On Tuesday, Ledger presented a new product allowing you to recover access to your cryptocurrency wallet without even owning your seed phrase: Ledger Recover. However, this announcement generated strong negative reactions from part of the community for lack of understanding. What is it really? We take stock.
Ledger Recover, a way to regain access to your wallet without seed phrase
If you read our previous interview with Charles Guillemet, you were probably expecting this announcement: Ledger presents a service allowing you to regain access to your cryptocurrency wallet without your seed phrase.
Exciting update, Ledger has a new product, Ledger Recover, that’s launching soon: https://t.co/nT1VHnnSYz
🧵Here’s what Ledger Recover is and what it isn’t, explained by @P3b7_ & in the thread below. pic.twitter.com/RW1w07H6pK
— Ledger (@Ledger) May 16, 2023
The promise of this novelty, named Ledger Recover, is therefore to provide access to its digital assets anywhere and at any time. This was made possible through a partnership with Coincover, which will ensure a backup of “military grade“, and a “independent backup service provider“.
As shown in this presentation video, the private key of the wallet is split into 3 encrypted parts, which cannot be unlocked only through identity verification which will have been configured when the wallet was created:
First, this service will be available on the Ledger Nano X, before being extended later to the Nano S Plus and the Stax.
Of course, it is important to point out that this option is not mandatorythe user chooses on his own if he wishes to subscribe to this service or not.
👉 To go further — Learn how to configure your Ledger hardware wallet
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Ledger at the heart of a controversy
Such news is so counter-intuitive with the concept of secret and private key that it did not fail to make a part of the community reacton the pretext that Ledger or some other third party would have access to the private keys.
On Reddit in particular, then massively on Twitter, users have worried that this new update would expose his wallet’s private key to the internet, which would then make him “less secure than a hot wallet“.
Even the competitor Trezor went there with his little spadetweeting the famous phrase “Not your keys, not your coins» :
Not👏Your👏Keys👏Not👏Your👏Coins
—Trezor (@Trezor) May 16, 2023
Among the other arguments put forward, there were also that of privacy, taking into account the identity verification necessary for the implementation of this service. Indeed, what would happen if the courts asked Ledger for this information?
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In fact, a large part of these doubts comes a misunderstanding of how Ledger Recover works.
First, it should be noted that for any cryptocurrency wallet, regardless of the medium or how it was created, the private key is “exposed” to the Internet with each interaction with the blockchain. It is the very foundation of our ecosystem.
Indeed, the validation of a transaction can only be done with the prior signature of a private key. This is why it is essential to pay attention with which protocol we interact and with the authorizations granted to the smart contracts.
Then, as mentioned above, Ledger Recover is optionalwhich means that for people who are not interested, it does not change anything.
As Charles Guillemet, Chief Technology Officer (CTO) of Ledger clarified, despite the new update, the activation of the service is only done with the explicit consent of the user. Thus, someone who does not wish to use it does not have to perform identity verification:
After consenting to this, and verifying your identity on your device, the OS will compute a (2 out of 3) SSS of your seed and encrypt them with a symmetric key.
— Charles Guillemet (@P3b7_) May 16, 2023
On the side of a possible legal seizure, the CTO of the company also returned to this point during a live Twitch at CryptoMatrix. If French justice asks anything from Ledger, it has a legal obligation to cooperate. This is also valid for any company based in France.
On the other hand, justice could not do anything with a single fragment, even if she managed to decipher it somehow. With this in mind, the other two partners of Ledger are each located in two different jurisdictions.
On the other hand, note that the choice to separate this private key into 3 is not insignificant. Actually, two shards are needed to restore the walletbut 3 actors are in the loop in the event of the bankruptcy of one of them.
Imagine that the private key is composed of 3 colors, the illustration below helps to understand how it can be reconstituted from only 2 fragments:
Example of a fragmentation allowing to be completed by 2 elements out of 3
Of course, the mechanism is much more complex in reality, everything is encrypted on the device, before sending it to third parties through encrypted channels. Moreover, third parties are not aware of the part of the private key that they possess, and the decryption of this data can only be done through identity verification.
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A vector of democratization
So, you have to see this new service from the perspective of mass adoption. People who are already comfortable with the liability of a seed phrase probably won’t be interested in Ledger Recover. On the other hand, for someone who is not very comfortable with this, it is a real added value in terms of self-guarding.
For someone who travels often and wants to have a “flexible” wallet, with funds they want to be able to move quickly, this is also a solution. much more viable than a hot walletwithout having to carry its seed phrase in case of a problem.
Of course, like any other cryptocurrency storage technology, however, it may be wise not to bet everything on it. For example, we could imagine an extreme extortion scenario where an attacker would force use of the feature. But to secure part of the funds, it is a completely viable compromise to consider in its strategy, and it will be up to everyone to adopt it or not.
👉 Also in the news — Jump Trading generated $1.28 billion in profits from secret deal with Terra (LUNA)
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Source: Ledger, CryptoMatrix
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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