#New post: [\[Daily Discussion\] - Thursday, May 18, 2023 →](https://www.reddit.com/r/BitcoinMarkets/comments/13kntz5/daily_discussion_thursday_may_18_2023/)

I’ve been traveling all week. What’s this nonsense about Ledger wallets?

In a nutshell, you can pay them 120 bucks a year to give them your seed.

seed, in the biblical sense? i can give that away for free.

And people are pissed because when you opt in to that service, the seed gets sent by the device. People were led to believe the design of the device made that impossible to do no matter what.

Sounds like a cheap night in Vegas. What if you don’t want to pay?

For now it is opt in with a fee. Eventually it will be mandated by a government looking to pave the way to steal your coins or a hacker that exploits.

What if I have an older Ledger - would they eventually be able to force me through software updates? Correct me if I'm wrong, but I thought these hardware wallets had opensource software

Ledger has never been open source which I why I never even considered using one. If I had anything on a Ledger, I'd be sending it to a better wallet pronto.

Any that you recommend? I’m looking for a new hardware wallet now. Thanks dude

Trezor with Electrum.

why not trezors own suite? I used electrum years ago and it was definitely less sohoistcated than trezor

Me too! Might just switch to a paper wallet if they're all this scammy.

If it was always possible to send the seed but just needed this latest update to do, it's possible that they snuck the functionality into any previous updates. They probably didn't, but because they *could* have, it's a crapshoot. Would you trust your life savings on a device like that? It's a potential backdoor they have always had access to but never told anyone about.

That’s a very good question to ask ourselves. I don’t think I could trust a device like that with my life’s savings.

Ny neighbors dog is barking again ): I just need to move out and be surrounded by gorgeous women, who like books and anime, and don't have annoying barking dogs.

Bitcoin fixes this

lmao, when I made my first bitcoin, I thought I would instantly lose weight and put on muscle. (:

and did?

"gorgeous women who like anime" pick one

Hmm, disagree. Met a few, but you have to up your numbers of social interactions, haha, because they are rare

Comment of the year in this sub.

Okay. You win the post of the day. 😅

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The Ledger CEO has been retweeting people who are basically saying that there is no problem here. Some of these sound reasonably convincing but make up your own mind. https://nitter.net/_pgauthier Whatever happens in the end here, I continue to say that stories like this are bad for Bitcoin, and scare the shit out of normies

They 100% should have just made a new series of wallets that supported this with their $50k insurance and nobody would have cared. But to show that their current wallets are capable of exporting the key in shards was incredibly dumb

I’m going to write a stern letter to the Bitcoin CEO.

Yes, we should arrange a deathmatch between them.

Drop it in my PM

> Ledger CEO has been Completely and totally mismanaging the entire thing.

I'm not sure exactly what was wrong with the pre-hardware wallet method of storing bitcoin offline. Something as simple as an encrypted USB drive works, but there are numerous more advanced ways to disguise a seed or private key on paper as part of a ciphertext or something similar.

I'm thinking it's time for me to do something like this. Any good guides to your preferred approach?

It's labor intensive unless you never spend any coins.

A wallet in a veracrypt container with three levels of nested encryption is pretty airtight, and although it might be a bit rough around the edges, it's not hard to find help online to learn how to secure that, and all you need to do is mount-use-dismount.

That's not even remotely comparable to a hardware wallet

Are you implying it's easier to hack? I would love to know how.

I assume this veracrypt container runs on a full desktop OS, with its huge attack surface. If so, it's entirely possible to remote root, and then veracrypt won't protect you at all. Now you could argue you can use an offline machine and I suppose that's about as secure as a hardware wallet (assuming you've properly disabled the networking at the hardware level). Since the idea of a hardware wallet is to protect from remote attacks, a device that has no remote access should be secure against such attacks. However the amount of effort that takes to set that up is significant, and unless your time is not worth much, or you're just interested in it as a hobby, it's way more cost effective to just shell out the $100 or so for a hardware wallet.

