Bitcoin Forum

Can anyone share their experiences with wallets. Which ones are the safest and what can go wrong?

Safest wallets are paper wallet, hardware wallets and multisig wallet. To make hardware wallet safer, you can get two and use it to setup 2-of-2 multisig wallets, it makes it more secure.

Yet, be careful of clipboard malware that can change recipient's address to a hacker's address. Check and recheck the inputted address before sending. Make sure you are also careful malware completely.

You can also set up Electrum on airgapped device too. And also using Electrum as a multisig wallet.

The safest wallets are certainly cold wallets that don't have a connection to the internet. The examples are Ledger and Trezor.
Some good hot wallets are Metamask and Trust wallet. Metamask is connectible to almost all projects on Binance Smart Chain, Polygon, Ethereum etc. Trust wallet has a big range of coins. The main risk of using these wallets is that they can be hacked, so the main thing is to keep your keys in private.

Safest wallets for Bitcoin are one that are open source and reviewed by security experts for bugs.
Electrum is probably most used light desktop wallet for Bitcoin, but Wasabi is also interesting option for privacy and Bitcoin Core is best if you run full node.
Best way is if you run cold wallet that is not connected with internet, and hardware wallets are most convenient cold wallets, but you can also run cold wallet on offline computer.

Trust wallet is closed source and is therefore a terrible choice of wallet. You have no way whatsoever of saying that it is a safe wallet since you have no idea what is going on under the hood.

The safest wallet is an open source one which is permanently airgapped and never connected to the internet. A good hardware wallet is the safest wallet for newbies or anyone who does not have the technical knowledge or spare hardware to properly set up an airgapped device or securely print a paper wallet.

The safest wallet depends on your understanding of that wallet, and your intended purpose.
Since you're asking such a generic (and lazy) question, it can't be answered :P Why don't you start with how you want to use the wallet? It's also good to realize "safe" means 2 things: ensuring someone else doesn't get your Bitcoin, while at the same time making sure you don't lose access by yourself.

"safest wallet" is a general term and the answer depends on your knowledge and experiences. Whatever wallet you use, if you do not use it well, you will lose your coins.

Hardware wallets are the best because they generate your PVT keys in a secure environment, have not been connected to the Internet and will not be connected, and therefore as long as you know how to use them, hide your wallet seed or physical access to those devices, you will be safe.
other wallets first need to read each line of code while ensuring keys are generated in a secure environment that has not and will not be connected to the Internet.

Closed-source wallets include an additional challenge of trusting the developer.

Trust wallet claims to be open source but there have always been hiccups with that claim, besides it is owned by Binance and that would itself be negative. Metamask is the riskiest choice for a hot wallet, if your browser is compromised so will the wallet, it's one of the main targets of clipboard hijacking, but on top of that, it's not a bitcoin wallet!

So, basically, you've recommended two of the worst choice for safety, maybe good for convenience but that's another discussion.


You realize that once your wallet has been "hacked", the other thing is either impossible or almost useless.

Without any details, everyone will say Hardware Wallet which offer good balance between security and ease of use. But if you're intermediate/advance users who don't mind some inconvenience, you could use Tails (https://tails.boum.org/doc/anonymous_internet/electrum/index.en.html (https://tails.boum.org/doc/anonymous_internet/electrum/index.en.html)) or Qubes (https://github.com/Qubes-Community/Contents/blob/master/docs/security/split-bitcoin.md (https://github.com/Qubes-Community/Contents/blob/master/docs/security/split-bitcoin.md)).

But people mostly use hardware wallets in a way to connect them to the internet, at least in case they need to upgrade firmware or install any coin app they need. This by no means falls into the category of cold crypto wallets, and anyone who thinks so lives in false security. Buying such devices does not mean that someone should completely relax and not worry about anything anymore, on the contrary, you should still be careful not to do something stupid, such as saving your backup on cloud or email, and one day discovering that someone has emptied all hardware wallet accounts.

Safety depends on user, and it can go wrong despite how technicalities you may be aware of.

Here is case of ledger+ malicious metamask: https://medium.com/@hugh_karp/nxm-hack-update-72c5c017b48

Do you also consider your privacy an important element of the "safest wallet" dilemma? For example, you can use a hardware wallet (considered a cold wallet) in connection with Electrum (an open-source non-custodial wallet), and you will have a good amount of security. But Electrum doesn't offer you privacy. The servers you connect to can see your IP, balance and the addresses that are part of your wallet. Another option is to run your own Electrum server and only connect through that. That way you can prevent potentially malicious parties from finding out how much Bitcoin you have and where.   

