I was intrigued this week by the latest story the mainstream media has sensationalized about people who get locked out and lose access to their Bitcoin holdings.
The focus this time centered on a user from Bitcoin’s early days who forgot the password securing what is essentially a hardware wallet on which he’s stored the private key protecting over 7,000 BTC for the past decade. Perhaps the most interesting part though was the claim that a Seattle-based company has developed a methodology to break through the drive’s encryption, especially because the drive in question was supposedly developed with military-grade encryption using funding from the United States Department of Homeland Security.
In other words, not even the U.S. government, arguably the most powerful of them all, can secure its information from motivated hackers.
What’s In Your Hardware Wallet?
Hardware wallets have grown immensely in popularity and are frequently considered one of the most secure ways to protect one’s private keys. After all, hardware wallets are typically offline 24/7, so they’re essentially completely resistant to online hackers. They’re also made of durable materials, meaning they’re intended to last far longer than the average paper wallet.
The growth in the popularity of hardware wallets can certainly be attributed to widely publicized corporate failures as well. Exchanges and crypto banks failed left and right last year, to the point where chants of “not your keys, not your coins” were (figuratively speaking) deafening. In a similar vein, software wallets, another common self-custody solution, have seemingly lost a bit of their luster, perhaps owing to the fact that they require far more frequent updates than hardware wallets do, ensuring that their users are far more reliant on software publishers than hardware wallet owners are reliant on manufacturers.
Notwithstanding the many strengths of hardware wallets, the news of a military-grade drive being cracked by white hat hackers should give pause to people in all corners of the Bitcoin community…
Securing Your Stash
Part of the problem in the case of the recently hacked drive may come down to its age — the drive is over ten years old. The fact that the company that made it has been sold at least two times since then probably doesn’t help either, since supporting such an old product probably isn’t a top priority. The security of your Bitcoin stash is probably one of your top priorities though, and you certainly don’t want your stash to get stolen by hackers or thieves.
For many people, this may not seem like an immediate problem. After all, most of us probably haven’t been in the Bitcoin space for 10+ years, and probably haven’t been using a hardware drive since the day we discovered Bitcoin either. Time passes though, and if you choose to stick around in Bitcoin for long enough, you’ll eventually reach the point where the age of your hardware wallet becomes a liability that’s too big to ignore.
I’ll leave it up to you to decide how best to address this risk in the context of your own self-custody setup, but perhaps a few words of advice to consider:
Protect your seed phrase. If your hardware wallet fails, the seed phrase may be the only way to recover your Bitcoin.
Don’t let people have unwanted physical access to your hardware wallet. Perhaps the best way to protect it is to keep it hidden.
When deciding which hardware wallet to buy, maybe the longevity of the manufacturer and the level of commitment they have towards their Bitcoin-related products should be considered.
No matter what, remember that your Bitcoin private key is only as secure as you make it.
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