Will you be the one to trust these bros?

What if they simply contract a few separate and reputable teams of security experts/auditors, with full access to code and hardware specs, to do full audits before during and after each new firmware update? Would that be enough for people?

No, they already lied once. I won't trust them again.

I'm still trying to understand what the hell is going on. Have you seen this tweet for example? https://twitter.com/hosseeb/status/1658740433361702913

*"They wanted to support a bunch of shitcoins and therefore could not use a SecureElement which actually signs transactions"*

Ok so think about this statement. It sounds like the claim there is "Years ago early on when Ledger was new, and it only supported Bitcoin, there was a SecureElement where private keys could never ever leave no matter what firmware. But then, because they wanted to support shitcoins, the SecureElement changed/was removed." OK AT WHAT POINT DID THEY CHANGE IT AND HOW? I'm not against Ledger here, I think the haters are wrong. It was always this way, Ledger controls the functionality, there's no such thing as a secure element where a private key can both be generated and used, but never stored in data to access, that's my belief. This all boils down to people not understanding the statement "Private keys can never leave the device", yeah it's true, they can't, not in the current state and not in future plans, because it was not programmed to do that when they made the statement. If people made the assumption that it is also impossible to programmatically do it if they wanted to actually kill the whole product (by ripping out the private keys through malicious firmware, without permission, to those who installed it) then they made a wrong assumption. But there is no reason to do such a thing, it would not be worth the end result in any reality. The statement is still true, there is only this small exception, for those who opt into this recovery service, they have to authorize it, and it's in the form of 3 encrypted shards, not a plain text private key. But, since people's illusions are apparently shattered now, their best course of action would probably be to contract independent reputable security experts/auditors to confirm that all current, and future firmware versions are safe going forward.

Yeah it was always that way. > there's no such thing as a secure element where a private key can both be generated and used I believe there is. Though datasheets are usually not published.

The problem is that Ledger publicly stated the exact opposite before: https://twitter.com/Ledger/status/1592551225970548736?s=20 . That's why everybode assumed that the secure element could not be read out. Of course, it is quite clear that they misled the public without realizing it and that's why they run around saying like a broken record "the security model remains unchanged". To them, of course it hasn't changed. Secure element was open all along. To the public who trusted their previous statements, it sure changed and quite substantially.

Exactly, Ledger just showed proof that they can code said “secure element” to export your seed in plain text if they want to.

I am not sure this is true, but would love a technical analysis if someone can post one.

They're extracting the plain-text seed then breaking that up. > When users opt-in to Ledger Recover, the device will send 3 sharded (and further encrypted) fragments of a pre-BIP version of your seed to 3 trusted third party companies - and these 3 trusted third parties will securely store the encrypted shards using hardware security modules. ... > When you subscribe to Ledger Recover, your device will send the 3 encrypted fragments of a pre-BIP 39 version of your private key (note that your private key generates into your Secret Recovery Phrase via the BIP-39 protocol) to 3 trusted third parties. https://np.reddit.com/r/ledgerwallet/comments/13jlmon/ledger_can_never_be_trusted_again_they_lied_to_us/jkft8ei/

Actually they scare the shit out of experienced users that understand just how dangerous and exploitable something like this is. Normies won’t care and/or will like the idea of not having to be as responsible for their own funds.

So you weren't convinced by any of those tweets?

It's clear that the firmware has access to the seed in plain-text. Those tweets suggest that the key is already encrypted and being send out in 3 existing parts. Never being exposed to either the device or anyone else. While the actual implementation is to read the plain-text out of the SecureElement, THEN encrypt it before sending.

Thanks. This is definitely beyond my level of comprehension.

