The author of Mastering Bitcoin, Andreas Antonopoulos, a well-known Bitcoin influencer, spoke about whether it is safe to store cryptocurrency in hardware wallets. He also elucidated on hardware wallet back-up and whether users should have additional layers of security.
According to the author, storing cryptocurrency on a hardware wallet is a “relatively” high-level of security. This was followed by the author speaking about the storage of the hardware wallet. Here, he quoted the example of a wallet with a PIN, wherein the keys are secure, but the device is vulnerable to physical attacks and a user needs to secure the location of the wallet. This was followed with Andreas speaking about the seed backups, the twenty-four characteristics, which also has to be protected by the user.
He considered the biggest risk as losing the seed, forgetting it and not making a back-up for the same. Furthermore, he spoke about how to prevent the risks. He said:
“Step one: Create another layer of protection. Make a passphrase on top of the seed so you have this additional layer of security. You still need to backup your passphrase […] A simple [set] of four to six random English words is a sufficient [passphrase], if you physically protect your seed against disclosure.”
Furthermore, he went on to say that an individual does not need to go to the technical complexity of the Glacier Protocol, adding that users’ promoting the use of this are not striving to achieve better protocol, but, in turn, are either “pushing people to overextend their technical skill” or “pushing people toward custodial exchanges and wallets”. He added:
“The vast majority of people, having read things like the Glacier Protocol, will think, ‘I don’t know about this.’ They will try to do it, without understanding it and [feeling] very uncomfortable with their knowledge, and probably lose their crypto because they messed it up. Or they will give up on the first page, move their crypto into custodial storage, and let someone else take care of the security.”
He went on to say that there are products in the intermediate level that can be used by people like the hardware wallets, with paper backups and secured with a passphrase, which is also easy to use. He said:
“[Hardware wallet] It is not more likely to be hacked now than it was at any time in the past. 99% of the attacks against hardware wallets that… you read about in academic papers or see at security conferences require physical access to the device. Even then, they [probably] won’t work if you have updated your firmware correctly. More importantly, the biggest risk you face is losing your crypto because you didn’t properly back-up your [keys].”
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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.