EP - 76
Taking The Next Steps On Bitcoin
with
Charles Guillemet & Mike Schmidt
CTO at Ledger & Executive Director at Brink
Oct 20, 2023
On this episode of On The Ledger, Ledger CTO, Charles Guillemet, and Mike Schmidt, Executive Director of the non-profit Brink.dev. Following his keynote at Bitcoin Amsterdam, Charles breaks down the critical challenges and solutions for Bitcoin institutional governance as TradFi entities prepare to enter the market. Then, Mike pulls back the curtain on the world of Bitcoin Core developers, explaining the vital work they do to maintain and enhance the network’s security and resilience.
“We used to say this for six years, but now I really think it’s coming.” – Charles Guillemet
Key Highlights:
“How Not to End Up in Jail”: The Crucial Need for Institutional Governance
The title of Charles’ keynote at Bitcoin Amsterdam, “How Not to End Up in Jail,” serves as a stark reminder of the risks associated with mismanaging digital assets. High-profile collapses like FTX and QuadrigaCX were not just market failures, but catastrophic failures of governance. Charles explains that as institutional adoption moves from a distant hope to an imminent reality—spurred by the potential approval of spot Bitcoin ETFs—the need for robust governance frameworks has never been greater. For organizations managing billions in assets, self-custody isn’t about a single person holding a Ledger device. It requires a flexible system of rules, roles, and approvals.
This is the exact problem Ledger Enterprise is built to solve. It provides a highly customizable governance framework, allowing organizations to set specific rules for transactions, create whitelisted addresses, and require multiple approvals for actions above certain thresholds. Using a combination of personal security devices for trusted display and Hardware Security Modules (HSMs), Ledger Vault ensures that institutions can manage their Bitcoin treasuries with the operational security they require, preventing the single points of failure that have plagued the industry.
Beyond Simple Custody: Solving the Counterparty Risk Problem
A major hurdle for traditional financial institutions entering crypto is the structure of the market itself. Unlike TradFi, where custody and trading are handled by separate, regulated entities, crypto often requires traders to deposit their funds directly onto an exchange, exposing them to significant counterparty risk. Charles highlights how Ledger is addressing this with Ledger Enterprise Tradelink, a solution that creates a technical and legal framework for off-exchange settlement.
By placing funds with a secure custodian in an escrow account, hedge funds and other institutions can trade freely on an exchange while settlement occurs periodically via the custodian. This model removes the risk of an exchange collapse wiping out client funds and represents, as Charles notes, “the direction of the history” for a more mature digital asset market.
The Unsung Heroes: Inside the World of Bitcoin Core Development
While institutions build on top of Bitcoin, a dedicated group of “unsung heroes” works to secure its very foundation. Mike Schmidt explains that Brink.dev is a non-profit organization dedicated to supporting these Bitcoin Core developers. Unlike other blockchains with foundations funded by an ICO, Bitcoin’s development relies on volunteers and donations. Mike emphasizes that this work is crucial for preserving the “permissionless, censorship-resistant nature of the Bitcoin Network.”
Developers focus on critical areas like performance improvements, bug fixes, and enhancing privacy. Mike points to recent examples like the AssumeUTXO project, which dramatically speeds up the initial setup time for new nodes, and BIP 324, which introduces encrypted communication between nodes to defend against surveillance and man-in-the-middle attacks. This continuous, non-protocol-altering work ensures the network remains decentralized, secure, and accessible for everyone.
Supporting the Builders: The Ledger & Brink Partnership
Recognizing the importance of this foundational work, Ledger has partnered with Brink to support the developer community. Charles explains that since Bitcoin has no central foundation to fund development, it is vital for ecosystem players to contribute.
For every BTC Orange Edition Ledger device sold, Ledger donates $5 to Brink.dev. As Mike notes, 100% of these donations go directly to funding developer grants, supporting their work on crucial projects like fuzz testing to find vulnerabilities, and improving Layer 2 fee management with package relay. This partnership allows the community to directly and humbly participate in strengthening the Bitcoin protocol for the future.
Watch the episode here:
Reading List
Learn more about these topics mentioned in the episode, or explore our library of articles on Ledger Academy: