Ledger, a maker of cryptocurrency wallets, has come under fire on Twitter for introducing the “Ledger Recover” function only lately, which enables users to save their encrypted seed phrases with third-party custodians. Some customers contend that this service compromises Ledger’s dedication to security and privacy. Pascal Gauthier, CEO of Ledger, defended the product, claiming that it is in line with the desires of potential clients. The event shows the continuous conflict between ideologically motivated portions of the cryptocurrency community and blockchain-focused businesses looking to gain new customers. It may be difficult to balance user experience with fundamental beliefs.
Hardware wallets, which are regarded as the safest way to store cryptocurrency, are a specialty of Ledger. In contrast to browser-based “hot wallets” or exchanges that retain assets on behalf of users, these “cold storage” devices, which store a person’s cryptocurrency holdings on a USB flash drive, provide higher levels of protection. However, the hardware wallets’ seed phrase approach poses usability issues since misplacing the phrase might result in the irreversible loss of cash. On the other side, if the phrase ends up in the wrong hands, it can jeopardize the safety of the wallet.
Ledger has announced the launch of its optional Ledger Recover service for users of Nano X wallets in order to solve these problems. Users may protect their seed words without the worry of losing them for a monthly price of $9.99. The service encrypts the private key in a pre-BIP39 format, splits it into three pieces, and stores each piece with a different business—Coincover, Ledger, and an independent backup service provider. The private key that unlocks the wallet can only be assembled when two out of the three parties submit the pieces back to the Ledger device.
A portion of the cryptocurrency community, however, expressed indignation in response, claiming that giving the encrypted key fragments to outside parties creates security flaws that defeat the point of utilizing a hardware wallet. Ledger Recover clients’ need to provide a government-issued ID, which some believe violates privacy ideals essential to the crypto ethos, also drew criticism.
Critics of the upgrade used the chance to attack Ledger’s prior security track record. In 2020, the business had a data breach that revealed the emails of around 10,000 clients, however no wallets were stolen. User confidence in the company’s security procedures has been impacted by these instances.
The management of Ledger defended the organization’s security standards in response to the criticism and emphasized that the recovery service is completely voluntary. They emphasized that users retain control and that nothing occurs without their agreement as they refuted claims that the new function amounted to a “backdoor” to the wallets. In order to provide transparency and give consumers the ability to confirm that user data is being encrypted securely, Ledger wants to open-source its code in the future.
Ledger CEO Gauthier underlined that the recovery option did not compromise security and that it was crucial for drawing in new crypto users. In response to questions regarding Ledger’s history, he emphasized the company’s dedication to giving customers a choice and transparency in their reliable relationships.
The uproar over Ledger’s new recovery function brings to light the difficulties encountered by cryptocurrency businesses trying to strike a balance between user experience and fundamental values in the quest for greater adoption. The current discussion among the crypto community emphasizes how crucial user control, security, and privacy are as guiding principles in the developing crypto ecosystem.