<p>Hardware wallets are generally designed to securely store your private keys in an always-offline environment (&quot;cold storage&quot;). This allows the user to have confidence that their coins will not be stolen by malware/hacking/etc, since any attacker would need to have physical access to the device itself.</p>
<p>If nothing else, this is the main advantage of a hardware wallet: the user can securely store their funds, without needing too much technical knowledge or skill.</p>
<blockquote>
<p>It's not like I can actually use it in physical stores.</p>
</blockquote>
<p>Well, if the store accepts BTC payments then you could, but I agree this is a perhaps less important/rare use case at the moment.</p>
<blockquote>
<p>And if I'm supposed to use it as a secure storage device for all my coins, doesn't it just scream &quot;STEAL/SEIZE ME!&quot; to burglars and the cops?</p>
</blockquote>
<p>Yes, any educated thief/cop/etc may view a hardware wallet as a target for theft. Most hardware wallets have security against this though, such as a PIN to unlock the device (usually with the threat of wiping the device after some number of failed attempts). Each device will have different features in this way, so as a user you'd have to decide what fits your needs best.</p>
<p>Keep in mind that you can also just use the device to generate a wallet in an offline/secure environment, then create and test backups of that wallet, and finally destroy the hardware wallet device itself. In this way, you could create a cold storage setup, without the added risk of having a device which is obviously a bitcoin hardware wallet in your possession (of course you'll need to keep the backup, but the idea is that the backup may be easier to hide- for example using steganographic techniques).</p>
<blockquote>
<p>why buy such a hardware wallet instead of just an encrypted USB stick with a wallet.dat on it?</p>
</blockquote>
<p>If the wallet.dat file was generated on a computer which connects to the internet at <em>any</em> point in time (past/present/future), then you will not have the strongest of guarantees that it is not infected with malware. The same goes for the USB stick.</p>
<p>A hardware wallet, on the other hand, should be designed to have extremely restricted communication channels with the outside world, such that the user can have a higher assurance that their privkeys have not been leaked. In many cases, I've seen hardware wallets include a physical confirmation that the firmware running on the device is genuine.</p>
<p>Worth mentioning as well: no electronic device should be used as the only form of long-term storage for a user's funds. Bit-rot and general electronic failure are guarantees, given a long enough timeline. It is <strong>very</strong> important to have a physical backup of the privkeys as well (think: written on paper, stamped into metal, etc. This backup usually comes in the form of a mnemonic seed phrase these days).</p>
<hr />
<p>Of course, if you're a technically savvy, then you may prefer to create your own cold storage device, perhaps something as simple as a raspberry pi running Tails as the operating system. But for many users, a hardware wallet offers a great mix of security and convenience, for a reasonable price.</p>
<p>The extremely adversarially-minded user may also feel alarmed at the prospect of a supply-chain attack against a hardware wallet manufacturer. They would be great targets after all! To combat this, the user may choose to use a multi-sig setup, with signing keys generated on multiple devices from different manufacturers, and perhaps even keys from bitcoin-core, etc, as well.</p>
<hr />
<p>Ultimately, there is no 'perfect solution' for security of your funds, each user will have to make a choice based on their needs, preferences, and comfort level.</p>

CC BY-SA 4.0
2020-10-26T06:35:35.043Z
2020-10-26T06:35:35.043Z
chytrik
<p>Let's say I invest in a physical Bitcoin wallet. They aren't exactly free, so it's going to cost me money, effort, time and energy (to set it up and put coins on it).</p>
<p>Then what?</p>
<p>It's not like I can actually use it in physical stores. And if I'm supposed to use it as a secure storage device for all my coins, doesn't it just <em>scream</em> &quot;STEAL/SEIZE ME!&quot; to burglars and the cops? And if I keep it hidden in my fireproof safe, why buy such a hardware wallet instead of just an encrypted USB stick with a wallet.dat on it? Much cheaper and the convenience of a hardware wallet is gone if it's physically tucked away in my safe anyway.</p>
<p>Basically every way I look at it, it seems like a bad idea.</p>
<p>The only situation I can think of where it would be good is if I were to meet up with a person physically to buy something from them with Bitcoin. I wouldn't want to take a computer with me, even a laptop, so then that hardware wallet would come in handy, if I &quot;load it up&quot; from my Bitcoin Core before leaving my home.</p>
<p>But that's a pretty specific and rare (to me) scenario. It's never happened, in fact.</p>
<p>As nice as it first sounds to have a dedicated hardware device which in theory allows me to easily pay people Bitcoin &quot;on the go&quot;, I don't see the actual use of this in this world as it is now. Is this only useful in some theoretical future when Bitcoin has taken over? If so, is it really a good idea to buy a hardware wallet today and risk it becoming obsolete by the time Bitcoin ever takes off?</p>
<p>Is there something I'm missing?</p>

<wallet><hardware-wallet>
What exactly is the benefit of buying a hardware wallet for Bitcoin?
Enid
# What exactly is the benefit of buying a hardware wallet for Bitcoin?

