Is Ledger Still the Best Way to Store Crypto?

Ledger has introduced a new update for their Nano X device, offering users the option to subscribe to a recovery tool. 

This tool encrypts their seed phrase and distributes it to various custodians who can reconstruct the seed after verifying the user's identity. 

However, this announcement has received a negative response from Ledger customers.

Is Ledger Still the Best Way to Store Crypto?
Mudit Gupta, the Chief Information Security Officer at Polygon Labs, strongly advised users against enabling this feature, describing it as a "terrible idea." While Gupta appreciated the idea of dividing the key, he expressed concerns about the ID verification process and granting key access to chosen contacts. He believed that this could potentially lead to identity theft.

Gupta was not the only one worried about the update. 

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In a video shared on Twitter, Ledger's Chief Technology Officer, Charles Guillemet, assured users that there was no backdoor access for anyone, including Ledger or hackers. CEO Pascal Gauthier also emphasized that only the users themselves could operate the functions on their Ledger device, and that no one else could access their pin code or press any buttons.
The Recover feature is an optional subscription and is not enabled by default. Ledger clarified on Twitter that Ledger Recover is intended for users who desire a backup of their Secret Recovery Phrase. They emphasized that users are not obligated to use it and can continue managing their recovery phrase independently, as originally intended when purchasing a Ledger device.
According to Ledger's co-founder, if users decide to utilize the service, the device will send encrypted portions of their seed to different companies. However, users still have the option to manually back up their seed if they prefer. Ledger maintains that self-custody remains a fundamental principle of their platform.

In February, Wired clarified that the three recovery custodians involved are Ledger, Coincover (a crypto custody firm), and EscrowTech (a code escrow company). 

The concerns raised about Ledger's update are reminiscent of the cyberattack the company experienced in the summer of 2020, which resulted in the leak of personal information belonging to 270,000 customers.
In response to the announcement, some Twitter users suggested that Ledger create Ledger Recover as a separate and distinct product. Udi Wertheimer pointed out that much of the fear, uncertainty, and doubt (FUD) surrounding the announcement was overblown.

And Gemini co-founder Austin Federa also expressed his opinion that fears were “blown out of proportion.” 

And I have to say that I agree.

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While some of the concerns raised by privacy advocates are warranted, the crypto community can be paranoid at times. This update only affects the Ledger Nano X, and one can simply opt out by either not subscribing to the service or not updating the firmware on their device. 

Your Bitcoin is perfectly safe in your wallet wherever you have it stored. 

But if you’re still worried you can use an alternative hardware wallet like Trezor. Or even make the leap to using the new Solana Mobile Seed Vault, which purports to be much more secure than a software wallet like Trust or Metamask while still being capable of interacting with apps running on the device. 

Self-custody is one of the principal features of crypto. 

I show you how to set up a hardware wallet step-by-step as just one of the benefits of Crypto Cycle.

Chris Curl

Chris Curl
Editor, Daily Profit Cycle