Self-Hosted vs Cloud Password Manager: What You Actually Risk Either Way

The LastPass breach of late 2022 laid bare a new kind of risk for cloud-hosted password managers. An attacker accessed encrypted vault backups in AWS S3 - which contained ciphertext that withstood decryption efforts but still revealed.user metadata. With the likes of Bitwarden now also having public cloud options, it is time to reassess whether self-hosting means being safer.

Assertions that self-hosted password managers are categorically safer because the masters of encryption are at the operator's fingertips use a narrow reading of cryptography. Password vaults, when prudently encrypted, do protect their contents from being directly accessed or exposed through any plaintext access to the vault next to the encrypted vault itself. But this is only a part of it. A compromised development environment, as with the LastPass incident, can still lead an attacker to target backups once they have obtained decryption keys. And - once the opponent has a secondary attack surface to probe - obtaining the necessary vault recovery details for an attacker is a matter of probing active credentials and finding the relevant metadata. And this is exactly where the risk in cloud versus self-hosting comes down to a matter of your organization’s patching not getting done to back up successfully, or whether that backup will restore a successful recovery—or not be an option, or even impossible, if the organization owning the vault no longer exists**.

Bitwarden states that it uses zero-knowledge architecture Bitwarden, the open-source password manager, states that it uses a zero-knowledge architecture with end-to-end encryption. Vault data is encrypted on the client device before being transmitted to Bitwarden’s servers, which store this encrypted data. Server compromise alone does not reveal vault contents because the data is encrypted.

The LastPass incident highlighted one of the weaknesses in relying on a vendor. The attackers obtained information from the LastPass development environment, including cloud storage access keys, and copied encrypted backup data from cloud storage. So it is possible for an attacker to tunnel into encrypted vault exposures, such as accessing encrypted user vault backups or exploiting weaknesses between old and new vault versions, all through the secondary attack surface from a development network compromise. Which makes giving the cloud provider the initial leg up matters as much as the ciphertext vault contents themselves. In a vendor self-hosted setup, it is an operator’s responsibility to ensure that the necessary security measures such as updates, backups, and recovery, are managed by the operator. But it would still require you to trust the vendor’s working practices as much as the vendor.

It is essential to understand that encryption alone while necessary, is not sufficient. The current cryptographic protection measures in place are designed to safeguard stored data, but they do not account for the potential for decryption keys to be coerced through a breakdown in authenticated access. For example, live credentials can be exposed using a gradual, not one-off, series of attacks, especially if stronger memory encryption technologies are needed to hold cipher keys during authenticated active access. Even with high standards, such as those set out in NIST SP 800-63B, which requires salted hashing of memorized secrets and prohibits plaintext storage, weaknesses can still arise..

An emergency access feature or account recovery should be built into password managers to allow access if the owner is unavailable. For example, Bitwarden provides emergency access features for designated contacts in case of emergency. NIST SP 800-63B also recommends that verifiers should offer a recovery process that is at least as strong as the initial identity proofing. Overall, it's essential to ensure that account recovery is secure and that only authorized individuals can access the encrypted data.

The choice between self-hosted and cloud-based password managers ultimately depends on your organization's resources and capabilities. With a vendor, the risk lies in the potential for a breach to expose a large number of users, while with self-hosting, the responsibility for updates, backups, and recovery falls on the organization itself. It is crucial to weigh the risks and choose the option that best meets your needs.