Hardware Wallet: Open Source or Secure Chip?
Don’t be the 2nd @ZhoujianfuRecent one or two years, it appears that the open source and secure chip have been a pair of opposite and incompatible practices. That’s really confusing to hardware wallet users, especially newbies — how to choose a good hardware wallet? Seemingly, to select a qualified wallet has simply become an option of choosing either open-source wallet or secure-chip wallet?
“Open source” and “Secure chip” are not at the same level. They should not be compared and debated as a pair.
In this article, we want to make it clear in plain words to those who still suffer from choosing a well-content hardware wallet.
First of all, one of the main purposes of wallet “open source” is to prove the team’s innocence. The purpose of the “secure chip” is to strengthen “physical security”. With different targets, comparison between the two implementations is not making any sense.
1 Why does a hardware wallet team need to prove itself innocent?In the crypto world, you either trust a third party or trust yourself. If you trust others absolutely, you can put your cryptos in the third party platform and no need to bother yourself managing wallets. However, if you want to HODL the coins in your own hands. You should choose a wallet which it can prove its own innocence.
If a wallet is not open sourced, you should totally trust the third party. Now that you trust a third party, why don’t you trust an exchange like Coinbase whose revenue is much healthier than any wallet team.
Only by opening source code can you know:
“What programs on earth are running on the wallet…”
“How the private key is generated…”
“How the transaction signature is performed…”
By open source, you don’t need to trust the manufacturer of the hardware wallet. You only need the hardware and the open-sourced programs on it. That’s all you need.
Therefore, for a hardware wallet, opening source code is a precondition rather than an option.
2 What’s “physical security”??Simply put, “physical security” is the difficulty a thief can take your coins away from your hardware wallet when a thief got the hardware in itself.
From this perspective, all hardware wallets are not able to ensure the 100% physical security, including the popular hardware wallet — Ledger, who was reported by Wallet.Fail that it was successfully physically attacked.
The first target of a hardware wallet is not physical security, but “network security”.
Hardware Wallets BitHD Watch2 & BitHD Razor
Your hardware wallet should be prevented from being compromised by a hacker from, let’s say, Iceland or somewhere you don’t know. In this case, “Cold” (offline) comes at the first place. In terms of “cold”, BitHD, Trezor and Ledger are all safe and reasonable hardware wallet solution.
3 What we should do to improve the physical security?Secure Chip standards form the traditional financial industry do help to strengthen physical security. It can increase the difficulty of physical attacks after your hardware wallet being stolen. However, a more reasonable way to prevent such physical attacks is not using a secure chip, but using a “Passphrase Account”.
The correct use of Passphrase Account can prevent you from losing any assets even if the seed/mnemonics is stolen, and you do not need to worry too much about losing your hardware wallet.
Therefore, from a physical security perspective, a “Passphrase Account” that strictly complies with the BIP specification can perfectly solve all problems. If a hardware wallet manufacturer focuses too much on “Secure Chip”, and gives up opening source, which means putting their users in a situation of trusting third parties, we think that is really tail wags the dog.
Through the discussion above, you should be able to logically understand “Why hardware wallets must be open sourced” now. And “Passphrase Accounts are more reasonable physical security solutions for hardware wallets than Secure Chip .” Do not be confused by some manufacturers mistake concept.
4 Finally, let ’s talk about Josh Jones(@zhoujianfu)The BTC whale lost 1547 BTC and more than 60,000 BCH 2 weeks ago. He is actually a typical example. At first, he trusted a third party (the world ’s largest Bitcoin exchange MtGox). Unfortunately, he lost more than 40,000 BTC. And this time it is said that they trusted a less reliable SIM card wallet solution and lost more than $30 million. This case is an alarm bell for everyone. By correctly choosing a hardware and software open source software, a reasonable architecture, a safe and reliable hardware cold wallet, and using a good password account function, you can truly be foolproof.
Again, keep your asset safe and do not regret of losing them in the bull market.
Hardware wallet open source refers to the hardware design and firmware source code are both open sourced. Capable users can make hardware wallet device and compile and package the firmware version in the hardware wallet.
