Select Page

What is a Hardware Wallet?

First off I should explain what one is before I go on to criticize it. The hardware wallet I will be talking about is the Ledger Nano S, which is probably the most sought after hardware wallet in the crypto community. First, a hardware wallet to users is known as an “offline” wallet because of the nature of it being in a usb like device, which isn’t connected to any network until its plugged into a computer. Second, a hardware wallet has a mechanism that forces the user to push a button on the device itself to “Sign” the transaction, so it can’t be compromised on the computer side. Third, a hardware wallet is created using a 24 word key that acts as the “Secret” for the wallet and a Pin to physically protect someone from gaining full access to it.

The Poll

Before doing a video/post on this topic, I put a poll on twitter (see below)

The Results

They were not surprising and exactly what I expected to see because of the perception of hardware wallets being “Safe”.

Why Hardware Wallets are NOT as Secure as they Seem?

I’m going to explain this from a XRP account perspective because that is what I’m familiar with. Every XRP Address from creation has 2 keys, a private “Master” key and a public key. In the case of a Hardware wallet that “Master” is a 24 word phrase. Whenever I hear that “Hardware” wallets are offline, I cringe because that is simply not true. Every persons XRP account/address is view able and live on the XRP Ledger at ALL times. If you compare a hardware wallet to something like the Toast (mobile) wallet or Harbor Wallet (desktop), they both have private keys & a pin to protect access. What if I lost my hardware wallet and phone? How would I recover my funds? Well I’m sure you backed them up, and guess what? They are both backed up on a piece of paper that would bypass a hardware wallet or Mobile wallet because your XRP is always online!

You can think of a hardware wallet as a digital pin pad on a safe, its more convenient, but when the battery dies or fails, you will still need to use the key/combo that came with the safe. When convenience goes up, security goes down.

One Last Thought

A Software Wallet like Harbor or Toast are Free.

The Hardware Wallet is $75+, but just because your paying for something does make it any better.

 

SubscribeFor Blog Updates!

SubscribeFor Blog Updates!

Updates Sent out on Mondays, Wednesdays and Saturdays!

You have Successfully Subscribed!

Share This