Dialogue OneKey Wang Yishi: The coverage rate of hardware wallets may be less than 5%, but the dividend period is still far away

Interview: Zhu Enmin, Chain Catcher

Interviewee: Wang Yishi, Core Contributor of OneKey

In 2022, despite the Web3 concept pushing the crypto industry to new heights, numerous incidents of platform bankruptcies and thefts still cast a shadow over the crypto community: how can asset security be ensured? After software wallets exposed various issues, some people turned to hardware wallets, attempting to establish absolute security through this physical isolation method.

In the field of hardware wallets, the Chinese startup OneKey has attracted significant attention. Its classic product, OneKey Classic, combines security with user experience and has received endorsements from many industry KOLs. Its founder, Wang Yishi, entered the industry in 2013, having translated and published many articles on the crypto industry on the Babit forum during his early years. He later worked for institutions such as Babit, CoinX, and ByteDance, and has had several entrepreneurial experiences. Various opportunities led him to focus on the hardware wallet sector and continue to cultivate it for several years.

Recently, Chain Catcher invited Wang Yishi for an in-depth dialogue. During the nearly three-hour conversation, Wang introduced the security value of hardware wallets, market trends, and usage recommendations. He also shared his entrepreneurial experiences in the crypto industry and his calm reflections on Chinese entrepreneurs going overseas, clarifying misconceptions from the Web2 industry. Additionally, he expressed his thoughts after ten years in the field.

Wang Yishi believes that hardware wallets are the last line of defense for crypto users, suitable for storing important cold assets. With the optimization of user experience and cost, hardware wallets will become as popular as USB drives. He reminded from his own experience that entrepreneurs must not get carried away; they should focus on whether they are creating real value for users. Below is the full dialogue.

1. If hardware wallets could be as cheap as Xiaomi bracelets

Chain Catcher: Please introduce your experience entering the crypto industry and the story behind founding OneKey.

Wang Yishi: I started learning about Bitcoin in 2013 on an IT forum while I was still a junior in civil engineering. After learning about it, I immediately looked for the Bitcoin white paper, but I couldn't understand it. After searching extensively, I found the Chinese version of the white paper translated by Wu Jihan on the Babit forum and thought it was incredibly cool, completely different from anything I had encountered before. At that time, there was very little information about the crypto space in China; there was basically only Bitcoin Magazine and an old forum called bitcointalk.org, which was popular in a small circle where everyone was purely interested.

My first Bitcoin was bought through a person on Taobao, and back then, it was easy to buy a whole Bitcoin, which is now very difficult. I remember when I first held Bitcoin, I was trembling, feeling like I was truly participating in a great social practice. When my wallet's transaction records synced to the blockchain, I was extremely excited, thinking, is this what it means to be on-chain? After getting involved with Bitcoin, I translated a lot of primary materials from CoinDesk and Bitcoin Magazine and posted them on the Babit forum. Song Huanping noticed me and privately messaged me on Weibo asking if I wanted to start a business together. The next day, I bought a plane ticket and went to join the early team at Babit near Zhejiang University.

In 2014, I wanted to change direction, so I went to BitFund, mainly responsible for project evaluation and working on some projects myself. However, the market was very poor during those two years, and the price of cryptocurrencies plummeted. I remember buying from 5,000 RMB down to over 800, and I ended up with nothing, and the projects weren't doing well either. Later, I worked at ByteDance for over half a year. Then, the founder of CoinX, Xingkong, found me, and I transitioned from part-time product design to a full-time role. During this time, I briefly left to start my own venture in 2018 and took some time off until I returned to CoinX in 2020.

The OneKey hardware wallet also spun off from CoinX. While I was responsible for CoinX's internal hardware encryption devices, I realized they could also be commercially viable. Initially, it became a hardware wallet called "CoinX Key," and later the R&D team secured funding, and it now operates as an independent company.

Chain Catcher: Why did you choose such a niche field as hardware wallets? What pain points currently exist?

Wang Yishi: Before security incidents became as frequent as they are now, people rarely paid attention to hardware wallets or the hardware branch of Web3; hardware wallets have always been a niche area. I chose to work on hardware wallets because exchanges, custodial wallets, and mining pools were already well-developed by others. Unless I could improve the product or user experience tenfold, I wouldn't be able to compete. OneKey started as an internal tool for CoinX, but later we found that users liked it, and through various coincidences, we decided to pursue it.

