Hardware Wallets & Security flaws

[AmmbrPlatform]

Hardware wallets are obviously NB for any holder with a fair amount of $ invested in whatever, but Ledger seems to be filled with flaws - what's up with their insistence not to use a tamper-proof seal?
But the Nano S sold about 1 mil units. I'm assuming anyone buying does hodl quite a bit and would therefore be quite clued up... so why trust in this?
Trezor have also suffered firmware hacks... KeepKey hasn't really had any major issues yet, but have a tiny market share. So what exactly are you looking for in a hardware wallet? Is it more of a status symbol?

Just interested to hear thoughts...

[Rath_]

Ledger is based on a Secure Element which at every boot checks if the device is compromised. That's why they don't use seals, there should be a leaflet in every package mentioning that. Some people prefer this solution over Trezor's open-source code and hardware. Keep in mind that Secure Element has limited space which is why there is a limit of how many apps can be installed on the Ledger (it was improved in the recent update but it's still a problem if you use many different altcoins).

Hardware wallets are convenient because they can be used almost with every device (even infected ones). Every discovered security flaw in both Ledger and TREZOR needed a physical access to the device. It's not a problem as long as you keep it properly hidden (some people tend to attach their wallets to their keyring). There is nothing wrong in not trusting even the most popular hardware wallets. Cold storage might be a better solution for you. It's less convenient but you can also use, for example, Samourai on your Android device which offers high privacy and security. Cold storage for savings, Android wallet for shopping and F2F transactions.

You can find more detailed discussion here and here.

[bob123]

Ledgers wallet (software) checks whether the firmware on your nano s is geniuine each time you connect and open it.
There is no need for a 'tamper-proof' seal. The best tamper-proof seal is not a small sticker on the package, but a proper genuine check of the firmware.

[...] but you can also use, for example, Samourai on your Android device which offers high privacy and security.

Note, that samourai is NOT more secure than any other mobile wallet (or desktop wallet).
Each desktop-/mobile- wallet has its vulnerabilities (not purely due to the wallet itself, but more because of the environment (e.g. OS, ..)).

Especially because quite a lot mobile manufacturer do skip android security updates (while displaying the latest patch has been installed), there are always vulnerabilities which can lead to a compromised mobile phone.
This does NOT directly mean that any mobile wallet on your android is compromised, but the possibility for a highly-techy person to gain access to your mobile phone does exist.

[Rath_]

Note, that samourai is NOT more secure than any other mobile wallet (or desktop wallet).

I should have been more specific. Mobile wallets are not completely safe not only because of the software itself but also it's fairly easy to steal a phone (seed recovery helps a lot in such case). I completely agree with you and that's why I wrote at the end:

Cold storage for savings, Android wallet for shopping and F2F transactions.

They are great for fast and small payments, not for storing long-term investment.

[aliashraf]

Ledgers wallet (software) checks whether the firmware on your nano s is geniuine each time you connect and open it.
There is no need for a 'tamper-proof' seal. The best tamper-proof seal is not a small sticker on the package, but a proper genuine check of the firmware.

This schema is yet vulnerable to bootstrap attack and as I remember it has been already cracked as a proof of concept. Theoretically a secure device validating the unsecure rom of its firmware attached to probeable bus , ... not the most secure architecture ever.

[Theb]

There was a post before that provided a pdf file explaining while hardware wallets are not safe even the ones being sold by Ledger. I have read it carefully that buying 2nd hand hardware wallets and also the ones in retail stores are vulnerable to this Evil Maid Attack. Based on how I read it this attack remains to be undetected to the user and the wallet's system, you will just know that your hardware wallet is tampered when you don't have any holdings left in your wallet. Main solution is buying the hardware wallets directly to the manufacturers' stores. Maybe still providing some kind of tamper proof seal will give the buyers a peace of mind, there are a lot of counterfeits out there and this is just one of the necessary security to have.

[Evil-Knievel]

I, personally, think that everything closed-source cannot be really trusted to be "secure". Just as my closed-source operating system is probably submitting my dick-picks to some coffee-sipping dude in a fancy suit on a regular basis, or just as my closed-source SmartTV is probably recording me watching movies in my undies so some CEO can take a break from his stressful Powerpoint work and - you know - enjoy his fetish, someone else probably also has access to my closed-source hardware wallet only waiting for me to deposit more than 10$.

I mean, why would you not release the code if you didn't want to hide something? Don't tell me, it's to "protect intellectual property"  
I don't trust any "proprietary stuff" - Bluescreen of death or not.

But even more devastating is the fact, that (unlike open source projects) proprietary projects have hired people working for them - you know, these 9-to-5 jobbers that always find the perfect equilibrium between doing as little as possible, but just enough to not get fired lol

[HeRetiK]

But the Nano S sold about 1 mil units. I'm assuming anyone buying does hodl quite a bit and would therefore be quite clued up... so why trust in this?
Trezor have also suffered firmware hacks... KeepKey hasn't really had any major issues yet, but have a tiny market share.

