security of a hardware wallet vs removing the sw-wallet app?

[joe1234]

Hello forum

I am wondering if and why a hardware wallet should be more secure compared to removing the wallet
app(and erasing it's private key) from the mobile AND remembering the 12 word seed......


Thank's a lot for any feedback!

Joe

[NeuroticFish]

I am wondering if and why a hardware wallet should be more secure compared to removing the wallet
app(and erasing it's private key) from the mobile AND remembering the 12 word seed......

If that mobile was ever online after the wallet was created or, in theory, also if it will ever be online again, there's a chance somebody has stolen or will steal your seed, giving him "spend" access to your funds.
On the other hand the seed will never get online from a hardware wallet.

It's a huge difference.

[Charles-Tim]

Oflline wallets are just the safest, it means the private key is not connected and has never been connected online before. Can attackers be able to attack online what is not online? It is not possible. Creating a wallet on mobile phone, sending bitcoin to the wallet and backup the private key and delete the wallet like you said can also be safe but better to just make use of paper wallet instead that can help you to create the wallet offline from the beginning, rather than using online wallet.

Normally, supposing your mobile phone is having malware like trojan horse or rookit already that is specifically designed for your phone operative system, the malware can be able to easily penetrate and know everything you do to create the wallet and be used against you in a way your private key is revealed to attackers. You can deleted the wallet immediately after you created it and yet the attackers got hold of your seed phrase or private key possibly because of the malware. Many people may not even know their devices contain malware.

But if your phone is intact with no malware, nothing will happen, and your wallet will be safe, but you will need to properly save the seed phrase in a place that will be impossible for attackers to penetrate and also that it will not be damaged. Triplicating it and saving it in different locations will be good.

I will still prefer using airgapped devices or hardware wallet because they store private key offline but yet we need to be careful while handling and using it online. But my best for now is the use of two electrum wallets on two different devices, one as cold wallet and the other as watch-only wallet, using QR code for signing transactions which is malware resistant.

Generating wallet oflline is the safest and recommendable, most especially for long term storage (hold) and saving high amount of bitcoin, but also using it for saving any amount is the safest.

[Yogee]

A hardware wallet is considered to be more secure that mobile wallets since it's less prone to online attacks but let's face the fact that the wallet security entirely depends on the one holding it and that applies to all kinds of wallets. If the owner is careless, it doesn't matter what wallet he's storing his cryptocurrencies. Even if you say you have an outanding ability to remember the seed for a very long time, can you really guarantee that all the time? It's always nice to have a back up.

[ranochigo]

There's nothing that can be compared to a hardware wallet. They are designed with security in mind. Their focus is on eliminating the possible attack vectors through both physical and non-physical means. Most hardware wallets has a security chips which is used to harden the device against bruteforce attack and are often designed to reduce the number of possible sidechannel attacks. Removing the software wallet and wiping the device does not mean anything if the malware was already on your device when you were generating the keys. They can and will be compromised regardless.

Even if you were to generate it offline, the problem arises when you have to send coins. Improper handling of the private keys and/or seed will make you vulnerable to attacks. Hardware wallet eliminates this possibility due to the fact that they cannot be infected by malware nor the private keys can be compromised through data transfers.

[joniboini]

AND remembering the 12 word seed......

Even if you can actually remember it, you still need to use something to make your tx, unless you want to manually calculate it yourself.

That being said, remembering your seed is either not going to work, or decrease the security of your 'wallet'. Are you interested in 'brain wallet' by any chance? Please don't do it. Don't trust your memory for something as sensitive as this one.

[hatshepsut93]

What a hardware wallet does is isolating your private key from unsecure environment that might have malware. In your example you have already created a Bitcoin wallet in an unsecure environment, and there are some things that could go wrong - you could have downloaded a fake wallet, or a malware could have stolen your new wallet file/seed. Then, even if you will delete a wallet file, you'd still need to use it later, and when you'll do so, you will again be exposed to risk. Hardware wallet allows you to send transactions without those risk.

There's nothing that can be compared to a hardware wallet. They are designed with security in mind. Their focus is on eliminating the possible attack vectors through both physical and non-physical means. Most hardware wallets has a security chips which is used to harden the device against bruteforce attack and are often designed to reduce the number of possible sidechannel attacks. Removing the software wallet and wiping the device does not mean anything if the malware was already on your device when you were generating the keys. They can and will be compromised regardless.

Having your own cold storage setup with an old computer or other device is very close to a hardware wallet, maybe sometimes even better. It's a bit harder to setup and use, but it's not rocket science, any advanced user will be able to do it, and it could be cheaper than a hardware wallet, as people upgrade their computers from time to time, so they probably have a spare computer quite often.

[ranochigo]

Having your own cold storage setup with an old computer or other device is very close to a hardware wallet, maybe sometimes even better. It's a bit harder to setup and use, but it's not rocket science, any advanced user will be able to do it, and it could be cheaper than a hardware wallet, as people upgrade their computers from time to time, so they probably have a spare computer quite often.

That's not true. Most computer are not designed to be resistant against side-channel attacks be it timing attacks, leakage of electromagnetic radiation, power analysis during the signing of txs etc etc.