* If you know how to safely generate and store it, paper wallet may be the safest option.
* Generating safely a seed and storing it, keeping one or more addresses at hand is another similarly safe option.
* If one wants to also spend and can safely handle cold storage, that's again very safe. Using multisig is even safer, but a bit more advanced too.
* If one wants a good mix of safety and convenience, also not a tech person, hardware wallet is the way to go (the seed still needs careful safe storing, offline)
* Then stand alone wallets come - Bitcoin Core, Electrum, Sparrow and so on.
* Then closed source stand alone wallets.
* Then web wallets, from non-custodial ones to custodial services (including exchanges).


It may worth mentioning that in theory a reputed custodial service may be seen safe by some, but it's far too easy to blame the user for any mistake, hack or inside job, it's also so easy to make mistakes (weak mail password, phishing, lack of 2FA) so I will not see it as a safe option at all.

1. Which ones are the safest?

This is precisely what the WalletScrutiny.com (http://"https://walletscrutiny.com") project aims to address.

For instance, somebody said "Trust Wallet" in this thread.

https://i.imgur.com/z7LFYRm.png (http://"https://walletscrutiny.com/android/com.wallet.crypto.trustapp/")


It depends on your threat profile. Do you live in a third-world impoverished slum, with a very secure air-gapped highly secure bitcoin wallet? Somebody could come up to you, and make you give up your seed phrases.

2. What can go wrong?

a. You do not continue learning, buy an expensive air-gapped cold wallet, put 100 BTC in it, do some drugs in a party, show off your hardware wallet, and divulge your seed phrases or private key to a hot chick or hot dude, once you're wasted.

Telling here and there you own 100BTC would probably just be enough.
Sooner or later somebody may come after you with the 5$ wrench (https://xkcd.com/538/) and you will give him the seed sooner or later.
Keeping your mouth shut is a must as soon as you have a meaningful amount of BTC. That's no longer wallet related.

The safest wallet is the Open source wallet which code is already reviewed for backlog or other error but for the wallet not to go wrong, that depends on your knowledge of taking the right security measures and avoiding human error that could expose your wallet to danger. Besides, downloading an open source wallet like electrum which is highly the recommended desktop wallet requires you to verify it before using it.

Actually, there is no safest wallet it all depends on how you protect your wallet. Hardware wallets like ledger nano still need to connect or bridge through a USB cable to authenticate your online public wallet. So there are still possibilities that it can be hacked compared to the offline wallet(Never connected to the internet).

For me, if you want the safest wallet offline wallet is the best, and never connect it to the internet or even a USB drive. Only use a QR code scanner if you want to transfer unsigned raw transactions generate a QR code and scan it with your offline laptop/PC. That's what I think would be safe and far from any viruses and malware.

The level of risk you're willing to take with your crypto will depend on many factors, so you need to understand how to identify when your cryptocurrency is being held in the safest way possible. Furthermore, it is important to know that you have control over your keys and that you can retrieve them in case anything goes wrong.

To decide which wallet to use, you need to think about a number of factors: what type of cryptocurrencies you plan to store with that wallet, how much control you want over the keys, and what security measures the wallet takes to ensure the keys are kept safe. If you don't understand these things, then you're likely to make decisions that you may regret later.

If you store most of your crypto in one wallet, you might want to consider investing in a wallet that provides multi-signature security, which is an especially attractive security feature for crypto enthusiasts.

Indeed, but lately, I've been seeing "security is in obscurity" model.

Alternatively, pair your hardware wallet with a piece of software which does provide better privacy than Electrum, such as Wasabi.

Care to elaborate? Obviously you should keep the details of how much bitcoin you are holding, how you are holding it, where your backs up are, etc., secret, but that is not what security through obscurity refers to. Rather, it refers to the security of the entire system, and it is a very poor way to secure a system.

Basically everything you can imagine (and more) can go wrong.

Without any further information (e.g. what you define as "safe"), no one will be able to give you some useful advice for a specific software/hardware.
There are lots of attack vectors, it depends on which of them apply to you. Based on this, there are good and bad decisions for your case.

Generally:
No closed-source, web- or online wallets.
Your wallet can only be as secure as the system it is running on / the building it is placed in.

Agree with point 1, but point 2 is confusing.
A good hardware wallet is meant to reduce the need of trust in the OS and physical security of the device. So in my opinion, the safest wallets' security should not depend on the system it is running on / the building it is placed in.

