Michael Shaulov with Fireblocks joins us to discuss a new way to securely store & transfer digital assets.
Michael is the CEO and co-founder of Fireblocks, a secure digital asset infrastructure company. Prior to Fireblocks, he co-founded Lacoon Mobile Security, which was acquired by Check Point, and was then appointed the Head of Products, Mobile, and Cloud Security for Check Point. Michael is a serial cybersecurity entrepreneur and investor. He is also a recognized industry speaker, delivering talks at RSA Conference, BlackHat and Infosec. Before his commercial endeavors, Michael pioneered the mobile security field in an elite military technological unit (8200), where he received the Israeli Presidential Excellency Honor for his contributions. He holds a BSc in Computer Sciences and Physics from Ben-Gurion University, Israel.
*Disclaimer. None of this information is financial advice.
The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:00:00:04 – 00:00:12:18
Richard Carthon: Hello everyone. Welcome to another episode of Crypto Current, your host here, Richard Carthon and today got a very special guest with me based out of New York. We have Michael with Fireblocks. How are you doing today?
00:00:12:20 – 00:00:14:01
Michael Shaulov: I’m doing well, thanks for having me.
00:00:14:03 – 00:00:20:10
Richard Carthon: Of course, of course. Well, before we go ahead and dive into today’s episode, how about you give us a little bit of background on yourself?
00:00:21:12 – 00:01:16:22
Michael Shaulov: Sure. So I spent the last 20 years actually in the cyber security space, mostly working for law enforcement agencies in the cyber space and then in 2011, I started my previous company. It was focused on that cyber security for mobile devices for enterprise customers. We worked with a lot of banks, insurance companies, like big high tech companies. In 2016, we got it. We were acquired by Checkpoint, which is one of the biggest cyber security vendors and I was running their mobile and cloud security business for about three years and then in 2018, basically started Fireblocks with two of my co-founders and current MTC co-founder of Fireblocks.
00:01:16:24 – 00:01:26:15
Richard Carthon: Gotcha, okay. So give us a little transition into you know what was your very first introduction into the cryptocurrency and blockchain space, like how did you first hear about it and then what made you want to get more involved?
00:01:26:23 – 00:02:29:12
Michael Shaulov: Yeah, so that’s an interesting question. To be quite honest, I think the first time that I heard about Bitcoin and cryptocurrencies was actually in 2011 and I’ve tried to buy with a bitcoin myself, but funny enough, I was just traveling and for whatever reason, I did manage to pass that KYC for it was like Mangone, I don’t even remember where I was trying to buy it. And I wasn’t really involved in the Bitcoin and the cryptocurrency space for a while and then in 2017, when I was working for Checkpoint, because we were sort of one of the biggest cyber security vendors and specifically my team was one of the world leading teams in researching a mobile security attacks and mobile breaches, we got pulled into the investigation around the breach that happened in South Korea.
00:02:29:14 – 00:03:15:14
Michael Shaulov: So for exchanges in 2017, and for cryptocurrency exchanges in South Korea were hacked by what you know, later on was discovered to be the North Koreans and about 200 million dollars basically were stolen over there. So we were part of that investigation team that was trying to understand what exactly happened and that’s what like drove my attention to the space and to the ecosystem and to everything that was going on and I started to basically educate myself around blockchain and Bitcoin and you know, talked with a lot of institutional parties that were active in this space and I think like you know, that’s essentially what pulled me into getting involved and doing what we doing now.
00:03:15:16 – 00:03:47:12
Richard Carthon: You know, you’re working on another company and all of a sudden you’re put on this pretty tall task of you know, figuring out what happened and you discover you know, the Korean attack or whatever of how they were able to from a security standpoint do all this you’re like wow you know, here’s this opportunity in this new found technology, let me educate myself, now let me create something that could be beneficial to others. So was that like the premise of Fireblocks? So tell me about like, how did you come up with the concept of Fireblocks and and how is it being used today?
00:03:47:25 – 00:04:36:22
Michael Shaulov: Yeah, so that was more or less sort of what happened. Essentially what we understood is that there’s, you know, in 2017, most of this solutions out there, whether for consumers you know, retail investors in cryptocurrency or for even you know, the high end institutions like the big exchanges, they were mostly relying on I would say two things. One is like, called storage or a harder case that they would use to store the assets and first and foremost was very clear that this act, this kind of technology or this kind of capability, is not really sufficient for the use cases that crypto was designed for, right?