The main issues with hardware wallets include blind signing, interaction methods, and user experience. Regarding blind signing, the key aspect when using a hardware wallet is the consistency between the signed data and the real data on-chain. This data is usually ABI, requiring parsing for each contract, which is a massive workload. In terms of user experience, the overall experience of hardware wallets, including both software and hardware, is still very much like early 1990s beepers; it's still in a very primitive state.

Many people do not use hardware wallets, partly because of poor user experience; the guidance process is too high a barrier for novice users, and the software support is lacking. Secondly, there's the pricing issue. When users are uncertain about the value a hardware wallet can provide, a price of one or two thousand yuan can deter many. Price is a crucial factor. If the price of hardware wallets could be as cheap as Xiaomi bracelets, the barrier to entry would be lowered; even if they are not user-friendly, losing one wouldn't matter. When users personally experience the benefits of the product, they will be willing to use it.

Chain Catcher: What are the differences and highlights of OneKey compared to other hardware wallets?

Wang Yishi: Currently, the two main players in the hardware wallet market are Ledger and Trezor. Trezor is the world's first hardware wallet but lacks a secure chip; Ledger has many users, but the firmware of its secure chip is not open-source, which is not very Web3; users can only trust that Ledger will not do harm. Compared to Ledger and Trezor, OneKey has taken a middle path, maintaining open-source while using a secure chip. It can be understood as "a Trezor with a secure chip," and it is currently the best-experienced and most balanced hardware wallet on the market.

The biggest difference between OneKey and other hardware wallets is that it is a truly fully open-source wallet, with both software and hardware being open-source. The software is not only open-source but also uses the MIT license, allowing others to use it commercially. There is a difference between true open-source and fake open-source. Previously, the Solana ecosystem wallet Slope uploaded users' private key mnemonics, exposing that many so-called open-source wallets on the market may not be genuinely open-source. I have an obsession with open-source; regardless of how well the wallet performs, open-source is more important.

Chain Catcher: Trezor and Ledger have both encountered security issues; are hardware wallets foolproof? How can ordinary users maximize the security of hardware wallets?

Wang Yishi: Trezor users were phished into entering their mnemonics via email, but software wallets can encounter similar issues; Ledger had user orders and privacy data leaked, but in reality, the assets were safe, and the leak was not caused by Ledger. These examples do not indicate that hardware wallets are unsafe; they only show that the data platforms used by hardware wallet service providers may be insecure, which indirectly indicates that software is inherently unreliable.

For ordinary users, a simple and effective method is to specialize and isolate as much as possible, separating cold and hot wallets, and separating small and large amounts. Store large amounts and cold assets in hardware wallets, while small amounts and hot assets can be kept in hot wallets; this can solve 99% of security issues. In the Web3 world, data is money, and money is data; isolating money essentially means isolating data, which is risk isolation. In my view, hardware wallets are like wrenches; they are excellent specialized tools that feel very low-profile and are suitable for storing important cold assets, which is a human need.

Chain Catcher: What is the market data for OneKey, and how are you promoting it?

Wang Yishi: In the overseas market, the industry leader is Ledger, which is about twenty to thirty times our size. In China, OneKey should be the number one due to its lower price and larger user asset scale. We haven't specifically spent money on promotions; early growth of OneKey was actually driven by some KOLs who promoted it voluntarily after experiencing it. Some employees from well-known crypto companies are also OneKey users; although we haven't formally collaborated with their companies yet, this is a particularly good signal.

Our promotion method is straightforward: we filter out users who are genuinely interested in hardware wallets and allow them to verify and promote the product through trial experiences. For OneKey, at this stage, spending on user acquisition is not very realistic; we focus on the product itself. The underlying logic is that the product itself is competitive, and we can confidently present it for users to compare. Once the product is polished to a very good state, we may consider some traffic investment.

2. Hardware wallets are the last line of defense

Chain Catcher: Will events like Celsius's bankruptcy lead to a boom in the hardware wallet market? What is the current market size for hardware wallets? What is the potential user base?

Wang Yishi: It's hard to say. There have been many security incidents in history, but the "retail investors" remain the same because their memory lasts only seven seconds. People will quickly forget and continue to use custodial wallets. In fact, similar security incidents or rug pulls serve as a signal to everyone: no matter how much you trust a platform, you must put your long-term large amounts of money into a wallet where you control the private keys, whether it's a software or hardware wallet.

