0
$0.00
0 items
Imagine losing access to your hard-earned crypto assets because of a misplaced key or an unforeseen event. For many, this nightmare becomes a reality. With crypto investments growing, secure crypto asset recovery and inheritance solutions have become more important than ever. Whether you’re a beginner or a seasoned investor, safeguarding your digital wealth is no longer optional—it’s essential.
In this article, we’ll explore two cutting-edge solutions tackling this challenge: Ledger Recover and Cypherock Cover. You’ll learn how each works, their pros and cons, and why Cypherock Cover might revolutionize the way we recover and pass on crypto assets. From privacy concerns to multi-wallet inheritance features, we’ll break down everything you need to know to make the best choice for your digital future.
Crypto assets are valuable, but they can also be fragile if not managed properly. Unlike traditional bank accounts, losing access to your cryptocurrency often means it’s gone forever. There’s no bank to call, no password reset button, and no easy way to recover your funds. This makes having a secure recovery plan critical.
Crypto recovery isn’t just about personal mistakes like losing your private key. It also covers events like hardware failures, theft, or even unexpected life events. Without proper recovery methods, your family or loved ones might never access your funds if something happens to you.
Traditional recovery solutions often involve custodial services, where companies store your private key for you. While convenient, they introduce risks like hacking, regulatory interference, and privacy invasion. These concerns highlight the need for better, more secure recovery options.
That’s why innovative solutions like Ledger Recover and Cypherock Cover are gaining attention. They offer unique methods for safeguarding and reclaiming your assets. Whether you’re securing your investments or planning for inheritance, crypto asset recovery is no longer just a precaution—it’s a necessity.
Before diving into how Ledger Recover works, it would be helpful to first understand Cypherock X1's approach to seed phrase backup, as this will provide context for comparing different methods of securing digital assets.
Note: We will be using seed phrase and private key interchangeably through the blog as private keys in BIP39 wallets like Ledger & Cypherock are derived from a seed phrase. Hence the security requirements are similar for both.
The Cypherock X1 uses 2-of-5 Shamir Secret Sharing to split your seed phrase into five cryptographic parts and stores each one of them in tamper-proof hardware (4 X1 cards and the X1 vault), which is further protected by a user-set PIN.
All of this happens within the wallet’s environment itself. This means your seed phrase never leaves your Cypherock X1.
If you want to access your seed phrase, just tap any one of the X1 cards to the X1 vault and enter the PIN you’ve set. Your seed phrase will be shown on the X1 vault's trusted display anytime you want and any number of times you like.
This way, the Cypherock X1 wallet acts as your seed phrase backup, so you do not have to write it down anywhere. You can read more about how Cypherock X1 works here, and how it can be used as a seed phrase backup here.
To set up Ledger Recover, users must first go through an identity verification (IDV) process. The process begins by entering your Ledger hardware wallet's PIN. You would then have to submit your official government-issued identification which could be a passport or driver's license based on where you reside, along with a live selfie.
All of this personal data will be used for the IDV process, which is done via the Ledger Live companion app and the Ledger hardware wallet itself. The wallet’s trusted display will confirm your personal information like your date of birth, full name, place of birth, and biometric data.
Once this process is complete, your personal details are encrypted and stored in Ledger's database for future verification.
The Ledger hardware wallet then creates a duplicate of your seed phrase and encrypts it with a private key stored in the device's secure element (SE). Interestingly, this private key is the same across all Ledger hardware wallets, this allows you to recover your wallet on a new Ledger device if you lose the original.
Next, the device uses 2-of-3 Shamir's Secret Sharing (SSS) to split your seed phrase into three parts—similar to how the Cypherock X1 decentralizes the seed phrase into five parts.These three parts are then distributed across three separate servers, where they are further encrypted by the servers' Hardware Security Modules (HSMs).
What's important to note here is that two of these servers aren't even owned by Ledger but are managed by third-party companies, namely, Coincover (the original Ledger Recover service provider) and EscrowTech.
