We're going to be talking about securing your sets. I'm here with Pascal Gauthier, the CEO of Ledger, creator of Bitcoin hardware and security. I'm Stefan L. I actually live in Dubai, but I'm focused on Bitcoin educational material as well. So let's just talk a little bit about where things are at. Obviously in Bitcoin we have this saying, everyone knows it: not your keys, not your coins. It's an important one. Do you want to just start us off with what is the current state of Bitcoin? Obviously we've recently hit 100k. Can you just give us some overview thoughts?
Sure. So hello everyone, very happy to be here today. So look, we often talk about what Ledger does: hardware, self-custody. But I think the way to think about it is more as a digital property. So with Bitcoin, there was an invention of this peer-to-peer electronic payment system, but one of the inventions was the fact that now you can own a digital asset, and it's yours. And the way to own it is because you own a secret. So what we do at Ledger, we protect secrets. That's what we do. We protect secrets when they are at rest, and we protect secrets when they move, meaning when you do a transaction. When you do a transaction with Bitcoin, you have to prove through the protocol that you know your secret, but only to the protocol. If you give your secret to someone else, by definition it's no longer a secret. So for a long time, especially at the beginning of crypto, when we started 10 years ago in 2014, the main use case was buy and hold. You would buy Bitcoin, you would put it on your Ledger, and then you would forget your Ledger forever. And it's funny because just before coming on stage, I was having a discussion in a group with a bunch of OGs who still think that this is the main use case: you buy your Bitcoin, you put it on Ledger, and you forget that it's there. And 10 years after, you take your Ledger from your drawer and you try to use it. There are two mistakes here. Number one: Ledger is a consumer electronic. If you take any consumer electronic device, put it in a drawer, take it out of the drawer 10 years after, you can be sure that it's not going to work. And number two: the game has completely evolved today. What is important to understand in the future is why not your keys, not your crypto. Before, it was something quite philosophical: I can own something digital, I can own value, I don't trust the banks, I don't trust the system, so I want to own myself. But today it's different. That is still true to a certain extent, but what is even more true and very important to understand is what is Bitcoin. Bitcoin is a public protocol. Ethereum is a public protocol. For the past 10 years, we've been building the protocol, just like the worldwide web is a protocol. And what's happening now, and has been happening for the past years, especially with Ethereum, Solana, but now it's happening also on Bitcoin: we're building an applicative layer on top of the protocol. Think about the worldwide web and think that Facebook is an application that sits on top of the worldwide web. So an application like DeFi, decentralized finance, is an application that sits on top of a protocol. And if you don't own your private keys, you cannot interact with the application, you cannot interact with the protocol. So that's what Ledger has become, but also that's where the market is going. So not your keys, not your crypto, that's for sure. But not your keys, there is nothing else that you can do with your crypto but watch it grow. Whether it's on your Ledger or at a bank, the use case of buy and hold is still valuable. If you want to hold Bitcoin forever, the value will certainly go up and you don't need to do anything else. But if you want to engage at protocol level and engage with DeFi and engage with art and engage with the different things that are being built on these public protocols, you need to own your private keys. And before, it was only true for Ethereum and Solana and a few other protocols, but now it's starting to be true for Bitcoin because 2024 has been the year where building on top of Bitcoin has become possible, and DeFi on Bitcoin is something that will happen in the near future. So definitely, not your keys, not your coins.
So let's get into some of this. Obviously we were talking about the hodling, people buy and hold, and we say hodl. That's an important aspect of Bitcoin. Hodling is a use of Bitcoin. But I think what you're getting at, Pascal, is around what other things may people want to do with their Bitcoin over time. So maybe that is also the question, because what we are seeing with various instruments around the world, as an example, there's now the ETFs, and there's people using things like MicroStrategy or others to have access to Bitcoin. And maybe there are centralized platforms where people are using their Bitcoin for loans and borrowing against it and collateral. Whereas maybe the crypto-native form of that, I think that's what you were touching on with the not your keys aspect. So how do you see these two worlds coexisting? Because I can imagine there will be a lot of people who are new, they haven't learned how to use a hardware wallet yet, and they come in through some of these forms. So how do you see the balance of these worlds coexisting?