Estimating based on the mainstream Ledger and Trezor, Ledger's global cumulative shipments are about 4.5 million units, with a significant proportion being multiple units per person, while Trezor has about half that. Roughly calculating, there may be only two to three million actual users of hardware wallets, accounting for less than 10% of the entire crypto user base, possibly around 4%-5%.

In the long run, I believe that for every two people in the crypto space, there should be one hardware wallet. Because the cost of hardware wallets will definitely decrease, the security of digital assets will become increasingly important. To make a somewhat inappropriate analogy, it's like USB drives; when the cost drops to dozens of yuan, people won't hesitate to buy them. When the cost of making a decision becomes very low, there won't be a psychological burden; they'll just buy it. If hardware wallets are inexpensive yet can ensure assets are never lost, it's essentially spending a little money to achieve a significant outcome.

Chain Catcher: From a human perspective, not carrying hardware seems more convenient. As software wallet security issues gradually get resolved, will hardware wallets gradually fall out of favor, like many people no longer using USB drives?

Wang Yishi: In terms of positioning, software and hardware wallets have diverged from the start. Software wallets focus on ease of use, providing more service functions to attract users while ensuring security. Hardware wallets, on the other hand, take a completely opposite route, fully distrusting software and only trusting themselves to act as gatekeepers. The different starting points determine that the two will increasingly diverge in product form.

A particularly core point regarding security is how we empower security capabilities. Security measures in Web2 products, such as email verification and customer validation, rely on the platform itself but do not achieve absolute security. From a security perspective, physical security is undoubtedly the safest; it requires complete network isolation for storage. Hardware wallets serve as the last line of defense, and this line is controlled by oneself. Even if all previous protective measures fail, the private key remains in one's hardware wallet.

3. Entrepreneurs must not get carried away; user willingness to pay is the measure

Chain Catcher: What major challenges have you faced during the OneKey entrepreneurial process? What advice do you have for new entrepreneurs entering the space?

Wang Yishi: From OneKey's experience, the first major issue is the people problem, specifically how to find someone who truly has ambition and determination for this cause, which is quite difficult. In the early days, OneKey was unable to establish a high standard for hiring, resulting in some hires not meeting current needs. From practical experience, an excellent engineer is ten times better than an ordinary engineer. This is a common problem faced by startups; it's hard for startups to compete with large companies for talent because people always want both long-term stability and high income, but startups find it difficult to meet these conditions and can only share a vision to attract people to join and build together.

Another issue for OneKey is some idealism. When developing functions and requirements, we didn't fully align with the market; sometimes we were just getting carried away, which is a frightening thing. If a startup feels good about itself, thinking it has solved a major problem, but in reality, users do not agree, that is not a good direction. I also reflect on the past, always wanting to solve a very difficult problem and tackle many of Web3's big challenges, but user needs may not be that complex; they may just need a simple solution to a problem. We may have overestimated the speed of new technology implementation and underestimated the impact after it is implemented.

We must pragmatically view the real situation of Web3: currently, there are about tens of millions of global Web3 users, definitely not reaching one hundred million. People in the circle are very excited, with some hot money flowing around. However, outsiders see Web3 as very superficial and peripheral, thinking that issuing an NFT is Web3, but it is not.

In this sense, entrepreneurs need to constantly ask themselves whether the functions they are developing are truly essential. Are users willing to pay? This is a fundamental question; if your product is good enough, users should be willing to pay; if users can take it or leave it, it indicates that it is not that essential. This is a question that startup companies must consider when they are pushed to the brink. They must align with the best teams and the most core users and absolutely must not get carried away; this is very taboo. It is very likely that what you are thinking has already been thought of by others, and what you are doing has already been done by others. You should step back, maintain a state of knowing nothing, and re-examine what the leading companies in the industry are doing. This may lead to some new ideas.

The real business environment is completely different from starting a business within a large company; there are no standard answers, nor do large companies provide resources like traffic in the early stages. In the real world, the dimensions of problems are often higher, and the challenges faced are far more than one. The way you can make an impact and reach more users may not necessarily be by solving the world's most difficult problems, but rather by solving a not-so-difficult problem in the fastest way or addressing a problem that everyone knows but cannot articulate.