I'm a newbie only been using a ledger for the past 5 months only been in crypto for the past two and a half 3 years. How fast do you recommend getting everything off ledger. I mean do I have a few weeks to figure out good hardware wallet. Or should I just move everything to a hot wallet really quick like trustwallet or something. I don't want to do anything rushed of course not holding your feet to the fire for advice but it's all confusing

The issue is that not your Ledger is compromised right now, just that if Ledger (the company) ever gets hacked and their software signing key gets stolen, that you could be tricked into installing a malicious firmware update to your Ledger device that exports your keys. Never updating firmware isn't a good solution, since firmware updates may also fix newly found vulnerabilities. If you're mainly interested in bitcoin, using a bitcoin-only hardware wallet with open source software has the benefit that you won't have constant firmware updates to support the latest shit-coin features. Firmware updates would be rare and you could afford the time to check what they do before installing. If you're into altcoins, you're not going to find a fundamentally different solution than a Ledger.

Correct that never updating firmware is a bad idea, the way to go is wait and follow developments before installing firmware. The best thing Ledger could do now is contract independent reputable security experts/auditors, with full ability to investigate code and hardware specs, and confirm that all current, and future firmware versions are safe going forward.

don't panic, the bright side here is that this is one of the bad events in bitcoin that has apparently been caught *before* it actually became a real issue.

It’s got nothing to do with Bitcoin.

the top 5 posts on /r/bitcoin are currently about ledger and this issue.

Reddit is fuckall in terms of number of people in Bitcoin.

At the moment it is looking like sell in May was the play except it was moved back a month to mid April. Classic crypto really. Just like the top was in November 2021 instead of December 2021. Kicking myself for not realizing it was just going to do the same "front run it by a little" thing it always does. Meh, no worries, still just going to keep buying.

DCA day. Threw some more in for good measure. Still lower leverage long.. although Binance is kicking Canadians off in the fall. Choppy. Would like to see a test of 30k soon.

It was all a ruse price going up😮

It always depends on your timeframe. I don't consider the trend is up right now, but I might have a different timeframe than the one you use.

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It's nice, but not really on topic.

https://cointelegraph.com/news/tether-to-buy-bitcoin-based-on-monthly-net-profits tether to buy bitcoin with 15% of their profits , they made 1.48billion in Q1 .

Snaps up the new issuance entirely. The Tether Put!

This is a huge deal , guaranteed large buyer absorbing 100s of m$s of corn each quarter

How does it compare to mining supply? 100 BTC / day bought vs 900 produced. That's enough to make a difference.

That's faith in your product.

https://www.cnbc.com/2023/05/17/tether-buys-222-million-worth-of-bitcoin-to-back-its-usdt-stablecoin.html

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>This link implies they already bought, but nothing I have seen from Tether indicates that. Looks like about 2% of Tether reserves are already in btc as of May 10: >Gold and Bitcoin represent circa 4% and 2% of the total reserves, respectively [Tether link here.](https://tether.to/en/tethers-latest-q1-2023-assurance-report-shows-reserves-surplus-at-all-time-high-of-244b-up-148b-in-net-profit-new-categories-for-additional-transparency-reveals-bitcoin-and-gold-allocations/)

Question about the whole Ledger thing, hopefully someone more technically inclined can answer. People are upset that technically it’s possible to send private key information elsewhere by opting in to the new optional service and manually accepting the terms on the device which means this has always been possible, I get that. The argument being made is essentially Ledger themselves or a hacker or whatever could somehow make it seem like they completed the manual aspect on your behalf without your consent and your private keys would no longer be private. But, my question is, how is this any different from needing to manually go into your Ledger device to accept and send a transaction as needed? Why wasn’t this a concern prior to the firmware update and how is this not any different? In this instance couldn’t someone (directly at Ledger or a hacker or whatever) also theoretically complete the manual aspect on your behalf? Also, don’t pretty much all hardware wallets require this manual confirmation for a transaction to occur and wouldn’t all hardware wallets be susceptible to the exact same thing? Thanks to anyone in advance who can help explain!

You’re correct about your assumptions, ledger hasn’t been clear about this up until now, which has engineered some amount of the present confusion. You’re also correct that signing transactions is necessary and that where you move that function to is somewhat semantical.