Trezor has an excellent track record of fixing security flaws in a timely manner. I presume this is true for Ledger as well. KeepKey still has to prove itself in this regard.

Problem being -- just because no major flaws have been found with KeepKey wallets yet, doesn't mean there are none. Especially given the fact that they likely have far fewer watchful eyes on them than the Ledger or Trezor wallets, due to the significantly larger userbase of the latter -- including many inquisitive minds hacking and probing about just for the fun of it. In other words, smaller market share means fewer people looking for security issues leading to fewer security issues being found.

That being said, KeepKey could very well be more secure than Ledger or Trezor wallets. But we won't know until more people have given it a go.

Ledger is based on a Secure Element which at every boot checks if the device is compromised. That's why they don't use seals, there should be a leaflet in every package mentioning that. Some people prefer this solution over Trezor's open-source code and hardware.

It is worth noting that Trezors also ensure firmware integrity on the hardware level:

https://doc.satoshilabs.com/trezor-faq/threats.html#reflashing-the-trezor-with-evil-firmware

Every discovered security flaw in both Ledger and TREZOR needed a physical access to the device.

[...]

Cold storage might be a better solution for you. It's less convenient but you can also use, for example, Samourai on your Android device which offers high privacy and security. Cold storage for savings, Android wallet for shopping and F2F transactions.

That's the thing though, except for encrypted paper wallets all other cold storage solutions also break with physical access. Compared to dedicated mobile devices or airgapped PCs a hardware wallet arguably still offers a higher level of both physical and software security.

[AmmbrPlatform]

That's the thing though, except for encrypted paper wallets all other cold storage solutions also break with physical access. Compared to dedicated mobile devices or airgapped PCs a hardware wallet arguably still offers a higher level of both physical and software security.

What about an air-gapped hardware wallet? Would you trust that?

[Evil-Knievel]

That's the thing though, except for encrypted paper wallets all other cold storage solutions also break with physical access. Compared to dedicated mobile devices or airgapped PCs a hardware wallet arguably still offers a higher level of both physical and software security.

What about an air-gapped hardware wallet? Would you trust that?

I personally wouldn't if I cannot build the firmware myself and flash it (and test it)... who tells me that the random numbers it's generating are really random?

[bob123]

What about an air-gapped hardware wallet? Would you trust that?

I personally wouldn't if I cannot build the firmware myself and flash it (and test it)... who tells me that the random numbers it's generating are really random?

Well, in ledgers case with the nano s, the entropy comes from an AIS-31 certified TRNG.
At some point you have to trust someone. France and germany both have official documents which describe the methodology of TRNG certified under AIS-31.
Federal IT-related agencies trust that way to generate random numbers.

Even if you do not trust anyone, you are still free to create your own (mnemonic) seed and import it into your hardware wallet, but the chances are very high you end up with a lower entropy.


[1] https://www.ssi.gouv.fr/archive/site_documents/certification/NOTE-05_Evaluation_AIS31_en.pdf
[2] https://www.bsi.bund.de/SharedDocs/Downloads/DE/BSI/Zertifizierung/Interpretationen/AIS_31_Functionality_classes_for_random_number_generators_e.pdf?__blob=publicationFile

[Evil-Knievel]

What about an air-gapped hardware wallet? Would you trust that?

I personally wouldn't if I cannot build the firmware myself and flash it (and test it)... who tells me that the random numbers it's generating are really random?

Well, in ledgers case with the nano s, the entropy comes from an AIS-31 certified TRNG.

Does it really? Where can I check it? (The FAQ section on a website does not give me enough confidence)

[HeRetiK]

That's the thing though, except for encrypted paper wallets all other cold storage solutions also break with physical access. Compared to dedicated mobile devices or airgapped PCs a hardware wallet arguably still offers a higher level of both physical and software security.

What about an air-gapped hardware wallet? Would you trust that?

Airgapping serves as a security measure to prevent unwanted online / network access by an adversary. That bit is covered by hardware wallets just as well as by airgapped mobile devices / PCs.

As mentioned by others, all security flaws that had to be fixed so far required physical access, something against which airgapping doesn't help. Point being, if your main fear is people gaining physical access to your cold storage device / hardware wallet, you're probably better off with a hardware wallet, since unlike regular hardware they are at least reasonably secured against physical attack vectors.

[AmmbrPlatform]

Thanks guys,
Your insights are incredibly helpful. Great to see what goes through your minds wrt hardware wallets...

Have you seen BlackBird? - https://blackbirdwallet.io

What are your thoughts on it?
Not much details have been released yet, but first impressions?

[HeRetiK]

Pretending to be a newbie asking questions about hardware wallets only to then link to your own online shop selling a previously unheard of product smells pretty scammy. I'm not saying that it's a scam, I'm just saying that at least in my opinion that's not exactly a way to gain the trust of people.

