Will Your Bank Collapse? This Is The Future Of Protecting Your Money | Michael Ou
Summary
Market Outlook: The global financial system is transitioning towards tokenization, with real-world assets and transactions increasingly moving on-chain, necessitating the widespread use of digital wallets.
Investment Theme: Tokenization is described as an unstoppable force that will eventually transform the entire financial system, making markets global, 24/7, and programmable.
Technology Insight: Digital wallets, both hot and cold, are essential for securely storing and managing tokenized assets, with cold wallets offering enhanced security by keeping private keys offline.
Adoption Trends: Crypto adoption is growing, driven by factors such as the introduction of ETFs and the tokenization of assets, with countries like India and the US leading in adoption rates.
Regulatory Developments: The Genius Act in the US mandates stable coins to have 100% reserve backing, signaling government support for stable coin adoption.
Security Concerns: Despite the security of cold wallets, incidents like the Bybit hack highlight the importance of clear signing and user awareness to prevent phishing and social engineering attacks.
Future Prospects: The long-term vision sees a coexistence of banks and digital wallets, with increasing integration of crypto payments into everyday financial activities.
Product Innovation: Cool Wallet's design philosophy focuses on security, user interface, and portability, providing a mobile-first, credit card-sized cold wallet for everyday use.
Transcript
Our entire global financial system is about to change. Real world assets are becoming tokenized and put on the blockchain securities as well. And more and more transactions are going to be done through stable coins. What does this mean for us? Well, we're going to be transacting more and more on chain. And we're going to be storing our wealth more and more on chain as well. That means everybody is going to have to need a wallet at some point. Our next guest, Michael O, is the CEO of Cool Wallet and he's working on bridging the gap between our present and our future. Michael, welcome to the show. Thank you for being here. Thank you for sponsoring this interview. >> David, thanks for having me. I'm a fan of your work. Honored to be here. >> Thank you very much. Thank you very much. Uh, I want to start by uh showing you a clip of Vlad Tennv. He is a CEO of Robin Hood talking about this future that I kind of referenced in my introduction. Take a listen. >> 10 years where it is ubiquitous. I mentioned in my talk that tokenization is a freight train. It can't be stopped and I think eventually it'll eat the whole global financial system but uh it's going to take time for for everyone to be comfortable with it. So that's why >> okay tokenization is going to eat the whole global financial system. Tell us about what that means. What is tokenization? How is that going to completely change the financial system? tokenization brings everything on chain and um it makes market global 24/7 programmable. So um if you house deed fund shares or invoices they leave onchain. You don't just need an account anymore. You need a key and that's where wallet plays in. Uh whether it's settlement at 2 a.m. or automated payouts the wallet um it's your control surface for real world asset. How is our life, our regular lives, not just people investing, we're uh professional traders in crypto, but you know, everyday people. How is the life of the everyday person going to change when most assets are going to live on chain? >> Um, a simple story, a nurse in Europe converts part of her paycheck to stable coins now >> and support home the same day and keep savings under her control. There's no weekend delays, no withdrawal cues. That's just life logistics. It's not hype. >> Okay. So, what does this nurse need in this example? What does she need to store these tokenized assets? >> She needs a wallet. She needs a wallet to store her um stable coins or any other crypto and she can send the tokens uh stable coins to her relatives at home. >> Okay. So, before we go any further, how is a wallet different from a bank account? Why can't this nurse just store her tokenized assets in her bank account? Well, because um her bank account has more uh bank hours uh withdrawal limits, counterparty limits, and with a wallet, there's no more restrictions. I just mentioned, are you suggesting, Michael, that in the future pretty much everybody is going to need a wallet? >> Oh, I am suggesting that. Yes, a wallet, uh for those of us watching is something that we store our um blockchain on. So, there's different types of wallets. There's hot wallets and there's cold wallets. Just explain the difference please Michael. >> Hot wallets they store your private keys uh in a internet connected environment. So it's um at risk. It's more dangerous cuz it's easier for hackers uh for uh bad actors to get into your uh u blockchain uh addresses and move your assets without your consent or um against your will. And a co-wallet puts your private keys offline in a isolated environment that's not connected to the internet. So it's uh way harder uh for hackers or bad actors to get into it. Why can't I just keep my cryptos on on let's say Binance or Coinbase or any other large exchange? I convert my fiat. I leave it on the exchange and it's easy. What's wrong with that? Well, there's nothing wrong with that, but uh centralized exchanges are great for on and off-ramp liquidity and familiar user experience, but they come with counterpart limits, withdrawal windows, paper day caps, destination controls. You're essentially holding an login and an IOU, not an asset. Um, Bitcoin was born after 2008 to remove the single pinch point. With self- custody, you send what you want, when you want, where you want. There's no bank hours, no withdrawal cues. The future is a hybrid balance. Exchanges for access and liquidity, wallets for saving, for sovereignty, and our job is to make the bridge between them safe and nearly frictionless. The uh there's a huge growth in crypto adoption worldwide. I want to talk about um uh growth first and then we'll talk more about how wallets work. So, this is from chain analysis. Um and actually in 2025, India was number one in global uh crypto global adoption. United States was number two. Uh retail centralized service value received rankings number rank 10. Centralized service value ranking two. DeFi value ranking two. Institutionalized service uh centralized institutional centralized service value ranking two. All right. So, basically, uh there's a lot of adoption happening not