepared for you, Ledger Academy, our YouTube channel, you should really check it out. And so if you’re not sure that you can trust yourself, check out the content first.

Pascal Gauthier (12:29):

All of this is a journey, you’re going to need to unlearn what you think you know and learn new things. And so we build this content and this educational content everywhere. The last thing that we did is to build educational content in the metaverse in partnership with… That also includes the partnership that we just done with Sandbox, and so education all the way in the metaverse, because education is probably the most important thing that we have to do for our users. So once you have your education, probably you feel better about your ability to actually control this. In the future, we will always make this easier to use. And so for even people that don’t trust themselves with keeping the 24 words, we’ll probably come to market then, we will announce it soon with detail, but we’ll come to market with a solution for that, the safe keeping of the 24 words, in something where no one will never have access to your 24 words. And so we’ll share the 24 words, but if you needed the 24 words, you have one red button to push and then we’ll send them back to you. And so we’re trying to really make sure that the user in the end is not the single point of failure of the system, but however, the user is in control. So with control comes responsibility.

Matt Turck (13:46):

Great. Can you talk about the roadmap a little bit for the devices?

Pascal Gauthier (13:52):

Well, so I can tell you that, yes, we have a big roadmap. And we say this many times, no, we cannot say yet what it is, but it’s coming out. But yes, it’s coming out sort of soon. But usually the way that I explain this is think about your phone, and remember your phone in your pocket in 2000, for those who can, and look at your phone now and imagine the difference or realize the difference. And the reason why phones have evolved so much is because the usage is pushing hardware. And before phones had smaller screens and could only make phone calls and eventually play Snake, and now they have bigger screens and they become sort of movie theaters. And this is where you listen to your music, et cetera.

Pascal Gauthier (14:40):

And when you look at the evolution of hardware, it’s always a combination of hardware, firmware, and software. And you try to build an experience around the hardware. If you think about your iPhone, nobody really thinks about the iPhone as a piece of hardware, everybody thinks of the iPhone as an experience. It’s like, this is how I connect to my friends, to my life. And look at how the experience has become so natural. Right now, with the palm of your hand, your sort of connected to everything. And you do it very naturally without thinking that you’re actually using the internet. Most people, when they say, “Oh, I don’t understand crypto,” it’s because it’s normal, crypto is still very geeky today. Think again about how you connected yourself to the internet in 2000, it was very geeky. It was much more difficult than what you do today. You had modems, you had to know IP addresses and do all these things with your computers. Honestly, it wasn’t user friendly. Right now, it’s super user friendly. Nobody thinks about, nobody says, “I don’t understand the internet.”

Pascal Gauthier (15:39):

I can tell you that most people, 99.9% of the people don’t understand the internet technology, but they use the internet. And so what’s going to happen, and the way that we develop products is exactly with this in mind, for people at some point to take a Ledger and just connect to a product that just works and that just renders services that are better for the users than what they would normally have if they stay with something else. And so this is why we think about designing products. And we don’t think too much about technology. We want to hide the technology and bring a product to the market.

Matt Turck (16:10):

Yep. So that’s a perfect segue into the next sort of big area I’d love to talk about, which is the evolution of Ledger as a company from being a hardware manufacturer into more of a platform. And the addition of software and apps, which is very much Ledger Live. When did that start, a couple of years ago?

Pascal Gauthier (16:35):

’17 or ’18. But then the strategy of sort of doubling down on Ledger Live and making Live an open platform, that’s a project that happened starting in ’19. Because we came to the realization that actually what we had developed was the best security platform in the world and that we needed to enhance connectivity to the platform. Was that you’re going to be able to develop every use case on the Ledger software? Of course not. Do we actually want to do this? No, of course not. Because again, we don’t know what’s going to happen in the future. What we know is security will be needed. And so our mission is to bring security and ease of use. And so we really wanted to develop these open platforms so now third parties can very easily code dApps, apps, or anything they want on top of the security platform and enjoy the security platform of Ledger all the way to integrating apps into Ledger Live. And then users sort of go from there and have everything connected to the Ledger that guarantees always the best security and ease of use. This is what happened, and this is what we’ve developed in the past two and a half years.

Matt Turck (17:48):

Can you give more context and examples on this? What can you do on Ledger Live today with what app and what partners?