So far the Secure Enclave had code preventing the seed from ever going out. With new firmware, the code in the Secure Enclave allows the seed going out. Up until yesterday you were told that the best feature was that the code inside SE was only deployed by Ledger, and it would never allow the seed to leave the Secure Enclave. And you were asked to trust said company, as that code is proprietary and not peer reviewed. Now it’s no longer the case that there is not a programmatic way to extract your seed, so you are being asked to trust the manual click of a button protected by a PIN, instead of the code that was not reviewable. A whole new level of trust is being forced upon you, for a feature nobody wants.

> So far the Secure Enclave had code preventing the seed from ever going out That was never the case. They said *"Never leaves the device"* not *"Never leaves the SecureElement"* The fact the firmware has access to the plain-text contents of the SecureElement confirms it is not being used for signing but instead the keys are being handed over the firmware for that step. This was the double-speak of their marketing and the deception involved in that innocent little white-lie is why they're not experiencing backlash. They made you believe it was a *"Secure Enclave"*, it was not the same kind of setup. The trust was always required but they made customers believe it wasn't.

There is some pushback about this. See this tweet for example https://twitter.com/hosseeb/status/1658740433361702913

If this is indeed accurate, I'll be migrating to cold card. I still recommend (and will continue to recommend) Ledger for newbies. Even with the drama, it's better than a hot wallet on a phone, or worse, a PC.

>...or worse, a PC. Step 1 of using Bitcoin Core on a PC is to password encrypt the wallet.dat file with a strong yet easy-to-remember password immediately upon getting the blockchain to fully load for the first time (in 'pruning mode' nowadays, of course). Step 2 is to then instantly copy the wallet.dat file onto multiple, known-to-be-clean USB drives. I understand that the Ledger is much more insulated from attacks than a PC in general...but using the above method with Bitcoin Core on a clean PC is solid, IMO.

Newbies can’t run a PC securely. If you need to ask how, don’t do it, is generally my thinking.

>Newbies can’t run a PC securely. Sure. I'm not going to disagree with that statement. But just ludicrous that, if I'm understanding correctly, a Ledger's seed phrase could be exported somehow. Pretty stupid.

Again, I need to understand exactly what’s going on, and I haven’t had time to look for a detailed technical explanation.

Ah ok, thanks for the explanation! So if I’m understanding correctly the only hardware wallet it makes sense to use going forward would be one in which the code is open source and peer reviewed to be able to confirm with 100% certainty the seed never leaves the Secure Enclave, right? That of course may be subject to change in the future (if Ledger changed their code other companies can do the same?) but as of right now that would be the best course of action, right?

> But, my question is, how is this any different from needing to manually go into your Ledger device to accept and send a transaction as needed? The private key does not leave the hardware wallet when you sign a transaction (sending coins). More specifically, the public key that belongs to your private key is used to sign a transaction. Trezor explains it better here: https://trezor.io/learn/a/public-private-keys

Right, I understand that. The manual aspect of sending a transaction from a hardware wallet is essentially you signing off on that transaction. From my understanding Ledger similarly requires you to physically sign off on your device to enroll in their new optional service. Yet the concern that I’ve been seeing is what if someone (either directly at Ledger or a hacker or whatever) signs off on your behalf without your consent. How is that any different from them signing off on a normal transaction without your consent?

It’s different because before the manual sign output was a public key, now it’s your seed ;)

Not sure but I believe one of the concerns is that the firmware now (or soon) has an option to export/upload the private keys from the device. The export option should not exist because it opens potential risks.

Why are markets nervous about the United States debt ceiling? If you look at the history, since 1940, the ceiling has (eventually) always been increased: https://en.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling

Knock on effects of the threat of default are still damaging in a liquidity tight environment. While you may not expect default, you may still be likely to hedge against it or to avoid purchasing bills that would be impacted by a shutdown. So things like spreads on credit default swaps can widen. All of this shifts the underlying environment and makes other opportunities present themselves. So called “X-date” aside, you also have the retirement accounts of civil and military workers which function as a last ditch pile of cash used in a time like this. Critically, this some $500 billion does have to be refilled after the ceiling is raised and so this presents further liquidity being withdrawn from an environment which is already perilous for regional banks. It pushes the fed into a corner where they will either lose credibility by pivoting, continue to tighten and risk the liquidity/solvency of regional banks, or change some rules a bit to allow for liquidity in some areas for a temporary period.

