Crypto Self-Custody Is Evolving Here's How w/ Ruben Merre & Kris Bullock

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1:30Hello, everyone. I'm Nico Bruga, and welcome back to the Real Vision Crypto Daily Briefing. I'm joined by Chris Bullock, a.k.a. BlastoPlast, a Real Vision crypto member and a great friend of Real Vision. Chris, welcome to your inaugural episode of Crypto Daily Briefing. Thanks, Nico. I'm actually really excited to be here today. Oh, I'm always excited to chat with you. And we have an incredibly exciting conversation lined up. But before we get into that, this show is free. Real Vision Crypto is free to sign up for. But we also have a professional grade paid for membership called ProCrypto. Chris, I know you're a member there.

2:08Can you explain why you're a member for ProCrypto? Yes. Honestly, ProCrypto is an amazing community, I think, more than anything. But, I mean, of course, you do get some really amazing features like essential macro insight every month from Raul and Julian, really comprehensive deep dives, but also zoomed out high timeframe charting and insights from Delphi Digital, regular up -to-date technical analysis shows that come out every week from industry experts that talk about crypto and DeFi and NFTs and all of that. And it's all great. But honestly, for me, the icing on the cake with ProCrypto is the Discord community.

2:46I think, honestly, it's the best community on the Internet. I mean, the members in there are like family. You know, there's so many different people from different backgrounds and experience levels, and they bring all kinds of just unique insight and information to the table. And really, I think most importantly, the signal-to-noise ratio in that group is just extremely high. I mean, everyone posts just super relevant content. Everyone treats each other with respect. Everyone is polite. It's just so full of robust civil discourse, you know. And I really think that that's where the magic of ProCrypto happens.

3:19And honestly, at this point, I don't know how I could navigate the crypto space without this community at this point. And then lastly, every month you guys do this really cool thing. You do this Discord distillery show where members of the community get to come on with you and Ash and talk about what's going on in the previous month in crypto. And I think it's cool. And it just gives us community members an opportunity to really feel like we're part of the Real Vision team and like we're all in this together. contributing to its success. And it's just a great thing. Yeah, I just love ProCrypto.

3:51Well, thank you, Chris. And we love having you as part of this community and having you on the Crypto Distillery Show, which everybody should check out. It's the last ProCrypto show every month. We wrap out the whole month with key takeaways from charts to macro to what might be going on in NFTs or Web3. And Chris is a regular contributor on that show. So please check it out. Before we get to our main segment today, let's do a quick check of the markets and pull up the BTC seven-day chart here. And let's see what's going on. So right now we see that BTC is trading around 30 ,000, pretty much flat for the entire week, it feels like.

4:30For Ether, let's take a look at that. Ether is a bit under today at$1 ,872, so$1 ,872 at the moment. Also pretty sideways week, it feels like, for Ether as well. Lastly, let's take a quick look at ApeCoin. The coin, of course, associated with Yuga Labs' Bored Ape Yacht Club. YugaCoin is down quite a bit this week. And there's speculation that that might be because one of the most rare and valuable Bored Apes has recently been sold. So that might have caused the ApeCoin to crash down. But we will see. Hopefully next week will be better for NFTs and we might see some rising numbers for Bitcoin and Ethereum.

5:16By the way, don't forget to put down your questions in the chat. We'll ask the best ones on air. Remember, Real Vision members take priority. If you're not a Real Vision member yet, go to realvision.com slash crypto to sign up. It's free and will remain so. And that's where you'll be able to watch the latest Raoul Pal adventures in crypto before anyone else. Today, we have an amazing conversation with Raoul and Ryan Sean Adams and David Hoffman, the founders and hosts of Bankless. Please check it out. Now, with that said, many of you will remember the ledger controversy from a few weeks ago. So we thought it would be good to talk about cold storage on this show.

