In this episode, Ouriel Ohayon, CEO of ZenGo, a crypto wallet company, takes us on an easy-to-follow journey into the complex world of cryptocurrency.
Using simple analogies and real-world examples, Ouriel makes complex crypto concepts understandable.
He paints a vivid picture of how crypto can help people in economically challenged countries, using the situation in Turkey as an example, where the local currency has plummeted.
Ouriel explains ZenGo's security architecture called multi-party computation (MPC) in simple terms, likening it to a vault that needs multiple keys to open. This is a much safer approach to safeguarding cryptocurrency wallets, potentially avoiding much of the theft and hacking in crypto that we hear so much about.
Understanding crypto becomes crucial as it continues to reshape our financial systems. This episode is a great entry point for anyone curious about crypto's potential and wants to understand why companies like ZenGo matter in this evolving landscape.
In this episode, Ouriel Ohayon, CEO of ZenGo, a crypto wallet company, takes us on an easy-to-follow journey into the complex world of cryptocurrency.
Using simple analogies and real-world examples, Ouriel makes complex crypto concepts understandable.
He paints a vivid picture of how crypto can help people in economically challenged countries, using the situation in Turkey as an example, where the local currency has plummeted.
Ouriel explains ZenGo's security architecture called multi-party computation (MPC) in simple terms, likening it to a vault that needs multiple keys to open. This is a much safer approach to safeguarding cryptocurrency wallets, potentially avoiding much of the theft and hacking in crypto that we hear so much about.
Understanding crypto becomes crucial as it continues to reshape our financial systems. This episode is a great entry point for anyone curious about crypto's potential and wants to understand why companies like ZenGo matter in this evolving landscape.
Welcome to The Dejargonizer. I'm your host Amir Mizroch. In this podcast, I speak to startup founders. I subject myself to their tech jargon to try and decipher what their company really does. I do this to find out if there's a bigger story that that matters to broader audiences like you. Today, I'm joined by Ouriel Ohayon. He's the founder of Zengo, a startup that makes a high security cryptocurrency digital wallet. It sounds more complicated than it actually is. Trust me. I'll let real explain.
Unknown:
It's difficult but simple. Okay.
Amir Mizroch:
Ouriel Ohayon. Thanks for coming on. I'm going to zoom out just for a second chaos in crypto land.
Unknown:
Today, an ex Coinbase employee pleads guilty in the first ever crypto insider trading case. And Bitcoin continues to rally even as crypto lending teeters on the brink of extinction. Can the industry
Amir Mizroch:
Why would anyone in their right mind right now want a crypto wallet? I mean, I'm opening up the crypto news, North Korean hackers are everywhere. It's a complete meltdown. But why now is a good idea to get a crypto wallet and why is your company the right company?
Ouriel Ohayon:
So you have to zoom out in this environment of bad news. The Crypto industry is at the bottom of a crisis of crisis that has not started recently, it has started a few months ago, you've just named FTX. But there were others. And they all have a common thread. They were centralized companies meaning basically banking equivalent, where you trust them with your funds, with the disadvantage that they have very little oversight. And so the problem that is at hand is not the problem that crypto is in crisis. The problem that is at hand is that the centralized business is built on top of crypto are in crisis.
Amir Mizroch:
Sorry, the centralized businesses meaning not actual banks and credit card companies, but the companies that are kind of the banks and credit card companies of the crypto economy,
Ouriel Ohayon:
the crypto banks, if you want to prefer to call them that way. So basically the equivalent of banks, but instead of dollars and euros and you know the money that we know, run with crypto assets. And so why is it broken? Because indeed, when you trust your systems with your friends, they are a blackbox, which can operate as they want. And if they are malicious actors.
Amir Mizroch:
Sorry, a malicious actor is a thief. Yeah, a guy breaks into your bank breaks into your house, for example.
Ouriel Ohayon:
But it can be also something that is not as if it could be a fatal piece of code. That is part of the system. And that is supposed to protect you but somehow is going to be hacked. The point is because it's no longer in your control, and it's in control of someone else. You basically give away your assets, your funds, but without recourse to recover them if anything wrong happens. And so what we've seen this year,
Amir Mizroch:
sorry, and people do this, they give away control, because it's easier to use. You don't have to really do anything, you don't have to know anything, you just kind of open an account.
Ouriel Ohayon:
That is correct. People go with what always with what's easiest. But the problem is that sometimes the easiest, can also be the most dangerous. There is also another reason is because centralized counterparties. Like these companies and others, they can operate at a structure of costs and fees that are way cheaper than in a decentralized environment. So you also choose them not just because it's simpler, but also because it's cheaper, except that at some point is going to cost you all your money possibly.
