Topic: Trying to have more knowledge about hardware wallet (Read 368 times)

Exactly. It's not the software that will get you in trouble (assuming you are using a trusted brand with a proven track record like Electrum in this example), it's the person working with the software and their general security consciousness, common sense, and intelligence. Or the lack of it. No anti-virus of anti-malware is good enough if the person using it destroys everything they touch. 

I would not say that it is only about the amount expressed in fiat at some point, but also about the fact that if you have $1000 of value in BTC today, in x years that value may be $5000, which means that you need to think a little differently than when we store fiat. In addition, security comes from the fact that you know what you are doing - even an ordinary hot wallet like Electrum on a desktop computer can be completely safe for larger amounts if you have a virus/malware free computer, and you know how to verify wallet files before installation.

Thanks for this reply, well explained 👍

o_e_l_e_o has already covered this very well, so there isn't much to add.

An amount such as $100 isn't valued equally in all parts of the world and by all people. For some, it's their entire monthly salary, but for others it's something you spend on your friends on a night out. There isn't really a threshold that needs to be crossed for you to start using a hardware wallet or cold storage. Take any amount. Let's do $100 since that's what I mentioned earlier. Imagine that $100 worth of BTC in your possession. If you lost it tomorrow, would you a) laugh about it because it's such an insignificant amount in your life that it's not worth worrying about, or b) you would be holding your head in disbelief at what you have done not knowing if you will be able to put food on the table one week from now?

If your answer leans more towards "b", I would consider upgrading my security to make sure I decrease the possibilities of losing my coins.

It's also worth considering what market condition we're in right now and not only thinking about a UTXO's current USD valuation, but also looking at it measured in BTC.
This requires a bit of speculation, but an UTXO may be worth a small amount now and worth a lot more by the time you are going to spend it.
Storing coins for a long time is a pretty good reason to move them offline anyway (no matter the amount), since the device which runs your software wallet is obviously exposed to more risk of theft and loss the longer you run around with it.

There is no fixed number because everyone's risk tolerance is different. My benchmark question is usually how much cash would you feel comfortable carrying around in your wallet. If you would be fine walking down the street with $100 in cash in your pocket, then you can store $100 on a software wallet. The risk is similar - easily lost, easily stolen. Would you be comfortable walking down the street with $5000 in your pocket? No? Then you shouldn't be storing $5000 in a software wallet and should have it on something more secure, which is a hardware wallet for most users (or an airgapped wallet for more advanced users).

Another benchmark some people use is whenever you start talking about sums of money which are more than the cost of a hardware wallet. You can get a decent hardware wallet for under $100, so anything more than that and you should be thinking about something more secure than a software wallet.

What amount of funds you will hold that you will start getting worried of having to buy a hardware wallet? Can you give me a number? 5000$ 10,000$? What advice would you give someone under 1000$ of asset in hold?...

Well, you'll change your mind later about having a hardware wallet if your funds are getting bigger.

Trust wallet is owned by Binance. Yes, it's one of the reputable exchanges that we have. But still owning a hardware wallet should be prioritized.

Well, if your relatives know how to keep themselves safe then that's good. You can use that wallet and any other wallets as long as you know how to make yourselves safe from being hacked or phished.

There are also some techniques like, if you own that much bitcoin and you have spare device like a laptop. You can download electrum there or any other reputable bitcoin wallets and keep that wallet installed and don't connect it to the web for a long time. It will serve as your alternative hardware wallet.

Most popular hardware wallets are not open source and I don't suggest using blackbox devices like that, but they are still better than hot wallets.
Some examples of open source hardware wallets are Keystone, Passport, Trezor, Bitbox and some diy wallets like SeedSigner.
Most secure option is using airgapped option that are not connected with other devices in any way than with QR codes.

It depends what hardware wallets you are using, they are different in many ways, so you need to be specific.
Some of them are only working on PC and others can be connected with smartphones, but you need to have desktop version for firmware updates.

Whole point of hardware wallets is to keep seed words offline, and you need internet for broadcasting transactions.
I would not use any hardware wallet that have wi-fi connection, it's much higher risk of hacks and exploits.

Hardware wallets are securing seed words and private keys are derived from that, so they are indirectly secureing them.

1. What do you mean by Standalone?  Anyway, here is how I take this Hardware Wallet thing.  There are some who think partially open source Hardware Wallets like Ledger's Secure Element are more secure than fully open source Hardware Wallets, and there are those who think fully Open Source Hardware Wallets like Trezor are safer.

It ultimately all goes down to what you trust more.  Having a Trezor, out of which the seed can be extracted by anyone with enough knowledge and the proper tools, or a Ledger with a Closed Source Secure Element no one but Ledger has any idea what it does?  Trezor's vulnerability can be fixed by a strong Passphrase, but you can not do much about Ledger's Secure Element except trust that they do not do anything malicious with it.  Maybe the Secure Element transfers information to intelligence servers.  Maybe it stores your seed and allows the intelligence to tamper with your Ledger in case they find and seize it.  Who the hell knows.