just in Southeast Asia, but also in the United States right now. Uh let's talk about what's driving this adoption in 2025. I know there's a bull market, but what else? >> Well, the I think there are two things. ETFs is definitely one of the driving force and another one uh is the uh tokenization of almost everything. Um RWA um stable coins. Okay. Now, can we start to see a future in which we start to get paid like our salaries are getting paid on chain? >> Well, there there are a percentage of the companies in the world now that are already paying um salaries, paychecks uh in crypto and taking one of the um um public listed companies uh financial conglomerates in Japan uh SBI. uh the the news is um starting from I think last year they started paying bonus in XRP uh to their employees already. So that's happening. >> Uh several landmark legislative um acts were signed this year including the Genius Act which I'll repeat for my audience um prioritizes consumer protection, strengthen the US dollar's reserve currency status and bolsters our national security. Uh it basically provides clarity on how stable coins will operate. The Genius Act requires 100% reserve backing with liquid assets like US dollars or short-term treasuries. It requires issuers to make monthly public disclosures to the composition of reserves. So stable coins issued by the government have to be backed by uh treasuries. Now if you were given the choice, this is basically so this is basically the government greenlighting the adoption of stable coins. If you were given the choice, Michael, would you be like, would you like to be paid in your salary? Would you like to be paid with stable coins or fiat USD, which is the same thing? I mean, stable coins are based on fiat USD, but they're just onchain. So, off offline or onchain USD, basically onchain USD online, onchain. Uh, it's it's more instant. It's global. It's programmable settlement and it's um less bank fees uh less less uh bank hours. Okay, so let's just uh compare. Right now I have all my cash in a bank. Okay, it's all fiat cash. Let's suppose I were to move half of that into a cold wallet. And by the way, this is um this is one of your cool wallet products which we'll talk about. I move it on a cold wallet and I'm able to have these faster transactions like you said. How will my life change once half my savings is now on the blockchain in the form of a stable coin? >> Okay. Um there are many many examp examples. Um so let's say you 90% of your uh US dollar is sitting in one bank. Um and that bank may go bankrupt uh in a very extreme um um situation. Okay, >> it's not impossible. But taking a look uh back a couple years ago, we we we saw many banks collapse uh in the US already, right? Uh 2008, that's a incident and uh I think there's um Silicon Valley Bank that go bankrupt a couple years ago as well. And we don't want to uh you know be any of the victims of those incidents. So um that removes a lot of risk there. Um and um if you are sending uh your US dollar uh across the um border, uh you're sending your um you have a lot of uh papers to fill and uh you have a uh pay limit per day. Uh let's say it's uh I don't know 100,000 at your bank. So that's um that's that feels strange to me because I will feel like uh this is my hard-earned money and I should decide and I should I should be the one who says uh where I want to spend it and how I want to spend it instead of somebody tell me how I should uh control my asset. >> But I can put my savings in a high savings bank account and the bank will pay me some interest. So that's one advantage, right? Can I do that with stable coins? >> Yeah. um you can have way more um choices uh on chain now. You you can lend it to um others via decentralized uh lending protocol uh like a for example and there's more. So um in in this current market you are seeing uh from 4% yield to 12% yield product of those stable coins. People are concerned about security. That's the main reason why you would put your keys on a cold wallet versus a hot wallet like you talked about earlier. And of course, centralized exchanges carry risks like you mentioned. We've seen FTX collapse. Uh we've seen Celsius collapse. Celsius was an exchange, but it was an asset manager. So, even large institutions can collapse. But earlier this year, we saw something interesting. Bybit was an exchange that got hacked. It was the largest crypto hack of Ethereum in history. And what Bbeck taught us was that cold wallets are not invulnerable. Can you just explain what happened with the BBIT hack and what you've learned from that incident in regards to cold wallet security? So what happened to the BBE hack was they were using uh Genosis safe um smart contract multi wallet for their u uh Ethereum based um tokens and um one of the uh final signes was Ben himself using a hardware wallet um and the takeaway isn't that hard wallet fail it it is that blind signature is dangerous if I user in if a user interface lies to you and the device cannot show the true call users can be tricked and our answer our solution is human readable clear signing of smart contract calls displaying who what and how much on which chain before the uncard approval if you see it you can decide >> so your your your company makes cold wallets Now before we talk about the products in detail, what is your overall design philosophy? What is the philosophy behind the form of the cold wallet and what is the major problem with self-custody right now that you think is out there that you need to solve? >> Um it's three pillars. Um one definitely is security. Um and we use uh CCEL 6 plus um secure element to protect users private key. And second um is user interface. We use um mobile first user interface. Uh so users no longer need a laptop uh desktop. Everybody has a smartphone now. So it has to be uh smartphone first. And third um it's the form factor. It's a credit card size that leave in your actual wallet so you can carry it every day. The uh the cold wallet that I have in front of me, it's it looks like a card. So, it's literally shaped like a credit card and it can fit in your wallet. Why did you opt for this design versus let's say a traditional hard um hardware cold wallet that basically looks like a hard drive? Early hardware wallets were bulky dongles like USBs hard drives. um people didn't carry them so they didn't use them and we flipped that a credit card form factor that live in your real wallet a mobile first connectivity like uh encrypted Bluetooth NFC and a secure element that keeps keys in hardware if it's easy to carry and easy to use people would actually self custody again this looks