Amir Mizroch:
Your company is different in a way. How are you telling people now? Listen, even within all this chaos, use Zengo because
Ouriel Ohayon:
so Zengo is a mobile crypto wallet, wallet for crypto assets, whether they are coins, or NFTs or any form of assets that live on the blockchain and it can be downloaded on your phone right away. And from there you can transact meaning send receive store, buy sell swap crypto to crypto and connect to applications built on the blockchain. There is a lot of great things that are happening. Just to give you an example, in crypto there is many, many applications been one of the most popular and important applications of stablecoins.
Amir Mizroch:
I found a really good explanation of stable coins from the 99 bitcoins YouTube channel.
Unknown:
Imagine throwing a rock into a small pond now take the same rock and throw it into the ocean. Clearly, the rock will have a much more of an effect on the pond than on the ocean in the same manner. Their cryptocurrency market cap is a small pond for now, and is more affected by everyday buy and sell orders than say, for example, the US dollar, that's exactly where stable coins come in. Simply put, stable coins are an attempt to create a cryptocurrency that isn't volatile, a stable coins value is pegged to a real world currency, also known as a fiat currency.
Ouriel Ohayon:
The adoption of stable coins worldwide is massive, we're talking about trillions of dollars of transactions that are made using stable coins. And why does that matter? Because there are many, many countries where their economy is very, very weak, where the banking system doesn't work, we have access to a stable or relatively stable assets which they can use to pay their bills, to send money to their relatives to get paid in, you know and get a salary.
Amir Mizroch:
You're saying that even within all this crisis, there are still people, it makes sense for them to use these wallets because a the the crypto economy is still going and be and this is the part that I didn't really get. It's a utility for people who otherwise wouldn't be able to send money to friends and family, it was out what you were saying.
Ouriel Ohayon:
Let me give you an example. Let's assume you live in Turkey, the value of the national currency has been melted in the past year by 80%. In a nutshell, to prevent the economy from overheating, central banks can increase the cost of borrowing by raising interest rates, which curbs the rate of inflation. But Turkey's central bank has done the opposite. The rate has been cut three times since mid September, which is torpedoed the value of the lira. That means that if you want to buy anything or send any money abroad to your family, or if you want to get paid, there is a disincentive to use your national currency because tomorrow is going to be worth less than one. It's worse today. So what do people do? They seeking for stability? Where do they find it? They find it on the blockchain with stable coins. And so they can get paid or receive payment on the blockchain, meaning without using the traditional banking system from anywhere in the world.
Amir Mizroch:
Zengo is a crypto wallet. What makes it different and safer is that it's non custodial. What does that mean?
Ouriel Ohayon:
The best way to explain what it is it's the services where the user as the possession, the control and the ownership of the money, the crypto that he owns, as opposed to the banking world where you delegate the ownership of whatever you have to a third party in a closed system. Third party can be your back. It can be PayPal, it can be a crypto exchange, like Coinbase, or Binance. And they can at any moment in time, seize your account, shut down your account and take the funds that are into your account.
Amir Mizroch:
Sure. But they would need a series of authorizations. And you'd get warnings, right? In crypto, it seems like it's the Wild West, right? How do you keep people's their crypto their money, their identity safe.
Ouriel Ohayon:
So in traditional noncustodial environment, or decentralized wallet, because you are in control, the words are going to give you a very long security phrase is called technically, are in jargon, a seed phrase, that's a bunch of letters and numbers. So that's private keys, a seed phrase would be a random string of 12 or 24 words. It's a basically a very, very long password. And so you put that into a crypto wallet instead of a login and a password, and it will magically give you access to your account your funds and your ability to spend it. This is extremely intimidating and scary because if you lose that long password, that seed phrase, it's game over, right? You lose completely human. And there is no I forgot my password button. You know, at least with the banking system, you can call someone and sometimes they can save you and retrieve transaction in crypto, you can't do that. We invented a new way to do self custodial wallets or while it's controlled by the user. We have created a system that works without passwords completely. Imagine a vault the access to that vault is one key versus a vault where you have multiple keys and They don't look like each other, but you need to have all of them to open the vault. If one is missing, the vault will stay locked and will not be stolen. So MPC is basically the closest equivalent to that MPC stands for multi party computation way of multi signing vault, if you want the old wallet, if you want to call it that way. Basically, it eliminates the risk of falling on the other single point of failure type of exposure and attacks.
Amir Mizroch:
When you say wallet, you're meaning a screen where I have a dashboard, that kind of is in my account,
Ouriel Ohayon:
it's obviously not a wallet, what it is what we have in our pocket, I'm going
Amir Mizroch:
to press pause on the story itself, as best I can, and you tell me when I'm off, and then I'm going to try and end up at how this wallet works. I think this is kind of the core innovation here. For many, many, many people, traditional banking, traditional finance is the only way but it's seriously flawed, as we've seen for so many years. Crypto was this idea that you could have decentralized there wouldn't be banks and central banks and governments. And there's a lot of innovation. But that's also become a complete cluster something however, business is not as usual, but it's still going. There's still investments happening. There are still people who want to build a future financial path on this blockchain decentralized blockchain. One of the companies that is doing this in a way that's different is your company Zengo, which has developed a wallet and account mechanism that is different from many of the other wallets in the sense that the mathematics used to give you that account and serve it up to you in a way that is safe and secure is called multi party computation MPC. How does that sound does that kind of sound overall, that's
Ouriel Ohayon:
a fantastic way to frame that if you need a job when they let me know. It's really, really clear.