00:04:37:06 – 00:05:16:11
Michael Shaulov: You have this virtual asset that’s supposed to be the data that’s money, but what you’re actually asking people to do is to disconnect from the internet by then basically creating an environment that is fully isolated from everything that is online and that actually made a lot of sense. And the second thing that we discovered is that the actual issue or the security issues or the operational issues that folks have with crypto and Bitcoin and blockchain we’re actually not specifically around how they store the assets, more around how they can transfer those assets securely, right?
00:05:16:13 – 00:06:36:13
Michael Shaulov: So I strongly believe that the main use case still of a lot of those cryptocurrencies is around you know, transfer of value whether it’s payment or whether it’s other use cases and in order for this actually to function, you need to be able to move those assets really quickly between if you want to pay someone with stable coin or with any other asset, you really want to do this action quickly and you want the value to move immediately to the other party. And right now, sort of the protocols or the system is not really designed to do it because you have a lot of issues around deposit addresses and spoofing and human errors that exist doing that. And what we essentially created is a solution and essentially a network that allows at the moment, primarily institutions, but we do see how we can sort of extend it to that B to C use case as well to really quickly and securely transfer those assets, to store those assets in a storage that you know, that they’re immediately available and yes, secure.
00:06:36:15 – 00:07:33:26
Richard Carthon: Right. And I mean, even when I was like first looking into Fireblocks and just you know, digging some information, you bring up a really good point and a challenge that I definitely faced when I first got into the crypto space of the stress that you have when you’re trying to transfer money either from your crypto wallet from an exchange. So for me it was Coinbase and then I had a cold storage wallet and I was sending myself money and you know, it was stressful making sure that my keys lined up and like, understanding like here’s how it works and oh there’s a transaction fee and like all of these elements. It is a high friction and not very easy initial experience to figure out and it seems like what you’ve done in what Fireblocks has done is create a more frictionless and more easy and secure way for people to either send themselves money or send others money in a very secure and easy way.
00:07:34:09 – 00:08:49:29
Michael Shaulov: Yeah, exactly. So I think that at the end of the day it all boils down to efficiency and user experience, right? So I think that there are still a lot of comments around that crypto is sufficiently simple, right? For like calling people to use and to jump in and you know, it doesn’t have to be my grandma, it can even be just you know, regular folks that are involved in finance or merchants or whoever that we definitely see that crypto, several coins, blockchain, although those technologies are really going to simplify, create transparency, create access, make it cheaper for folks to operate, but simultaneously, if it’s so complicated to understand how to use it, if you have so much room to make an error that will end up in sort of full loss of that transaction, then clearly you understand why we don’t see this mass adoption.
00:08:50:01 – 00:09:18:16
Richard Carthon: Definitely. I mean and that’s the point of all of this right now, is we have to get to the point where it’s easy in the user experience if you can come on and not really need a whole lot of directions and understand what’s going on and how I can use this. And it sounds like what you are doing is trying to create that experience in security to make sure that whoever comes on and uses Fireblocks is able to securely exchange their assets in a very easy fashion.
00:09:18:25 – 00:09:20:00
Michael Shaulov: Yeah, exactly.
00:09:20:02 – 00:09:32:12
Richard Carthon: So with that, one of the things I was curious about though you know, you’ve been, as you said you’ve been in this space for quite a while now. You know, what are some different or various projects that has your attention at the moment?
00:09:34:00 – 00:10:59:13
Michael Shaulov: So I think you know, for us, we still have actually a fairly long roadmap in terms of creating essentially like you know, opening up the technology and opening up the networking type of it is to introduce more and more market participants into Fireblocks and to the simplicity and the security of moving those assets. But you know, I think through that activity and through we actually being exposed to quite a lot of different projects and initiatives, so some of the things that we are really excited about, I mean, not to say that I knew, but I think that they are picking up and are very interesting. For example, DeFi technologies, specifically one of the projects that I’m most excited about is a project called Compound, that is a decentralized lending and borrowing platform. We actually raced integration as it was Compound a couple of months back and it was Cydia adoption and the institutional space and sort of fascinating what they’re able to do and essentially how they are really able to show that you can disintermediate traditional functions that are usually centralized. So you know, that’s probably one.