like a card it's easy to carry but it's also easy to lose it stores your private keys on this card correct So, what happens if I lose this card or let's say a thief steals my wallet, steals his card. Wouldn't I just lose my private keys? >> Um, you use your backup to move the funds uh to a to to a fresh address you control. If you only lost the card, you're fine. The attacker can't sign. Uh, if you lost both phone and card, your recovery plan casing, restore uh from your rhythm backup or backup card, then uh sweep funds. Okay. But so so let's say I lose my phone and my and my and my key. Let's say I'm traveling or something, right? Everything's portable. Um I can't access my backup. My backup is at home. What do I do? >> You can't access your recovery. Um then you wait until you you go back to um get access to your recovery. >> Oh, no. I have my recovery. Let's say I wrote down my C phrase somewhere. >> Yeah. >> Right. I have two cards. One's a backup. My backup is at home, but I'm traveling right now. I lost my card, so I can't access my card at home, but I have my seat phrase. What do I do? >> Oh, you you still uh buy a new card and enter your recovery seat phrase into the new new card uh through the app and then you will be able to get all your access back. >> Okay. Um in terms of security, how is your card different than let's say a traditional uh cold wallet that is bulkier in form? We know about the form factor but what what what enhancements to security have you made? >> Okay. Uh two things. First we designed a two plus one factor authentication. So to enable one transaction uh you need the car itself and you need the phone uh it's user's phone and you need the biometric authentication of the user. So if you um if you don't have any of the three uh you won't be able to make a transaction. So that's first design. Uh and second um it's the um smart scan feature that we develop for clear signing purpose uh in order to u protect users from fishing attacks or uh user interface um manipulations. Okay. So I have two cards here. This one's called the Cool Wallet Go. It's designed for people on the go. This one's uh Cool Wallet Pro. It's got a screen on top and you need to click a button to activate it. Now, this one you have to pair with your phone through Bluetooth. And then this one, the Go, you have to pair through NFC. So, what's stopping a thief from stealing my signal either through NFC or Bluetooth? All the signals uh sending through Bluetooth or NFCs are uh insensitive. We only um share public sharable data. Um and those data even if a hacker or a thief uh intercept it they won't be able to make any change of it or um decod it back to your private key. But the the seed phrase that's generated on my app. So I have to download the cool wallet app. The app generates a seed phrase when I activate a card. Where is that seed phrase stored? Isn't that stored in some centralized data base that's owned by your company? That cphrase is the master private key of all of your blockchain addresses and it only lives in the secure element of the card. We don't have a backup and we shouldn't have a backup. Um only you have a backup that's in written form and that's why when it's very important for you to keep the recovery seed phrase very safe cuz if you if you lose that sephrase we won't be able to help you. So there's no way for a hacker to hack into the Cool Wallet website and steal user data. >> Well, they can hack into our website as they like, but there is no private key data in our website. >> There's been a lot of concern over the last, you know, couple years of of of of corporate hacking. So not just uh company information, but also client information. So clients are very concerned about having their personal information and especially something like this their private keys um available for hackers on a database that's hackable. Uh so all right um I guess you've addressed that concern. What about um uh for people who aren't technical what is what is a secure element inside the cool wallet actually do? Can you explain that? A secure element is a separate temper resistant chip built specifically to withstand physical attacks. They can work together. But the secure element is the gold standard for key custody. >> Right. But but I can can I can I can I take the card and insert it into my computer somehow and then hack the chip? >> Uh you can't. Um as I mentioned, it's um built to within within physical attacks. So when you try that uh the car or the the chip will destroy the private keys itself. So basically to access my private key I'll need uh my phone which has the app. I'll need my biometric scan which accesses the phone and then from there um if I want to let's say send money to somebody using my cool wallet wallet uh it will then require me to use my key on this cool wallet uh device and I have to tap it to my phone. I have to physically tap it to my phone. That's how I validate the transaction. >> Yes. Yes. So basically you need you need biometric scans, the phone and the key. Without all three you cannot authorize any transactions. >> That's correct. >> What about fake wallet apps? How do you how do you stop a fake wallet app or a tampered build let's say from tricking users? >> Okay, there are there are two ways that we are preventing such attacks. So first um the card itself um has a um algorithm a software that we designed uh to only recognize uh the official build. That's first. And second um all of our official apps uh come with a smart scan feature uh to prevent um risky approvals or drainers. >> Well, you mentioned I think before social engineering uh not hacking causes most crypto losses. So can you can you tell us about the number one scam that you see uh that people users are falling for and how can something like cool wallet help to stop these kinds of scams? >> Okay. Um it's fishing smart contracts uh or um bad actors sending uh telling you to send uh your crypto to a specific address and there are um so so those are typically called approval tricks uh infinite allowances uh fake mints. So in our web uh in our app our smart scan feature we flag risky patterns like infinite approvals suspicious senders and uh default to list privilege approvals and we shown uh an approval dashboard so you can revoke anything you don't recognize. Um, so if you if you are seeing something um like red warning sign, just don't do it. >> The the the the the person sending the fishing, there's no way that they can steal my crypto even if they have my address. Correct. >> Even if they have your address, they they are not able to steal your crypto unless you approve them to do