Yeah, so I think it's not just because of hardware wallets. It's a feature of a public protocol: you can build applications on top. And then the question is how do you interact. The hardware wallet and Ledger is probably the safer way to interact, but you can use a software wallet. There are many other ways to interact at the protocol level. And I think in the past, we've made the mistake to think that it was one or zero: either you own your private keys and then you're a hero, or you leave your private keys with Coinbase and you're zero. So I think the world is full of opportunities and services. Think about your normal life, your physical life. For some things, you own it yourself and you take the risk of owning it: your identity, your watches, etc. There are some stuff that you keep at home, you do your own security. For other things, you leave it at the bank or you have custodians for your art. There are different services out there. Even for your watches, you can trust a custodian with your watch, and when you need to wear your watch, they send it to you. So I think the world of digital value will actually be the same. And the world of digital value is going to be the world of value. 20 years ago, we didn't know that we were going to be digital beings. 20 years ago was 2004, and I can tell you that even at Yahoo, employees at Yahoo didn't really understand that we were going to become digital beings. People didn't understand that we were going to be on our mobile phones all day long. And it was only 20 years ago. I can tell you that in 20 years, we'll look back and realize that all value will be tokenized, not so much because of a philosophical standpoint, but just because these are better rails to transfer value. It's a better technology to transfer value. And because of that, so much more value is going to come on those public blockchains. You don't need to trust my word for it. There are many speakers out there like Michael Saylor that make a great case about it. If you haven't watched yet, Michael makes that point better than anybody else. But once you start thinking like that, if a lot of the world's value goes on the public blockchain, then you will need a bunch of services anyway. You need centralized services. ETFs have been extremely good to the market because they bring a lot of money, they push the price up, and this is very good overall for the Bitcoin public blockchain because the price of Bitcoin is not just speculation, it is also the security of the blockchain. The blockchain gets more secure when the price goes up. Bitcoin has more liquidity, and therefore building an application on top of Bitcoin becomes more interesting. So all of these things are here to coexist in the future. It's not black or white or one or zero. You will need self-custody to do many things. You will probably leave some coins at the bank, and that's fine.
Yeah, so I think as you said, there's a spectrum and people will choose components. They may keep some on a phone wallet, maybe some on a hardware wallet, and some with a financial service provider or some other way they're using some of those coins. So I think there's going to be a mix of those things, and people will pick and choose what are the right solutions for them. So here we are, end of 2024. We just hit 100k, or let's say right now today about 99k, whatever we are. If you had to give a rough number, how many people in the world have some Bitcoin?
Well, there are a bunch of people in the world that have Bitcoin. And the question is how many people in the world have real money and own their private keys? That's a different question. People with Bitcoin in the world, I don't know, 600 million? But for me, it's like they bought Apple stock on Robinhood. Most of these people actually bought a Bitcoin or part of a Bitcoin on Binance, on Coinbase, etc. The first wave of Bitcoin, we talk about ETFs now, but the ETFs of the past were the exchanges. You would buy your Bitcoin and hold it there, you would never see your private keys. But for the past 10 years, it was okay. The problem is always that nobody is too big to fail, and you learn that fire burns by touching it. Typically, people lost a lot of money with Celsius, with FTX. The 2022 debacle of crypto was largely due to those new financial institutions. Some like FTX were thought too big to fail, and yet they failed. So there is always this concept: Bitcoin was born on the wings of the 2008 financial crisis and Lehman Brothers failing, and the financial system almost crumbling on itself. So we must never forget that one of the reasons why you want to keep some of your value with you is also you cannot put all your eggs in the same basket. But I think what happened in the past is the past. What will happen in the future? There are probably, I don't know, people with more than $1,000 that own their private keys in the world: 20 million people, 30 million people, but not a lot. We sold close to 8 million devices now. We have a good market share on different buckets depending on if you have value or not. So we have a good understanding of how many people hold their private