Crypto: Self-custody brings ‘ease of use without compromising on security,’ Ledger exec says

Ledger Chief Experience Officer Ian Rogers joins Yahoo Finance Live to discuss Ledger's crypto wallet and how it works, crypto regulation, privacy and security among investors following the collapse of FTX, and the outlook for the crypto industry.

Video transcript

AKIKO FUJITA: And amid the fallout from FTX's collapse, Ledger is launching a new device as privacy and security concerns intensify among crypto users. Joining us now is the company's chief experience officer, Ian Rogers. We've also got Yahoo Finance senior crypto reporter, David Hollerith, joining us. Ian, Ledger's gotten a lot of attention on the back of FTX's collapse. Can you talk to me first about the inflows that you have seen if we're talking specifically about users increasingly turning to hardware wallets over exchanges?

IAN ROGERS: Yeah, I mean, our sales have always been highly correlated with outflows from exchanges because what Ledger does is not centralized finance. It's decentralized. So with your Ledger device, you have your crypto, and you do self-custody. So instead of entrusting that to a centralized provider, you have self custody. Now we've been telling people that self-custody is preferred for the entire seven years of the life of the company, but unfortunately, this year, there have been many incidents which have given people a real understanding of why that's important.

DAVID HOLLERITH: And Ian, could you just sort of touch on this newest product that Ledger has just released? I was curious, how does it vary compared to other-- we use the term "cold storage," but it seems like with this, you can go back and forth between connecting the wallet, your crypto funds online to holding them offline. So could you sort of explain that a little bit more?

IAN ROGERS: Sure. The way that a Ledger hardware wallet works is, again, it's self custody. So you have custody of your coins. There isn't $50 behind the counter for you with your name on it at the bank, right? You deposit your money, and then you assume that when you go to retrieve your money, they're going to have some money for you. But in the case of crypto, then there actually is value with your name on it, whether that's a Bitcoin or it's Ethereum or it's an NFT. You have-- you do have possession because you have the key that shows that you are the owner of that digital value.

So with Ledger devices, you use them to prove that you are the owner of digital value. With the new device, which is Ledger Stacks, which was invented by Tony Fadell, the inventor of the iPod and Nest, basically, you have a more user-friendly way to do that. Our goal is to bring this market from business to geek to business to consumer. And I say that as somebody who is an early adopter. I'm a technologist. I'm a self-professed geek, and I don't think that's a negative connotation at all.

But as we know, with all technology, whether that's the internet that I used in the 1990s, or the iPods that we used in 2002, 2003, 2004, we needed to add user experience to those to bring them to a broader and broader audience. So the device that we announced today, Ledger Stacks, is a much more user-friendly device with the world's first curved e-ink touch screen. You know, fit together and have multiples quite easily.

And it's-- from our perspective, this is about taking this notion of self custody, which the events of 2022 have made painfully obvious the need for, and bringing them to a wider audience with an unprecedented ease of use. So we do ease of use without compromising on either security or self custody.

RACHELLE AKUFFO: And we know that a lot of trust was lost in the FTX fallout because a lot of people didn't distinguish between FTX, say, Coinbase, other platforms, and then what was happening with the tokens themselves. So in terms of where this is now heading with the development of hot and cold wallets, what do consumers need to know, and what are they also asking you for?

IAN ROGERS: Well, I think, again, people have learned about self-custody and security the hard way, right? Because FTX was not only a failure of centralized finance and a bankruptcy that gambled customer funds with centralized finance, but they were also hacked, right? So they suffered from the security challenges of digital assets as well. So I think that what consumers need to know is that, first of all, centralized value propositions are not the same as self-custody. If not self-custody, why crypto?

And I would do-- I think double clicking on that and understanding what that phrase means is very important, and not your keys, not your coins. Don't trust verify. We didn't make any of these things up. These are things that are very often said in the world of crypto. You know, but also that having kind of full access to all of the things that the world of crypto and digital assets is available for you, all different kinds of tokens, all different kinds of assets.

And this will grow over time because it will grow from digital currency to digital goods and services, digital ticketing, digital memberships, and ultimately digital identity. So taking possession of those things is both the opportunity and the challenge. And the reality is, is that the phones that we have in our pockets and the computers we have on our desktops were built for the internet. They were built for the revolution of information. They weren't built for a revolution of value.

All software utilizes hardware. And if the hardware that you have doesn't have a secure element and a secure screen, then there's no software that's going to make it secure. So much like you would add an iPod to your life in 2002 to carry digital music around with you, people today add a Ledger to their digital life to carry security around with them, security that their phone and their computer don't provide.

DAVID HOLLERITH: And Ian, quickly, just thinking about the future of how people would custody crypto, are you saying that centralized exchanges, things like that, won't be a part of the picture?

IAN ROGERS: I think that whether you're using a centralized picture or you're custodying your own, security is important. So if you are using a centralized custodian, you can't make any assumptions about their security. Are they using Ledger Enterprise? Do they have not only proof of funds, but also proof of liabilities? And then I would ask, why? When you have the ability to self-custody securely, why trust a centralized partner? And what should you trust a centralized partner for?

Now, I think if you look at our lives today, you know, my keychain has many keys on it. I have many bank accounts. I have a savings account, a checking account, a brokerage account. In my family, we have many keys, accounts. So I think that we will have many solutions. We'll have different tools for different jobs. The reality is, is that we live digital lives. We'll have digital value. We'll have digital identity. And therefore, thinking hard about the security and the custody of that value and that identity will become increasingly important.

And just like the world has changed since the internet of the 1990s that I was very happily and excitedly a part of, but the applications on my phone look very different from that internet that I was playing with in the mid 1990s. Similarly, the security devices that we use in the world of digital assets will look different tomorrow. And we're just taking our steps along that evolutionary curve at the moment.

RACHELLE AKUFFO: It does seem to be that natural evolution of where things are headed. A big thank you, Ledger chief experience officer Ian Rogers and Yahoo Finance senior crypto reporter David Hollerith. Thank you both.