Maybe Bitcoin Hardware Wallets Aren’t the Best Idea After All

When it comes to secure storage of bitcoin, hardware wallets are one the first solutions that usually come to mind. Although the idea that people would pay money for an extra device to store their bitcoin seemed crazy in the early days, Ledger was able to sell over one million of their hardware wallets back in 2017 alone.

A hardware wallet is a little computer that allows users to keep their crypto asset private keys offline — meaning they aren’t exposed to hackers who may get into a device that is often connected to the internet. Ledger and Trezor are the two most well-known brands in this space.

The basic idea is the hardware wallet is the best of both worlds because it allows crypto assets to remain in cold storage while also having the ability to sign transactions in a user-friendly manner.

The Potential Issue with Hardware Wallets

Of course, there is one glaring issue with the concept of the hardware wallet: They’re basically an advertisement for everyone to know that there is some bitcoin or other crypto assets on the device. In fact, it’s usually a sign that a non-trivial amount of value is stored on the device because the individual who owns the Ledger or Trezor product went through the trouble of buying it in the first place.

As early bitcoin investor Trace Mayer said during an interview on the BitcoinMeister YouTube channel back in November, “They know that you’re going to use that particular device for bitcoin, so if you’re looking at it in terms of a search space doing cryptanalysis, you just made the search space a lot smaller.”

Worth thinking about!

Hardware wallets are a massive target screaming out "GUARDANTEED BTC IF YOU BACKDOOR THIS PACKAGE!"

Against many threat models a small laptop that you use only for BTC would be safer, simply because it's not an obvious target.

Better yet: multisig. https://t.co/nGFCP5hnRv

— Peter Todd (@peterktodd) May 3, 2018

Noted applied cryptography consultant and former Bitcoin Core contributor Peter Todd has also tweeted about this issue multiple times.

Whether it’s the creator of the hardware wallet, someone involved in the shipping process, or a maid in a hotel room who sees the device on a desk, it’s basically never a good idea to advertise to other people one’s ownership of bitcoin or other crypto assets. There are few reasons to put a target on one’s own back like that.

Is Purism the Solution?

During the same interview on the BitcoinMesiter YouTube channel, Mayer mentioned a Purism laptop as a potential alternative to a hardware wallet. Purism laptops come loaded with free software and the inclusion of a Wi-Fi card is optional.

The general concept with Purism computers is they are intended to be more private and secure than the other options on the market. Of course, the choice of a Purism device over something else may also be interesting to an observer in an age where this type of computer is still uncommon.