It will undoubtedly be cheaper than a hardware wallet but given that the information cannot be stored in a secure chip, it's fairly easy to at least obtain the encrypted copy of the wallet. Most hardware wallets have a feature which will wipe the wallets after too many tries and the ColdCard that I've gotten offers a feature with duress wallets to provide plausible deniability.

Setting up an air-gapped cold storage is not difficulty or requires any special skills but keeping it anywhere near to the security level of hardware wallets could be fairly hard.

[webtricks]

I am wondering if and why a hardware wallet should be more secure compared to removing the wallet app(and erasing it's private key) from the mobile AND remembering the 12 word seed......

Are you talking about 'buying once and holding till selling' or 'making transactions regularly'? As @joniboini said above, you will need private key to sign transaction every time you send bitcoin to someone/somewhere.  To sign the transaction, it is required that your private keys are available in your wallet. Such private keys in the wallet will be encrypted with the password but still the security is lesser than the hardware wallet.

Or if you are just looking to store bitcoin safely offline for long period without making any transaction until you plan to move it to the other address not associated with your seed, then your method could work. Seeds are random and possible to remember as well. Speaking personally about myself, I have perfectly memorized 3 of my mnemonic seeds and there isn't any record of them except in my mind. But I don't think this is possible for everyone so I won't suggest anyone to try this. It is better to always write it somewhere and keep it safely. Also, make sure you are using open-source wallet (whose source code could be verified) and you are offline while generating the seed. There is no need to be connected to the internet while seed generation process and if your wallet insist for that, better not to use that wallet. Copy down your bitcoin address or master public key after seed generation and delete the wallet.

If you can meet all the conditions of the above paragraph then yes, your bitcoins are safe.

[BrewMaster]

what you do after wallet creation is not as important as what you do before. if you remove the wallet and only remember the seed phrase you are just protecting yourself from possible future issues but not about what might have already happened.

a phone is not a cold storage and it can never be considered the safest environment for creation of a wallet. so during the creation you might have leaked a lot of information already and it won't matter what you do next any more.

you also want to spend your bitcoins at some point. a hardware wallet lets you do it in a safe way while your deleted wallet doesn't and you will have to re-install and take all the risks again.

[The Cryptovator]

I believe you got the answer to what you need. Remember, you can't spend your funds without private keys or seeds. That means you have to import it in an online machine unless you sign a transaction offline machine. If you have an extra device that should offline forever to sign a transaction and you have to generate your private keys or seeds offline, then it would be quite safe. But isn't it costly than buying a hardware wallet? Because you should reserve a device which should not be online ever. But I will not encourage to generate private keys or seed from any website either it's trusted or not. Better to trust in a hardware wallet.

[odolvlobo]

I am wondering if and why a hardware wallet should be more secure compared to removing the wallet
app(and erasing it's private key) from the mobile AND remembering the 12 word seed......

There are many aspects to security. Each kind of wallet has its pros and cons. Remembering the 12 word seed is not risk-free.

• 1. You could forget the seed.
• 2. Someone could force you to reveal it.
• 3. You must reveal the seed in order spend the bitcoins.

I think that the main advantage of a hardware wallet is that it is the safest form of portable wallet.

[hatshepsut93]

That's not true. Most computer are not designed to be resistant against side-channel attacks be it timing attacks, leakage of electromagnetic radiation, power analysis during the signing of txs etc etc.

It will undoubtedly be cheaper than a hardware wallet but given that the information cannot be stored in a secure chip, it's fairly easy to at least obtain the encrypted copy of the wallet. Most hardware wallets have a feature which will wipe the wallets after too many tries and the ColdCard that I've gotten offers a feature with duress wallets to provide plausible deniability.

Setting up an air-gapped cold storage is not difficulty or requires any special skills but keeping it anywhere near to the security level of hardware wallets could be fairly hard.

How likely is an average user to get attacked through side channels, which requires some physical access and equpment only available to security services and maybe some top-level criminals? And it's not like hardware wallets are unhackable, there has been many reports of proof-of-concept attacks on them, and all these things with sidechannels actually apply to hardware wallets too.

[ranochigo]

How likely is an average user to get attacked through side channels, which requires some physical access and equpment only available to security services and maybe some top-level criminals?

Not likely. But I had the impression that you were comparing the absolute security being provided by both and hence why I've written the post. If you have a decent amount of money, the incentive could possibly be pretty enticing.

And it's not like hardware wallets are unhackable, there has been many reports of proof-of-concept attacks on them, and all these things with sidechannels actually apply to hardware wallets too.

There is. But the HW wallets are specifically designed to try to minimize the signature that is required to successfully execute an attack. If there is indeed a POC, the attack that I've found seems to require certain level of expertise and/or time. I don't think they are unhackable but certainly will be less hackable than an air-gapped old computer.

I think the difference level of security when comparing devices that are not specifically designed to secure keys and those who are is fairly significant. The reason why you see more POC, especially ones that requires a high level of expertise against HW wallets is because they go through pretty rigorous audits than what you see with normal wallets, especially ones that actually has unrealistic scenarios for the attack to be successful.

I agree with you that air-gapped cold storage are fairly secure. But in terms of the level of security, having a separate air-gapped computer is definitely not better than a HW wallet and I think having them on the same playing field would certainly raise some eyebrows.