Cryptocurrency hardware wallets are often seen as one of the safest ways to store your assets at first glance. However, the security of these wallets heavily depends on a fundamental aspect: their firmware. I will quote the words spoken by Ledger, a leading company in the hardware wallet industry:
Technically speaking it is and always has been possible to write firmware that facilitates key extraction. You have always trusted Ledger not to deploy such firmware whether you knew it or not.
This statement highlights that the safety of hardware wallets heavily depends on how the firmware is designed and distributed. It also suggests that users need to trust the manufacturer of the hardware wallet.
This is where the importance of open source comes into play. Open source software is a type of software whose code is made public, and can be viewed and verified by anyone. This allows for the verification of the software’s safety. Therefore, hardware wallets with open source firmware offer increased transparency in terms of their security.
However, hardware wallets with non-open source firmware depend on their manufacturer for their security. You have no choice but to trust that the manufacturer will provide safe firmware. As a result, users of these products are forced to believe that the manufacturer will not distribute firmware that makes key extraction easy.
I would like to mention the security risks associated with making firmware open source. In the case of open source, the code is public, so malicious users could potentially find vulnerabilities in the software and attack it. However, it’s also worth noting that members of the community might spot these vulnerabilities and correct them, so this isn’t necessarily a negative.
In conclusion, the safety of hardware wallets heavily depends on the design and distribution method of its firmware. Also, by using open source firmware, the security may be enhanced. However, wallets with non-open source firmware need caution as their security depends on the manufacturer.
Storing cryptocurrency is about finding a balance between security and convenience. Hardware wallets provide convenience, but their security isn’t fully guaranteed. Therefore, when using a hardware wallet, it is crucial to thoroughly consider the reliability of the manufacturer and the security design of the firmware. If possible, choosing a wallet with open source firmware (like Trezor, for example) could provide higher transparency and security.
Moving forward, the security of cryptocurrency hardware wallets will likely become an increasingly important issue for user trust and peace of mind. Manufacturers should strive to improve transparency and security. Users need to understand these facts and make the right choices in order to safely store their digital assets.