Ledger Unveils NFC Recovery Key: A New Layer of Crypto Backup. How Safe Is It?

Transcript

I'm here now with Charles GMA, chief technology officer at Ledger, which has a new self- custody product that they're announcing the day this episode airs, and it's called Ledger Recovery Key. Charles, tell us what problem you were trying to solve with this new product. Hi, thank you for having me. Um yes, the problem we we want to solve with this product is is the problem of the backup like backup and and recovery is uh always comes always with some friction and uh and this is part of self self custody. Self custody is about having your own keys and and being able to prove ownership over your coin. Um but it works only if you're secure and only if you have um a good backup option. Uh

so at Ledger we are trying to innovate in the space and this is what we did in the past with uh with ledger recover uh and now we are launching ledger recovery key which is which is an other option uh to to do the the backup and the recovery for your coin and so tell us how it works. Yeah definitely. So it looks like this. Um it's a it's a small square and it's a NFC card uh chip uh that is inside the this device and when you are doing your onboarding with uh your flex or your stacks uh it it works on NFC. So it only work with the with the recent product. When you do the onboarding of your device, you are going to uh create

a pin for the ledger recover key. You input the pin on this device. Then you tap the card on the device and that's it. you have created a backup for your 24 birds and as soon as you need to recover your wallet because I don't know you wiped your device or you lost it or whatever you need to recover your wallet then you just have to get this device um with a brand like this one is wiped and you will recover your um your wallet not by inputting your 24words but by inputting the pin of this card tap it on the device and then you recover your wallet and uh and that's it. It's very simple uh completely secure and it

provides like a new option for creating the the backup of your 24 words. Okay. Yeah. Um obviously people have had issues before where they've lost their seed phrase and things like that. um famously well there were so many famous stories like uh I think the CTO of Ripple or former CTO was um known to have lost a seed phrase or a password and then there's somebody um who well I guess it's a little bit of a different story where they dropped their hardware in the trash and then I think he lost he lost the password of his iron key. I know this story a little bit.

Iron key iron key is an encrypted USB drive and uh and you simply lost the password of it. Oh, okay. Okay. Yeah. Well, um so still there there is an element of risk in the sense that now um there's this other thing where somebody else could potentially if they get control of both they could um you know use that to to drain your wallet. So how would you recommend people safeguard this recovery key? So first of all it's it's uh it's yet another option uh like there is no perfect setup. Your setup really depends on your threat model and and and everything. Um and u so I I I won't give like an absolute recommendation. It really depends on how

you see your setup. But a potential possibility is to do like you write down your 24 words on a piece of paper. You put this at at the bank in a safe for instance. And at home you also have this ledger recovery key that you protect with the pin. Uh the pin is is a regular pin meaning that you uh input three wrong pins and this card is is wiped. Um and so that uh at home if you want to recover quickly uh your uh your wallet then you can simply tap uh the this ledger recover key with this this device after inputting your PIN and and that's it. You recover your device. So for this one you like compared to the recovery

sheet. The problem with the recover sheet is if someone uh like get an access to it as a direct access to your wallet and there is nothing you can do with this as there is a pin then it's protected by the pin and you don't really have to worry about someone stealing it. Okay. And um and so just explain the the tapping that I think uses um NFC technology. So can you explain yeah what's happening on the back end? Yeah definitely. So uh in terms of communication uh channel definitely we are using NFC technology.

So the same tap and card that you have with your banking card when you do like a wireless payment or the one that you have on your uh phone. Um on top of the NFC communication layer uh we have imple implemented our own um um like secure communication channel and what we are you what we are doing is is a mutual authentication meaning that the this card is proving it's a ledger one and this device is proving to the card that it's it's a ledger one. On top of this, there was a there was another um like number on this card so that exactly when as we as you do when you do like a Bluetooth pairing, you have to verify

the the number and there is the the same thing here so that like you are sure that you are discussing with this specific card and there is no other card in the room or something something crazy like this. Um and then as soon as like the authentication is done on both side uh everything is encrypted like we are mounting what we what is called a secure channel and this secure channel encrypts every single communication that goes from uh from this device to to the card and vice versa when when you do a recover. So you have like a strong security uh guarantees even if there was someone in the room with like advanced equipment that could like listen what's going on on the NFC channel. there is nothing interesting for anyone because

everything is authenticated and encrypted. So there is a high level of security and the second thing we can say is like inside this uh NFC card uh there is a secure element chip. So we are using the same technology that that we have uh in this in this device with the with the secure element technology which is smart card technology the the one that you find in your banking cards or in your passport. So again, the highest level of security uh that you can have in the space and um so I know that it works only on certain Ledger products but not others.

So can you tell listeners which ones will have this capability? Yeah, sure. So as I as we said it's NFC type of card. So it only works with with our recent devices that are implementing NFC. And we have the Ledger Flex and the Ledger STS that are implementing the NFC. So this one and the and the other one is the one with the with the curved screen. Okay. So yeah, I think um the older nanos are the one that uh the ones that don't have this functionality.

So, um, this is like a a just one of those questions that's going to pull together a couple of different trends. And I'm not sure, um, you know, how this could connect with the, um, recent launch, but obviously there has been a very concerning trend about these increasing physical attacks, um, on, you know, people who um, are prominent or even maybe not so prominent in crypto. Um but you know I wondered you know and obviously Ledger is very um probably much more information about how you know what happens on the back end obviously because of what happened with um your executive this past winter. But you know I wondered um are there any thoughts around how the NFC card could help

protect users who self- custody um in any way from these so-called wrench attacks? Um like the the wrench attack is is always is always a big problem. Um so here we are solving really the the backup problem. It can avoid like the the issue when someone would steal your 24 words on the piece of paper. Um also we are implementing like different functionality uh which which is the which implements like the passphrase function for instance and this one is is pretty good for plausible deniability.

So for those who are not familiar with this one, so you have the 24 words and on top of this 24 words you can add a small passphrase. You decide whatever word or or passphrase you want. And on ledger we are implementing this with different pin. So you can you can have one pin to access to your first wallet, the 24 words based wallet, and another pin to access to your hidden wallet, which will be the 24 plus passphrase wallet. So with this feature, you can implement plausible deniability, meaning that if there is someone with a wrench that is implementing a wrench attack, you can unlock the wallet you want and completely hide the the other one. So

this is a a possibility also you can use this ledger recovery key in a different manner. I I also like this this specific feature. So as as you can have like multiple ledger recovery key that means that you can you can put like different seed in a different recovery key with the same device. So what what you can do and as it's very easy to uh to to back up and recover you can switch from one seat to another very quickly. So uh in terms of possible den deniability, you can also do that like implement um use like two different recovery key. One with a smaller amount and another one with a bigger amount like your wealth wallet. And um and and all the time you

are using maybe like the the the smaller one. And whenever you want to really use like your wealth one, you can use your recovery key to tap it and recover it on the device. And then you you you have like one device but two different recovery key and you can switch from one uh seat to another very quickly. So it can also help in this area. Okay, great. Well um thank you so much for sharing your news on Unchained. Yeah, thank you for having me. [Music]