keys. We think this number is going to go ballistic because in the past, why Ledger? Why owning your private keys? It was difficult. It's the easy tech versus hard tech problem. Using Coinbase is so easy, and we are all very lazy. Because in our digital life, we've been told to be lazy. Your digital self doesn't belong to you, it belongs to Google, it belongs to Apple. This is very new: the fact that you can own something digital, that you can own your identity, that it's your digital self. Your identity: you have your passport on you. I've got my passport here, so it's with me, I own it. I'm not talking about owning the identity, that's the government thing, but owning the documents. Where is your digital passport today? Nowhere. Where is it going to be tomorrow? It's going to be on your Ledger. So all of this is happening in the next 10 years. What has happened yet in terms of digital property is the tip of the iceberg, and the iceberg is to come. Because so many things you will want to own privately. Let me give you a very simple example. Today, your communication is neither secure nor private. As soon as something runs on the phone, you're not secure, you're not private. I can ask my hackers to hack any of your phones in less than 30 seconds. And if you're very important, I will pay whatever money to hack your phone. Super easy. Whatever is on your phone, I can see, I can steal. That's true, that's fact. Do you really want it to stay like this for the next 10 years? Now that more values are coming onto public blockchains, now that more value you can own, are you sure you want to leave your millions of dollars of Bitcoin or hundreds of thousands or tens of thousands of dollars of Bitcoin on your phone? No, you're not sure. If you have your identity on your phone now, are you sure you want to leave it on your phone now that you know that I can hack it? Probably not. And what about your communications? People always say, 'Well, I got nothing to hide.' But the conversation I have with my wife, I want them to stay private. It's between me and my wife. Sometimes when we do business, we have things that are very private that need to stay private. People try to spy on you for different reasons. Today, there is no communication channel on your phone that guarantees you security and privacy. I don't care if it's Telegram, I don't care if it's Signal, I don't care if it's any app that you're using. As soon as it runs on the phone, you're not secure, you're not private. So Ledger will fix this over the years, because everything that is online that is your digital safe that you want secure and private will have to go on a security device.
So I guess the idea we're getting out there is segregating the private key away, or helping you secure or encrypt in the case of communication. So one way to think about that is maybe things like PGP existed, and then now Signal and WhatsApp can kind of help you a little bit, but ultimately these things can still be cracked. So I guess you're getting at this idea that you could have some of your keys or some form of encryption that keeps that offline. Is that what you're saying?
No, no, no. So this is a misconception that comes from the early days. When Satoshi wrote the white paper, he wrote nothing about the private keys. It was not a concern. When I read the white paper, I thought, 'Okay, what do I do with this? Because now I got the private key with all my money on it. Where do I put it?' The world of security is a very different world from the world of software. So there are a lot of misconceptions out there. Security is important today. Online security today will be more important tomorrow, the day after tomorrow, and the day after that. Because there are two phenomena that happen at the same time. One: there is more value that goes online every day. I don't care if it's in a public blockchain or not, but in general, there is more value that goes online every day. And there are more hacks every year. 2024 will be a record year for hacking. 2025 will beat 2024, 2026 will beat 2025, etc. So because of these two phenomena, you need to think about your security. And again, we need to unlearn everything that we know and think about this new world. First of all, if security is about putting something under a mountain with armed guards and F-35s ready to scramble at any sign of attack, this is not good security because you cannot just use anything. So security has to rhyme with usability. If security is too hard to use, then it defeats the purpose of even being secure. What we are trying to do is to bring the two together. So offline doesn't help anybody. You're trying to protect online value by being offline? It's crazy. You want online value to be protected being online, because you want to be able to engage with the value online. If you want to engage with your Bitcoin, your Ethereum, your Solana, etc., and you want to use that application layer that is being built on top of a protocol, you need to be online. It's as if you say, 'Okay, I'm going to use the internet, but it's so dangerous that I'm going to use it offline.' It doesn't make sense.
