Trust me, I am an Engineer !

Trust me, I am an Engineer !

The Fipto research team
May 23, 2023

Impossible to start this new week without telling you about Ledger

Bitcoin was created in a climate of crisis of confidence in the banking sector with the objective of disintermediation, decentralization and transparency.

Ledger is a tool to keep your funds safe, a hardware wallet that allows you to store your private key which, instead of being inserted into different information systems by multiplying the risk, is stored in a hardware, the Ledger Nano. Ledger has made its reputation on its tamper-proof products, allowing it to keep a unique private key on several networks including Bitcoin.

Only here, so far Ledger implied that the Seed Phrase could never leave its devices so that NO Third Party can access your funds under any pressure whatsoever. And I mean by third party, Ledger itself.

In any case, that was what a very large majority of its customers thought, convinced by this promise. Nothing has changed since the beginning but a large number of people did not understand how the hardware wallet works or it was poorly explained to them.

And the announcement of this new feature set things on fire.

By offering a feature, even optional, Ledger half-heartedly admits that the Seed phrase can come out of its devices. Optional by the user or not, Ledger can therefore by these additions of lines of code have access to your funds. Obviously this is not planned and probably never will be. BUT, if you trust Ledger do you trust any authority that would force Ledger to change its policy?

The initial Bitcoin-like promise of complete independence and complete disintermediation is somewhat flouted, like it or not, even though Ledger devices are still technically tamper-proof.

Ledger remains the best hardware wallet solution to date..

...and is subject to unfair condemnation by social networks due to poor communication and perhaps even a poor general explanation of the hardware wallet principle. Other competitors, certainly sometimes open-source, have the same operation.

The return of the paper wallet? It would be a real step backwards for mass adoption.

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Source: Ledger

What about custody for my company ?

Keeping crypto funds for companies and institutions is a job. The bigger your company is with decision-making bodies, the more interest you have in delegating custody.

There are several reasons why it can be better for a company to delegate its crypto funds to a regulated company for custody rather than keeping them in-house:

Regulated companies specializing in crypto custody often have dedicated security teams. They implement advanced security measures such as strict access controls,  real-time monitoring systems and dividing the private key between users. Their expertise in security can provide better protection against the risks of hacking, theft, or loss of crypto funds.

Regulated companies are also subject to strict regulatory requirements. By entrusting the custody of crypto funds to a regulated company, the company can ensure that its activities comply with laws and regulations, reducing legal and compliance risks.

Shared Responsibility: By delegating custody to a regulated company, the company can share the responsibility for security with external experts. This can alleviate the internal workload associated with managing the security of crypto funds and allow the company to focus on its core business activities.

Simplified Operational Management: Delegating custody allows the company to focus on its core operations without having to worry about the day-to-day operational management and security of crypto funds. This can streamline internal processes and reduce operational risks associated with crypto custody.

At Fipto we work with Fireblocks solution, the technological leader on the market, to offer you an institutional grade custody: Operational efficiency with battle-tested security.

Let’s discuss it !

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May 23, 2023

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