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Cryptogambling / Navigating Ledger Wallet Risks: From Hacks to Hassles, What You Need to Know!

Navigating Ledger Wallet Risks: From Hacks to Hassles, What You Need to Know!

Publish Date: 01/06/2023

Are hardware wallets truly safe?

This question has become a really important one in the crypto community after the company disclosed a new recovery feature. This news has met with some strong reactions from desired customers.

Many crypto community members were in shock to find out that Ledger had always had the ability to crack secret keys with its hardware updates while some have expressed fear for the capabilities of this hardware in the wrong hands.

Well, if you ask me? I will tell you to read this article to the end.

What is a Ledger Hardware Wallet?

Hardware wallets are devices that store your private key on encryption, severed from an internet connection.Β This also allows you access to your device should you lose your seed phrase.

This piece of hardware allows users to carry out transactions as well as interact with many blockchain networks.

What happened to Ledger?

Ledger might be in PR mode since its first day of recovery series update.

The company mentioned that users might decline to install the firmware update if they don’t feel safe with the new firmware. The statement made during a Twitter space session raised so many questions; would the company provide a separate firmware upgrade? would the present firmware accommodate the application the new upgrades recognise? and if the Ledger upgrade has the ability to extract private keys.

Meanwhile, in Nov 2022, Ledger tweeted that “a firmware update cannot extract the private keys from the secure element”

olimpio
2023-05-31 10:04
Nov 2022: A firmware update cannot extract the private keys from the Secure Element β€” Ledger May 2023: Technically speaking it is and always has been possible to write firmware that facilitates key extraction β€” Ledger @Ledger, do you now understand the problem? https://t.co/czG53SuCOu
935 105

While Ledger is promising that users’ data are safe, Ledger is yet to come out with clean hands.

In 2020, Ledger experienced a database hack and leak of customer records. While this is still fresh in the memory of users, what happens when the company is subpoenaed or a government directive to build a backdoor?

How does it work and why you should Care?

The Ledger hardware allows you to recover access to your device if you lose your 12 or 24 random words seed phrase.

These seed phrases are encrypted into three “shards” and then shared with various custodians. This makes it easy to recover your seed phrases should in case you forget. The platform charges a fee as low as $9.99 a month.

However, there is a catch.

To use this service, you have to provide good identification. This means that as a user, you are trusting this device not just to keep your seed phrases safe but also to safeguard pieces of information about you.

Contrary to this, the fear now is bothering around the news that seed phrases in fact can be extracted from the device.

Mudit Gupta, the chief information security officer at Polygon tweeted that “the major problem is that the encrypted keys that are sent to 3 corporations can reconstruct your keys”

Mudit Gupta
2023-05-31 10:04
The problem here is not splitting the key in 3 parts. That’s actually good! I may or may not be doing that personally as well :) The problem here is that the encrypted keys parts are sent to 3 corporations and they can reconstruct your keys.
237 14

Gupta added further that the use of the Ledger hardware might not be safe at all, considering the requirement for ID verification and the rise in identity theft.

In another tweet by a prominent Twitter personality, this is going the wrong way and he would not recommend anyone upgrading to such firmware.

Customers Calling for Open-Source Codes

There is a popular saying “Verify, don’t trust.” In a bid to verify how the Ledger hardware work, the crypto community has urged the company to make the code open-sourced.

This will make the user pair into its repositories and allow users to verify its securities.

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