Last month, hardware crypto wallet manufacturer Ledger announced its \u201cLedger Recover\u201d program designed to allow customers to back up their seed phrases to the cloud and link it with their real-world identity.<\/p>\n
The announcement was met with heavy pushback<\/a> from the crypto community, as many saw it as opposing the ideals of blockchain security and the decade-old mantra of keeping custody over one\u2019s own keys.<\/p>\n Ledger responded swiftly, assuring customers that their seed phrases were safe and that the Ledger Recover program was opt-in. But the entire saga has led to a growing demand for open-source hardware wallets, which could enable the community to rule out any hardware or software backdoors.<\/p>\n Just a week later, Ledger announced that it was accelerating its open-source roadmap. But what does an open-source hardware wallet mean? What are the benefits? And crucially, are they actually securer than their closed-source counterparts?<\/p>\n First, it\u2019ll help to clear up some misconceptions surrounding hardware wallets.<\/p>\n Your wallet doesn’t store crypto.<\/strong><\/p>\n A lot of people think hardware wallets are used to store cryptocurrencies, but in reality, they\u2019re used to store your private keys. All cryptocurrencies exist on the blockchain, and your private keys prove you own your tokens. This is why it\u2019s important to keep your private key, well, private<\/em>.<\/p>\n Your spare phone isn’t a hardware wallet.<\/strong><\/p>\n Hardware wallet manufacturing is complicated \u2014 and for good reason. People use these devices to secure millions of dollars worth of digital assets, and ensuring the safety of customer funds is crucial to building and maintaining a successful hardware wallet brand. <\/p>\n For this reason, various hardware wallet components are typically proprietary, meaning they cannot be purchased or inspected outside of buying a device and tearing it down. Some wallets even have built-in tamper protection to prevent this. Phones use far more accessible parts, making it a lot easier for an attacker to study and break.<\/p>\n Hardware wallets are not %100 secure<\/strong><\/p>\n No device or software is completely invulnerable to attack. Accidentally interacting with a malicious smart contract can be catastrophic, and even the most secure wallet can\u2019t protect you from rug pulls or phishing attacks. Hardware wallets are not digital bank vaults \u2014 they\u2019re more like keys to a secure public lockbox. They\u2019re a tool to help you store and access your assets securely and are only ever as safe as you are.<\/p>\n If wallets were built with publicly available source code, mass individual audits could prevent malicious actors from getting their way \u2014 or at least that\u2019s the claim. But manufacturing hardware wallets requires a lot more trust than one may think, and not just for the manufacturer.<\/p>\n Other businesses in the supply chain have reasonable opportunities to insert their own backdoors, and these devices have complex supply chains. Most hardware wallet companies rely on contract manufacturers, which tend to rely on supply chains originating in China.<\/p>\n Recent:\u00a0Bitcoin 2023 in Miami comes to grips with \u2018shitcoins on Bitcoin\u2019<\/a><\/em><\/strong><\/p>\n Another supposed advantage of open-source hardware wallets is increased compatibility and greater community involvement in development. However, making code publicly available makes it easier for hackers to scour it for vulnerabilities. And since the wallet would be made using publicly available components, it would be easier for scammers to create fake wallets that can steal your funds.<\/p>\n Nicolas Bacca, co-founder and vice president of Innovation Lab at Ledger, told Cointelegraph that the biggest challenge facing open-source hardware wallets is creating a way for users to easily verify whether their device is genuine with strong guarantees. Most reputable manufacturers allow you to check the device serial number on their website to confirm its legitimacy. Would you trust every business in an open-source hardware wallet\u2019s supply chain?<\/p>\n \u201cIt\u2019s important to remember that an open-source hardware wallet will almost always rely on closed-source components,\u201d said Bacca. \u201cThe only way to really know how secure it is is to try to break it and reverse engineer it.\u201d With closed-source wallets, this isn\u2019t possible.<\/p>\n \u201cUntil now no wallet has ever released firmware with a proven backdoor. If the firmware is open, it is scrutinized around the world. In closed-source wallets, that is never possible,\u201d Vipul Saini, co-founder and chief technology officer of hardware wallet firm Cypherock, told Cointelegraph. <\/p>\n He believes that operations involving the generation and utilization of private keys should be made open-source. \u201cThat is where major backdoors, like kleptographic attacks and predictive random numbers, can be easily established,\u201d he said. <\/p>\n In April 2022, a white hat hacker from Ledger\u2019s security team caught<\/a> a vulnerability similar to a backdoor in the seed generation of Trust Wallet, a Binance-owned open-source software wallet. With off-the-shelf chips, any party in the supply chain could modify the code that loads the bootloader, a critical part of ensuring the customer receives a device with genuine firmware. <\/p>\n This wouldn\u2019t be noticed by code auditors since the backdoor could be inserted, while the code is being loaded onto the device.<\/p>\n \u201cGiven this limitation, it\u2019s not possible to build a robust chain of trust for open-source hardware wallets, which considerably limits their distribution and safe use by the largest number of users,\u201d he added. \u201cThe \u2018many eyes\u2019 paradigm doesn\u2019t really work for security code, with the best example of this being the Heartbleed OpenSSL exploit<\/a>.\u201d<\/p>\n As centralized exchanges continue their efforts to rebuild trust with the crypto community, people are being encouraged to store their coins in hardware wallets more than ever before. If the open-source movement gains more traction, the ability to verify that your device hasn\u2019t been tampered with is critical, and this isn\u2019t easy without an intermediary.<\/p>\n One solution is encouraging open-source hardware wallet producers to comply with the Open Source Hardware Association (OSHWA) criteria and obtain CERN\u2019s Open Hardware Licence. But as examples like the 2008 global financial crisis showed, licenses and certifications can only guarantee so much.<\/p>\n \u201cOSHWA helps provide proper labels, define and certify what is open hardware,\u201d said Bacca, stating that it doesn\u2019t help secure against attacks, but it\u2019s useful to avoid dubious marketing claims. Bacca also mentioned a few existing vendors that claimed<\/a> to be open-source without having an open-source license, or with proprietary code mixed in<\/a> with their open-source codebase.<\/p>\nWhat your hardware wallet isn\u2019t<\/h3>\n
![\"Wallet,](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-05\/cee39971-c6f7-4328-b4aa-8a1a7bb477e9.png\" "\\"Open")
<\/figure>\nWill going open-source help?<\/h2>\n
Are open-source wallets the future?<\/h2>\n