Now everyone take a deep breath – Excitement about Ledger is overblown3 min read
Hardware wallet maker Ledger has committed a deadly sin. At least that’s how they read it Comments to the newly introduced feature “Ledger Recover”.
In a nutshell, it means that Ledger customers can optionally order a backup of their seed phrase – i.e. the up to 24 words to restore the private key. The seed phrase is divided into three parts and given to individual service providers for safekeeping. In the event of loss, these can then be restored using classic KYC processes, i.e. ID cards in the video identification process.
Ledger and the Betrayal
The mere possibility that Ledger offers this service as an option is absurd for many orthodox crypto enthusiasts. After all, the self-custody of the private keys is the top priority. Custody by third-party service providers, on the other hand, violates the imperative of autonomy and decentralization. The fact that Ledger, which has made precisely that self-custody with its hardware wallets suitable for the masses, now offers a third-party option, is viewed as high treason on social media – boycott the informer is the harsh tone.
More emotions than factual arguments
It is perfectly legitimate to question and criticize Ledger’s move. Is the newly introduced interface really secure with the firmware update, or does it open up a dangerous attack vector? Exactly such questions belong on the table now.
Calls for boycotts and insults, on the other hand, do not belong on the table. The emotional reactions can only be explained by the fact that some crypto enthusiasts feel their ideology has been attacked. Otherwise – if it were only about the factual level – the reactions would not be so aggressive. After all, no one will be forced to use Ledger’s new service.
Ledger is not a denomination
Angry Ledger critics ignore the fact that Ledger only reacts to market demand. A company does not act exclusively according to idealistic motives. Companies that do this have a very short life expectancy.
Instead, Ledger, like any other successful company, tries to optimally serve a market demand. If internal investigations and market research show that many crypto users do not trust themselves to carry out safe custody themselves, then Ledger Recover’s step is only logical.
After all, Ledger only received funding of 100 million US dollars in March of this year, primarily to attract new customers. Especially since it should be in the interest of the entire crypto sector that bitcoin adoption continues to advance. In order to achieve this, new products, in case of doubt with less self-responsibility, are necessary.
Self-custody: between desire and reality
The reason for this is quite simple: not everyone wants to take full responsibility for the custody of their assets. For this reason, not everyone keeps their gold bars at home, but some prefer to put them in the safe deposit box at their bank. Of course, this creates new risks – the bank could refuse access, for example – but it would not be the case that there were no risks with self-custody.
On the other hand, many people tend to overestimate themselves. Some people may proudly tell their friends that they only keep their private keys themselves. In reality, however, self-custody often means that the private keys are written down in Word or Google Doc on the family computer, ideally still in the cloud. Some convinced self-custodians stow away their private keys or seed phrase so securely that they can no longer find them themselves. The number of unreported bitcoins lost through unprofessional self-custody can only be guessed at, it will definitely be high.
Anyone who feels capable of doing this and is willing to take responsibility for their digital assets can confidently ignore Ledger’s new service. Here the outraged Ledger critics are quite right: self-custody is the safest form of custody. With the addition: If you do it right.