Building a better crypto wallet with ZenGo’s Ouriel Ohayon
For Ouriel Ohayon, founder of keyless cryptocurrency wallet ZenGo, the technology presented a unique challenge: “Unlike the traditional financial system where you rely on banks — whether they are retail banks or large banks — for a custodian of your funds, in crypto, you basically are your own custodian. You have to basically be your own bank,” he says.
On this week’s episode of What’s NEXT, Ouriel speaks with Samsung NEXT’s Royi Benyossef. Ouriel dives into the future of digital currency transfers, the challenges in keeping financial data both secret and safe, and what comes next as crypto-methodology becomes the go-to solution for identity management at scale.
Building a better bank
Ouriel knows what it takes to grow a business. Over the course of two decades, he has done it all. “I worked in large companies,” he says. “I worked in small companies. I created a bunch of companies. Sold a bunch of them. I also worked in venture capital, have for a few years, both as an employee and as a co-founder of a venture fund.”
Eventually, his passion for building and investing in similar companies began to wane, so he headed back to Israel “to look for the next thing that would excite me.”
He found it in cryptocurrency.
While cryptocurrency promises complete control over personal finances, it also introduces the problem of complexity. Ouriel found that existing bitcoin and other crypto management solutions were “extremely overwhelming and intimidating.”
Without anything in the marketplace to streamline the security process, Ouriel and his team decided to create their own: A digital wallet solution that was more secure, less intimidating and way more convenient.
The multiparty method
ZenGo created a new multiparty solution. “The promise of crypto was that you can finally float the custody of your wealth back to yourself, ” Ouriel says.
But individual control increases complexity and introduces risk. In fact, cryptocurrency exchanges remain top targets for bad actors seeking bitcoin. As noted by Coindesk, for example, one exchange that had only been open a few months recently lost more than $70 million in cryptocurrency to hackers.
The vulnerable crypto market clearly had a problem that needed a solution. “When we looked at all the basics of cryptography on the market, we could not find the right way to do that,” Ouriel says. “So we had to develop and build a kind of new approach, which is based on what is called an industry multiparty computation and threshold signatures, which is a way of distributing the security.”
Instead of generating a single secret key or password that can be compromised, multiparty computation (MPC) creates multiple secrets using multiple devices “that don’t know each other and don’t need to trust each other,” he says.
Private keys, private key signatures, and signature verification calculations are all handled separately and then bundled together with ZenGo using what are known as zero-knowledge proofs. As a result, there’s no single point of failure.
By leveraging MPC at scale, Ouriel says his team developed “something that feels familiar, but that also ends up with the best of both worlds.”
Experiments in electronic identity
While cryptocurrency represents the frontier of digital asset defense, Ouriel notes that larger-scale change is already in the works. “What we’ve seen during the past one-to-two years,” he says, “is that every single asset has started to become digital.”
E-commerce transactions are on the rise, too. The world of finance is moving away from physical money to both contactless chip cards and cryptocurrency, and governments are beginning to experiment with blockchain-based electronic identity management.
In Bermuda, for example, efforts are underway to develop a blockchain-based national ID system, while India is working on a blockchain voting system that would let citizens vote securely even if they’re working or living away from their hometowns.
But, as Ouriel notes, there are obstacles to widespread adoption. Although India “has basically onboarded 100 percent of their citizens to a digital identity system,” he says, “countries like EU led by Germany that has a project for decentralized personal identities and they’re pushing it forward, but they are unwilling to work with companies outside the EU because of trust issues, which is funny as it is because it’s supposed to be trustless.”
The move to blockchain
For Ouriel, the shift to digital assets is inevitable. Blockchain is the natural choice to streamline access and improve security. Moreover, he says, more robust mobile platforms and gateways paired with enhanced regulatory controls will help drive mainstream adoption.
Ouriel’s advice around cryptocurrency and blockchain cuts through the industry’s oft-cited complexity. “Learn about it,” he says. “You don’t have to invest millions of dollars or even invest at all to understand why this is important, why it matters.”
For starters, Ouriel suggests, get a crypto wallet and buy a few dollars worth of digital currency. Doing that, he says, will help you “realize why this matters, and why the future is going to be built around blockchains.”
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