[AmmbrPlatform]

I wasn't trying to look like a newbie. Just trying to find out what people think. What are your biggest concerns when it comes to hardware wallets? Do you think this solves any issue. Not trying to direct you to buy (although that would be nice). Just want to create a discussion... there are other areas to advertise, but I doubt I'll get better insights than a discussion on hardware wallets in general.
My apologies if it seems spammy. That wasn't the intention at all.

[HCP]

What are your thoughts on it?
Not much details have been released yet, but first impressions?

Then release some details... given that the device is yours. You might want to release some actual details of the device if you want anyone to consider purchasing it... especially with a $300 price tag!


Also... this:

Completely Air-gapped

02 Bluetooth Tethering

Ummm.... What??!?

No need to trust third-party software or networks.

"Visit the Google Play Store on your Android device, download and install the Blackbird Tethering App."

Uh huh... so, I don't need to trust the mobile OS, bluetooth stack or the network that the mobile device is connected to?


And what security protections are in place to prevent someone uploading a malicious firmware or creating a "clone" site with malicious firmware and tricking people into downloading from it etc?

Visit blackbirdwallet.io/download to compare your version with the latest firmware version available. If a newer version is available, download it and extract the files to the SD card provided for firmware upgrades.

I appreciate a lot of the stuff on the website is just "marketing speak"... but you're trying to crack a niche market in a space full of very suspicious and paranoid people. Are you at least going to list the full specs and/or open source the code etc

[ThatRandom8543]

AmmbrPlatform, In your other thread I did post my statement

Since you did mention some functionality, I do would like to ask how does it justify the price? Bluetooth in itself does have its own risk as well while something like trezor/keepkey and ledger, while can be connected via usb, has security features builtin to prevent many different type of attacks. In trezor case, you would need the pin (and passphrase) to sign a transaction, retrieve the xpub, etc. They make sure the user confirm the address and transaction as well. Plus not every pc is going to have bluetooth while every pc will have some type of usb port. Taking that away pretty much limits the device to mainly the mobile market, which not everyone is going to want to use just to send cryptocurrency. Bring the price down a bit or add usb support because in my eyes, I see a clone of the ledger blue (which imo has failed in many ways at this point, mainly due to the company lack of support for the device, but thats a different story) with limited functionality, and the product may not go long without usb support.

What hardware is being used for the device and is the firmware (that is open source?) based on an existing project or your own? Is it available via github and if so could you provide a link?

While I do like the design of the device, its not something I would simply just buy right away, especially when you advertised it as secured with no source code, limited to just bluetooth, which has its own flaws, especially if the implementation is poor.

In regards to keepkey security, they are based on trezor firmware so whenever trezor does a security update, keepkey is usually notified and 9/10 they will update as well, which is why you hardly hear about security issues with keepkey.

With that said, it almost feels like youre avoiding trying to answer, which I hope isnt the case.

[Hire_Go]

Problem is in reality every chip can be hacked using ion beams. but generally your safer with a hardware wallet than the alternatives.

[BestSSS]

Hardware wallets are obviously NB for any holder with a fair amount of $ invested in whatever, but Ledger seems to be filled with flaws - what's up with their insistence not to use a tamper-proof seal?
But the Nano S sold about 1 mil units. I'm assuming anyone buying does hodl quite a bit and would therefore be quite clued up... so why trust in this?
Trezor have also suffered firmware hacks... KeepKey hasn't really had any major issues yet, but have a tiny market share. So what exactly are you looking for in a hardware wallet? Is it more of a status symbol?

Just interested to hear thoughts...

Trezor - a relatively simple device that connects through the connector Micro-USB. It has a very simple case made of molded plastic with two plastic buttons and an LCD display. Interestingly, the plastic case is glued together with something like cyanoacrylate or superglue.
Trezor uses a single microcontroller, the standard STM32F205, which creates a large hardware attack surface. This is a very common 32-bit ARM Cortex M3 processor. It is not considered one of the secure ST microcontrollers, and it does not use Secure Enclave technology. In this general-purpose microcontroller, private keys are generated and stored. For these reasons, Trezor does not have a certificate in accordance with the general safety criteria.

Ledger Nano S also connects via Micro-USB, has two input buttons and a display. The main difference between Trezor and Ledger is that the latter uses not one but two microcontrollers: STM32F042K and ST31H320. STM32F042K is very similar to Trezor STM32F205, but it does not have external, but internal clock. It is also interesting that Ledger has a full-fledged bank-level microcontroller with Secure Enclave ST31H320 technology, where private wallet keys are stored. ST31H320 has already found many other applications, including banking, identification and pay-TV. In addition, it complies with safety standards according to the general criteria of the EAL6 + level. Combined architecture ST31 / STM32 has a lower, but decent level of certification EAL5 +. In addition to the secure storage of private keys, Secure Enclave can store the device key, which provides a high degree of confidence that the Ledger device is not fake and has not been hacked on the way to the user.