Gunya on Nostr: Following the introduction of the Recover service by #Ledger, I was trying to ...
Following the introduction of the Recover service by #Ledger, I was trying to understand what are the actual risks (new and old) in using a hardware wallet.
petermccormack (npub14mc…frlx) WBD podcast on this subjects has been the best source of clarification so far (https://iris.to/note1gdvzzx2c7xc7q754fsjnt7pfqn0edmqqmpnja6l4859fwjsm5ktsejgjqk)
1) The service is optional. If you do not opt-in, your KYC is not requested and encrypted shards of the seed are not leaving your device (on this we have to trust Ledger).
2) We should be aware and educate others that there are always trade-offs. E.g. using exchange to custody your crypto is the simplest, but least secure option. All hot wallets are ultimately breakable. Hardware wallets are best way to self-custody, but here you have trade-offs as well - UI, open-source, ability to support other coins, etc.
3) By introducing this service Ledger is off-boarding loss of key risk, but on-boarding state actor risk (credit to Harry Sudock from Griid for formulating that well).
For most of users, risk of their personas being of interest to the Government is relatively low vs risk of loosing their seed phrase, and this service might make sense. For others - one can not use the service or move to other wallets.
But the feature should also be looked at in the context of how many users are actually using self-custody - less than 10 mln people among more than 300 mln crypto holders.
If this feature helps brings more people into self-custody on a hard wallet - the trade-off might be totally worth it.
petermccormack (npub14mc…frlx) WBD podcast on this subjects has been the best source of clarification so far (https://iris.to/note1gdvzzx2c7xc7q754fsjnt7pfqn0edmqqmpnja6l4859fwjsm5ktsejgjqk)
1) The service is optional. If you do not opt-in, your KYC is not requested and encrypted shards of the seed are not leaving your device (on this we have to trust Ledger).
2) We should be aware and educate others that there are always trade-offs. E.g. using exchange to custody your crypto is the simplest, but least secure option. All hot wallets are ultimately breakable. Hardware wallets are best way to self-custody, but here you have trade-offs as well - UI, open-source, ability to support other coins, etc.
3) By introducing this service Ledger is off-boarding loss of key risk, but on-boarding state actor risk (credit to Harry Sudock from Griid for formulating that well).
For most of users, risk of their personas being of interest to the Government is relatively low vs risk of loosing their seed phrase, and this service might make sense. For others - one can not use the service or move to other wallets.
But the feature should also be looked at in the context of how many users are actually using self-custody - less than 10 mln people among more than 300 mln crypto holders.
If this feature helps brings more people into self-custody on a hard wallet - the trade-off might be totally worth it.