5:54Let's bring in our guest. Ruben Mayer is co-founder and CEO of Engrave. Welcome to Real Vision, Ruben. Hi, Nico. Hi, Chris. Good to be here. I'm actually also an avid follower of the podcast specifically. So it's an honor to be here. Well, thank you so much for joining us, Ruben. Now, I am a bit of a Luddite with all of these things. Chris is actually our unofficial slash official technical security expert for Real Vision. He did an amazing series with our own Elaine Lee for ProCrypto all about how to protect your crypto assets. So check it out. So I'm going to stick around just to inject some humor and maybe pull you guys out of the weeds a little bit.

6:36But because Chris is our expert, I'm going to hand it off to Chris right now. Thanks, Nico. Ruben, hi. It's a pleasure to have you here today. Thanks for having me. So let's talk a little bit about your background first and how Engrave came to be. How did you first get into the crypto space and then hardware wallets in particular? Absolutely. So long story short, I think you can best characterize me as a lifelong learner. So during my studies, I was reading a lot after my studies. I actually, when I started my work, I kept studying in parallel. So my main degree is a master's in business engineering, which sort of combines, let's say, all the civil engineering topics with business.

7:18And then after that, when I started my job as a strategy consultant, I just kept studying. And the first postgraduate I did was in financial markets, where I created as my thesis a robo-advisor, so automated wealth management. And I think that's sort of the red line throughout my career and my life. I really want to empower people to be financially up to speed, but also, of course, with Engrave not to lose that wealth that they build up. So that became sort of one of the first robo-advisors automated world investment platforms back in Europe. And then I also, let's say, was doing in 2015, I think, sort of a strategy 2020 for one of the big banks there.

8:04And, of course, Bitcoin sort of came waving around. And it looked interesting. But for me, most of it, I was trained a bit by the Warren Buffett principles, where whatever looks like a bubble, stay away. things you don't understand, don't invest in them. So that's exactly what I did until I think it was 2016, maybe early 17, that my co-founder Edward told me, just look under the hood of this technology and tell me you don't like it. And when I did that, everything changed. It was like 100 light bulbs going on in my head and all shouting the same thing. This is actually the way to empower anything you can empower.

8:42And for me, one of the main use cases that came out of that, The first thing I thought of was, what if a tsunami comes by, wipes away all the land in a developing country, and there is only one database, the database of the dictator that says now it's all mine. How do you fight against that? And the idea that with this shared truth, this shared immutable truth that everybody could have and just have that first step of we can stand up against this centralized power. For me, I could see so many use cases there that I decided to invest in crypto. And let's say that in 2016, so me, Edward and Xavier, the three co-founders of Engrave, we met each other around that shared purpose.

9:25So initially, we were just challenging each other with a very simple question. What if you would have to put all your crypto in one spot and be able to sleep at night? We looked out of the window, but we couldn't see anything that we actually could say yes to. And after my co-founder Xavier, he was hacked in 2017 for 44 ,000 ETH in the parity hack. So one of the big hacks in the industry. Okay. Two big things came out of that. So the first one was they actually turned the whole thing around by finding the vulnerability and wiping all the other wallets based on ETH, saving around$200 million worth of ETH back then.

10:02And second, it just amplified that whole idea of protection, financial empowerment, and ultimately what became the seed for Engrave. Okay. Where is Engrave based out of? Engrave is based in Belgium, and our supply chain for the hardware wallets is also based completely in Belgium. Oh, nice. Okay. Okay. And when did you guys launch fully, officially, and get your product out? Yeah, so we started in 2018, but our main goal was to build ultimate security product for, let's say, digital assets slash Web3. So happy to dive into that, of course. And we did a pre-order campaign like Indiegogo campaign in June 2020, where we sold about$500 ,000 worth of wallets.

10:45And then in November 2021, we started shipping all those pre-orders. And since last year, around this time, we do next day worldwide shipping. So if you need a wallet, you go to the website, you buy it. And if you're in Europe, tomorrow you have it. If you're in the US, you will have it in a few days, maybe by the end of the week. Hey, everyone, we're going to take a quick pause and hear a word from our partners. We'll be right back.