I will not answer the rest of the questions, since they have already been answered above.  My personal choice is Trezor.  They offer a fully Open Source product of which millions of units have been sold, so you can call it battle tested.  Particularly when you know that not even some of the best hackers in the industry have been able to do anything besides extracting its seed which is an useless vulnerability when you have a Passphrase they can just not brute force.  And since having a Passphrase is recommended anyway, you get the idea.  This is why they are my choice.

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Regards,
PrivacyG

It matters if your hardware wallet is open source & nothing malicious (Ledger Nano is closed source but they are planning to go with open source), if your wallet is truly air-gapped. That's what matters the most. Your private keys are safe as they are not connected online and are unlikely to get hacked. Legendary members recommended hardware wallets as best because they are best. ledger Nano is a closed source but still, they have some good names in the market.

I have family members that have been using trust wallet for the past 6 years while I thought that crypto was scam, nothing happened to their wallet for that long which is why I think that having hardware wallet isn't that a first priority, one can do well with trust wallet and buy hardware wallet later.

God damn! If ledger nano ain't an open source why does hardware wallet matters? I've read dozens of posts on here saying hardware wallets are the best, everyone including legendary members recommend hardware wallets, they never said some are closed source. Safest my footh!

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And this my friend is a big red flag 🤣🤣🤣

Not the case. There are several hardware wallets which will work with mobile phones rather than PCs, and there are several which are entirely airgapped and don't need to connect to anything at all. Instead they use a camera to scan a QR code to import an unsigned transaction, and then display a QR code of the signed transaction on their screen, which can then be scanned and broadcast by a computer, without ever having a physical connection.

Yes, this is the main advantage of hardware wallets. When it comes to the security of private keys then they are as safe as cold wallets. Private keys/seeds are generated of line and never leave your device and transactions are signed offline also meaning your PKs will not be exposed to the Internet.
The problem with closed source HWs and all closed source wallets is that the end user has no way to know how his wallet generates the private keys/seeds and verify whether they are generated in a safe and random way or not. He has to trust the developers on this.

The idea of ​​the hardware wallet is that the private keys are generated without an Internet connection and will not connect to the Internet, so the addresses are signed there without fear of losing money, and it provides an easy and friendly interface for the user who does not know how to do it himself.

• The fact that the wallet is open source gives it additional value, but none of the hardware wallets has been hacked without physical access and therefore you can consider yourself safe.
• Hardware wallets are good for those who want to use Bitcoin once or twice a year and want to keep several cryptocurrencies.
• Using hardware wallets does not mean that you are safe. If you download wrong or unknown software, your money may be stolen.
  
• Learning the basics will enable you to get higher security and pay lower fees.

Do remember that a hardware wallet is typically a USB device. Replying to all your questions one by one.


Yes, one of the reasons is that they have open source either firmware or software or both. Another important feature is that they are non-custodial and are cold wallets.


Yes, in order to initiate any transaction you need to connect it to a PC.


Please read this article - https://medium.com/radartech/hardware-wallets-explained-da8bd93ce801


That is the reason why they are considered the most secured cryptocurrency wallet and better than others.

You can check this lists:

Secure Element in Hardware Wallets

There are also some hardware wallets that do not support other wallet extension like Electrum for making transaction other than their own wallet extension which can be close source, like Safepal.

Any hardware wallet developer can choose to either reveal the source code or not to the public. One of the motive is to never reveal the code to the public, some people can copy and include the source code into their own wallet they are developing and some scammers can easily find the source code and use it to create a scam app. But if some wallets can be open source like Electrum and Trezor, I think that should not be an excuse.

The problem that close source wallets can cause is that malware can be included along like spyware while public will not notice as they do not know what is running underground. Even if the secure element is close source, it is possible for the wallet to generate pregenerated seed phrase in a way people will not know.

Ledger Nano is completely not a close source wallet which makes it completely not an open source wallet as well, only its secure Electrum is close source. The wallet can even be used with open source wallets like Electrum.

I am a longtime user of one HW and I will not name them because I do not want to give them a free promotion, but I will just say that no one should be trusted blindly, especially if they are not completely open-source. Although such devices provide a certain amount of security when it comes to creating your seed words (the whole process takes place offline on the device), there are always possible vectors of attack that at this time no one is even aware of.

What is far safer (though not easy for many) is to create a cold wallet that will always be completely isolated from the internet and thus prevent any possibility of being hacked. Most HWs need to connect to the internet to be able to install coin apps or make a firmware upgrade on them - and this completely nullifies all those claims that describe them as cold wallets.

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@Outhue, a lot of relevant information can be found in -> Hardware wallets

Yes, Ledger wallets are closed source. Refer to this quote below;


In general, all of these hardware wallets are safe (at least the top 3, ledger, trezor & keepkey). In my experience for having and owning a ledger nano s more than five years. I don't experience any problems owning it, getting in and out transactions from my ledger wallet.

They're also up to date with their software updates and that's why I find it a good thing upon using this hardware wallet. Also, I don't usually connect them to the internet at all times since I can always check my portfolio through their app, the Ledger Live.