Subnostr

The news about Ledger adding KYC and remote key backup to their product made me think what this could be. What feature would be compatible with

* my understanding of a good hardware wallet

* what Ledger was communicating there

I haven't quite figured it out yet but let's explore how this could be a good feature.

But before I start: Ledger being a trusted third party running closed source software always was a no-go for me but ... this detail aside, how could they improve their product with shards stored by 3 independent respected companies?

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Discussion

Leo Wandersleb 2y ago

Before plotting schemes, lets speculate about the intended goal of this feature. I suspect it is

> At the press of a button, the user can get rid of the biggest nightmare of losing access. Even beyond their passing, the funds are secured for their heirs. At the same time, nobody can steal the coins.

But how could that look?

Leo Wandersleb 2y ago

Scheme 1:

0. Collect KYC identifier. Passport number etc.

1. Split key into 3 parts

2. Encrypt each part with a different company public key with the respective private keys in some shielded high security offline bunkers

3. Ask the user on the hardware wallet if he really wants to proceed

4. Send the parts to the companies together with identifiers

As the companies can only decrypt their respective parts, nothing could ever happen without legal representatives of the person asking for legal cooperation. The companies would not even be able to check balances or transactions until that day a judge asks them to.

Problem:

* Companies could collude and trivially empty all the wallets. This is not different than a federation of three custodians storing customer funds in one big multi signature wallet between the three. At the end of the day, the keys have to be stored somewhere. Some engineers has to have access to them for legal recovery. Three engineers colluding might be all it takes for disaster.

* As the scheme is known to be limited to European documents, the involved companies are probably European, too, and not spread across mutually distrusting jurisdictions. Sweden, England and Germany, not USA, China and Iran. So if these governments agree to tax or cap Bitcoin wallets, they could even execute this ... legally.

Leo Wandersleb 2y ago

Scheme 2:

Same as scheme 1 but hide the identifier such that only the legal representatives can find the right three files to access the funds.

Problem:

* This is impossible