In my view, startup teams are easily influenced by external voices. When the outside world blows a wind, the team wants to do this; when another wind blows, the team wants to do that. This makes it very difficult to truly grasp the stage of rapid user growth. To put it bluntly, they might miss the boat entirely. Additionally, cash flow is very important. The current market environment is poor; not only will valuations be low, but financing will also take a long time. Without good cash flow, it is hard for the team to maintain high morale to continue building.

Chain Catcher: How do you view the advantages and disadvantages of Chinese entrepreneurs in the crypto field? In the current context of going overseas to start businesses, what should Chinese entrepreneurs pay attention to?

Wang Yishi: I haven't achieved success in the conventional sense; I can only share my personal experiences. Chinese entrepreneurs are generally hardworking, but a major issue is that they are not internationalized enough. In contrast, Indian Web3 teams are typically both hardworking and internationalized, with English as their official language, giving them an advantage when going overseas. The reason for this is that language is a barrier, which can hinder smooth communication with overseas VCs and teams, but it can be overcome.

However, the more critical reason lies in the Chinese perspective that Chinese entrepreneurs have when viewing problems. One viewpoint is that Chinese entrepreneurs tend to create parental-style apps, hoping to meet all user needs, while Chinese internet users are in a somewhat sheltered state; overseas apps prefer to treat users as adults, solving one problem per app without cramming everything into one app.

A similar phenomenon exists in the crypto field, where overseas Web3 business projects usually focus on one point and do it to perfection, preferring to attract more users through collaboration. Everyone is not building a wall to enclose users but rather creating large nodes, and when different projects collaborate, they do not worry about conflicts of interest or market share being taken by others, thus meeting more user needs.

A significant challenge for Chinese entrepreneurs going overseas is how to shrink their ambitions from grand parental-style Web3 ideas to a very small point after giving them up. After breaking through a single point, how do they compete with Indian and Silicon Valley Web3 entrepreneurs? This is something that Web2 companies, which only focused on the domestic market, did not need to consider, but in the crypto field, facing many overseas users, it cannot become a product that only Chinese people play with.

Another major challenge for Chinese entrepreneurs going overseas is the difficulty in hiring. Startup teams need to recruit people whose native language is English and who also understand Chinese to help with going overseas. However, in places like Singapore and the Bay Area, it is challenging to find suitable candidates. If the other party's native language is English, the team must have efficient communication to form a cohesive force, and the cost of hiring in Singapore is higher than in Beijing, Shanghai, and Shenzhen, making it difficult to find people who can align perfectly on a shared direction. Due to various reasons, you will find that even though the team has moved to Singapore, it is still very difficult to hire someone there.

Now many crypto companies have moved to Dubai and Singapore; I want to pour a bucket of cold water on this. Just because you move out does not mean your understanding has moved out. If you go to Singapore but remain in a Web3 environment dominated by Chinese people, it does not truly mean going overseas; it is merely changing countries to live. In fact, going overseas should not refer to physical relocation but rather to a shift in understanding; where you are physically is not that important. Currently, Web3 essentially has no physical landing scenarios; most are online, generally remote work, and a product aimed at overseas users can also be developed in China.

4. A "crypto class" may emerge in the future, with vastly different value concepts

Chain Catcher: From ByteDance to CoinX, and then to OneKey, you have experienced both the Web2 and Web3 industries. What do you think is the relationship between the two? What misunderstandings does the Web2 industry have about Web3?

Wang Yishi: In my view, all Web2 companies will eventually become Web3 companies. First, let me correct a misconception: many people in Web2 companies think that Web3 is just Web2 products with a blockchain added; this view is quite one-sided. My definition of Web3 is that it is Web1 endowed with the flow of assets.

Web2 companies generally like to create platforms, enclosing users to generate transaction flows on the platform and then taking a cut. Web3 is different; it particularly emphasizes composability, where no single application or chain can stand alone; it always interacts with other ecosystems. Another characteristic of Web3 is that users control their own data and assets.

If Web2 companies want to transition to Web3, it is absolutely not as simple as issuing a token or NFT for their products; that would be too boring. Many Web2 companies are already exploring Web3 product forms and may produce a giant enterprise similar to Facebook, but the problems they solve will definitely not be the ones that Facebook has already addressed; they will be problems that only exist in Web3. To be honest, my imagination is limited, and I do not know what will happen.

