But if my data remains gibberish on 1Password's servers without my 'secret key', how do mistakes, rogue employers or security breaches constitute risks? My data either does remain indecipherable on their servers without my 'secret key' or it doesn't. I realise I'm taking that fact on trust, but if it's incorrect then everything that 1Password say about that would have to be one big lie, and that's a huge assumption. Is the secret key wholly generated on my device(s) and at every stage unknown to the company's systems?
One thing that puzzles me and gives me pause though, is why they took the decision to keep customers' data on their servers anyway. What is the point of this? They must know that customers by and large feel safer with local vaults, so why not allow them to have them?
1Password must surely read the comments and fears here: why don't they respond?
It's all very confusing to me. I'm using 1Password 7, the last 'local vault' version usable, and I already notice certain glitches (editing requires saving twice to see the edits updated). I really don't know whether I'm being paranoid about all this or whether I'm just being properly careful with my most sensitive data.
There is a very interesting Whitepaper on 1Password security design:
https://1passwordstatic.com/files/security/1password-white-paper.pdf
It also tackles your question on the Secret Key.
According to the Whitepaper the Secret Key is generated on-device and never relayed to the company.
As well as your Master Password, which is chosen by yourself and also never relayed to the company.
The encryption key for your vault is then derived mathematically from your Secret Key and your Master Password (two-secret key derivation or 2SKD). The randomly generated Secret Key with a high entropy can partially make up for weak, human-chosen Master Passwords. However, it is wise to make the Master Password as good as possible.
To decrypt your vault, you need all three items: the vault, the Secret Key and the Master Password.
The Secret Key is stored on your authorized devices only, so you just need to remember the Master Password. It is never stored on 1Password's servers.
For authenticating on their servers, they use a process called Secure Remote Password (SRP), which makes it possible to decrypt your vault without ever sending your Secret Key or Master Password over the internet.
So if everything works as expected, if they implemented the process correctly as described in the Whitepaper, if you handle your Secret Key and Master Password correctly and if your device is not compromised, then in theory, there shouldn't be enough information on 1Password's servers to decrypt your vault, even if 1Password's servers are compromised and your vault is stolen.
These are many "ifs", however, and if the system in real life is as secure as described in the Whitepaper, I cannot tell.
There is a lot of trust involved, even though they post reports of external audits online.
I've been a long-time 1Password customer and I find recent developments worrying, however, I am still satisfied with the app (works fine for me on the Mac, even though it is an Electron app) and the service, so for the moment, I am holding on.