11:12Wow, that's great. That's great. So one of the things I kind of wanted to touch on is I know it's been difficult for a lot of new entrants into the space to really understand the big differences between hardware wallets and software wallets. Can you talk a little bit about some of the things you guys are doing to kind of reach a larger audience and promote the importance of self-custody and more specifically self-custody with hardware wallets? Yeah, I'm not sure if I fully understand the question. So, I mean, I think what's interesting to see is that 2022 was sort of a good year for the whole concept of self-custody and by extension hardware wallets.

11:49platforms failing platforms that over every single year what we saw since the beginning let's say 2018 that was a record year when you talked about the number of hacks 2.5 billion last year was the last record year it just keeps on becoming a bigger problem and yeah you you can either keep it on an exchange where it basically means you don't own anything they own the assets you have a right to ask if you can send them somewhere. With hot wallets, you sort of get the keys and the custody, but then again, you don't know where the keys were made, who made them, who saw them. And there's so many questions that you don't have a proper answer to.

12:30And then ultimately, I think last year became the year in which the idea of self-custody and real self-custody with cold wallets, for most people, it was, let's say, a far away from your home, far away from your bed show, suddenly became a crucial part of your security hygiene in crypto. And that is what I think is sort of continuing also with the incumbents that use connected technology like USB, Bluetooth, that are actually now evidencing that they can extract your private keys, that they can get to your keys. So with Engrave by design, something like that is impossible. And to answer your question a bit on how do we sort of get this more to the mass, So we are currently building, so it's a QR code based fully air-gapped hardware wallet.

13:17So we are currently setting a standard for the whole industry together with Trust Wallet, together with Metamask, so that everybody can use the same QR code communication layer and can easily, let's say, SDK into, I have my favorite wallet already, but I want more security. So I link it up with the Engrave. The Engrave makes my keys, helps me with signing for the big transactions. And of course, I mean, these two wallets on their own have 60 million users in total monthly active. So for us, that's one of those steps to get us closer to helping all of these people. Very good. And that's a perfect segue into my next question, which is, you know, let's talk about a little bit of some of the features that make your product unique amongst your competitors.

14:00Things like the Aerodap, like you mentioned, the perfect key generation. Maybe dig into that a little bit. Absolutely. So for us, it was really about constantly adhering to three very simple but very crucial principles. So the first one is all about we will never compromise on your security. And before maybe I go into that, second is it needs to be all easy to use. So what would Apple do if they built this kind of technology? And third, it needs to be end-to-end security. So we see security as something systemic. It starts in the supply chain. You can already make a lot of mistakes there. or your products can be intercepted before they arrive to the user it can already be hacked so there are so many things there but also on the other side so you create your keys and so on and so on and ultimately you pass on to hopefully heaven and your kids need access to to it so what do you do then and so in the first layer so the maximum security layer that is where we immediately realized we couldn't build a connected device because the connection for us we saw it as that's opening the box of pandora suddenly every hacker in the world can try to attack that that connection layer so we decided to go air gapped meaning 100 offline device we cannot connect to bluetooth usb you name it any kind of those technologies we use qr codes and the beauty about qr codes is one it's air gapped so if you're somewhere else you cannot really attack that kind of channel but also it it opens up the whole idea of security through transparency.

15:36So today, if you sign with your hardware wallet and transaction, you don't really know what you're signing. It's really a black box. There is a connection, but you don't really see what am I about to sign. With the QR code, everybody in the world and in crypto, we know that tomorrow if we do things we shouldn't be doing, everybody will know. So you can easily scan a QR code with any device and see what's inside there. So that means that if we hide information, everybody will know that. So you get the security to transparency, sort of the white box experience. And basically, it's also intuitive security.

16:11You understand what you're about to sign. It's still five Bitcoin from Chris to Nico, just maybe a gas fee. You still see exactly the thing that you were communicating from your phone to your cold vault. So I would say on the level of air gap is very important because it also means by design, we cannot extract your private keys, which has been a big topic in the last few months, simply because we don't have that kind of connection. And second, and that's, I would say, what we're also most proud of, we actually put a certification as the ultimate proof of our security. So worldwide, there is an internationally recognized standard for security.

