The power of the Middle Empire and its neighboring co-country Taiwan on the blockchain is breathtaking. BLOCKTV interviewed Michael Ou, CEO of Taiwanese hard wallet powerhouse CoolWallet S, who recently launched his product in America. With the help of 26 collaborators, Ou built one of the most cutting-edge hard wallet products on the market.
In a lengthy conversation with BLOCKTV, he explained the innovation his product brings to the market, replacing cables with Bluetooth.
I am Michael. I founded the company in 2014. In the beginning we were trying to figure out what was the problem with cryptocurrency investment. We figured there was a lack of tools that could allow people to trade and to facilitate the purchase, and holding cryptocurrencies in a safe, easy-to-use way, and that resulted in the slow growth of the crypto expansion and mass adoption. The result was that the price wasn’t going to the moon. So, to solve that problem, we built something that is super easy and safe to use.
Back then, we saw a lot of news about 'this individual gets hacked' or 'that exchange gets hacked,' so a lot of cryptos lost to hackers. And the reason we think was that there was hot wallets and pure cold storage. Hot wallets are the ones that operate in pure internet-connected environments like smartphone apps, laptop softwares, and websites. So all these three types of wallets are vulnerable because they store the private keys of your cryptocurrency on hackable environments. On the other hand, there’s hardware wallets, and the classical options are ledger, trezor, keep key. They are USB-based wallets, meaning they need a USB cable and a laptop for users to access their crypto. We think that’s a very big issue.
Nowadays, moms and pops, and mainstream people won’t just carry their laptop all day all the time. The best access they have is the smartphone. We are in the smartphone era already. Somehow these classic options of hardware wallet only support USB, so we figured we had to make a combination of both ease of use and good security. So, since 2014 we’ve been building the easiest to use wallets. Currently, we are on the second generation.
I don’t know if you have any experience using a hardware wallet?
Other hardware wallets are the size of a USB stick. So in general you need an extra pocket to carry it. We squeezed the whole USB and smartphone device into this tiny piece space that looks exactly like a credit card. It has the exact same dimensions. When you push the button, it turns on, and it’s polite. When you turn it on, it says “hello.”
The screen shows you the amount of Bitcoin you have, and if you push the button again, it gives you all your different assets.
It doesn’t give out your public key. But they get something called recovery seed phrase. It’s a seed of your hierarchical deterministic wallet. In a hierarchical deterministic wallet, you have theoretically unlimited amount of private and public keys, but it’s impossible for a user to remember all that or to write it down. We use an algorithm to calculate all private keys with that seed phrase. It’s a set of 10 to 24 English words or numbers. When you first set up the wallet, the app will ask you to write them all down on a piece of paper. That recovery seed phrase is only used when you lost your card or your phone. That will give your card your private key, and only inside the secure element of the card.
The way it works is if the user makes a transaction on his phone of, for example, XRP, he verifies his address and the address he wants to transfer to. He fills in the amount and before he completes the transaction, he turns on his CoolWallet S card. After the phone does biometric facial recognition, the app tells the card to prepare a transaction of one XRP, and the wallet tells the user to verify the amount that is being transferred. So there are no manipulations. There may be instances when hackers are remotely controlling your phone, so if the user sees any transfers he didn’t authorize, he doesn’t click the button on the card to confirm them.
This process only takes 10 to 15 seconds, in comparison to any other USB-based hardware wallets in which you need two to three minutes if you are very familiar with the process. Sometimes it takes five to 10 minutes.
We are now a team of 26 people and 70 percent of them are developers.
This is the smallest we are going to get, but we intend to add more functions into the app. So now it’s not only storage, receive and send, but also exchange, meaning if you’ve received XRP already and you see the market price fluctuating, and you say, “I want to sell my XRP and get Ethereum instead,” the app will tell you the instant rate of that exchange. You fill in the amount, click 'Next', and get Ethereum in return. So basically an exchange function is built into the app. So it’s the world's first hardware-to-hardware exchange environment.
It’s a third party we work with. Currently Changelly.
We delivered the first batch of our beta version in 2015. Up till today, we've sold 105,000 units.
If the user copies and pastes an address into the app, it tells him if it’s a fraudulent address or not. There are pyramid schemes and phishing addresses, or fake addresses, so this shield prevents you from sending funds to that kind of address. That kind of attack does not require your private key.
What we do better than other hardware wallets is that we practice the 2+1 authentication. You've probably heard of two-fold authentication. In the market now, other wallets have 1+1 authentication, which means if you have their hardware wall, like you stole it, the only thing you need to get the funds inside is a pass code, say six digits. Once you have the device and those numbers, you are in. Our card only communicates with a previously paired phone. So, if you have the app on your phone and you pick my card, they won’t be paired. So that’s authentication number one, recognition of device. The second is that when you need to make a transaction, you need to have access to the card with Bluetooth, just by pushing the button, so you need to have physical access to the card. The third is biometric, facial recognition.
We’ve been doing quite OK in Japan, Korea, and China, and we are looking to expand.
Editor's note: Since the interview, Cool Wallet S reached out to BLOCKTV and stated that their sales have been going really well after price change and the ERC20 token function.
There are restrictions not only to ICOs but also cryptocurrencies and even crypto media. For example, on WeChat, the largest Chinese messaging app, there used to be a lot of media groups where people shared cryptocurrency news and messages. Most of them were also closed down.