As mentioned, each backup provider uses an HSM to securely store the encrypted shares. This makes it extremely hard (maybe?) for anyone inside the companies to access the shares. You can read more about this here.
To reconstruct your seed phrase, you'll need any two out of the three encrypted shares. However, the recovery process involves a thorough identity verification (IDV).
When you initiate recovery, you must use the same identification documents provided during the initial setup. A liveliness check will ensure that a real human is behind the biometric data. This step can be conducted through live interviews with multiple Identity Verification providers.
The process includes multiple independent IDVs:
If you do not pass these IDV tests, there will be a manual investigation process (third IDV) where you will have to go through a video chat with an agent and you will be asked to show all of your IDs, answer random questions, perform unusual movements, and whatnot.
If you fail this as well, then the Coincover investigator will contact you and might want to physically meet you to confirm your identity. This will involve a legal officer too.
While these measures add layers of security, they may feel overwhelming for the average user, especially those who prioritize simplicity and self-sovereignty. Too many parties and steps are involved, making this process very complex.
You can read more about the IDV process here, where Ledger explains it in great detail.
If all of this goes through, then the encrypted shares will be sent to your device and your seed phrase will be reconstructed and shown to you on the hardware wallet’s trusted display.
While Ledger’s use of Shamir Secret Sharing (SSS) to split the seed phrase might initially seem like a decentralized approach similar to the Cypherock X1’s, the reality is different. Ledger Recover actually comes with multiple drawbacks and limitations that take away from its promise of true self-custody — here’s why:
Though encrypted, your private key leaves your Ledger device. This, first of all, defeats the purpose of having a cold wallet as it goes against the philosophy of self-custody and self-sovereignty.
Another important point to note here is that Ledger is based in France, Coincover is based in the UK, and EscrowTech is based in the US. If the legal or regulatory framework in any of these countries changes in a way that could impact the functionality or security of this service, the user should be ready to weigh the associated risks against the convenience of the recovery service. While the key shares are encrypted and theoretically inaccessible, Ledger shareholder and former CEO Éric Larchevêque himself had acknowledged that if the government could subpoena the companies involved in Ledger Recover, both Ledger and the government can get access to your funds without your permission.
Ledger requires your verifiable personal information like your official government-issued IDs, and a live selfie to set up this service, which will be stored in their database as long as you remain subscribed to the Ledger Recover service. However, Ledger claims their IDV isn’t a regular KYC, which doesn’t make sense, as your ID is enough to extract information such as place of birth, date of birth, first name, last name, and photo. Your identity is literally being tied to your crypto, which compromises your privacy.
Now, if you thought there were only two third-parties involved, you are wrong; there are three more. All your KYC data is stored on servers managed by a company called Onfido to whom Ledger outsources the KYC onboarding process. So, while Ledger claims to keep your personal data secure, it’s actually held in Onfido’s database. Additionally, Ledger and Coincover have partnered with two more companies, Tessi (providing independent identity verification services) and VeriDas (specializing in digital IDV technology), to facilitate the ID verification process. These additional layers of complexity add risks to the overall setup.
Ledger uses a common encryption key (the key used to encrypt your seed phrase before being split and sent out of your Ledger wallet) across all its hardware wallets, stored within the device's secure element.
While this setup allows you to recover your seed phrase on any other Ledger device, it introduces risks. If this encryption key were ever leaked, it could potentially compromise the security of all encrypted seed phrase backups (i.e., backups of all Ledger Recover users). For example, if this encryption key gets leaked and two out of the three companies decide to use the shares of your seed phrase, they can reconstruct your encrypted seed phrase and then decrypt it using this leaked encryption key.
Moreover, since Ledger provisions this encryption key, they themselves could theoretically access and decrypt your seed phrase if they ever decide to collaborate with one of the companies holding the shares. Ledger even has access to your ID to wallet bindings/mapping.
