Ledger Recover: Bitcoin community in turmoil
2 min readLedger Recover a planned wallet feature that is causing head-shaking in the Bitcoin community, to say the least. The core function of this “security” feature is to split the seed phrase, i.e. the secret security key for your own cryptocurrencies, into three parts and store them encrypted in a cloud.
As soon as you do that, you are violating one of the top guidelines in the bitcoin space: Never give up your private keys! A second feature that is known to be very important to Bitcoiners is also compromised with Ledger Recover: privacy. Because in order to activate Ledger Recover, you have to prove your identity, like the company does on theirs home page explained.
This is met with incomprehension in the Bitcoin community. In relevant Reddit threads, the hardware wallet manufacturer’s approach is dubbed the “biggest fail” in crypto history. So why would Ledger do such a thing?
Reasons for Ledger Recover
As seen in a series of tweets from Ledger CEO Pascal Gauthier, the service is optional. Rather, it is about making ledgers suitable for the masses. Gauthier speaks of 100 million future users for whom the leap into the Bitcoin world should be made easier with the new service.
Ask yourself… Where do users keep their private keys… On an exchange 🙈 @cz_binance In the cloud 🙈 On a password manager 🙈 In a software wallet 🙈Ledger Recover fixes this. It will also help the next 100M users to onboard self custody 😎 And… (1) You dont have to use it…
— Pascal Gauthier @Ledger (@_pgauthier) May 16, 2023
What causes displeasure for die-hard bitcoiners at first sounds a little more understandable at second glance. Finally, the mandatory personal responsibility of having to store your own seed phrase can be a deterrent for many. In addition, there is no one to help Bitcoin users if they lose their seed phrase. But is cloud storage the right solution? After all, self-custody is about the Bitcoin feature.
Hard facts about Ledger Recover
Here are some hard facts about Ledger Recover to clear up some misunderstandings:
- The feature is optional, nobody has to use Ledger Recover
- It costs $9.99 a month
- According to Ledger, all three companies holding the Seedphrase shares have their own strong safeguards. Should only one of them be compromised, it would be useless to the attackers
- Unlocking Ledger Recover requires unique personal characteristics that are randomly changed with each query, making them extremely difficult to impossible to forge.
If you follow the discussions on social media, it quickly becomes clear despite these facts: Doubts and outrage prevail in the Bitcoin community. One argument that is listed relates to the emerging security problems caused by the cloud solution.
One thing is certain: temporary damage to trust and image is unavoidable for Ledger. No matter how you evaluate the new function: Successful external communication looks different. The hardware manufacturer now has its hands full in order to straighten that out.
