Crypto hardware wallet manufacturer Ledger has launched cloud-based private key recovery services in spite of criticism from the crypto community. Many people lost their cryptocurrency and it's gone forever due to losing their private key. If you do not have the private key anymore, you cannot get access to your crypto wallet.
Ledger came up with a cloud-based private key recovery service that will help to recover the secret seed phrase in case users forget or lose it. It sounds good to hear but it is not. The whole purpose of using a hardware crypto wallet is to get the highest level of security.
People in the crypto community did not like the idea of recovering private key like this. It can leave the private key in a vulnerable position. People often hear that the private key does not leave the crypto hardware wallet. Introducing this recovery feature, users have the option to use it and other companies associated with providing this service will hold a portion of the encrypted component of the key in a secure way.
Ledger's private key recovery feature is a subscription-based service and you have to pay $9.99 monthly or $120 yearly. It is up to the users whether they will take monthly or yearly subscription. If users cannot pay for a subscription, it will be suspended. Then users will have nine months to reactivate the subscription again.
In order to provide this service, users' private key will be encrypted and segmented into three parts. Then each part will be sent to three companies - Ledger, Coincover, and EscrowTech. A single company will not have access to the entire backup and they will maintain the highest level of security.
Users will have to provide ID documents and selfi recordings to verify their identities. How do you feel about their identity verification procedure? I do not like this. it is terrible. They say ID checks are not like KYC because you need to provide less information.
If you use Ledger and do not like this private key recovery service, you do not have to use it. It is completely optional and you can use Ledger like you did before, according to Ledger’s chief technology officer Charles Guillemet. I don't think people will trust Ledger the way they did before.
Introducing this feature, Ledger may get subscription fees, and that will add to their revenue but will their user base increase? The crypto community highly criticized Ledger's move, still, they finally launched this service.
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