Offline vs. Online: The Eternal Struggle of Cryptocurrency Cold Storage

Ledger introduced a service called "Recover" that converts a hardware wallet with offline cold storage into something always online for backup reasons. It does this, at a high level, by sharing your private keys with a few service providers. Yes, it is a little more complicated than that but many people are upset that this defeats the whole purpose of cold storage. After all, if your private keys are shared, in whole or in part, then they are not so private anymore.

What is going on here? And why is reliable offline cold storage proving so difficult for the industry to get right? Here we are going to work through some basic concepts in cryptography and explain why this is such a hard problem. At the core, there is a tension between wanting to never share your secret information and also having a reliable way to ensure you can always access your funds. Some part of this is linked to how human memory is better for words than random 80-digit numbers.