That's their entire point: you stick that thing into an infected machine? Software can't do anything without you confirming a receiving address on the wallet's screen & entering some sort of passphrase. Someone breaks into your house or steals it from your bag? Can't do anything without passcode & reading out the memory isn't possible either.

Not all hardware wallets fulfill these requirements (e.g. ones without secure element can be read out), but any falling under the safest category should and do exist.

A hardware wallet is not running on your computer. The sensitive data is only handled within the secure element (speaking about hardware wallets which actually have such a security mechanism).
Therefore the 2nd point still applies. It is a concept applying to every software/hardware.

Just because you use your PC to communicate with your hardware wallet, the keys are not handled by the PC. The crucial system here is the hardware wallet. I could have made that clearer.


A hardware wallet can be only as secure as the hardware is (e.g. vulnerabilities in the MCU or SE).
The same applies to a software wallet, taking hardware, software, network connectivity etc. into account.

Oh right, sorry, I thought you were trying to say 'Your wallet can only be as secure as the system it is running on [== the OS / computer used with it] / the building it is placed in.'

The way you put it now basically says 'Your wallet can only be as secure as the hardware & software it is directly running on'.
That's not even 100% correct, since you could have an infected device, but it's using heavy sandboxing and the virus can't reach the 'wallet sandbox' or something like that. But in most cases, I'd agree.

The cool thing about hardware wallets is that they're not powered on neither connected to networks constantly; thus even if we assumed the same 'system security' as your daily driver laptop, the attack success probability would be lower since the time windows during which attacks are possible, are shorter. Also these devices don't run third party software, unlike Windows PCs where many programs run as root ('admin') or other desktop OSes where 3rd party software simply runs on them directly (privileged or not); thus reducing the overall 'underlying system security' as well. This means exploits for attacking hardware wallets need to be more elaborate to bridge the 'device-device gap'.

I don't want to direct my criticism at any particular wallet. Despite all the protection you have, your wallet could be compromised. Whether or not you are negligent, we may fall victim to phishing. However, it appears that most of us used ETH tokens, where a Ledger setup with Metamask would be standard. Is there a universal (safe) wallet solution? This depends on your needs. It is common for web wallets to be breached, resulting in the loss of all contents. This is why a cold storage solution like those described above is needed. Maybe we need cold storage?

Anti-sandbox and Anti-VM types of malware and password stealers have been around for years. I remember seeing them back in the days of pirated and warez software. Even then it was possible for certain malware to detect that a system is using a sandbox or virtual machine and break through its defenses to perform any kind of attack it was designed to perform. I wouldn't rely on a sandbox as an ultimate way of protection. Being careful and not opening and executing programs and scripts on your end is still the best protection.

OP, for my hot wallet I have only used Electrum for my PC/laptop that both run Linux, and BlueWallet for my mobile phone.

Has anyone used HexaWallet, https://hexawallet.io/

A friend discovered it while looking for the most appropriate wallet for accepting donations.

I've never heard of it, but their website throws off a bunch of red flags immediately.

They don't use a seed phrase back up, but instead back up the wallet on the cloud. Big security risk.
Level 2 back up redirects you to a paper on using Shamir's secret sharing (which is immediately a bad idea: https://en.bitcoin.it/wiki/Shamir_Secret_Snakeoil), but it then goes on to suggest storing your shares on email addresses and cloud servers. Again, big security risk.
I can't find much information on how you would recover your wallet or extract your private keys should Hexa disappear or their servers go offline.

It seems a lot of their security also relies on answers to security questions, which in many cases are easy to guess, work out, or socially engineer by looking at someone's social media profiles.

They are no-custodial wallet, but they use Amazon and Google Cloud Platform for their node and relay servers, and I wouldn't recommend this wallet to anyone.
Hexa team is not looking like that great and apps have only few installs and mixed reviews on App Store and Google play.
Looks like they are somehow connected with Swan Bitcoin, that is much more famous and advertised by Max Keiser all the time.

It's not like regular wallet recovery for sure, but they tried to implement some splitting scheme.
They have system of encrypted recovery keys that are split parts of seed words in five recovery keys, and you can gain access to your funds if you have any 3 recovery keys.

They list the CEO of SwanBitcoin as one of their team members.

