Unchained The Ugly Tradeoffs of Ledger’s New Recovery Service - Ep. 494
May 19, 2023
Seth for Privacy, a blogger and Head of Content at Foundation Devices, dives into the controversies behind Ledger's new recovery service. He discusses how Ledger Recover, with its closed-source code, poses serious risks to crypto self-custody. Seth highlights the dangers of relying on third parties and the implications for user privacy. He questions the trade-offs between convenience and security, citing Ledger's past security mishaps. Listeners gain insights into the ethical dilemmas and potential future challenges facing the crypto community.
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Ledger Recover Functionality
- Ledger Recover lets users recover crypto funds if they lose their Ledger device.
- This is done by encrypting and splitting the seed phrase into three shards, stored with custodians.
Seed Phrase Security
- Hardware wallets were previously understood to keep seed phrases on the device.
- Ledger Recover changes this by enabling the seed phrase to leave the device, raising security concerns.
Closed-Source Risk
- Closed-source code prevents independent security audits of Ledger's systems.
- Users must trust Ledger completely, highlighting a potential risk emphasized by the Ledger Recover situation.