When we look at this Ledger issue we should look at three things.
Creating and maintaining your cryptocurrency wallet is hard to do.
Ledger recovery option provides you a backup plan
Ledger 's plan generates some new risks for it's users
Lets begin
Creating and maintaining your cryptocurrency wallet is hard to do.
- Wallet technology is complicated, and requires some high level technological knowledge and some discipline and anticipation of problems like plan b, and plan c for recovering lost passwords.
- Unfortunately many people who want to protect their cryptocurrency will buy and use physical cryptocurrency wallets, and they lose access to that cryptocurrency because they lose their passwords.
Ledger recovery option provides you a backup plan
- The Ledger software update allows your private password to be broken up into three parts, sent to three trusted companies , in three trusted countries.
- If you lost your private password, you could present a government ID like a password to two of these three companies and they could recover your password and your cryptocurrency .
Ledger's solution creates new risks
- Ledgers solution does make you identify yourself to recover your cryptocurrency
- These three companies could be served a subpena by the government to divulge information about you, your passwords and your crypto.
- These three companies could be pressured to allow the government access to your private pasword and thus access to your cryptocurrency, so they could seize your cryptocurrency.
Last words
- Ledger does report that out of the 5 million devices they have sold in 12 years, one million were sold last year.
- So almost 20% of their sales are to people who are relatively new to cryptocurrency, and thus at great risk of losing their private passwords and thus losing access to their cryptocurrency.
- Ledger has been charged with violating a longheld belief that Ledger owners private password would never leave their device.
- Cryptocurrency is built for self custody, but most people were raised in a shared custody financial system, and this is a compromise effort by them, which has had some unintended consequences.
- That is the basic outline of this issue, if you have questions please ask below.