Why Self-Custody Is Crypto's Non-Negotiable Standard with Ian Rogers

Transcript

Every cycle people come in and they tell you why they need to compromise on security, why they need to compromise on self-custody. It's usually got onboarding the masses and their rationality and it all and it always blows up and Ledger says, "You know what? We're going to keep high standards of security and self-custody. We're not going to go below them and therefore we'll be here tomorrow." >> You were kind of looking at your portfolio of work, music, luxury brands kind of going from from one thing to the next and you heard about Bitcoin. What was it about Ledger's story that drew you in >> music um in kind of early internet, some luxury brands, net crypto with Ledger.

Is there any common thread that kind of ties your experience together in these ecosystems? >> Storytelling plus time equals value. >> Welcome back to the Rowup. We are your hosts. I'm Andy. >> I'm Robbie. And this is your home to learn from the biggest guest, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. >> Ian, >> welcome to the show. >> Hey, thanks for having me.

>> Absolutely. Thanks for being here. Um, we uh we've had quite a few conversations with memecoin trenchers and launchpads today. Um, none of that >> not the usual show for us. >> Not the usual show for us. And neither of them had uh had the hair that you have. So, you're a nice refreshing guest today. >> Hey, man. Thank you. I'm this old. I still have this hair. So, I figure I gotta I got a lot of my friends don't. You know what I mean? I gotta gota gotta keep it keep it going. >> Man, I got a feeling you found Bitcoin in like 2012. Am I right? Am I wrong? >> Not quite. You know, I I knew about Bitcoin 20 2009 2010, but but was like so I looked at it through the lens of I had done digital music and I looked at it

through the lens of watching, you know, Nutella and anyone who had been in the in the peer-to-peer business get sued out of existence and I said, "Okay, well, this is super interesting technology, but you know, they can't kill the technology, but they can kill businesses that are around the technology, which is what they did with Nutella and file sharing, right? you can't kill the ability to move one file from one computer to the other, but you can get rid of Kazah, Lime Wire, Bearshare, etc. And that's what happened. So I looked at Bitcoin and I said, "This threatens state sovereignty." So they will obviously come after this. But by around 2015, I was like, "Wait a minute, this is too big." You know, this is now the game theoryy's on where if let's say that one country bans it, another country is

going to welcome it. It had gotten to that size. Um, so that was when I started really paying attention and then I joined Ledger in 2021. really it was it was during COVID where you know I was I Tony Fidel and I Tony was the the podf father created the iPod and co-invented the iPhone and he and I spent a lot of time our family spent a lot of time together during COVID and we were looking at crypto at that time going this is it you know this is um you know the technology is here a lot of these ideas that were sort of a promise like smart contract uh for example that was like an idea four years ago is real today. Um, and you've got two trillion of stimulus in the US, a trillion of

stimulus in Europe. Um, this is what this technology was built for. Um, and that was when it was really go time. And and I I came to my friend Pascal who was the CEO and still is at Ledger and said, "All right, what are we doing?" And that's how I ended up joining the company in January of 21. There there was a clip that I saw just today and it speaks to something that you're talking about where they actually it was Tucker Carlson and and another uh it was a co-founder and they said they thought Bitcoin was like created by the federal government but it kind of got out of hand and so we can may maybe there's something and they also said that like Rockefellers, Rothschilds, they would never let let their power go to to this new this new world, this new era. Um,

but I'm curious because I've heard this connection between digital music and Bitcoin. I think Andy and I were actually sitting in an airport. We were on our way to ETH Denver one year and this guy started talking to us about it and I was curious about the connection because this isn't the first time that I've heard it. So, when you were kind of doing this digital music thing, where did Bitcoin come in? How did you kind of stumble upon it back 2009 2010? >> There's a guy in my office at the time. We're running a company called Top Spin back then. Um, so my my background for your listeners, I I studied computer science in the early 90s. I dropped out of grad school to go on tour with the BC boys in 1995. We did Win Amp in the late um in the late 90s. Um, which when that