so. That's why before you sign any smart contract signature, you have to read um what the app tells you. Uh there's a if if it tells you that after signing this you'll be losing um 10 million um USDT for example um just don't do it. >> Let's say users out there watching uh who who are interested in getting a wallet. What what you need to do is send in order to send money you need to give the opposite party the person you're sending money to a an address a wallet address. So that's that's that information is public. Now what happens if that wallet address is passed on? Are there any risks involved whatsoever when that address is publicized? Uh if somebody else see it uh the only risk you will have is they will be able to know uh how much balance you have on that address but they wouldn't no one is able to do anything to the address. they cannot um move the the funds from your address to another unless uh you you approve the transaction yourself in your wallet. >> Well, what's your what's your long-term vision for cold wallets in general? Do you think it'll one day replace banks? >> Well, I think they will coexist. The long-term vision uh that I think u is I'll say 20% um of the everyday finance uh goes to bank and the rest goes to wallets. uh bank for uh the credit and then lending and um the rest you can do it uh with your wallets. >> People still like NFTTS and more and more people are adopting staking products. So how is Cool Wallet adopting these trends? >> Um we constantly uh integrate uh with new features that the market demand. Um currently we already have staking services uh from proof of stake um staking and uh lending product uh like a for example um and NFT is built in already um couple years ago. So whenever uh a new crypto um product comes out uh we try our best to um integrate as soon as possible. it it one of the concerns of uh cold wallets in the past is that it was difficult to onramp um directly from fiat. So um not just cold wallets but even hot wallets online. Sometimes you have to I have to on-ramp to let's say Coinbase and then uh send my Bitcoin or whatever from my Coinbase account uh from my Coinbase wallet address to a hot wallet address online. I can't just directly on ramp into the hot wallet with fiat. How do you solve that problem? >> Um, starting from two weeks ago, we we launched a new feature. Um it's called fiat onrem a fiat deposit feature uh where you can create your US or uh Europe SEPA bank account uh under your name and um you can wire the actual US dollar into that uh bank account and within 20 minutes of receiving that um US dollar transfer uh in the account those money will be instantly exchanged to stable coins of your choice on chain. into your wallet. >> But doesn't that make you a centralized exchange, Michael? >> Uh, it doesn't. We work with um we work with partners that have uh banking licenses. So, we don't um act as the uh centralized exchange or the bank. We we work with third parties. So, third parties does the KYC. We don't keep the uh any of the user data. >> Okay. So if somebody asks you, well, so you're not going to be like, FTX, take our fiat before it's converted and then invest it, for example. Um, >> is that possible? >> It's very unlikely to happen cuz uh as I mentioned, there's only 20 minutes uh window uh after receiving your fiat dollar and it will be instantly uh sent to your um wallet on chain. So is in your hand within 20 minutes. >> All right. Well, what's the uh next feature we should watch out for? Uh we are expanding our uh bank account feature to more regions. Uh hopefully uh more uh you will be seeing more Asia countries markets uh open uh for um the the dollar transfer and uh we'll be integrating more um uh mainets blockchains. Currently we support more than 40 magnets and all the EVM networks and um that's supporting at least uh 100 million uh thousand types of u uh tokens and uh we'll be expanding that as well and of course uh security and um user experience we continue to improve. >> Okay, very good. Thank you very much Michael. Uh where can we find out more about the product? >> Uh you can check our website at kwallet.io io and our exac account wallet. >> Okay. Before we go, I just want to ask you cuz you're based in Taiwan. It's also where I'm from. How is the crypto adoption um and how's the ecosystem in Asia compared to the west that you've noticed? Um one statistics I can share with you is that um Taiwan is a country with 23 million population and the um registered KYC um exchange accounts uh is uh above 2 million already. So we are looking at around 10% of the uh market adoption here. Uh I would say that's that's very good and uh you can already live most of your onchain life here. you can invest, earn, pay bills or merchants via crypto rails or uh crypto debit cards uh and move across border same day. So I'd say it's it's very mature here. >> Okay. Do you have any guess as to what that percentage may be in let's say 5 to 10 years? It's currently 10% you said. I'd say it's growing to uh 20% within five years because uh just this year uh one of the major um eight telco companies already launched their uh local crypto exchange with fiat on ramp uh feature. So it's more mainstream now. What I would like to see is let's say one day we have this what you have here except it's like a debit card and I can go to any store and instead of tapping my phone right now I have Apple Pay right I can tap my phone and I can pay for my Starbucks but now in the future I can pay with my stable coin. Is that future likely? Is it possible? Can you design something like that? >> It's definitely possible. Um in old days all the merchants post terminals were dominated by Visa and Mastercard but we are seeing more digital payments uh available uh in the market and I think uh most of them are looking into how to bundle that uh with um crypto payments and so I think uh we are seeing that future uh in in the next 5 years. Yeah, because right now the issue is let's say I have a bunch of Bitcoin and let's say I just want to spend it. I I I don't have instead of transacting with fiat or converting it into a stable coin. I just want to tap and then select an option and you know that the screen will say hey do you want to pay with your existing holdings Bitcoin, stable coins, Ethereum, whatever and I can just pick Bitcoin and it'll just charge my Bitcoin. Wouldn't that make it so much easier, right? >> Yeah, I possible. >> Okay. Anyway, let's put the link down below. So, follow Cool Wallet there. Thank you very much, Michael. Great talk. Thank you. >> Thank you, David. >> Thank you for watching. Don't forget to like and subscribe.
