Amid intense controversy, Ledger, a major hardware wallet manufacturer, faces scrutiny over its recent firmware update that introduces a feature allowing users to back up their seed phrases by transmitting encrypted key fragments to third-party firms. As opinions diverge, Charles Hoskinson, the founder of Cardano, took to Twitter to express his perspective on the matter.
Hoskinson emphasized the need for open-source software audited by numerous sources on a consistent basis in order to boost security and trust in the hardware wallet industry. He argued that relying on audited software, users would benefit from the transparency and collective scrutiny – the pillars of a strong security framework.
Simplicity is another crucial aspect underscored by Hoskinson. A less complex system with a smaller footprint limits potential vulnerabilities, strengthening security outcomes. As a prime example of such a concept, Hoskinson mentioned Yubikey, a product that upholds immutable firmware as part of its security approach.
While implementing non-updateable firmware can be challenging in the cryptocurrency space, Hoskinson suggested decentralizing the update process to heighten overall security. Hardware wallets are predominantly purchased to maximize fund protection rather than for everyday use or to offer a user experience comparable to hot wallets. In that light, Hoskinson draws attention to the hardware wallet industry as an extreme example of self-custody. Individuals have alternative methods like encrypting seed phrases and storing them in email accounts. However, hardware wallets provide an added layer of security by keeping private keys in a tamper-resistant environment.
Hoskinson also stressed the importance of not “breaking social contracts” by urging companies to maintain the promises made to their customers regarding security and privacy. Adhering to these principles strengthens trust in the hardware wallet ecosystem.
Given the ongoing Ledger dispute, Hoskinson’s insights were met with approval from the cryptocurrency community, with ADA loyalists viewing them as valuable insights into the ramifications and potential hazards of this new approach to seed phrase security. At the time of writing, Cardano’s native cryptocurrency ADA was trading at $0.3704, representing a 0.37% gain within the past hour.