team at Winamp is who also created Shoutcast and and Nutella, but then I did Yahoo Music for a bunch of years. I'm making a long story short. And then we had this company called Top Spin. And this guy Parker Todd Brooks worked for us at Top Spin. Um, and he was like, "Bitcoin, Bitcoin, you got to check this out. You got to check this out." And, you know, I'm just a nerd. So, I'm like, "All right, well, what is it?" You know, and I I, you know, I do do the deep dive and try to get my head around it. So, to me, it's more of a I think it's more about the kind of people. I mean, digital music was the tip of the spear with the internet, I think, for a very specific reason.

>> If you think about it, you go back to the 90s, like audio files are pretty small. Like, video files were just too big to deal with in those days. digital music is a really simple database problem, you know, artist, album, track, genre, you know, like um every like young coder loves music. You can listen to music while you code, you know. So, I think that there's a you know, there's an old joke that like every college student has this idea for a company that has to do with either music or bars, you know what I mean? So it it it there's some there is some I think it's just the tip of the spear because it's so it's a kind of a a nice entry point and that's why music was really disrupted by Napster 1999 2000 where a lot of the you know internet

disrupted a lot of other industries more around 2010 and I I that's why also I think that digital art is is a tip of the spear and the reason is because it's just really simple you think about value and exchanging value between two individuals if we have to come up with a C with a currency getting enough people to buy into the value of that currency is like that's a massive that's a scale problem in a way whereas like I make this thing do you like it? Oh I like it. Oh cool want to trade it? Oh yeah let's trade it. You literally need two people >> right? You know, and that's why in if you look in the world of digital art, sometimes you'll see an auction that goes for, you know, tons of money, but there were really only two biders

because if you think about it, you know, that that's the way even in the the contemporary art world, it can be the case. There are famous examples of particular pieces going for huge amounts of money, but they're really only two bidders, right? And that that to me is why digital art is the tip of the spear because it you can a market can literally be one or two people and and whereas you know to get to a true ecosystem >> you know it takes much more than that. So I think that you know music was a tip of the spear for the internet for those reasons and I think that you know digital art holds a similar place in the world of digital value for that that other very specific reason. No matter what you think about digital art it's a it's a physical fact or fact. Just like

one last thing on this and then we'll get into some of the ledger, some of the stable coins, some of the self-custody concepts. You know, you've worked in uh music um in kind of early internet, some luxury brands, net crypto with Ledger. Is there any common thread that kind of ties your experience together in these ecosystems? whether it be the types of people, the work, the values, um just any kind of experience that you can tie a thread through that applies to each of these industries maybe in their early days. >> Yeah, I mean I think I think that there are a few things. The the probably the the number one thing that that I would keep in mind is is that storytelling plus time equals value,

>> right? You know, and if you look at it, that doesn't matter if it's the Beatles, if it's Christian Dior, or if it's Bitcoin. Storytelling plus time equals value. Um, and I think we really discount that, you know, we we look at, you know, we we try to look at, you know, fundamentals, uh, you know, of course they have to be there, but the fundamentals are what creates the story. I mean, in the case of Bitcoin, you know, we could easily bemoone the ETF and say, "Hey, that's not like that's not the spirit of Bitcoin. You know, if not self-custody, why crypto?" Like, there are a bunch of things that we could say, but the reality is if if it's not for what Bitcoin actually is and the story of Bitcoin and the ability to do

self- custody, it doesn't have that value. >> You know, there there's no there's no value in the ETF if Bitcoin isn't Bitcoin, >> right? Um, and so I think that to me, this is the thing that holds it all together. And I think the other thing that I'm really comfortable with that a lot of people aren't is just that that storytelling has value. >> You know, there there and that's what I have loved so much about um, you know, Bitcoin and and digital assets broadly is it's really forced me to look at this thing that I never really thought about before. Like what is value? How is it created? And I realized that I was already thinking about that because like well, you know, why why does a particular artist have an appeal to so

