Thread by @hosseeb

Yesterday I freaked out about the revelation that @Ledger could spit out your private key with a firmware update.

Yet I noticed the smartest people were not freaking out. Was I missing something?

I spent the evening educating myself, and now I'm in the "nvm it's fine" camp.

This was my initial mental model: I thought Ledger's Secure Element was like Apple's Secure Enclave—a box that a private key lives in which can only sign things, but "keys can never leave the device." h/t @roinevirta

But it's not! Firmware can exfiltrate the private key! Oh god!

This take is actually nonsensical. This *can't be how it works*.

Because Ledgers *upgrade*.

Many people's instinct is "wait why even? I don't want my hardware wallet to ever upgrade."

But Ledgers upgrade to support evolving blockchains. Ethereum now requires BLS signatures. Then there's Solana, NEAR, Aptos, all the new stuff. They have new signing algorithms, new key derivations, all sorts of fanciness. Aside from Bitcoin, every single blockchain evolves.

If a Ledger were an un-upgradeable box with a private key inside, then it would need every algorithm that every blockchain will ever use already available inside the box. And if they didn't think to include a newer algorithm, you'd have to throw it away and buy a newer model.

Consumers will not sign up for that. So they accept a compromise:

The box can take in new code that touches the private key if the user approves it. *But only code that was signed by Ledger Co.*

Their signoff is how they keep you from getting owned by malicious apps/phishing.

Every Ledger app (for any blockchain you run) can in principle extract the private key on your device.

Of course it can!

Because Ledger Apps often have to derive a key for another blockchain, which originates from the master secret on the device.

There is no way around this.

So yes, you're trusting Ledger. Although you only need to trust them once, since you are never *forced* to upgrade firmware.

__This was always true.__

Either you throw away your device every time a new blockchain ships, or you embrace this trust model. Can't be both.

The important point is: every major hardware wallet works this way.

That said, Ledger did some terrible corporate comms and freaked everyone out.

But the more I reflect on this, the main reason was people don't understand how hardware wallets actually work (myself included).

People want hardware wallets to be ASICs. But they're actually FPGAs, and consumers have chosen that.

That said, maybe there will now be a market for an "ASIC" hardware wallet. It's easier now that the landscape of blockchains has settled down a bit compared to 5 years ago.

TL;DR: Ledger is fine, regardless of model. Choose your hardware wallet provider on the merits.

Also shoutout to @OneKeyHQ which is one of my daily driver HW wallets and is fully open source, invaluable in understanding this (disclosure: Dragonfly is an investor).

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