Will Your Bank Collapse? This Is The Future Of Protecting Your Money | Michael Ou
Summary
Transcript
Our entire global financial system is about to change. Real world assets are becoming tokenized and put on the blockchain securities as well. And more and more transactions are going to be done through stable coins. What does this mean for us? Well, we're going to be transacting more and more on chain. And we're going to be storing our wealth more and more on chain as well. That means everybody is going to have to need a wallet at some point. Our next guest, Michael O, is the CEO of Cool Wallet and he's working on bridging the gap between our present and our future. Michael, welcome to the show. Thank you for being here. Thank you for sponsoring this interview. >> David, thanks for having me. I'm a fan of your work. Honored to be here. >> Thank you very much. Thank you very much. Uh, I want to start by uh showing you a clip of Vlad Tennv. He is a CEO of Robin Hood talking about this future that I kind of referenced in my introduction. Take a listen. >> 10 years where it is ubiquitous. I mentioned in my talk that tokenization is a freight train. It can't be stopped and I think eventually it'll eat the whole global financial system but uh it's going to take time for for everyone to be comfortable with it. So that's why >> okay tokenization is going to eat the whole global financial system. Tell us about what that means. What is tokenization? How is that going to completely change the financial system? tokenization brings everything on chain and um it makes market global 24/7 programmable. So um if you house deed fund shares or invoices they leave onchain. You don't just need an account anymore. You need a key and that's where wallet plays in. Uh whether it's settlement at 2 a.m. or automated payouts the wallet um it's your control surface for real world asset. How is our life, our regular lives, not just people investing, we're uh professional traders in crypto, but you know, everyday people. How is the life of the everyday person going to change when most assets are going to live on chain? >> Um, a simple story, a nurse in Europe converts part of her paycheck to stable coins now >> and support home the same day and keep savings under her control. There's no weekend delays, no withdrawal cues. That's just life logistics. It's not hype. >> Okay. So, what does this nurse need in this example? What does she need to store these tokenized assets? >> She needs a wallet. She needs a wallet to store her um stable coins or any other crypto and she can send the tokens uh stable coins to her relatives at home. >> Okay. So, before we go any further, how is a wallet different from a bank account? Why can't this nurse just store her tokenized assets in her bank account? Well, because um her bank account has more uh bank hours uh withdrawal limits, counterparty limits, and with a wallet, there's no more restrictions. I just mentioned, are you suggesting, Michael, that in the future pretty much everybody is going to need a wallet? >> Oh, I am suggesting that. Yes, a wallet, uh for those of us watching is something that we store our um blockchain on. So, there's different types of wallets. There's hot wallets and there's cold wallets. Just explain the difference please Michael. >> Hot wallets they store your private keys uh in a internet connected environment. So it's um at risk. It's more dangerous cuz it's easier for hackers uh for uh bad actors to get into your uh u blockchain uh addresses and move your assets without your consent or um against your will. And a co-wallet puts your private keys offline in a isolated environment that's not connected to the internet. So it's uh way harder uh for hackers or bad actors to get into it. Why can't I just keep my cryptos on on let's say Binance or Coinbase or any other large exchange? I convert my fiat. I leave it on the exchange and it's easy. What's wrong with that? Well, there's nothing wrong with that, but uh centralized exchanges are great for on and off-ramp liquidity and familiar user experience, but they come with counterpart limits, withdrawal windows, paper day caps, destination controls. You're essentially holding an login and an IOU, not an asset. Um, Bitcoin was born after 2008 to remove the single pinch point. With self- custody, you send what you want, when you want, where you want. There's no bank hours, no withdrawal cues. The future is a hybrid balance. Exchanges for access and liquidity, wallets for saving, for sovereignty, and our job is to make the bridge between them safe and nearly frictionless. The uh there's a huge growth in crypto adoption worldwide. I want to talk about um uh growth first and then we'll talk more about how wallets work. So, this is from chain analysis. Um and actually in 2025, India was number one in global uh crypto global adoption. United States was number two. Uh retail centralized service value received rankings number rank 10. Centralized service value ranking two. DeFi value ranking two. Institutionalized service uh centralized institutional centralized service value ranking two. All right. So, basically, uh there's a lot of adoption happening not just in Southeast Asia, but also in the United States right now. Uh let's talk about what's driving this adoption in 2025. I know there's a bull market, but what else? >> Well, the I think there are two things. ETFs is definitely one of the driving force and another one uh is the uh tokenization of almost everything. Um RWA um stable coins. Okay. Now, can we start to see a future in which we start to get paid like our salaries are getting paid on chain? >> Well, there there are a percentage of the companies in the world now that are already paying um salaries, paychecks uh in crypto and taking one of the um um public listed companies uh financial conglomerates in Japan uh SBI. uh the the news is um starting from I think last year they started paying bonus in XRP uh to their employees already. So that's happening. >> Uh several landmark legislative um acts were signed this year including the Genius Act which I'll repeat for my audience um prioritizes consumer protection, strengthen the US dollar's reserve currency status and bolsters our national security. Uh it basically provides clarity on