many people and another one doesn't? And why are there these inefficiencies? Like what I always what I always wanted in music was just to be more efficient. I feel like we're all bombarded with music we don't really like all the time and there's a bunch of music we would like that we're not getting. Super inefficient. I always wanted to fix that inefficiency. So then you become a a student of how technology changes culture. But the reality is that value is a part of culture. And so for me, you know, I watched um the the digitization of all information. And that's really what the internet was, you know, a revolution of information. And now, you know, we're living through this once in humanity digitization of all value. And that's really what what blockchain is, the digitization of all

value. Um, and so there's there's some sort of a thread in, you know, in in that. And then I really like, you know, I I I I did I was with LVMH for five years, then I consulted with LVH for four years after I left my full-time position there. And I just love that business. I love that. Um, you know, most people don't get it. Like so many people would say, "Oh, why would anyone spend $50,000 on a watch?" you know, and and I think that my, you know, but the reality is is that they do. If you live in denial of that fact, then you don't understand um the way humans work, you know, and there's a lot of value in like understanding that. And you know, to be

honest, people who understand why someone would spend $50,000 on a watch are very well placed to understand why someone would spend $250,000 on a crypto punk. >> You know, they're very similar. You know, why would why would why does you know, understanding why Bosat has value is very related to why does a cryptounk have value? Because storytelling plus time equals value. Every year more people know the story of Bosat and there is no more supply. >> Yeah. >> Storytelling plus time is value. >> It's that simple. Th this is similar to the Lindy effect where the longer that something's around, the more likely it's going to be around in the future because it h starts to build that that insulation around it. That that >> That's right.

>> But you know what's really interesting about that, Robbie, is that that like that really applies to brands. Like if you think if you start to reposition things and think about brands and if you realize that Bitcoin is a brand, the Beatles is a brand, Christian Dior is a brand, Christian Dior died a long time ago and Christian Dior as a brand is more valuable today than ever. Louis Vuitton died a very very long time ago, but Fel >> carries that torch and builds the storytelling and and adds to that time. And if you and I started a brand today, um then we need we're gonna it's going to take us 15 years, you know, there's no overnight success in brands, >> right?

>> You know, um there's just it can't happen. It can only grow organically. I'm watching watching my friend Bree build this running clothes brand called Satisfy. And I'm watching him build it brick by brick and it's the best land, you know, lesson in brand building I've ever seen in my life. And I feel it, you know, I I'm I'm friendly with the um the really amazing person who's the CEO of Golden Goops, the shoe brand. And what's interesting about that brand is, you know, the first 15 or so years were were organic growth, you know, slow slowish growth.

>> Now, the hockey stick growth was in the next 15 years, you know, and that makes perfect sense. It's a Lindy effect, as you said. It's like you have to have it's almost like in a in brand building, in culture, we can we can like point to it because we can say, "Okay, Golden Goose had to be around long enough that Virgil Abau could say, "Yo, that was my when I was in high school." >> You know what I mean? Like you have to be around that long. And if you're not around that long, then you then you haven't built, to your point, any of that insulation, right? And that's why last year I was going like, "This year is Bitcoin's year." You know why?

People, why is it because 15 years? >> That's it. It's just >> it does stand the test of time. And without time, it doesn't have it. It hasn't shown that it has. It hasn't earned that. >> Hasn't earned it. And think about 15 years of everyone trying to kill it from every angle. From every angle. The technical angle, the security angle, the like the the the shit-talking angle. Like people try for 15 years to kill it and Bitcoin is just still sitting there going, >> "Guess what?" >> Yeah. Well, yeah, I think that's that's a good segue to Ledgers because Ledger >> because it's it's a security it's a it's a brand that's built on trust and security and it takes time to earn that trust. And so, um, when when you were

looking at this and you were kind of looking at your portfolio of work, music, luxury brands, kind of going from from one thing to the next, and you heard about Bitcoin, what was it about Ledger's story that drew you in? >> So, I didn't get it when I first met Pascal in 2015. I was like, "Okay." I mean, by the way, Ledger started in 2014, right? So, it was sort of like, "Okay, I I guess like why do we why aren't we just going to do this on our phones?" You know what I mean? Like, our phones seem real powerful. >> Um, so for me, one hurdle I had to get over was that question. Just technically speaking, why can't our phones and our computers do this?