The problem is that the paper they link to on their website regarding this back up system - https://hexawallet.io/wp-content/uploads/2019/07/Hexa-Wallet-Backup-Scheme-SSS-WP_-1.0.pdf - makes no mention whatsoever of how they are actually splitting up your back up and encoding the various shares. Every SSS implementation is different, and so without the knowledge of how they created the shares then you will be unable to recombine them and recover your coins. They say they will release an open source tool to allow users to recombine their shares, but I can find no links to this tool in this paper or on their website, and I can find no mention of this tool on their GitHub. That leaves you with the option ETFbitcoin gave above of trying to reverse engineer their process and writing your own code to recover your coins, which is not a possibility for the vast majority of users.

Not to mention they suggest storing your shares on your email or cloud storage, which is just plain bad advice.

These are some of your contenders for safe wallets. https://www.cnet.com/personal-finance/crypto/the-best-bitcoin-and-crypto-wallets/ but as most Crypto currency enthusiast would say, your wallet is just as safe as you can secure your Private keys and/or Seed words.

You can buy a hardware wallet and it will be one of the safest wallets you will ever have, but if those Seed words for the recovery are not stored in a secure place.... it will be useless. (People will simply take that and restore the wallet onto say Electrum and your coins will be gone)

Also.... do not write down your password for the hardware wallet on a piece of paper and then store those together.  ::)

goal is to have deep cold storage and then use a software wallet (via phone) to accumulate more btc over time. as the amount builds up, send that to cold storage. then one day be able to access btc from cold storage (myself or other family).

is it possible to

1) load bitcoin core on a laptop not connected to the internet
2) create a new wallet for cold storage
3) remove the dat file or at lease the private key (make it a "watch only" type wallet)
4) get public key/address in order to send btc from software wallet
5) connect laptop to internet and DL blockchain/run node, monitor wallet balance

then if i need to move funds from that cold wallet, have another laptop that is not connected to the internet reinsert private key and move funds.

i know i must be missing something, but the hardware wallet/ multi sig stuff makes a semi complex procedure more complex, imo.

Yes.

You can remove the wallet.dat from the data directory but not individual private keys from the wallet.

Yes, it is possible to create a watching-only wallet consisting of address(es) in Bitcoin Core.
All you have to do is to create a "blank wallet" (with "disable private key" option) then import the cold-storage's address using the command: importaddress

You should use that laptop in the first place when creating the cold-storage wallet.
Then use the other online laptop for the watching-only wallet.

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If Bitcoin Core isn't a requirement, try Electrum cold storage setup: https://electrum.readthedocs.io/en/latest/coldstorage.html
If it is, try Armory (it uses Bitcoin Core in the background):  https://www.bitcoinarmory.com/cold-storage/ (https://www.bitcoinarmory.com/cold-storage/) (old site | refer to the link in the main page for the latest url)

is the only reason to use something other than bitcoin core to create a wallet to set up multi-sig?

im looking at a seedsigner and they recommend sparrow or specter desktop wallet. is it just "easier" to create a watch-only wallet with those?

im trying to understand better why someone would want to use something other than btc core for cold storage wallet set up and have to work with two different programs instead of one?

i want to make the best decision for my use but its hard to understand all the use case to determine that. appreciate you alls responses.

No, it's not a MultiSig wallet.
It's a standard single-sig, the online machine doesn't contain private keys, only the offline machine.
The goal is to isolate the private keys from online environment even when spending the funds.

In your case, you can just delete the offline laptop's wallet later since you won't be spending the funds for long
and use only the online watch-only wallet to receive funds and monitor the balance.
When you need to spend it, restore the offline wallet on the offline laptop to sign the transaction that you'll create using the online laptop.

I can't tell, used neither of those wallets.

thank you

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is it possible to tell from an xpub if a wallet is single sig or multi sig?

That's true; I was slightly hinting at mobile malware, where the sandbox that individual apps run in is deeply embedded into the OS and such sandbox escapes are much harder than what we know from 'warez times' where VM escapes were a feature of many viruses. Of course, it's still possible today though, but can be pretty hard depending on the platform used.

No. An xpub is only used to derive public keys. You can use several xpub keys to form a hierarchical deterministic multi-sig wallet, just as you can with multiple public keys (but one address). Their existence alone doesn't reveal they come from a multi-sig or single-sig wallet.

While you are correct in saying that an xpub can be used to create single-sig or multi-sig wallets and you can't tell what it was used for, note that this is only the case for legacy multi-sig. If you use nested segwit, then your master public key will generally be ypub for P2WPKH nested in P2SH but Ypub for multi-sig nested in P2SH, and for native segwit will be zpub for P2WPKH and Zpub for P2WSH.

You can see the different prefixes in SLIP 132: https://github.com/satoshilabs/slips/blob/master/slip-0132.md#registered-hd-version-bytes