how stable coins will operate. The Genius Act requires 100% reserve backing with liquid assets like US dollars or short-term treasuries. It requires issuers to make monthly public disclosures to the composition of reserves. So stable coins issued by the government have to be backed by uh treasuries. Now if you were given the choice, this is basically so this is basically the government greenlighting the adoption of stable coins. If you were given the choice, Michael, would you be like, would you like to be paid in your salary? Would you like to be paid with stable coins or fiat USD, which is the same thing? I mean, stable coins are based on fiat USD, but they're just onchain. So, off offline or onchain USD, basically onchain USD online, onchain. Uh, it's it's more instant. It's global. It's programmable settlement and it's um less bank fees uh less less uh bank hours. Okay, so let's just uh compare. Right now I have all my cash in a bank. Okay, it's all fiat cash. Let's suppose I were to move half of that into a cold wallet. And by the way, this is um this is one of your cool wallet products which we'll talk about. I move it on a cold wallet and I'm able to have these faster transactions like you said. How will my life change once half my savings is now on the blockchain in the form of a stable coin? >> Okay. Um there are many many examp examples. Um so let's say you 90% of your uh US dollar is sitting in one bank. Um and that bank may go bankrupt uh in a very extreme um um situation. Okay, >> it's not impossible. But taking a look uh back a couple years ago, we we we saw many banks collapse uh in the US already, right? Uh 2008, that's a incident and uh I think there's um Silicon Valley Bank that go bankrupt a couple years ago as well. And we don't want to uh you know be any of the victims of those incidents. So um that removes a lot of risk there. Um and um if you are sending uh your US dollar uh across the um border, uh you're sending your um you have a lot of uh papers to fill and uh you have a uh pay limit per day. Uh let's say it's uh I don't know 100,000 at your bank. So that's um that's that feels strange to me because I will feel like uh this is my hard-earned money and I should decide and I should I should be the one who says uh where I want to spend it and how I want to spend it instead of somebody tell me how I should uh control my asset. >> But I can put my savings in a high savings bank account and the bank will pay me some interest. So that's one advantage, right? Can I do that with stable coins? >> Yeah. um you can have way more um choices uh on chain now. You you can lend it to um others via decentralized uh lending protocol uh like a for example and there's more. So um in in this current market you are seeing uh from 4% yield to 12% yield product of those stable coins. People are concerned about security. That's the main reason why you would put your keys on a cold wallet versus a hot wallet like you talked about earlier. And of course, centralized exchanges carry risks like you mentioned. We've seen FTX collapse. Uh we've seen Celsius collapse. Celsius was an exchange, but it was an asset manager. So, even large institutions can collapse. But earlier this year, we saw something interesting. Bybit was an exchange that got hacked. It was the largest crypto hack of Ethereum in history. And what Bbeck taught us was that cold wallets are not invulnerable. Can you just explain what happened with the BBIT hack and what you've learned from that incident in regards to cold wallet security? So what happened to the BBE hack was they were using uh Genosis safe um smart contract multi wallet for their u uh Ethereum based um tokens and um one of the uh final signes was Ben himself using a hardware wallet um and the takeaway isn't that hard wallet fail it it is that blind signature is dangerous if I user in if a user interface lies to you and the device cannot show the true call users can be tricked and our answer our solution is human readable clear signing of smart contract calls displaying who what and how much on which chain before the uncard approval if you see it you can decide >> so your your your company makes cold wallets Now before we talk about the products in detail, what is your overall design philosophy? What is the philosophy behind the form of the cold wallet and what is the major problem with self-custody right now that you think is out there that you need to solve? >> Um it's three pillars. Um one definitely is security. Um and we use uh CCEL 6 plus um secure element to protect users private key. And second um is user interface. We use um mobile first user interface. Uh so users no longer need a laptop uh desktop. Everybody has a smartphone now. So it has to be uh smartphone first. And third um it's the form factor. It's a credit card size that leave in your actual wallet so you can carry it every day. The uh the cold wallet that I have in front of me, it's it looks like a card. So, it's literally shaped like a credit card and it can fit in your wallet. Why did you opt for this design versus let's say a traditional hard um hardware cold wallet that basically looks like a hard drive? Early hardware wallets were bulky dongles like USBs hard drives. um people didn't carry them so they didn't use them and we flipped that a credit card form factor that live in your real wallet a mobile first connectivity like uh encrypted Bluetooth NFC and a secure element that keeps keys in hardware if it's easy to carry and easy to use people would actually self custody again this looks like a card it's easy to carry but it's also easy to lose it stores your private keys on this card correct So, what happens if I lose this card or let's say a thief steals my wallet, steals his card. Wouldn't I just lose my private keys? >> Um, you use your backup to move the funds uh to a to to a fresh address you control. If you only lost the card, you're fine. The attacker can't sign. Uh, if you lost both phone and card, your recovery plan casing, restore uh from your rhythm backup or backup card, then uh sweep funds. Okay. But so so let's say I lose my phone and my and my and my key. Let's say I'm traveling or something, right? Everything's portable. Um I can't access my backup. My backup is at home. What do I do? >> You