This makes it very easy for them, and the attack could even happen without your knowledge, especially due to Ledger’s closed-source firmware, where changes can be made through updates that users cannot independently verify.
Again, this centralization of the encryption key defeats the purpose of self custody. We think it is much better to keep the funds for free on an exchange than paying $9.99/month to Ledger, since the trust assumptions are the same in both cases.
Ledger Recover currently fails to address the important issue of crypto inheritance. If something unfortunate happens to you, your loved ones will be unable to access your digital assets forever.
When you break it down, opting for Ledger Recover means placing your trust in not just one, but five different companies and three different governments. If your goal is to secure your assets and enjoy peace of mind, this might not be the best choice.
Instead of simply protecting your seed phrase, you’ll now have to think about the potential risks tied to multiple entities and jurisdictions. This added complexity may leave you worrying more than feeling secure.
Cypherock X1 solves this by eliminating the need to back up your seed phrase entirely. By decentralizing the seed phrase, as long as you have two out of the five hardware components, your assets are always recoverable.
So if you are looking for a solution to securely back up your seed phrase, the Cypherock X1 wallet already does this for you in a much more secure way. More importantly, you can recover and access your seed phrase backup anytime and as many times as needed at no extra cost (Ledger Recover is a subscription-based service charged at $9.99/month).
You can even use a Cypherock X1 to secure any BIP39 compatible hardware or software wallet like your Ledger device by transferring the seed phrase onto the Cypherock X1. You and only you will be in charge as there are no third parties involved. The seed phrase is split and stored within the X1 cards and X1 vault itself, and only you know the PIN.
Fundamentally, both Ledger through Ledger Recover and Cypherock through the Cypherock X1 HW wallet address and solve the issue of having to keep a separate seed phrase backup.
Since Cypherock X1 does not require you to back up the seed phrase separately, you may lose your assets if you forget your wallet PIN. This is where Cypherock Cover steps in.
Cypherock Cover helps prevent loss of assets in case you forget your wallet PIN. But most importantly, it also takes things a step further by addressing a crucial question of “what happens to your assets if you die?”
The only way to safely pass your digital assets on to your loved ones is through crypto inheritance. It's a pressing issue because over 4 million Bitcoins are estimated to be lost forever, mainly due to forgotten PINs or the owner's death. With Cypherock Cover, you can ensure your loved ones have safe and secure access to your crypto when it matters most.
Cypherock Cover is a completely non-custodial and non-KYC solution. Both the user and the nominee remain anonymous throughout the entire process.
PIN Recovery lets you securely back up your PIN and recover it whenever needed. Setting this up is refreshingly straightforward compared to Ledger Recover. Unlike Ledger, Cypherock Cover does not require you to submit a government ID or biometrics. Instead, you only need an email address for authentication, which is done through the Cypherock cySync app.
After that, you only need to tap any one of your X1 cards to the X1 vault. This action allows the X1 card to encrypt your PIN using a private key generated from your unique seed phrase. This makes sure that even if you shift to a new Cypherock X1, as long as the seed phrase is the same, you will be able to recover the PIN.
Unlike Ledger Recover, where the encryption key resides with Ledger, and could potentially be accessed, Cypherock ensures that the private key always remains offline and within your non-upgradable X1 cards. This approach eliminates third-party access, meaning not even Cypherock has a way to access this private key, which encrypts the PIN.
Once your PIN is encrypted with this private key, it is securely sent to Cypherock’s secure server for back up. Everything that is handled by the X1 vault is open-source and can be verified here.
Recovering your PIN through Cypherock Cover is simple and secure. Using the cySync app, you authenticate yourself by tapping any one X1 card on the X1 vault, and verify your email by doing an OTP verification.
After successful authentication, the encrypted PIN is received from Cypherock's secure server. Your PIN is sent to the X1 vault, and a quick tap between the X1 vault and any X1 card decrypts and displays the PIN directly on the X1 vault.
