TechRepublic's Karen Roby talks with a cryptocurrency expert about blockchain, bitcoin, and IoT-connected devices.
TechRepublic's Karen Roby discussed blockchain with Pascal Gauthier, the CEO of Ledger. The following is an edited transcript of their conversation.
Pascal Gauthier: I think when we talk about blockchain, you can cover many things. If we talk about cryptocurrencies, Bitcoin white paper in 2008, we're sort of 11 years after and I think this is still the beginning of a big revolution. Even 11 years after, protocols are still very young. Bitcoin has several contenders, and we've seen lately—with the Libra announcements, different stable coins, government coins—that this is just a big wave of crypto that will change the world, and the way that we exchange value.
SEE: What is blockchain? Understanding the technology and the revolution (free PDF) (TechRepublic)
Karen Roby: What are some of the biggest myths surrounding blockchain?
Pascal Gauthier: That it can save the world, and that you can use blockchain for everything. I think this is actually probably the biggest myth. I think blockchains are good for some things, not for everything. Centralized databases have been here and solved many problems. And I think blockchain is one of the elements of a public protocol, and it's a supplement of Bitcoin for example. So I think behind the word blockchain actually there are many things that we could refer to. So I think the misconception about blockchain is that there is such thing as a blockchain.
We at Ledger, we're focused on public protocols—this is what we do. This is where we bring security. We are about the endpoint security for public protocols today. And, of course, we look very closely at every other sort of blockchain initiative, but we stay focused on where the market is today. And when we say blockchain, for us the market today is on cryptocurrencies. In the future, we might go into tokenization of financial assets. We might go into many other things, but right now the market looks like it's mainly in primarily cryptocurrencies and Bitcoin first and foremost.
Karen Roby: I understand at Ledger you started out in SIM cards and progressed from there. So just talk a little bit about your company's evolution from where you started and where you're going.
Pascal Gauthier: We come from the chip and PIN industry. It's a French technology actually. It was invented in France, and it's a technology that has been designed to protect secrets. That's what you have on your credit card. That's what the telcos have been using for a long time, except that so far it was protecting secrets of the bank, secrets of the telco operator. Now we've adapted the system and the technology to protect your secrets and the secrets of your coins, because actually owning a Bitcoin only means that you own a secret. And because it's a secret, only you should know about the secrets. If you tell someone, it's not a secret anymore. And so the technology that we have allows you to protect your secrets when you're not using your crypto or at the moment of transaction, when you're using it. Never revealing the full private keys and never revealing your secret to anyone.
Karen Roby: Talk about some of the obstacles your company has faced along the way.
Pascal Gauthier: Five years has been a fantastic ride, and I think every year was very different from the other. It was never a dull moment, I would say. I think '15, '16 were very difficult with the market. The market was very low, it was not only bearish, it was bearish with really nothing happening. 2017 was, of course, a fantastic year for everyone. It was a very bullish market. We were very surprised with how the bearish market came very quickly after and how brutal it was. And for every company, it was very hard to adapt from a market that was very high with a lot of demand coming in to suddenly dropping 80%. I think this has been a tough moment for everyone.
We were prepared, we knew that it was coming, so it's not like it had taken us by surprise, but what was surprising was the intensity of the dip and how long we're staying in a bearish market. We still believe that today we are not yet back into anything that is bullish, and that bullish market is yet to come. So what's difficult when you drive a company as a CEO in those moments is that you need to forecast and you need to adapt to the situation. So, certainly it has been very interesting, but we remain very focused on the future and the next five years now, because we think the next five years will be fantastic compared to the past five.
Karen Roby: Expand a bit on security within IoT services as it relates to blockchain.
Pascal Gauthier: I mean what we do is IoT is actually very new. And when we talk about blockchain application that sits sort of outside cryptocurrencies, these are good examples of what can happen outside of cryptocurrencies. We have first two businesses that people know already. It's the hardware wallet, Ledger Nano, that's very popular. We sold 1.5 million units of the Nano in more than 165 countries. That's one business unit.
The other business unit is the Ledger Vaults. So it's the enterprise version of the Nano, let's say, where we bring security and governance to hedge funds, banks, etc. And to give you one example of a contract that we signed, it was ENGIE in France, which is a utility company. We put Ledger technology on every windmill that they have in Europe, and we track electricity production. So every time that there is a certain megawatt of electricity that is being produced, we send a token into a blockchain. And so everything is happening into a secure environment. And so you can be sure that then what's in the blockchain is actually true. And so that's what Ledger Origin does.
Karen Roby: In talking about cryptocurrency in general, what do people need to understand?
Pascal Gauthier: I think people need to know that it's still very early. People always ask so much of the new technologies because you ask new technologies to be sort of on par with existing technologies. And so therefore, the internet is very powerful today as a protocol—it works really well. And so when you look at cryptocurrencies, it looks a little bit clunky right now compared to other technology that you can use. People always think that we want to fast-track technology 10 years, they forget that crypto is still very young.
I mean, 2008 [for the blockchain] white paper, it's only sort of 10 years in or 11 years in. It's not a long time. And so I think that what people underestimate globally is how young the industry is and how much progress it needs to make, especially on security, but on so many other levels—user experience, user interfaces, and many things that are not working well today. The user experience is not so great—that needs to improve drastically if we want to look at mass adoption. But these things take time. But five years, 10 years, the industry will look very different, and most of the companies are working hard toward that end goal, and we are working hard certainly toward that end goal.
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