(Asked by: username_0 on 2020-10-26)

Let's say I invest in a physical Bitcoin wallet. They aren't exactly free, so it's going to cost me money, effort, time and energy (to set it up and put coins on it).

Then what?

It's not like I can actually use it in physical stores. And if I'm supposed to use it as a secure storage device for all my coins, doesn't it just *scream* "STEAL/SEIZE ME!" to burglars and the cops? And if I keep it hidden in my fireproof safe, why buy such a hardware wallet instead of just an encrypted USB stick with a wallet.dat on it? Much cheaper and the convenience of a hardware wallet is gone if it's physically tucked away in my safe anyway.

Basically every way I look at it, it seems like a bad idea.

The only situation I can think of where it would be good is if I were to meet up with a person physically to buy something from them with Bitcoin. I wouldn't want to take a computer with me, even a laptop, so then that hardware wallet would come in handy, if I "load it up" from my Bitcoin Core before leaving my home.

But that's a pretty specific and rare (to me) scenario. It's never happened, in fact.

As nice as it first sounds to have a dedicated hardware device which in theory allows me to easily pay people Bitcoin "on the go", I don't see the actual use of this in this world as it is now. Is this only useful in some theoretical future when Bitcoin has taken over? If so, is it really a good idea to buy a hardware wallet today and risk it becoming obsolete by the time Bitcoin ever takes off?

Is there something I'm missing?

**Tags:** wallet, hardware-wallet


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## 1 answers

### Answer by username_1 on 2020-10-26. Score: 10

Hardware wallets are generally designed to securely store your private keys in an always-offline environment ("cold storage"). This allows the user to have confidence that their coins will not be stolen by malware/hacking/etc, since any attacker would need to have physical access to the device itself.

If nothing else, this is the main advantage of a hardware wallet: the user can securely store their funds, without needing too much technical knowledge or skill.

> It's not like I can actually use it in physical stores.

Well, if the store accepts BTC payments then you could, but I agree this is a perhaps less important/rare use case at the moment.

> And if I'm supposed to use it as a secure storage device for all my coins, doesn't it just scream "STEAL/SEIZE ME!" to burglars and the cops?

Yes, any educated thief/cop/etc may view a hardware wallet as a target for theft. Most hardware wallets have security against this though, such as a PIN to unlock the device (usually with the threat of wiping the device after some number of failed attempts). Each device will have different features in this way, so as a user you'd have to decide what fits your needs best.

Keep in mind that you can also just use the device to generate a wallet in an offline/secure environment, then create and test backups of that wallet, and finally destroy the hardware wallet device itself. In this way, you could create a cold storage setup, without the added risk of having a device which is obviously a bitcoin hardware wallet in your possession (of course you'll need to keep the backup, but the idea is that the backup may be easier to hide- for example using steganographic techniques).

> why buy such a hardware wallet instead of just an encrypted USB stick with a wallet.dat on it?

If the wallet.dat file was generated on a computer which connects to the internet at *any* point in time (past/present/future), then you will not have the strongest of guarantees that it is not infected with malware. The same goes for the USB stick.

A hardware wallet, on the other hand, should be designed to have extremely restricted communication channels with the outside world, such that the user can have a higher assurance that their privkeys have not been leaked. In many cases, I've seen hardware wallets include a physical confirmation that the firmware running on the device is genuine.

Worth mentioning as well: no electronic device should be used as the only form of long-term storage for a user's funds. Bit-rot and general electronic failure are guarantees, given a long enough timeline. It is **very** important to have a physical backup of the privkeys as well (think: written on paper, stamped into metal, etc. This backup usually comes in the form of a mnemonic seed phrase these days).

---

Of course, if you're a technically savvy, then you may prefer to create your own cold storage device, perhaps something as simple as a raspberry pi running Tails as the operating system. But for many users, a hardware wallet offers a great mix of security and convenience, for a reasonable price.

The extremely adversarially-minded user may also feel alarmed at the prospect of a supply-chain attack against a hardware wallet manufacturer. They would be great targets after all! To combat this, the user may choose to use a multi-sig setup, with signing keys generated on multiple devices from different manufacturers, and perhaps even keys from bitcoin-core, etc, as well.

---

Ultimately, there is no 'perfect solution' for security of your funds, each user will have to make a choice based on their needs, preferences, and comfort level.


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