00:10:59:15 – 00:12:38:15
Michael Shaulov: There’s another really cool project that is called X Margin, a star app that does what they do, it’s mostly for the institutional space. What they are building is cross margining capability that active traders can basically operate in a very efficient way across multiple exchanges and then take positions. So what they are basically doing is that they’re reinventing the way that prime brokerage looks like in the traditional space domestically disintermediating that function and bringing it to you in a much more native way to crypto. And just like you know, in a very high level, the area that I’m probably most excited about is the area around stable coins, where I think you know, liberalised making great progress in terms of being ready to launch and carry their other projects like you can see and we’re seeing more and more of those ethics currencies being launched and for me this is one of the most exciting use cases because you really, you see the impact in terms of how it you know, optimizes and innovates payments and cross-border payments and just makes things much more simpler, cheaper and faster.
00:12:38:17 – 00:13:11:16
Richard Carthon: Yeah. And I appreciate you speaking on those three various projects and actually I want to expand on this a little bit more because there are quite a few stable coins out there and it seems there are a lot of opportunities in that space right now. And what is it specifically? And I know you said like you know, cross-border and the fees being less and just making everything simpler, but like what is it about the stable coin that you think, or stable coins in general especially even like a Libra, that you think is just going to be a game changer in this space?
00:13:12:00 – 00:13:39:04
Michael Shaulov: Yeah. So maybe just to give some idea what we’re seeing, right? From where we stand. So you know, in terms of Fireblocks, we are currently securing 9.5 billion dollar flow per month, right? So like, the last thirty days we basically secured from our wallets and through our network 9.5 billion dollars of digital assets were transferred.
00:13:39:09 – 00:13:39:24
Richard Carthon: Impressive.
00:13:39:26 – 00:13:52:21
Michael Shaulov: Now the vast majority, I think 60 percent. Yeah, it’s like a fairly large amount and it’s almost doubling every two quarters, right?
00:13:52:26 – 00:13:53:11
Richard Carthon: Wow.
00:13:53:13 – 00:14:47:10
Michael Shaulov: So in the beginning of this year we were at four and now we’re already at nine, so it keeps growing, it’s great. But the interesting fact is that while 60, I think 50 or 60 percent of it is still Bitcoin, around 20 something percent is actually stable coin. So one last time I checked it was 1.8 billion dollars out of this 9 billion was a stable coin volume. There is still the king, right? So it is still probably like 70 percent, but the amount or the ratio of USTC, the second Coinbase stable coin is actually growing. So it’s now it’s just like you know, in our flow it’s about 20 percent at the moment.
00:14:47:21 – 00:14:48:06
Richard Carthon: Okay.
00:14:48:08 – 00:15:59:15
Michael Shaulov: Now when you sort of start looking into why people are using it, right? There is really a lot of usage of those stable coins in terms of at the moment on the speculative side, right? So basically hedge against the movement of the traditional assets, sorry, out of those notaries assets that hedge against that the volatility of the bitcoin, but we do see quite a lot of sort of cross-border movements. At the moment specific, I think around the areas where those movements are quite expensive, where there are capital controls, where there are the fees to basically get to you know, just regular currencies in and out from a country are cost prohibitive. So we see those things, which you know, I guess you can they somehow fall into the categories of fair remittance. And also we and others are currently sort of in the early stages of leveraging stable coins for just regular payments.
00:15:59:17 – 00:16:18:28
Michael Shaulov: So I’ll just give an example, we’re actually incentivizing our customers that are paying us monthly. And the contracts, I mean our contracts are quite large, right? So like you know, quite a few of them are paying thousands or tens of thousands of dollars per month, right?
00:16:19:14 – 00:16:19:29
Richard Carthon: Okay.
00:16:20:01 – 00:17:25:17
Michael Shaulov: And while you know, traditionally people would do those payments through wire or ACH, the problem with that, let’s say that like wire is an example. So if we have a customer in France that is paying us through our U.S. bank or through our Israeli bank, then it usually would take you know, like three days to appear in our bank account. We actually don’t know when it’s going to show up and you know, we pay around 100 dollars for the transfer with stable coin. So now we’re basically incentivizing or we’re asking our customers to pay us with stable coins and it takes 15 seconds, it costs less, usually less, depending on the fees, but usually it will cost us 15 cents to basically sell that transaction. And just instantaneous, we can track it, just beautiful. I mean the fees that you save, the speed, sort of like you know, shows you like you know, where the future is.