can't access your recovery. Um then you wait until you you go back to um get access to your recovery. >> Oh, no. I have my recovery. Let's say I wrote down my C phrase somewhere. >> Yeah. >> Right. I have two cards. One's a backup. My backup is at home, but I'm traveling right now. I lost my card, so I can't access my card at home, but I have my seat phrase. What do I do? >> Oh, you you still uh buy a new card and enter your recovery seat phrase into the new new card uh through the app and then you will be able to get all your access back. >> Okay. Um in terms of security, how is your card different than let's say a traditional uh cold wallet that is bulkier in form? We know about the form factor but what what what enhancements to security have you made? >> Okay. Uh two things. First we designed a two plus one factor authentication. So to enable one transaction uh you need the car itself and you need the phone uh it's user's phone and you need the biometric authentication of the user. So if you um if you don't have any of the three uh you won't be able to make a transaction. So that's first design. Uh and second um it's the um smart scan feature that we develop for clear signing purpose uh in order to u protect users from fishing attacks or uh user interface um manipulations. Okay. So I have two cards here. This one's called the Cool Wallet Go. It's designed for people on the go. This one's uh Cool Wallet Pro. It's got a screen on top and you need to click a button to activate it. Now, this one you have to pair with your phone through Bluetooth. And then this one, the Go, you have to pair through NFC. So, what's stopping a thief from stealing my signal either through NFC or Bluetooth? All the signals uh sending through Bluetooth or NFCs are uh insensitive. We only um share public sharable data. Um and those data even if a hacker or a thief uh intercept it they won't be able to make any change of it or um decod it back to your private key. But the the seed phrase that's generated on my app. So I have to download the cool wallet app. The app generates a seed phrase when I activate a card. Where is that seed phrase stored? Isn't that stored in some centralized data base that's owned by your company? That cphrase is the master private key of all of your blockchain addresses and it only lives in the secure element of the card. We don't have a backup and we shouldn't have a backup. Um only you have a backup that's in written form and that's why when it's very important for you to keep the recovery seed phrase very safe cuz if you if you lose that sephrase we won't be able to help you. So there's no way for a hacker to hack into the Cool Wallet website and steal user data. >> Well, they can hack into our website as they like, but there is no private key data in our website. >> There's been a lot of concern over the last, you know, couple years of of of of corporate hacking. So not just uh company information, but also client information. So clients are very concerned about having their personal information and especially something like this their private keys um available for hackers on a database that's hackable. Uh so all right um I guess you've addressed that concern. What about um uh for people who aren't technical what is what is a secure element inside the cool wallet actually do? Can you explain that? A secure element is a separate temper resistant chip built specifically to withstand physical attacks. They can work together. But the secure element is the gold standard for key custody. >> Right. But but I can can I can I can I take the card and insert it into my computer somehow and then hack the chip? >> Uh you can't. Um as I mentioned, it's um built to within within physical attacks. So when you try that uh the car or the the chip will destroy the private keys itself. So basically to access my private key I'll need uh my phone which has the app. I'll need my biometric scan which accesses the phone and then from there um if I want to let's say send money to somebody using my cool wallet wallet uh it will then require me to use my key on this cool wallet uh device and I have to tap it to my phone. I have to physically tap it to my phone. That's how I validate the transaction. >> Yes. Yes. So basically you need you need biometric scans, the phone and the key. Without all three you cannot authorize any transactions. >> That's correct. >> What about fake wallet apps? How do you how do you stop a fake wallet app or a tampered build let's say from tricking users? >> Okay, there are there are two ways that we are preventing such attacks. So first um the card itself um has a um algorithm a software that we designed uh to only recognize uh the official build. That's first. And second um all of our official apps uh come with a smart scan feature uh to prevent um risky approvals or drainers. >> Well, you mentioned I think before social engineering uh not hacking causes most crypto losses. So can you can you tell us about the number one scam that you see uh that people users are falling for and how can something like cool wallet help to stop these kinds of scams? >> Okay. Um it's fishing smart contracts uh or um bad actors sending uh telling you to send uh your crypto to a specific address and there are um so so those are typically called approval tricks uh infinite allowances uh fake mints. So in our web uh in our app our smart scan feature we flag risky patterns like infinite approvals suspicious senders and uh default to list privilege approvals and we shown uh an approval dashboard so you can revoke anything you don't recognize. Um, so if you if you are seeing something um like red warning sign, just don't do it. >> The the the the the person sending the fishing, there's no way that they can steal my crypto even if they have my address. Correct. >> Even if they have your address, they they are not able to steal your crypto unless you approve them to do so. That's why before you sign any smart contract signature, you have to read um what the app tells you. Uh there's a if if it tells you that after signing this you'll be losing um 10 million um USDT for example um just don't do it. >> Let's say users out there watching uh who who are interested in getting a wallet. What what you need to do is send in order to send money