I also want to correct a notion: many people think that exchanges and DeFi are both Web3. In fact, exchanges are Web2 because all the core business of exchanges can be solved in Web2; aside from depositing and withdrawing, exchanges are more like Web2.5, not truly Web3. Web3 should start from the moment users open an application or visit a website, engaging in numerous activities on-chain in a highly composable manner.

Another misunderstanding is that Web2 experiences can be simply applied to Web3. Many Web2 teams say they want to do Web3 but do not understand which things must be placed on-chain, which do not need to be on-chain, and do not recognize which are fleeting demands and which are long-term needs. Therefore, when Web2 entrepreneurs switch to Web3, they often bring preconceived notions from their previous Web2 experiences.

For example, many Web2 entrepreneurs do not know what to do when they enter Web3; they want to work on infrastructure, node services, and on-chain data, and they still approach it in a Web2 manner. However, what Web3 lacks is not infrastructure; what Web3 lacks is super applications, the kind that can bring outsiders in, like STEPN.

Chain Catcher: What is the question you have been thinking about the most regarding Web3 recently?

Wang Yishi: I have a strong feeling lately that when the location of value storage shifts, the valuation models of the traditional world will change. For example, some people born in the 2000s may buy their first asset in the form of cryptocurrency, and for a long time, their main investment targets will also be cryptocurrencies. This means that from the day this generation starts investing, their value perception will be anchored to crypto. If a bottle of Maotai is priced at 3,000 yuan, they may feel it is not worth it, but if one ETH is 3,000 yuan, they might say it is really cheap.

In other words, value seems to be shifting. First, it was traditional finance, then other areas like real estate. We often mock people for buying land in Sandbox, thinking it is just on-chain data; how can a piece of land in the blockchain compare to a house? Of course, the house is valuable. However, long-term holders in the crypto industry would provide a different answer.

This makes me realize that, in addition to the proletariat and bourgeoisie, a new class may emerge in the future, which could be called the "crypto class." In their perception, native tokens are cryptocurrencies, not houses, stocks, or bonds. As more and more such people emerge, many values will be absorbed into the Web3 world, and the traditional world’s valuation models will be affected. If you are no longer bound by traditional value concepts and have already been in a Web3 pricing system since you first entered society, your perception of the value of the same things will be completely different from others. This may happen faster than I imagine.

Chain Catcher: After ten years in the industry, how do you position yourself in the crypto field? What is your mindset?

Wang Yishi: After ten years in the industry, I have not left because the crypto space is addictive. Once you enter Web3 and try to jump out, you will find that traditional industry concepts are all clichés, with no fresh content. The crypto industry sees new terms emerging every so often, indicating rapid changes in the industry, which brings a lot of excitement. A day in the crypto world feels like a year in the real world.

I see myself as a student, not out of modesty. A very obvious feeling is that since 2020, Ethereum's infrastructure has improved, and some new chains have also performed well. A large number of highly educated elites have suddenly flooded into this industry, creating many innovative financial products from their past experiences in top companies and financial institutions. The crypto industry is constantly moving forward, and old knowledge becomes obsolete; the later people come in, the more impressive they are. If I cannot produce a good product early on and build a solid user base, opportunities will become increasingly scarce.

Building OneKey may be my last chance to lead a team in entrepreneurship; I may not have another opportunity. The competition is fierce. Now, some people born in the 1990s, even in 1999, are doing quite well; their understanding and execution are excellent. In comparison, I may still be able to keep up for a few more years, but going further down the line will be dangerous, and I could be eliminated.

Therefore, it is essential to maintain a beginner's mindset; you are nothing. All past accumulations and experiences are merely the result of entering the industry a few years earlier than others, which makes it easier to accept new knowledge. If you have too many concerns or sunk costs, it will be challenging to let go and embrace new things. A common mistake people make is viewing new things through their biases, which not only causes them to miss participation opportunities but also keeps them lost in past understandings.

I consider myself a pessimistic optimist, always preparing actively to better enter the next stage. In my view, trends are more important than individuals; the opportunities presented by major trends are very limited. A great opportunity may lie in a very inconspicuous place; if you always focus on the well-known opportunities, it may already be too late.