Thread by @unstoppablebyhs

Hardware Non-custodial Wallets Do Not Have Perfect Security! Read on👇

#Bitcoin #Ethereum #Crypto

1. Hardware wallets i.e. #Trezor #Ledger etc are secure but far from ideal wallets. There are many sides to that story. Below we explore problems with hardware non-custodial wallets that no one talks about.

2. All non-custodial wallets (desktop apps, mobile apps, hardware devices …) share one thing in common: They generate and keep the private keys (these keys are what allow someone to own and manage cryptocurrency).

3. Non-custodial wallets are essentially apps that store these keys. These keys are generated on device during wallet setup and never leave the device after that.

4. So, when it comes to safety of private keys hardware wallets generally considered to be superior. In theory, finding a hole (bypass security) on purposely-built device by a small experienced team is harder than finding a hole in an all-purpose OS like Windows, Android, iOS etc

5. In reality (apart from safe storage of private keys) there are other aspects that should be taken into account:

- wallet purchase and setup
- vendor data leaks and phishing attacks
- ongoing usage
- device safe storage
- team behind the wallet

6. Purchase. The whole process of purchase and setup is still fairly complicated and inaccessible to someone new to crypto. There are many security as well as privacy aspects to be considered i.e. where to buy, address to use for delivery, how to setup/backup etc.

7. Data Leaks. We have seen several cases where hardware wallet sellers had their client databases stolen. As a result user names, emails and addresses were leaked. These may have serious implications for high net worth individuals or anyone leaving in high crime areas.

8. Phishing Targets. Once the data is exposed, the users become potential targets of phishing attacks. Users should be vigilant whenever they receive an email from a vendor announcing some update or anything else. It just might be safer not to update unless absolutely have to!

9. The Ongoing Usage. Experience showed that hardware devices are not suitable for wallets if to be accessed regularly. If you keep a lot of funds on the device carrying it around may pose greater security risks rather than having a non-custodial wallet on your mobile device.

10. Safe storage. When storing hardware wallet device users are expected to keep it well hidden, safe from fire/water damage etc. At the same time, to have backup of the private keys which are also to be stored separately/safely. This may not be as easy as it may seem.

11. Team. When selecting a hardware wallet the person should take into account the qualifications of the team behind the hardware device. While some early vendors i.e. #Trezor #Ledger have well experienced people building the devices it may not be the case for others.

12. In conclusion, hardware wallets are ideal for large sums and for technically experienced individuals. If the needed security experience is not there, there security risks are likely to outweigh the benefits.

13. Peace! Keep learning!

Follow @unstoppablebyhs for more crypto tips.

To master self custody also consider reading following thread

https://twitter.com/unstoppablebyhs/status/1610274610422988801?s=20