Will Ledger... Recover?

Weekly recap: Ledger's disaster, Dogecoin's opportunity
May 20, 20233 min read

Dear Bankless Nation,

Ledger had a disastrous week, and it isn't clear whether users are going to forgive and forget.

For our weekly recap, we dig into:

  1. Ledger's PR disaster
  2. Congress wants OpenAI to regulate AI
  3. Worldcoin launches App
  4. Dogecoin releases DRC-20
  5. CBDCs banned in Florida

- Bankless team

📅 Weekly Recap

1. Ledger's PR disaster

This week, Ledger found itself embroiled in a brutal PR crisis after announcing its social recovery service, Ledger Recover.

Ledger Recover is an optional, subscription-based service that acts as a backup for users who lose their private keys. Recover splits your private key into three encrypted pieces to be sent through “secure channels” to three different custodial entities, one of which is Ledger themselves. For the full private key to be restored, all three shards are needed.

Drama ensued when critics perceived this as a preinstalled 'backdoor' on Ledger devices, seemingly contradicting years of Ledger marketing messaging that the private keys of users could never be exposed.

In an attempt to dissuade user discontent, Ledger seemed to make it worse by telling users “you have always trusted Ledger not to deploy such firmware whether you knew it or not”. Co-founder and previous CEO of Ledger Éric Larchevêque cited the episode as a “total PR failure, but absolutely not a technical one”.

So are Ledger wallets safe? The gist of it is: yes they seem to be. But Ledger's fiasco this week showcased that users still have to place some trust in the company.

For all the details, see the full Bankless episode with Ledger CTO Charles Guillemet.

2. Congress wants OpenAI to regulate AI

OpenAI CEO Sam Altman was dragged before Congress this week.

Artificial intelligence threatens to displace the job market, and lawmakers on the Senate Judiciary subcommittee on Privacy, Technology and the Law want to know how OpenAI plans to self-regulate artificial intelligence.

Altman acknowledged that AI technology could “go quite wrong”, that there will be an impact on the labor market, that it could erode democratic institutions through targeted misinformation during elections, but that he wants to “work with the government to prevent that from happening”.

He recommended a new regulatory agency to be formed to regulate and license AI companies and said that OpenAI should be independently audited.

Senators in the subcommittee raised the need for new laws so OpenAI could more easily be sued. Senator Richard Blumenthal said that an AI-dominated future "is not necessarily the future that we want".

3. Worldcoin launches App

Worldcoin, the digital identity project by ChatGPT co-founder Sam Altman, widely launched its World App crypto wallet this past week. The app already boasts 1.6 million registered users, of which 500K are active users.

World App hosts an open source and self-custodial wallet, as well as World ID, a digital identity authenticator for users to sign into websites or crypto dapps, claim UBI-like “Worldcoin Grants,” and send crypto.

The app was built on Polygon but recently committed to migrating to Optimism’s OP Stack.

4. Dogecoin releases DRC-20

When you’ve successfully launched an enduring memecoin and secured the backing of Elon Musk, the next logical thing to do is… make more memecoins.

Taking notes from Bitcoin’s success with the Ordinals protocol, Dogecoin developers introduced their own DRC-20 fungible token standard this week, paving the way for a potential DeFi ecosystem to be built on top of it.

Transaction volumes on the chain immediately pumped to all-time-highs of 1.1 million transactions as of Wednesday, surpassing Bitcoin and Litecoin chains.

Not everyone is behind it though. Some dogecoin loyalists are unhappy with how this may lead to higher fees, network congestion and dilution of Dogecoin’s true purpose of being used as money.

5. CBDCs banned in Florida

Florida Governor and expected 2024 presidential candidate Ron DeSantis has signed a bill banning the government’s use of a central bank digital currency (CBDC) in the state.

Casting CBDCs as “Big Brother’s Digital Dollar,” DeSantis has heavily embraced a pro-crypto policy platform that rejects CBDCs as an authoritarian tool that governments can use to curtail the financial freedom of Americans.

📺 Bankless Weekly Rollup

Other news:

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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