Pascal Gauthier (17:59):

On Ledger Live, you can buy, sell, swap, stake, and you can do this with sort of various partners, whether it’s CeFi, DeFi. And so we’ve just announced a partnership with FTX, so right now when you swap on Ledger Live, we give you FTX. And FTX US has an option with low fees. But you have Changelly, you have Wire, you have various players on Dexus and DeFi, you have ParaSwap, You have 1inch. We really integrated all these players so you actually don’t have to exit from the security of your Ledger and then come back after you’ve done your trade. You can actually do all of this in one go in your Ledger Live experience.

Pascal Gauthier (18:50):

For staking, we’ve done many things. We’ve launched our own staking infrastructure on Cosmos, for example. For other coins we’ve partners with Figment. And so right now, when you go into Ledger Live, if you want to stake your Solana, it’s probably one of the easiest experiences in the market. It’s like three clicks and your Solana has staked. And then we report back to you on the earnings that you have in the passive income that you’re making on your Solana staking. So all of this is happening, but not just. If you want to declare your tax, there is also an app for this. There is a app for everything. So remember Apple, “There is an app for this.” So the same mentality. Apple has a Web 2 app browser, and we have a Web 3 app browser, basically.

Matt Turck (19:39):

Talk about Ledger Connect. What does that do?

Pascal Gauthier (19:47):

Ledger again, has this is this open mentality. If you want ease of use and comfort of your Ledger, like we have one thing where we integrate everything into Ledger Live, but also we want to be open and we want you to be free. And so if Ledger Live is not your software of choice, first, you can connect your Ledger to many other wallets, software wallets, including Coinbase Wallet, for example, we’ve announced recently our partnership with Coinbase. And we think that’s great. We will sell wallets, it will be the security platform. And if you decide that Coinbase Wallet is a better software wallet for you, fine, but you should always use it with the security of your Ledger. Same with MetaMask, it’s perfectly fine that you use MetaMask, but make sure that the private key is secured by Ledger. And there is a good integration that we’ve done with MetaMask, with Rally, et cetera, et cetera. So most stuff for wallets today are secured by Ledger, and you need hardware security for your software wallet. Please don’t leave your private keys on your phone or on your computer.

Pascal Gauthier (20:50):

But equally, Ledger Connect is something else. The program is Web 3 right now, you have a lot of Web 3 properties where actually to connect to them, it’s very difficult. You need WalletConnect, you need a MetaMask, and then you need a Ledger. So you need several things in order to connect to one value proposition. We decided to make it a lot easier for the user. And so with your Ledger and your Ledger Live, you have an application that will run on Chrome and iOS that allows you very easily to connect your Ledger device directly to the Web 3 app or the Web 3 website that you want to use. And that’s going to be true for sort of all blockchain starting with Ethereum, but also Solana, et cetera. So imagine you go on Magic Eden, you want to do a transaction right now, you’re doing it without the security of your Ledger. Tomorrow, you’ll be very easily able from the browser, you’ll be able to connect your Ledger directly onto Magic Eden, do your transaction and validate with your Ledger. And you won’t need to go all the way back to Ledger Live in order to do that.

Matt Turck (21:56):

You recently had, in New York as part of NFT week, a very successful Ledger Open event. And you made a bunch of announcements, one of which was the launch of an NFT marketplace, Ledger Market, which prioritizes security and transparency. Tell us more about it. What’s the goal? What does it do? What was the thinking behind launching Ledger Market?

Pascal Gauthier (22:30):

Yeah, so Ledger Market, again, our mission is security. And so when we saw the NFT market being formed, we thought, okay, first, NFT as first class citizen on Ledger product was a no brainer. So whether it’s on the consumer side or on the enterprise side, the best security, ease of use in terms of securing NFT and using them, et cetera, you have it on Ledger and Ledger Live, or Ledger Nano and Ledger Live, and Ledger Votes on the other side. Ledger Vote actually offers the minting of your NFT, the governance on top of your NFT, if your a brand. And so we’ve done our part there in terms of minting and security and governance on top of NFT both for consumer and enterprise.

Pascal Gauthier (23:21):

But the thing is, okay, now your NFTs are ready. And so where do I drop them for the first time? And sort of dropping an NFT for the first time is happening today in very unsecure environments. And it’s triggering many wrong behavior in the space, like blind signing everything and waiting for hours on the Discord channel, et cetera, et cetera. So we decided to streamline this experience. On the one side, we have the consumer, on the other side, we have the enterprise. And so they all meet on Ledger Market for the first drop. And so the brands and the businesses will mint and create their NFTs with Ledger Enterprise. And then they’ll drop those NFTs on Ledger Market. And on the other side, very easily, you’ll be able to connect as a consumer and buy those NFTs that will be firstly dropped there. In order to have premium access, we are also launching a mint pass. So there are 10,000 mint passes that will be sold, I think in a few days now, I think it’s July 22nd. And we have a waiting list of 135,000 people today.