>> And so, and that one I'm technical enough that that didn't take me very long once I spent some time with the founders of Ledger. There's a couple things here. One, it's based on the chip and pin technology, right? And the other is just the simple fact that phones and computers are built for performance, not for security. And they've got layers of technology in there. It's really like if I gave you the task, I'm like, "Hey, I've got a billion in gold bars. Can you let's build a building to protect this?" And you're like, "Okay, let me get into that." And you start planning it out. And then I come to you and I go, "Oh, yeah. Um, sorry, I forgot to mention.

I'm going to put a shopping mall and a kindergarten and a nightclub in the building, too." and uh and you'd be like um please don't like can we just focus on the gold bars? But that's literally what and if you're keeping value on your phone or even worse in your browser like that's what you're up against, right? That that's not what it was designed for. It was designed it's a very powerful tool but it was designed for something else where Ledger was designed for this very specific thing. Um, I think the other thing for me was just realizing that as this value grows, as it becomes less niche and becomes more something that everyone's doing, then the the the attack surface gets gets broader, not you know, you know, not more like it doesn't become more hardened, it becomes less. Um, and you

and you have a device that your kids are playing Candy Crush on and you're also going to try to protect your like your wealth on that. Like that just seems absurd. But the real thing for me that made me kind of get Ledger was 2017 boom and boom and bust the ICO craze because um during the ICO craze I was just like I don't know like I'm looking at this I'm like this is docom madness. I've seen this before. I remember 1999 really well. I'm that old and this is just total madness. This this does not hold. Um, and I was like also who knows like I thought maybe it was Bitcoin and Ethereum, but I don't know. Like you got Kodakcoin and your mama coin and everything else.

>> Kanye coin man. >> Yeah. I don't I don't know, you know. And then it all came crashing down >> and I was like, "Oh my god, Ledger." >> Because what I remember from the late 90s was the late 90s was the same. It was a bloodbath. Everybody was going to kill everybody. Was it Yahoo, Excite, Likos, Alta Vista, Google? Um, you thought Netscape couldn't be killed, but Microsoft comes in with Internet Explorer. There's a book called World War 3.0. AOL, which is like what? They buy Netscape. What? Like, you know, it was just And then what I and what I remember from that 99 era is that Cisco was just sitting there on the side going, we're good. Why? Because they have one question. Will there be more

internet tomorrow or less internet tomorrow? We think more. Okay, we're gonna be fine. They don't really care if it's Google or Alta Vista or somebody else. Cisco is just Cisco. So, I called Pascal, my friend Pascal. I was like, Pascal, I think your company's gonna be huge. He was like, "Okay, well, you finally get it after we've known each other for three years, you know, like what? Why? Why do you finally get it?" I said, "Because you're Cisco." Like, I just watched a thousand coins get created and 999 coins fail and Ledger doesn't care. Ledgers like the honeybger doesn't care. Ledger's like, will there be more internet value tomorrow or less?