This process is much quicker and more user-friendly compared to Ledger Recover, where you would have to go through a complex and rigorous identity verification process.
Unlike Cypherock Cover, Ledger Recover does not offer an explicit PIN recovery option. However, if you forget or lose your PIN, and have already set up the Ledger Recover subscription, you can perform a workaround to your crypto asset recovery. For this, just reset your Ledger hardware wallet by entering the wrong PIN three times. This will erase all the data on your device, and after resetting, use Ledger Recover by going through identity verification with your ID and biometrics. This way, you can use Ledger Recover to recover your seed phrase or private keys even if you lose your PIN.
Cypherock Cover’s Estate Recovery feature extends beyond PIN recovery. It addresses a critical need for crypto inheritance: ensuring your loved ones can securely access your digital assets in case something happens to you.
Setting up Estate Recovery is easy, and the first few steps are the same as setting PIN Recovery. You’ll need to enter your email address for authentication.
Next, tap any one of your X1 cards to the X1 vault to start the setup process, then enter the email address you want Cypherock to monitor for inactivity.
Once authenticated, you can add nominees. These are the individuals who you want to inherit your digital assets, for example, your children or parents. You can choose up to two nominees.
Once that's chosen, you need to enter the nominee(s) email address. This email address will be used to send the nominee instructions about the Estate Recovery process. You can optionally verify the email address via OTP, but if you prefer the nominee not be informed immediately, that’s doable too.
Now, it is very crucial that you give this nominee any one of your four X1 cards to keep for the future recovery of your digital assets. If you chose two nominees, repeat these steps for the second nominee and also give him/her anyone out of the remaining three X1 cards.
Both of these nominees will receive the same recovery instructions in an email written by you. The only difference is that the second nominee will receive the email three months after the first nominee receives it.
You can optionally assign an executor to help your nominee in recovering your funds. The executor should ideally be a person you trust, such as your close friend, while your nominee might be your wife.
The executor setup is similar to the nominee process. Enter the executor’s email address, and link them to a specific nominee. The executor will receive your instructions simultaneously with the nominee they’re linked to.
Next, write a personalized message for your nominee(s). This should include clear instructions on the location of other X1 cards, how to fetch them, passphrases for your wallets, and any personal notes. This is very important because your nominee will need at least one other X1 card to complete the recovery process and gain access to your assets.
Additionally, you will have a maximum character limit of 800 characters each for the instructions and personal message, giving you enough space to include detailed information like:
Finally, you’ll set a reminder interval, which means how often Cypherock will check your activity to confirm your liveliness.
For instance, if you choose 6 months, Cypherock will email you every six months. If you don’t respond within 30 days, Cypherock will trigger the recovery process by sending recovery instructions to your nominee. If you confirm your activity, the timer resets, and the next email will arrive after another 6 months.
Once all details are confirmed, enter your wallet PIN on the X1 vault and tap any X1 card to the X1 vault. This will allow the X1 card to encrypt your PIN and messages, which are then securely sent to Cypherock’s server. The backup process is now complete.
The recovery process is triggered if you fail to reply back to Cypherock in the buffer period of the reminder interval that you had set. The nominee will then receive an email having information about Estate Recovery and the process of recovering assets.
The nominee must have a Cypherock X1 wallet (or at least an X1 vault, which can be bought separately). He/she will start the recovery process by entering the email address to which the recovery email was sent. An OTP will be sent for verification to proceed.
Next, the nominee taps the X1 card he/she received from you onto the X1 vault. This step triggers another OTP sent to their email for further verification. After entering this OTP, the encrypted information (your PIN and messages) is retrieved from Cypherock’s server.
The nominee must then tap the same X1 card on the X1 vault again to decrypt the data. Only the 4 X1 cards that you had can decrypt this information, not even the X1 cards of any other user’s Cypherock X1 wallet.