00:17:25:19 – 00:17:58:10
Richard Carthon: For sure. And I think the power in that is speed. Speed, convenience and affordability. And especially from a security standpoint when you think about a bank in the first place, your ACH and all that you’re just making sure that you can securely send a good amount of money. And even though like, technically two or three days is fairly quick from a banking standpoint, the fact that you can now do this in minutes or you know, hours compared to days like it’s just.
00:17:58:12 – 00:17:58:29
Michael Shaulov: Seconds.
00:17:59:28 – 00:18:16:07
Michael Shaulov: Yeah and you know, it’s sort of seconds with all the twenty base tokens and things like Libra or I’ll go on they’re going to basically you know, move it to a second or a split of a second.
00:18:16:09 – 00:18:35:09
Richard Carthon: Which is incredibly powerful and definitely something everyone here listening should be paying attention to and keeping you on the ground. So appreciate you putting that on our radar. But Michael, really appreciate all the information you’ve dropped on us today and I really would like and appreciate it if you would leave a final thought with all of our listeners here today.
00:18:35:11 – 00:19:30:20
Michael Shaulov: Yeah so, I think that the next 12 to 18 months will be quite interesting because we’ll see a lot of the big projects coming into and you know, moving into production. And I think that a lot of the folks in this space will probably, you know, we need to continue and focus on making things usable and sort of propagating them and educating the mass market on the benefits of using this new technology. And I think that’s really with everything that’s going on at the moment in the world, you know, the economic changes that we see I think it’s a huge opportunity for everyone who is involved to really lever it you know, in a quite a weird way to actually leverage that because usually those are the points in time that you can actually credit.
00:19:30:29 – 00:20:25:25
Richard Carthon: Definitely. And there is so much, I mean I don’t want to call it a perfect storm, but there is just so much going on in the world environment between COVID, what’s going on in the U.S. with unemployment, global recessions basically going on right now. And the whole point of crypto being made in the first place in response to the recession of 2008, just the attention that was on cryptocurrency, I think that might’ve start to really happen in the next five to 10 years it’s just been expedited and a lot more eyes are looking into this space as an opportunity and as a way to really hedge against a lot of the world, everything that’s happening in the world between inflation and between just even some scenarios, hyperinflation.
00:20:25:27 – 00:21:16:01
Richard Carthon: But as more attention is brought here, it’s going to be more and more important for secure ways to be able to move money and to be secure and how just institutions, but just large quantities of money can be securely passed from institution to institution or person to person and just having that quick and easy user experience and having all that flow and I really just think your statement rings really strong as well. As like, for everyone listening you know, Fireblocks could be a really good way for you to have an opportunity to be a little bit more or feel a bit more secure with how all of this is happening so I really do appreciate you saying that and for leaving all the information that you did today.
00:21:16:03 – 00:21:16:18
Michael Shaulov: Yeah, thanks for the time.
00:21:17:03 – 00:21:17:18
Richard Carthon: Of course
00:21:17:20 – 00:21:23:21
Michael Shaulov: Appreciate the time, appreciate you guys inviting us to the podcast.
00:21:23:23 – 00:21:27:26
Richard Carthon: Of course. So what are some different ways that people can connect with you and learn more about Fireblocks?
00:21:28:15 – 00:22:28:25
Michael Shaulov: Yeah of course. So have our website, Fireblocks.com. You know, if you are an institution, you can go to the website. There is a lot of information over there, you know, videos and so on, white papers. And we provide the trials and demos of the platforms, so there is about enough there to request us to to contact you and engage. And we’re really looking forward to engaging with as many folks as possible on the institutional space to make sure that we sort of transform into something that is extremely secure. And just looking back at some of the things that Goldman published over the last week. You know, a lot of what they mentioned was around the insecurity and this clearly has to be resolved. And I think that it’s up to all of us to make sure that we use the right tools and definitely Fireblocks is something that can help that.
00:22:31:01 – 00:22:37:19
Richard Carthon: For sure. Well, again make sure y’all connect with Michael and everything that’s going on with Fireblocks and for everyone listening, stay Crypto Current.
Crypto Current will be guiding all of you who are new to the cryptocurrency world to becoming a cryptocurrency and blockchain expert. Crypto Current was founded to give access to information to everyone on current events occurring in cryptocurrency and blockchain in a digestible way. Since its creation, we have created content that impacted thousands of people through its podcast, blog, and social media.