16:50It's called Common Criteria Evaluation Assurance Level, or in short, EAL. So every chip in the world is certified for that. Generally, let's say your credit card chip will have EAL5 as a level, and there are seven levels. Incumbent hardware wallets also have level 5 chips that they basically buy from somewhere else. Apple Pay is level 5 and 0, so our hardware wallet has a secure OS that tackles all the security functionalities. and it's the only device in the world that has EL7. So if we talk about not compromising your security, we mean it, and you can see it in our AirGap and in our security certification to name two aspects.

17:32So I did notice specifically talking about AirGap regarding firmware updates. You do have to connect a USB cable to install firmware. So can you talk a little bit about sort of what mechanisms you have in place to mitigate any potential threats while the device is connected to the computer in that situation? Yeah, so our USB, we have a USB connection available. Right. It's a sandbox from the rest of the device, and it can only receive packages. So you can, of course, test it as a user. We cannot send anything back. So the way that you can use the USB is either you do all charging or you put it in your computer.

18:07There is no way to extract information out of it. And it's also part of the certification of the EAL7 security. So even if you do a firmware update, you have the most secure firmware update in the world. That's what the security certification says. Nobody else has achieved it. So basically, I would say that's the main gist of our firmware updates. Got it, got it. Tell me a little bit about the battery. How long does it last? Is it replaceable? Yeah, so the battery is a smartphone-grade battery. So let's say you use your smartphone every day, 24 hours a day probably, even if you sleep, it's doing stuff.

18:44Sure. So we have a smartphone great battery in the hardware wallet. Hardware wallet, you don't use it that much. So let's say you have it for a few years, that thing will still be at 95 % of its capacity. So on that level, you shouldn't be worrying. When it comes to battery malfunctioning, sometimes it happens, of course. Hardware is only hardware. Then typically we have a warranty period of two years, so you will get a new one if you really have an issue. We cannot, let's say, by design, take out your battery, put in a new one. Why? Because it is the ultimate security device. It is completely built from scratch, hardware-wise as well, to know that it's being opened and to wipe the keys when that happens.

19:25So we don't allow for battery replacements. We prefer to send you a new one because that's our first promise. We don't compromise on your security. So it has like kind of a self-destruct sort of mechanism built in if you open the case or something like that? Okay, okay. Yes, so there are different layers of anti-tampering and also some new novel layers that didn't exist before nGRAVE0 came along. Nice, nice. So tell me about some of the current maybe feature updates that you guys are working on now for the device that are in development to be released soon. Yes, I would say the QR code standard is definitely a huge one, because in the end, then you can use your MetaMask and do it with keys that you created offline with your device.

20:11We also have another key generation process where we sort of ironed out all the security risks we still saw for users. So we can definitely talk about that. We have a sort of a patented key, which is called the Engrave Perfect Key. And it solves sort of the last hiccups of the 24-hour seat race to keep it at that. So we're working on that. We're currently doing a fundraise, so a capital raise for a company led by Binance. There's also one of the big asset managers part of this round. And that will allow us to subsequently support the swapping, the on and off ramp, the staking parts of the hardware wallet.

20:51So today they're not there, but in a few months' time they will be. And of course, the continuous evolution of their new coins, we need to support them, their new features. And what's interesting is that we are not necessarily a hardware-wide company. We're more of a end-to-end security company. So we already have these asset managers coming to us, telling us, look, we understand EAL7. That's what we need. So what can you build for us? And then the discussion sometimes goes into the direction of Engrift can also build super secure apps and super secure, let's say, cryptographic algorithms-based setups.

21:30Everybody knows MPC, but there is so much more in cryptography. So, yeah, we are sort of also an end-to-end security partner for asset managers, B2B, and beyond. Hey, everyone. We're going to take another quick break and hear a word from our partners. We'll be right back to the Real Vision Crypto Daily Briefing.