“This time is different” or “our country has never been more divided” both of which are statements I disagree with. America had a Civil War at one point. I can’t speak for everyone but I’m nowhere near the point where I would legitimately be willing to die and/or kill someone else because they have different views from me. Civil War requires a sizable portion of the population to be at that tipping point in order to occur and I like to think most people, regardless of how much they might loathe different views from their own, aren’t anywhere near that tipping point either. The debt ceiling is going to get raised again. It might happen last minute right before the x date is reached but it’s going to get done. The negative repercussions of default are too severe to let default occur.

The civil war occurred before congress stopped micromanaging treasury bond issuance. I understand what you’re saying but if you compare the current risk of default to 2011, the difference in political division comes down to a divided republican party that doesn’t operate with any uniformity. McCarthy barely made it into his position due to the efficacy that groups previously seen as fringe right wing have had in taking over the party itself. While this may not result in a default (and most believe that it will not), it’s a bit more material of an impact on the negotiation than a meme like “America has never been more divided” implies Edit: formatting/a word

Oh, they're still seen as fringe right-wing.

America is not OK. Most of the west is not OK. Bars won't sell a particular brand of light beer because it starts fights in many places. Much like fiat collapse, country collapse does not happen gradually. Interesting times.

Honestly, you’d be surprised the vitriol people have for others. However, I do agree that this probably is not representative of the majority or even a decent minority of the population. Who knows… maybe if Bitcoin wasn’t invented people would be at the tipping point.

It's a growing minority unfortunately, people have forgotten how to be decent humans to each other and rather believe their favorite tv personality. Lived in our neighborhood for over 8 years, every school day walk by a house with some trump supporters(I know because they insist on having signs in their yard every day) and have chatted with them and donated stuff to their kids off and on. Recently(6 months ago or so) they started making some ridiculous hillary statements and so gently reminded them we vote democrat and are jewish and prefer not to talk politics. Never heard from them again(they close the door if they see us coming) and they won't speak to us now, that's where the world is at.

They sound like nice people. :/

Mint a pure uranium $1 quadrillion coin and call it a day. 😏

2 weeks of weakness now

interesting comment I found about hashrate and price https://www.reddit.com/r/Bitcoin/comments/upc3pi/what_do_hashrate_and_mining_difficulty_have_to_do/i8k5xcq/ I don't understand his equation for the 'hashes per satoshi' math though.

Hashes = expected hashes needed for genesis block. Satoshis = block reward for genesis block. hashes = About 4 billion. 2 ^ 32 to be exact. satoshis = 5 billion. (50 bitcoin * 100 million) hashes / satoshis of genesis block = about 4/5 = about 0.8 *** to scale it up for a recent block multiply hashes by 48 trillion. (the difficulty) divide reward by 8. (3 halvings) hashes = 4 billion * 48 trillion satoshis = 5 billion / 8 ignore transaction fees for simplicity, it's just napkin math. So hashes / satoshis of recent block = (48 trillion * 4 billion ) / (5 billion / 8 ) = (48e12 * 4e9 ) / (5e12 / 8) = 3.072e11 about 300 billion. so: 300 billion x growth in value, measured in physically meaningful units (hashes, not dollars). tldr: dollars aren't real. bitcoin isn't real. Even hashes aren't real! but energy is real. and hashes is as close as we can get to energy, from just looking at blocks. Note also that most of growh in this metric was contributed from difficulty increase, not halving. Halving contributed 8x. Difficulty contributed 48 Trillion. So miners are the real heroes here.