Once decrypted, the nominee will see your detailed instructions, which will include:
After the nominee finds the second X1 card, he/she can use it to recover your wallet by syncing your two X1 cards with the new X1 vault, followed by entering the PIN that was just shown.
They can use the same PIN to view the seed phrase anytime on the X1 vault too by clicking at the view seed option. To view the assets, they would have to add assets on the cySync app which is fairly easy and here’s the tutorial for the same.
No personal information about the user (you), your nominee(s), or your executor is required to set up Cypherock Cover. Cypherock only asks for email addresses to facilitate the setup process, keeping your identity private and secure. You can find a more in-depth blog about Cypherock Cover here.
If you prefer a straightforward process, you can pass on your assets directly to your nominee without involving any legal procedures. Therefore, you do not have to trust anybody outside of your family. Alternatively, if you want to formalize the process, you can choose the legal system by designating a lawyer or a trust as your nominee during the Estate Recovery setup.
This flexibility ensures that your assets are passed on securely and according to your preferences, while your seed phrase remains protected and private throughout the process.
Unlike Ledger Recover, Cypherock Cover includes an inheritance solution through its Estate Recovery feature. This ensures that in the unfortunate event of your death, your loved ones will have secure access to your digital assets.
With Ledger Recover, inheritance is not possible. Its rigorous identity verification (IDV) process ensures that only the original user can recover their seed phrase backup. Even if you provide your family with your photo and IDs, the liveness check would prevent them from gaining access. Ledger is so sure of their IDV process that they even state that if somebody were to ever trick the system to access your funds using Ledger Recover, Coincover will offer users a compensation of $50,000.
If inheritance is a priority for you, Cypherock Cover offers a better solution through its Estate Recovery feature.
Even if you use a Ledger wallet as your primary wallet and don’t plan to migrate to Cypherock X1 or another crypto wallet, you can still use Cypherock Cover for inheritance alone.
Simply import the seed phrase of your Ledger wallet into Cypherock X1, include any associated passphrases in your final message, and set up Estate Recovery. This way, your family can securely access the funds stored in your Ledger wallet upon your passing. You can watch this quick tutorial to learn how to do this.
Since the Cypherock X1 can secure up to four different seed phrases, you can use Cypherock Cover for multi-wallet inheritance of your other hardware and software wallets like Trezor, Metamask, Trust wallet, Exodus, et al.
The Cypherock X1 vault’s firmware is fully open source, and WalletScrutiny scrutinizes its firmware builds. This transparency extends to the cySync companion app as well. This means that the code for Cypherock Cover, Cypherock X1 wallet, and the cySync app is also open source.
Ledger hardware wallets are not open source. Their firmware is closed source due to nondisclosure agreements (NDAs). This means we cannot see what code goes into the device and what it runs on.
However, the entry points of Ledger Recover implementation, are open source, which means it’s currently only partially transparent. All this means that you have to trust Ledger at their word as there is no way for anybody to check and verify what is running on your Ledger device.
Both Ledger and Cypherock offer multi-chain support. This means that the recovery will work for all of the coins and tokens that you currently own. You just need to add them to your Ledger Live and cySync companion apps to see them.
When choosing between Ledger Recover and Cypherock Cover, it’s important to consider your priorities for security, privacy, and inheritance.
Ledger Recover helps you recover your seed phrase but involves multiple third parties, complex identity verification, and doesn’t offer inheritance options. This approach may not align with the principles of self-custody and privacy.
Cypherock Cover offers an easier and more secure solution. It allows you to recover your PIN and ensures your loved ones can inherit your assets without legal barriers or third-party involvement. There’s no need for KYC, and your seed phrase stays private and offline, always.
If you value security, privacy, and safe inheritance, Cypherock Cover is the undisputed choice.
Stay Ahead with Cypherock Cover: Secure, Accessible, and Trustless.
Connect with us:
Twitter: @CypherockWallet
Telegram: Join the Community