I think more. Okay, guess what? You're going to if digital value, you must have self- custody or else what are we doing? We're building another Visa, another PayPal. No, if not self- custody, why crypto? Well, if self-custody, then security. >> It's that simple. And so, Ledger is the only company, it's been around for 11 years, saying exactly the same thing. We are maximalists about self-custody and security. We have standards of self-custody and security that we don't go below. Every cycle people come in and they tell you why they need to compromise on security. Why they need to compromise on self-custody. It's usually got onboarding the masses and their rationality and it all and it always blows up. And Ledger says, you know what, we're going to keep high standards

of security and self-custody and we're not going to go below them and therefore we'll be here tomorrow. >> Yeah. >> Because if not self-custody, why crypto? If self custody then security period and and also coming out of luxury I'm very happy to be that that premium choice 7 and a half billion smartphones with some kind of a value management app on them from PayPal and Venmo to Coinbase Robin Hood Revolute right very happy to be the one where if you're serious about finance if you're serious about security privacy self-custody counterparty risk in the form of like not getting FTXed Ledger is your choice. Seven and a half billion with a billion people with a password problem. How many of them have

like good password hygiene? >> Yeah. >> Okay. Not very many. But enough that one password is a great business, right? Same thing here. You're going to have seven and a half billion with value apps on their phone. How many of them are going to have good security, real privacy, no counterparty risk? Okay, it probably won't be 50%. I'm the first one to admit that. But it's still the right way to do it. and a great business for ledger and that's like who we are and why we're here. >> Introducing extended exclusively on Stark a nextg per trading platform live today with 50 plus trading pairs from crypto to tradi you get the best experience on chain today. Deposit in the community vault for attractive returns EMV compatible and engage in

unified margin spot trading lending and per trading exclusively live at extended.app on Starknet today. stable coins from these institutional providers. I mean the Treasury Secretary Bessant says this is a trillion dollar industry. It's going to help the US issue T bills and treasuries that is all happening through like custody like custodians. They're using Bitco and Coinbase custody. And then on the other side it's the convenience that you mentioned like it's these guys that maybe they don't have good password hygiene and they're using it and and it's kind of you they want exposure to dollars. Maybe it's in the third world and they don't have that luxury. Uh they're not taking it seriously. It's

just it's incrementally better than their own native currency. And so where does where does Ledger carve out the the audience that you're talking about its customer segment between these in institutions and then these you know uh these other countries citizens that are using it to get exposure to dollars uh and not taking self-custody as seriously? Why why should they? >> Yeah. It's a great ledger. >> It's a great question. I mean, just to kind of acknowledge what you're saying, like we are at this crazy inflection point where you've got this like real merge of tradi and um and and crypto, right? Which is a great it's a great moment for all of us, I think. And I and I think that I think this is where the my my internet history experience comes

in handy. Um because I think there's both um hope and caution if you look back at the internet history. Like first of all you know we have this we do have still have TCP IP and we do have you know a free and open internet in many places now at the same time there are a lot of things where it's converged around big players right the gaffa and you know how many we we used to have a billion email providers that's an exaggeration but you know what I mean like people used to use their like local ISP as their email provider and now everybody's on Gmail right and so you do get these central centralization points as well so I think we could you know we can look at that and expect some of the same things. But the reality is is that there were many people who thought that

the internet wasn't going to look like the internet as we have it today with a lot of interoperability. Um they thought it was going to look like America online or um you know or computerve and I think that that's very much sort of like the CFI way of looking at things and but what we ended up with is an open internet you know with with you know with open protocols uh that are interoperable and they and they talk to each other. So again, I think that we will always like have these sort of scary points of centralization. Um, and that's somewhat inevitable. You know, I mean, if you look at like in the stable coin space, what Circle announced last week by announcing their L1, you know, you're like, "Wow, are we just kind of moving toward like a more bulcanized world again,