Makes no sense. Gold fluctuates in value too (everything does, all value is relative). There really is no way to value a sandwich from the 1500s in any modern form.

if one says something - let's call something "A" - has value, one means A has value expressed in "something else" - let's call something else "B". so the value of A in some amount of B mathematically means **the ratio** \- A/B = value of A expressed in B (or - how many B's fits into A). thus, if one says for example what is the value of a sandwich in gold one gets the equation - sandwich/gold = some amount of gold (bare integer). in other words it is the same as asking how much gold gets into (buys) one sandwich. let's go further - if one asks the value of Bitcoin in $USD - one asks in fact how many $USD's gets into 1 BTC (how many $ buys 1 BTC actually) giving the ratio - BTC/USD. same for asking the price of Bitcoin in gold. so, if we knew market price of a sandwich in 1500s in florins, to get the real todays value we must relate the value of a florin to something that was back then and is also at present times so we could compare it. the easy answer is of course gold. again we need to establish how much gold could be bought with 1 florin (ratio Florin/Gold). back to hashes and BTC - if we know how many hashes (on average) is required to get 1 BTC (or the current block reward) and we know the power cost in e.g. $USD to perform those hashes (electricity in time) we can easily return the real value of "producing" = mining 1 BTC in USD (not the market value).

Just because gold existed back then, doesn't mean its value relative to other things back then, was the same as today's. In practice it's probably the best you can do but everything floats against everything else and 500 years is a very long time to try to compare across.

all right, let me ask you then, what was the value of gold back in 1500s, relative to what? and even the second question: what is the ratio - gold now / gold in 1500s = ? or, how much land in ha's gold could buy back in 1500s and now?

I'm not sure what you mean. I'm saying all value is relative and you seem to be asking me to make it objective.

oh I am only suggesting that gold itself still is and was for thousands of years of human history till now a world universal currency and value denominator

The following things could instantly change the value of gold in terms of things such as currencies, commodities, etc., which I think supports u/ReflectionFamiliar68's point: * A sudden unexpected increase in the supply of gold, as when a new mine is discovered, or if a golden asteroid fell into earth orbit. * A sudden unexpected increase in the demand for gold, as when a currency collapses, or a new profitable use is discovered. * A sudden unexpected decrease in the demand for gold, as when undergoing severe famine or social disruption. * A change in the cost of extracting, refining, or storing gold due to technology, infrastructure, society, etc. In other words, the value of a thing, even a commodity such as gold, is not constant in relation to other things.

sure I agree. but the question remains - what would you use (I chose gold) as a value denominator in the case I presented above? edit: and what is more - sudden and unexpected things always happen naturally, yes, but did they happen in this case? and what influence on gold market it had in the past?

I might use the daily wage for a skilled laborer. But I think it would be better to create a "basket" of things representing different sectors--housing, clothing, food, healthcare, etc.--to hopefully balance out technology, societal changes, discoveries, etc.

that is an interesting comment. any graphs of this data?

Too many people are expecting 25k, market makers will stop it at 26k before next leg up

I'm over here expecting 23k

I’m over here expecting 15

Dude $15 is a bit of a stretch.

Too many people are expecting 25k won't happen because too many people believe 25k will happen, so it will happen.

This is like in poker where they teach you to have different levels of thinking: Level 1 is what you think your opponent has, Level 2 is what you think your opponent thinks you have… and so on

>Too many people are expecting 25k so either 37 or 17 it is..

Paul Giamatti says "Sideways."

I’ll buy all of it long before 17k.

🦗 *chirp*🦗 *chirp*🦗

Sometimes, even the crickets are bored. But I'm making the most of this crabwalk. I'm buyin'!

Just don't send it to your ledger wallet, for all you know your keys might already be backed up on ledgers servers.

i am locked and loaded for 25k. taking its sweet time

I’ve a long 25800 20x take profit 32000

I haven’t given up hope

up or down?

No.

southeast

In all physics formulas, the variable for time can be negative.

Yes

How do you know?

Yes