21:52You mentioned MetaMask support. I know currently it's not yet available, but what's kind of the timeframe for that? And I guess maybe talk briefly how that process works. Like, do you have to work directly with MetaMask? Is it sort of a joint development to sort of have support for that? Or what's that like? Yeah, absolutely. It needs to be done in, let's say, mutual communication between the two projects, because in the end, they need to decide if they want to put QR codes there. and so it all needs to work. So of course, we are doing this together with them. Same with Trust Wallet. So the first one that will go live will be Trust Wallet and then after that, it will be Metamask.

22:31For a user perspective, it's extremely straightforward. So you just say, I want to connect a wallet and then you can go into the hardware wallet section. You tap on Engrave and whether you have, let's say a phone or a computer, both have a camera. you just have a sign-in QR code and your wallet will be connected. But your private keys obviously will stay offline on the coldest wallet. Right. And then what about NFT support? Yeah, so today we already support the EAT NFTs. And then I would say when it comes to overall coin support and some of the NFT chains, we are still a bit behind on the wallets.

23:13We have been longer into the industry. But of course, those are not the biggest catch ups that we need to do. So it's just a matter of time and then all your favorite coins will be supported. And of course, we always support a lot like let's say Solana, Avalanche, Elrond, Elrond ecosystem. So we do support a lot already. And the beauty about the device is it is much more powerful than the average Harawatt because it uses a much stronger microprocessor. it can it has let's say gigabytes of memory so there is no limitation on how many coins you can have on there and the device itself already has everything pre-programmed and when it comes with a firmware update you can add the new coins so with our device you just tell it with one tap of your finger i want bitcoin i want eat if you want something you can look for it and so in a blink of an eye you can do you can do everything you need from your crypto vault even though it's actually offline.

24:09Okay. And with the NFT management, I'm just curious, like, are the NFTs viewable on the device itself or only through, say, you have a companion app, the Liquid companion app? Is that where they would be managed, I suppose? Yeah, exactly. So, of course, we could do it, but we don't really see the actual use of it. I mean, in the end, you can take your phone, which you always have on you. You can show your friends, look, these are all my NFTs. And the beauty is that even if they kick your butt, it doesn't matter. They can't get access to that because those are stored on your zero. Even if you have your zero with you, it doesn't matter either.

24:45Even you have the so-called$5 wrench attack that they can do. And they can sort of push you to give out your keys. You can always get into a fake wallet that might have some assets as well. That's the standard thing in most gold wallets. so for us it's just more logical to show on your phone these are this is everything i have and on your wallet you have everything you need to send them somewhere else so you are able to send them directly like you could send like i could send you an nft through the liquid app say for example without having to go through like openc or some kind of marketplace yeah absolutely absolutely so um of course you need to sign it with your zero but that's simply said it's basically your zero screen, you tap on scan, the device goes in scan mode, that's one button, and on your device you say where you want to send it, and then you scan that and sign it with your higher wallet.

25:40And then you have a signature that you scan with your phone, and that's it, then it moves on to, let's say, the person you're sending it to. Got it, got it, okay. And I think the last question for me is just maybe talk about, like, some of the things you guys are doing to, I guess, help prevent users from falling victim to so many of the scams that are out there? Like, perhaps a solution to address things like blind signing or various phishing scams or ways to maybe help identify, you know, dodgy smart contracts or things like that? Is there mechanisms that you guys are putting in place to sort of make that process easier for newer entrants and things?

26:16Yeah, I would say the first thing is obviously just education. So if you would go on our blog, you will find a lot of those articles. We really want to look out there for for you and it doesn't limit itself to, let's say, a gold wallet. So that's, I think, the most important thing. And then ultimately, I think the industry is moving a bit towards the fact that there are, let's say, new tools that can look for you behind the transaction and look into the smart contract if everything makes sense. So those are things that in the future will be part of hardware walls as well. The beauty, of course, with us is that if it's about your offline crypto, then you will always be able to verify what you're about to sign.