When a promising new technology emerges, we’re usually also able to see many of the obstacles and glitches. And so long as the promise is great enough, we’re willing to work through early hiccups.
But we’re often less willing or able to see the trade-offs – those aspects of the new technology that aren’t ephemeral.
When Satoshi unveiled Bitcoin to the world, the promise was a secure, decentralized, and digital way to store and exchange value. And by extension – more autonomy & anonymity, along with lower transaction costs and bureaucratic red-tape.
For all of that, we’re willing to work through glitches like scaling, temporarily high fees and slow transactions, and difficult user experiences.
However, what sometimes gets glossed over is that the very nature of cryptocurrency also carries with it a few tradeoffs.
In May of 2016, a new project called theDAO launched – a project meant to fund various projects elected by votes of stakeholders in theDAO. And “launch” is more applicable here than usual, because the project was an instant success – raising over $250MM worth of ethereum.
But by mid-June, there was a problem. Somebody had hacked theDAO and started stealing huge amounts of Ethereum – enough that Ethereum itself quickly lost 35% of its value.
The surface-level problem was a glitch in the code of theDAO, which allowed the hack. However, on a deeper level, one of cryptocurrency’s tradeoffs is that all transfers are final and irreversible. So unlike a digital theft of dollars or euros, there’s no way to reverse the transaction, few ways to trace it, and no central authority to offer restitution.
For theDAO hack, there’s a semi-happy ending, in that the Ethereum community actually voted to fork Ethereum solely to restore the amounts people had lost.
But this aspect of cryptocurrency affects more than just large hacks.
In 2013, James Howells was cleaning out his home and accidentally discarded the hard drive holding the private key to around 7,500 Bitcoins. Even at the time, 7,500 Bitcoins were fairly valuable – to the tune of a few million dollars. But in late 2017 terms, that hard drive is worth over $100,000,000 – and it’s sitting at the bottom of a landfill.
Unfortunately – for James and others like him – without that key, there is no recourse. Some people estimate that between 5-30% of all Bitcoins have been lost – and remember, there will only ever be 21 million.
Security in the cryptocurrency world is more than simply throttling the bad guys trying to steal your money – security is also now about guarding against your own negligence.
None of this is a reason to think that cryptocurrency is fatally flawed, but it’s an aspect of cryptocurrency that deserves more attention.
So today, I’m talking with Thomas France.
Thomas is the founder of Ledger Wallet, which has quickly become super-popular as a hardware wallet – so popular, in fact, that it ruined their forecasts and they spent a few months just trying to catch up on manufacturing and stock.
Thomas was born in the US and grew up in France. As we discuss in our conversation, he founded a couple companies prior to Ledger, but this has had all of his focus for a few years now.
In today’s episode, we discuss his journey, but also a lot about security, ease-of-use, and how he views the current state of the cryptocurrency world in terms of adoption and growth.
Thomas is a great guy, so please enjoy this conversation!
Jeremy Hendon grew up in Georgia, practiced law for a while, and then built several companies - from food manufacturing to magazines to digital events. Jeremy has also developed apps with 500,000+ downloads, co-authored multiple books, had his products featured on national TV, and has lived in 9 different countries over the last 4 years.
S01E11: ICOs, FOMO, and the Promise and Hype of Cryptocurrency with Brad Mills
S01E10: The Perils and Promises of Investing in Cryptocurrency with Teddy Wayne
S01E09: Investment, Finance, and Privacy in the Blockchain with Jack Gavigan
S01E08: Investment, Speculation, and The Future of Cryptocurrency with Spencer Bogart
S01E07: The Philosophy and Ethics of Cryptocurrency and the Blockchain with Dmitry Buterin
S01E06: Cryptocurrency - How’d We Get Here and Why Now?
S01E05 - Privacy, Security, and the Blockchain (Arvind Narayanan)
S01E04 - How Cryptocurrency Will Be Used in the Future (Bernard Golden)