Self-custody is important in crypto, and security is essential to self-custody. Ledger, a notable hardware wallet manufacturer, has built its reputation on the secure storage of users’ private keys. Hardware wallets create a secure offline environment for storing keys and using keys to execute transactions.
The user’s private keys are generated and stored within the device and are supposed to never leave it. This “cold storage” provides an unrivaled level of security compared with “hot wallets” or online wallets. The problem is that lots of people lose their keys.
Ledger rolled out a seed phrase backup product this week called Ledger Recover. If you give the company your ID and personal information, you can pay for a service that takes your seed phrase within your device, encrypts it into three “shards” and then shares them with various custodians.
Introducing a third party inherently centralizes control, creating a single point of failure that could be exploited by hackers or be subject to regulatory actions.
Related: Throw your Bored Apes in the trash
I don’t begrudge Ledger its effort to grow as a business to reach non-OG and non-cypherpunk-ethos users. Millions of normies, like our skeptical baby boomer in-laws, will only ever be onboarded to crypto through this type of custodial backup approach. Its mistake may have been in…