Matt Turck (24:28):

And you have some exciting upcoming collaborations, right, with some key artists and brands?

Pascal Gauthier (24:37):

Yeah. We’ve announced like a bunch of key artists and brands at the Ledger Op3n. Tiger, as a brand, and Dead Fellas as one of the communities that we’re working with. But the list is long and is getting longer by the day, and it’s going to be very exciting. And we will have drops every month, and it’s going to be at first like a curated marketplace. It’s not everyone will be able to drop on Ledger Market. In time, probably yes. But right now, we’ll be focusing on the partnerships that we think are the best for the market and consumers right now.

Matt Turck (25:14):

So let’s turn our attention to a part of the business that I think fewer people are aware of, which is Ledger Enterprise, which is a fast growing enterprise business. What does that do? What use cases do you cover? What is the product there?

Pascal Gauthier (25:34):

Yeah, so companies, whether they’re financial businesses or regular businesses, at some point will interact with crypto. And the question becomes, how do I do it? There is always two choices. Either I don’t touch it and I trust the custodian to do it, or I have to manage it myself. For the custodian, there’s no question, they have to manage the crypto themself because they are actually the depository of the crypto. And so all these players sort of need, if you decide to self custody or you do custody on behalf of others, then you need to have technology that allows you to solve a few issues.

Pascal Gauthier (26:20):

One is the security of the private key. That’s clear, you don’t want anyone to access a private key. Very similar to what we do with the Nano. But the bigger problem is the governance. Because as soon as you are an organization, then there are several people that will want to interact with the crypto. And the problem with crypto, again, if you have one private key and multiple people can see that private key, then who’s going to go to Costa Rica first? That’s the question. And actually, governance on top of money is not just a crypto issue. If you think about Société Générale and the [inaudible 00:26:54] story, it’s a story about governance. Who was allowed to do what, and who decided what, when, et cetera, et cetera? And the [inaudible 00:27:02] story says that it’s vastly unclear who had the governance on the money. But most hacks actually in our space happen at the governance level. Most of the keys are protected on Ledger today, even for enterprise, they use Nanos. But Nanos have not been designed for enterprise. And so my message is if you’re a financial institution and use Nanos to protect the private keys, don’t, upgrade to Ledger Enterprise, because we’ve designed this for you for the governance issue. The problem is the Nano has one private key in each nano. The question is who accesses the Nano? And what’s your governance on top of that?

Pascal Gauthier (27:42):

And so with Ledger Enterprise, we have the governance also inside the security layer, meaning that we have a division of work with administrators on one side that decide how the funds or how the money will be administrated, and operators on the other side. The administrators cannot touch the money and the operators cannot touch the administration. And all of this is enforced by the security layer, meaning once it’s coded, no one can go around decisions that have been made in the past. And this seems like nothing, but actually we are one of the very few companies in the space to do this. And we’re the only company in the space to do this at scale, where actually companies, when they buy our technology, they buy the fact that they’re become very independent and very resilient. No one has access to your private keys but you. Ledger will never have access to the private key. We cannot touch your money, we cannot block the funds, et cetera. Only you have access to the private key. There are other models in the space where the private key is actually charted and the tech player has one chart of the key, and so has something to say about funds moving. It’s not the case for Ledger.

Pascal Gauthier (28:49):

And so the best security, the best governance and the most features right now, is offered by Ledger Enterprise. Because whether you want to handle cryptocurrency for treasury, for whatever the use case is, Ledger Enterprise is designed for you, but also NFTs. And that’s one of the announcements that we’ve done at the Ledger Op3n in New York is that Ledger Enterprise Create.

Matt Turck (29:11):

Ledger Enterprise Create, right?

Pascal Gauthier (29:14):

Ledger Enterprise Create for NFTs, but basically Ledger Enterprise has the ability to handle smart contracts. So whether it’s for NFTs or DeFi, every smart contract can run with the security and governance layer of Ledger Enterprise.

Matt Turck (29:29):

Where do people learn more about Ledger and where do they follow you?

Pascal Gauthier (29:35):

So and our YouTube channel, but usually Twitter, we are on TikTok, et cetera. We try to do them all. So whatever is your preferred channel, usually you will find us. But come on and we present everything, basically.

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