A crisis of trust: Are you still comfortable using hardware wallets?

[Vincom]

First off, I am not a hardware wallet user poking fun at or bashing anyone. I simply want to share an objective perspective on the current state of crypto asset storage, where the bunkers once considered the absolute safest are undergoing the fiercest storm in their history.

If just a few years ago the vast majority of the community confidently insisted that hardware wallets were the ultimate self-custody solution—accepting a bit of inconvenience and an upfront investment of 100 USD to 200 USD—right now, that absolute faith is being violently shaken. Everything has unfolded all too quickly through a relentless string of vulnerabilities and incidents:

+ Fake malware: Sophisticatedly disguised as reputable software (like Exodus), tricking users into manually triggering info-stealers.

+ Coding flaws and weak key generation algorithms: The incident on Coldcard where the seed phrase generation algorithm lacked sufficient randomness, opening the door for attackers to guess or reconstruct private keys.

+ Mass personal data leaks: Customer information leaks at SafePal, Trezor, and Ledger inadvertently painted targets on users' backs for sophisticated phishing campaigns, and even risks of physical extortion in real life.

+ Supply chain risks: Allegations of Ledger devices being physically tampered with, having spyware chips implanted right from the production phase or during shipping before reaching the end user.

Facing this grim picture, quite a few investors have opted to pull assets back to hot wallets or transfer them entirely onto major CEXs—where at least risk reserve funds exist to compensate users when incidents occur. Meanwhile, large institutional entities have found safety in BTC Spot ETFs rather than holding private keys themselves.

It is genuinely hard to offer a solution that could restore the hardware wallet market's absolute reputation of the past. Software bugs or data security flaws can be patched, but supply chain tampering risks between the manufacturer and the end user are a puzzle almost impossible to guarantee 100%. Sometimes, it crosses my mind: Has the time finally come for traditional hardware wallets to gradually phase out, ceding ground to the convenience of CEXs and hot wallets?

I would like to know your perspective on this:

• Are you currently using a hardware wallet? Have these recent back-to-back incidents put severe psychological pressure on you regarding the safety of your assets?
• In the future, will hardware wallets remain your top priority for storing crypto?
• Is it time for hardware wallets to step back and make room for next-gen custody technologies (like Account Abstraction or MPC)?

[fullfitlarry]

Of course with the current issues that we have on hardware wallets, for sure majority of us here could have trust issues with them.

That's why the community somewhat revived the 2-of-3 multisig as a best way to prevent this kind of theft as a single seed phrase is potentially dangerous. Yes, I also heard that there are some who rather go with ETF's as way to stay safe too.

I guess it's going to be a debate whether we should used hardware wallets that are still in existence or have a new way to use other methods to keep our Bitcoin or crypto safe.

[asriloni]

1. I never use a hardware wallet. So many hack happened to the hardware wallet worried me. it's already happened for years, but still continue. We even have 10 cases related to the hardware wallet get hacked this year. So i avoid to use it.

I've been using offline PC/mac to store my wallet and any sensitive data related to the crypto asset for years. So far i never encounter any problem.

I'd rather trust any product developed by big company such as Microsoft and Apple instead of trusting my money to the amateur company such as ledger.

2. Using offline PC/mac is always my top preferred choice. The never ending hacked case in hardware wallet is enough to be my reason to never touch it. There is no logic to trust your money on 4b valuation company such as Ledger rather than Apple that is valuing at 5 trillion mcap.
Greater marketcap, better RnD team.

3.  MPC is also as weak as hardware wallet unless you put multiple layer of protections to ensure no one has access to your master account use to login to your mpc wallet. For me, it's time consuming, and it's also posessing same risk as hardware wallet.

[$crypto$]

Of course with the current issues that we have on hardware wallets, for sure majority of us here could have trust issues with them.

That's why the community somewhat revived the 2-of-3 multisig as a best way to prevent this kind of theft as a single seed phrase is potentially dangerous. Yes, I also heard that there are some who rather go with ETF's as way to stay safe too.

I guess it's going to be a debate whether we should used hardware wallets that are still in existence or have a new way to use other methods to keep our Bitcoin or crypto safe.

PlanB has decided to move Bitcoin to an ETF in 2025 despite the criticism of its decision, now all is not to be regretted after the infiltrated damage to the hardware.
https://x.com/100trillionUSD/status/2109559139903131806

Are people more inclined to think about it now? Zachxbt says only Iphone as one of the best storage as long as it is in offline mode.

There continues to be another debate, when Bitget is hacked, customer funds are all safe, when the hardware is hacked who is responsible? On the other hand, many people believe cold wallets are proof of the fact that many people lose due to exploitation because it is not the user's fault.

[Charles-Tim]

Are you currently using a hardware wallet? Have these recent back-to-back incidents put severe psychological pressure on you regarding the safety of your assets?

All the hardware wallet vulnerabilities that I have known, there are some that no matter what you do, you coins can still be stolen. Example is the one that happened to Ledger recently.

I do not see a point in getting a hardware wallet. I can use multisig wallet or have my coins on a wallet on an airgapped device with passphrase.

In the future, will hardware wallets remain your top priority for storing crypto?

I do not know. If what happened this year continued, many people will go for alternatives.

[satscraper]

~

Yeah, I'm comfortable with both of the hardware wallets I have.

Tangem for on-the-go use, because I don't top it up with more than $1,000 at once.

Passport Core for the long-term storage, because first, it has one of the best sources of entropy, and second, even if the first doesn't hold, it is protected bythe high-entropy passphrase.

[Hatchy]

• Are you currently using a hardware wallet? Have these recent back-to-back incidents put severe psychological pressure on you regarding the safety of your assets?
• In the future, will hardware wallets remain your top priority for storing crypto?
• Is it time for hardware wallets to step back and make room for next-gen custody technologies (like Account Abstraction or MPC)?

I used a hardware wallet before, the BitBox02 to be precise. There is no need to go into the long story of what happened to it, but yeah, it was worth the trial. The truth remains that hardware wallets are one of the safest ways to store cryptocurrency. They offer cold storage by keeping your private keys offline, and they also give you secure control over your assets in one place.

However, with the recent trials and concerns surrounding hardware wallets, it is clear that many big investors may start looking for other ways to protect their funds. The question is, what are the best alternatives? Buying ETFs or using centralized exchanges? Those should be the last options to consider if you truly understand what it means to have control over your funds. The moment you no longer have control over your assets, you are putting your funds at the mercy of someone else. So, perhaps it is time to reconsider who actually holds the keys to your funds.

[Meuserna]

I stopped using corporate hardware wallets for anything I care about a few years ago, when Ledger added a key extraction API to their firmware and started selling it as a feature.

I switched to DIY hardware wallets, and the security of my coins improved immensely.

These days, DIY solutions are easy to use, and they offer better security than the corporate slop.

SeedSigner is the easiest place to begin. It's fully airgapped and stateless. Run the ShieldSigner fork and you also get encrypted SeedQR, passphrase QR, and other advanced security options. In terms of security, there is no better hardware wallet at any price.

Airgapped: No internet connection means online hackers can't reach it.

Stateless: Your seed & wallet aren't saved on the device, so if somebody steals it, no worries. There's nothing on it.

Add the encryption features of ShieldSigner and you've also got an offline backup that is fully encrypted (encrypted SeedQR). If somebody finds that, they don't even know what they found. It's just a QR that scans like it's blank (because without the decryption key, it's garbled nonsense).

I hope more people learn the benefits of DIY self custody, but for whatever reason, most people seem to want corporations to trust and cool gadgets regardless of whether they're safe.