>> you know, but also I think it's a bit naive to think that we're going to onboard, you know, grandma to the, you know, sorry for your loss world, right? There's gonna There's there's going to have to be there's going to have to be like flavors of this which have guard rails >> um you know for the average for the average population and I think that there are you know people building tools for that circle's one of them canon networks another one you know there are really interesting things happening in in that space also though you know all of those whether it is USDC or um or like a Canton network or you know or or um you know a private blockchain, you know, privacy centric blockchain, you know,

you still do have self-custody at the end of the day. Someone has custody. Even in the case of a custodian, the security of that custodian matters. And at Ledger, we have two sides to the business, a retail side of the business and an enterprise side of the business. And as a user, the security of the custody matters, whether that's in your hand or in the hands of the custodian. You know, the amount of times that like Pascal tried to tell Sam Bankman Freed that he should be using Ledger Enterprise, you know what I mean? Like, and Sam's like, "Oh, not my department. I got people on my team who worry about that." Well, you know, we can talk about that now because FTX imploded, but they're we have that same conversation with exchanges that your users use every day. You know, your users should be

asking what is the security of the custody of those tokens on an enterprise side. you know, are they and you know, the Binance is on record saying they use Ledger Nanos, you know, as their uh, you know, as their custody solution. Okay. Well, what's the governance model around that? You know, that's why we have Ledger Enterprises for governance. So, my point is is that if it's not self-custody, then it's not crypto to begin with. What we have stable coins is dollars running on crypto rails. There's going to be and and that also is going to lower the cost um of of of building fintech. you know, we don't need to use credit rails for digital cash anymore, which means that merchants don't need to pay 3% at the, you know, in the US for those those transaction fees. And so you

do end up with just a different infrastructure layer and a a different marketplace uh with different like forms of competition between the players. You know, they're going to need to compete on different things. Um, so I I think at the end of the day though, this is going to be very uh invisible for the customer. You know, at the beginning, remember, you know, the initial pitch for Spotify was it was a P2P network. >> Yeah. >> Is Spotify a P2P network today? >> No. >> I mean, or the answer really for me and you is who cares? Maybe. Yeah.

>> You know, I don't think it is either, but for the user, who cares? It works, right? >> Right. Um, same thing when I'm using a solution like Satis Pay to pay in Italy. Um, is that crypto underneath? I don't know. Probably not. But who cares, you know? Like what the merchant cares about is that they can get the money really cheaply and they can get it immediately and they don't need to pay 3% and they don't need to wait 30 days for settlement. Like that's what the merchant cares about. And what the consumer cares about is do I have a good user experience? Am I getting a good product at a good price when I want it? Right. >> Yep. >> The rest of it is for us nerds.

>> Yeah. you know, um, and so I think, you know, we do need to care about these things and I think there are definitely some pitfalls that, you know, collectively we want to avoid, but to be honest, the toothpaste out of the tube, >> you know, and and you can't put it back in. Like, we've got stable coin regulation in the US. You have competition around offering the best user experience around digital dollars and that opens a whole new world globally. in this move from God to state to network that Velagi talks about this is uh this is a big big big moment and so yeah I think there's pitfalls but I think overall you know the the ball rolls downhill from here and it it will I I think it will surprise us I mean for

those of us who entered the the internet because it was this you know open you know free software free as in free speech not free beer like that's where I come from like you know free software foundation roots And you know, we're obviously disappointed with an internet that's owned by Google and Facebook. So, you know, don't be naive is my lesson. >> Um, at the same time, the internet did change the world. No question. So, you know, in in in ways that we never would have predicted. >> Um, so I think that you can expect the same here. It's that thing where you always overestimated in the short term and you underestimated in the long term.

And I promise you that'll apply here. Yeah, totally. Ian, thanks so much for coming on, man. It was an absolute pleasure. I think, you know, this this was one of the more fascinating conversations because it stretched all the way from, you know, your your early innings when you first heard about Bitcoin and blockchain as as this record for uh trans transmitting digital music and and and any information digitally all the way to the internet of value and and we're just like you said, the ball is rolling downhill now and this is just getting more. >> So, man, it's the most exciting thing I've ever been involved with. I love the I I love the mental calisthenics on this one. Bring Bring me back anytime you want. I'll jump in. I'll jump in anytime. Anytime. And just have some fun with you guys. Absolutely. So much fun.

Ian, see you next time. See you. All right everybody. Cheers,