you need to give the opposite party the person you're sending money to a an address a wallet address. So that's that's that information is public. Now what happens if that wallet address is passed on? Are there any risks involved whatsoever when that address is publicized? Uh if somebody else see it uh the only risk you will have is they will be able to know uh how much balance you have on that address but they wouldn't no one is able to do anything to the address. they cannot um move the the funds from your address to another unless uh you you approve the transaction yourself in your wallet. >> Well, what's your what's your long-term vision for cold wallets in general? Do you think it'll one day replace banks? >> Well, I think they will coexist. The long-term vision uh that I think u is I'll say 20% um of the everyday finance uh goes to bank and the rest goes to wallets. uh bank for uh the credit and then lending and um the rest you can do it uh with your wallets. >> People still like NFTTS and more and more people are adopting staking products. So how is Cool Wallet adopting these trends? >> Um we constantly uh integrate uh with new features that the market demand. Um currently we already have staking services uh from proof of stake um staking and uh lending product uh like a for example um and NFT is built in already um couple years ago. So whenever uh a new crypto um product comes out uh we try our best to um integrate as soon as possible. it it one of the concerns of uh cold wallets in the past is that it was difficult to onramp um directly from fiat. So um not just cold wallets but even hot wallets online. Sometimes you have to I have to on-ramp to let's say Coinbase and then uh send my Bitcoin or whatever from my Coinbase account uh from my Coinbase wallet address to a hot wallet address online. I can't just directly on ramp into the hot wallet with fiat. How do you solve that problem? >> Um, starting from two weeks ago, we we launched a new feature. Um it's called fiat onrem a fiat deposit feature uh where you can create your US or uh Europe SEPA bank account uh under your name and um you can wire the actual US dollar into that uh bank account and within 20 minutes of receiving that um US dollar transfer uh in the account those money will be instantly exchanged to stable coins of your choice on chain. into your wallet. >> But doesn't that make you a centralized exchange, Michael? >> Uh, it doesn't. We work with um we work with partners that have uh banking licenses. So, we don't um act as the uh centralized exchange or the bank. We we work with third parties. So, third parties does the KYC. We don't keep the uh any of the user data. >> Okay. So if somebody asks you, well, so you're not going to be like, FTX, take our fiat before it's converted and then invest it, for example. Um, >> is that possible? >> It's very unlikely to happen cuz uh as I mentioned, there's only 20 minutes uh window uh after receiving your fiat dollar and it will be instantly uh sent to your um wallet on chain. So is in your hand within 20 minutes. >> All right. Well, what's the uh next feature we should watch out for? Uh we are expanding our uh bank account feature to more regions. Uh hopefully uh more uh you will be seeing more Asia countries markets uh open uh for um the the dollar transfer and uh we'll be integrating more um uh mainets blockchains. Currently we support more than 40 magnets and all the EVM networks and um that's supporting at least uh 100 million uh thousand types of u uh tokens and uh we'll be expanding that as well and of course uh security and um user experience we continue to improve. >> Okay, very good. Thank you very much Michael. Uh where can we find out more about the product? >> Uh you can check our website at kwallet.io io and our exac account wallet. >> Okay. Before we go, I just want to ask you cuz you're based in Taiwan. It's also where I'm from. How is the crypto adoption um and how's the ecosystem in Asia compared to the west that you've noticed? Um one statistics I can share with you is that um Taiwan is a country with 23 million population and the um registered KYC um exchange accounts uh is uh above 2 million already. So we are looking at around 10% of the uh market adoption here. Uh I would say that's that's very good and uh you can already live most of your onchain life here. you can invest, earn, pay bills or merchants via crypto rails or uh crypto debit cards uh and move across border same day. So I'd say it's it's very mature here. >> Okay. Do you have any guess as to what that percentage may be in let's say 5 to 10 years? It's currently 10% you said. I'd say it's growing to uh 20% within five years because uh just this year uh one of the major um eight telco companies already launched their uh local crypto exchange with fiat on ramp uh feature. So it's more mainstream now. What I would like to see is let's say one day we have this what you have here except it's like a debit card and I can go to any store and instead of tapping my phone right now I have Apple Pay right I can tap my phone and I can pay for my Starbucks but now in the future I can pay with my stable coin. Is that future likely? Is it possible? Can you design something like that? >> It's definitely possible. Um in old days all the merchants post terminals were dominated by Visa and Mastercard but we are seeing more digital payments uh available uh in the market and I think uh most of them are looking into how to bundle that uh with um crypto payments and so I think uh we are seeing that future uh in in the next 5 years. Yeah, because right now the issue is let's say I have a bunch of Bitcoin and let's say I just want to spend it. I I I don't have instead of transacting with fiat or converting it into a stable coin. I just want to tap and then select an option and you know that the screen will say hey do you want to pay with your existing holdings Bitcoin, stable coins, Ethereum, whatever and I can just pick Bitcoin and it'll just charge my Bitcoin. Wouldn't that make it so much easier, right? >> Yeah, I possible. >> Okay. Anyway, let's put the link down below. So, follow Cool Wallet there. Thank you very much, Michael. Great talk. Thank you. >> Thank you, David. >> Thank you for watching. Don't forget to like and subscribe.