Amir Mizroch:
Okay, so now the old way was having cryptographic computations, digital handshake that's kind of blowing up. What is the Zengo approach?
Ouriel Ohayon:
The old way is to use I'm going to use technical word I apologize in advance for that the private public key paradigm or technology. What does that mean is when you create a blockchain account, you will be given the public capabilities like the destination, the i ban equivalent of your account where you receive the funds, or your crypto. And the private key is a very long password, very gibberish password that allows you to not only access your account, but to spend the money that is in your account, right? So public private key cryptography is traditionally our crypto accounts are being architected built in engineered. The problem with that is that you asked to the user to save keep his private key in a place that is safe. And no one really knows how to do that. Because no one is a security expert. And what happens, accidents happen, you lose it, you misplace it, someone is going to take it and use it instead of you and to lure you into all sorts of phishing scams. And those accidents have happened at scale for the past 10 years. So that doesn't work. So what do we do here with Zengo. So we're using multi party computation. It's been around for three decades, we've just made it applicable to the world of wallets. The idea is that instead of generating one single secret, that alone can control everything. You basically generating multiple secrets that together are going to be able to control everything. Okay? It sounds like a minor difference, but it's actually your huge one. If one of those secrets is lost or is compromised, then the system is not compromised.
Unknown:
over $150 billion in three days, that's how much the world's 15th largest cryptocurrencies lost in market value. You have a lot of thieves and con artists and scammers who have gotten rich off of the backs of ordinary folks like you and me trying to invest in something to multiply our hard earned money.
Amir Mizroch:
And let's say I'm a person that is trying to do some smart investing, right? And I'm also despite everything that I see around me, I'm gonna get a little bit into crypto and I want to do it securely and safely. I don't want to go crazy, but I'm going to get a wallet that seems to be the kind of the new next generation of security. I guess the one question I still have is, if I want to use any of this crypto, try and turn it into what's called fiat money. So where does the crypto world and the traditional financial world began on Zengo? How does that work?
Ouriel Ohayon:
So you can do that straight in the wallet. It's very, very simple. You can use credit cards, bank wires, Apple pay Google Pay very soon ACH. And you can use that in 150 countries in the world, we say how much you want to sell, you give your bank details which you want to receive your payment. And it depends on your bank. But in Europe, for example, it can be instant in some other countries can take up to three days and it arrives into your bank account.
Amir Mizroch:
Is there any thing about the way that the media write about your company or that that you feel that people are not kind of getting or the tech media or the crypto media,
Ouriel Ohayon:
we do something that is radically new and unconventional to how crypto has been being done for the past five years. In the past couple of years, everyone has been told and repeated over and over again, if you don't have a seed phrase, this long password, then you are not in control of your crypto, this is the only right way to do crypto, we come with a new model where we say well do this, the security can be done in a different way it can be architected differently. And so people immediately have a natural instinct to say that it's not possible. So the good news today is that we're not the only one to explain it. So if I the magic wand and the wisher about how media was going to cover it was going to try to cover it 360 trying to explain how the world was before how it's changing today. And who is adopting this kind of solution to just show that it's not just one little company in Israel, well, not so little anymore. But in Israel doing that. But this is a true industrial evolution.
Amir Mizroch:
Last question from me and potentially the most important, why should anyone outside of the crypto native world care about Zengo and what it's doing and what it represents?
Ouriel Ohayon:
We have invented the first wallet system in the world that works without passwords, regardless of the fact that we are crypto or not. It's an innovation in itself. It's very, very clear the world of finance is in trouble at large, right? You know, stocks have melted, the inflation has never been so high ever. That means that the value of your networks as melted during the past two years, you should not invest in crypto if you don't understand what you invest in. But you need to be curious about how crypto is working because it offers a new path to financial adoption, and to wealth building. That's what we meant by becoming your own bank.
Amir Mizroch:
Excellent. Thank you very much for being on the Dejargonizer.
Ouriel Ohayon:
Thank you very much.
Amir Mizroch:
There are several reasons why the public should keep an eye on crypto innovations despite the problems and scams. cryptocurrencies have the potential to become widely adopted as a means of exchange if the whole industry just cleans up its act. And lastly, a small allocation of crypto in your investment portfolio could diversify risk, especially when stocks and bonds are being hammered. But what do you think? Let me know by leaving a review or comment on your favorite podcast app or on substack at thedejargonizer.substack.com. The Dejargonizer is produced and edited by Astrid Landon