Ledger, a leading provider of cryptocurrency wallets, is facing criticism following the introduction of a new feature allowing users to extract and send their private keys to external service providers for backup purposes. The unveiling of this voluntary function has sparked concerns and raised alarm among users. The controversial feature has prompted questions about its functionality and the potential risks it poses. As a result, individuals are seeking alternatives to Ledger in order to safeguard their cryptocurrency holdings. This article explores the details of the new private key extraction feature, delves into the reasons behind the concerns it has generated, and discusses ledger alternatives to consider.
Ledger Update: What’s New with Ledger?
Ledger is one of the most renowned providers of hardware wallets for Bitcoin and other cryptocurrencies. The French company has been offering reliable solutions for the custody of cryptocurrencies for years and has long been considered a reputable provider that combined security and excellent usability.
Yesterday Ledger announced on Twitter that with the new firmware update they want to install a feature with which you can optionally extract your private keys and give them to various third-party providers for storage. This is intended to offer a recovery function in which trustees issue 3 different parts individually to the user if the recovery phrase (12 or 24 words) is lost, so that they can restore their words and thus access to their coins.
This feature is called Ledger Recover. This feature will be optional via opt-in. It should be integrated into the Ledger Nano X with the next update. For other models, the function is not planned for the time being.
How does Ledger Recover work?
The Ledger Recover function comes with the new firmware update for the Ledger Nano X. It is an optional service that must be confirmed by the user via opt-in. If the user agrees, the recovery phrase (12 or 24 words) is split into 3 different encrypted fragments. The fragments are then given to various trustees.
If the user loses his recovery phrase, he can get it back. This leads to a KYC (Know your costumer) registration. To get the passphrase again, you have to authenticate yourself again via video.
Why is Ledger Recover Bad?
Ledger received a tsunami of criticism upon the announcement. With a hardware wallet, most users assume that the recovery phrase (passphrase) cannot be extracted from the device. The fact that this is now possible via firmware update shocked most Ledger users.
Wanting to stem the storm of outrage, Ledger assuaged that the service is optional and that no one can obtain the passphrase from the secure element of the hardware wallet against the user’s will. But numerous users have already made their decision and have announced that they will never again use a ledger to store their cryptocurrencies.
Is Ledger still Good?
Ledger has been heavily criticized for months. With good service, easy-to-use products and good marketing, Ledger became the best-known and most popular hardware wallet provider before 2020. But over time, Ledger has destroyed its reputation.
For one thing, the fact that Ledger’s code is not open source has received increasing attention. Competitors like Trezor or Bitbox use open-source code, so anyone can verify that there are no backdoors in the code.
Furthermore, Ledger experienced a hack in July 2020 in which customer data such as names and addresses were stolen. Ledger’s actions following the hack were criticized much more than the fact that the company was hacked. The company failed to add a feature that would allow users to check if their data was affected by the hack. Furthermore, manipulated legders were subsequently sent to the addresses of certain users. The company lacked any transparency during all these events.
In this article, a month ago, we already spoke about how Ledger was starting to get off-track with its users.
Ledger Alternatives: Should I change Ledger?
As the owner of a ledger, you should now consider switching to other hardware wallets such as Trezor, KeepKey or CoolWallet. In any case, it is always a good idea to diversify your crypto holdings, just in case something bad happens, you won’t lose everything all at once.