Hardware Wallets Should Be Called Hardware Passphrase Managers

Hardware Wallets Should Be Called Hardware Passphrase Managers

By Smoljanović | Smoljanovic | 16 Jun 2020

Hardware Wallets Should Be Called Hardware Passphrase Managers

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Introduction To Hardware Wallets

Hardware wallets are physically constructed devices made from various elements and compounds designed to assist with secure storage and transaction of cryptocurrency.

Private keys are basically stored on some hardware wallets in a protective area and never leave the device.  The private keys are the instruments needed to break through the reality barrier and communicate with the blockchains in the cryptoverse.

Some hardware devices use a unique rotating cipher to restore private keys with a BIP 0039 recovery seed removing the necessity of storing keys on the device as in the case of the exotic KeepKey hardware wallet.

Hardware wallets are not bulletproof solutions to coin-jacking but are considered a step in the right direction for purposes of enhanced security at least by me.

There is no protection from sending crypto to malware swapped addresses or guarantee that all software, firmware and hardware levels are free from bugs or imperfections.

Even random number generators which are embedded within hardware wallets can not be fully verifiable and are prone to attacks by generating pseudo-randomness that is statistically indistinguishable from true randomness. 

Human nature ensures that all high profile security applications and devices will always be prime targets for attackers.  Hardware devices have notoriously good track records even considering the minor hiccoughs along the way.

The purpose Of Hardware Wallets.

Hardware wallets do not store your cryptocurrency and should really be called passphrase managers since they don't do much more than that.  Your crypto does not exist on any hardware or software wallet and never will.

A popular misconception among new users in the cryptospace is that cryptocurrency exists within the casing of hardware wallets as digital information.  The hardware wallet is not a glorified flash-drive capable of storing funds of any kind.

The funds you own exist on the blockchain associated with the type of cryptocurrency it is.  XRP exists on the Ripple network while BTC exists on the Bitcoin blockchain network.  Ether exists on the Ethereum network.

Hardware wallets attempt to provide a secure way to store and use your seed to authorize and execute transactions.  The physical passphrase managers better known as hardware wallets are designed to ensure secure transactions even when connected to computational devices that are infected with malware and viruses although they may not prevent you from accidentally spilling your seed when getting excited.

Anyone having access to your passphrase can import the keys to another hardware device and gain total control of your cryptocurrency.  Your existing hardware device or pin-code is not needed for an import to transpire.  The actual key to your crypto account is all someone needs to assume ownership of your funds.

The Cost Of Hardware Wallets.

Hardware wallets range in price and generally go for as much as the manufacturer can extract from the consumer.  The materials used in some of the hardware devices produced can probably set the manufacturers back several pennies per unit.  The most expensive units are not necessarily the best.  It is not uncommon in the business world to pay more for products that are successfully marketed regardless of actual value.

You can also dabble with creating your own version of a Homemade Hardware Wallet as I have previously done for experimentation purposes.

Determining The Ultimate Hardware Wallet.

I will be testing the Ledger Nano X, Trezor Model T and KeepKey hardware wallets for about two weeks to determine which unit is best for everyday use.

The two devices I find least favorable will probably be given away to family members or friends unless they prove to be unworthy.

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