It may sound a bit controversial but the new update introduces ability to backup your secret seed phrase into cloud. Called the Ledger Recover, it is an ID based key recovery service that will be made available to its users living in EU, UK, USA, Canada and they will require you to send a passport or a national identity card.
Support for more countries in coming. Is it a good thing for the cryptocurrency hardware wallet users? We think not as seed phrase is supposed to be private and not to be shared by anyone and this includes Ledger team.
With Ledger Recover, you are not only giving away your identity to the Ledger cloud service but also your seed phrase. Ledger has been hacked bunch of times in past and this time; the thieves will not get access to your funds but also your identity. This will open door to new and better phishing portals.
This new idea defeats the whole idea of a cold wallet. It is supposed to be offline. In this case, you are storing your phrase on a cloud service by Ledger. This is no longer a cold wallet.
Another thing to keep in mind – this new service is only for Ledger Nano X users, not Nano S. We consider this a plus point for Nano S since they are not vulnerable from being a hot wallet.