Most people I talk to are convinced that a hardware wallet is the safest place to hold your Bitcoins. But I'm not so sure if it's not safer if I create offline on a non compromised fresh system the keys and write it down on a paper (two copies at two safe places). Of course somebody could steal the keys. But looking on hardware wallets, I see those risks:

  1. Seed words have to be written down - subject to theft
  2. If I or anybody else wants to use the stick in 10 or 15 years the firmware will be outdated, the solution might be hacked or I could run into the problem not finding a safe computer with USB port or accepting the stick. This remembers me when I want to get the films from the 20 years old cameras.
  3. The stick itself plus seed is more difficult to hide than a seed/key alone. If a criminal finds the stick he could force me to hand out the seed.
  4. If not open source I need to trust the manufacturer. E.g. the selection of keys could be not random. If the manufacturer selects just out of fix selection of 10 Mio private keys I wouldn't realise but he could take over all Bitcoin credits from the clients after a few years.

What do you think, what's the best hodl strategy to store the coins safe?

1 Answer 1

  1. True.

  2. There is a standard algorithm for generating the keys from the seed words (BIP 39 / BIP 32). Most hardware wallets follow this algorithm (check before you buy). So even if the hardware device has failed or cannot be used, you can still use your written seed words with any other software or hardware device that implements the standard algorithm to recover your keys and spend your coins.

  3. True.

  4. True. But if you are paranoid, you could generate your own seed words with some more trusted software, import them into your wallet, and check with some other software that the hardware wallet is correctly generating the keys from them. That would guarantee that the keys are secure, though of course it wouldn't rule out the possibility that the hardware wallet is secretly sending them back to the manufacturer or another attacker.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.