Are Bitcoin hardware wallets from eBay safe?

So I bought a HW wallet from eBay

Hardware wallets tend to be on backorder due to Bitcoin’s popularity and the recent outflow from Coinbase. I’ve wanted a HW wallet for a while and decided to take a risk and order one from eBay before my backorder unit arrives. The most popular HW wallets are Trezor and the Ledger Nano S. Personally, I like the Ledger as it fits better in my pocket. Other than that they are both well reviewed.

Hardware Wallets

There are two general rules for Bitcoin security/sovereignty.[1]

  1. If you control your private keys, it’s your Bitcoin. If you don’t control your private keys, it’s not your Bitcoin.
  2. Your private keys should never touch or be typed into your computer or your phone.

This is where hardware wallets become a critical piece of the security puzzle for storing cryptocurrencies safely. HW wallets generate your private keys off your computer, let you write down a backup and then simply sign any transactions you want to perform safe from prying eyes.

Where you keep that piece of paper is another matter.[2] I suggest Cryptosteel.

Physical Verification

This step won’t tell you much. It is easy to alter a device, repackage it and wrap in plastic. My box was still in it’s plastic but Ledger included a note inside the box that says as much. So lets move on to the relevant tests.

Software Verification

This is the easiest thing to check on your Ledger. The two main attacks here are either altered firmware or a replacement of the Secure Element. Luckily, Ledger has thought of this and built tools into both the HW and SW to defend against this.

First step is to verify the Secure Element. With the Ledger plugged into your computer and freshly set up with a new passphrase, you can interrogate the Secure Element to determine if it has been tampered with.[3]

Now that we have verified the authenticity of the Secure Element we can also verify the firmware. Luckily, this has already been done for us since the Secure Element checks the full firmware on every boot and will alert you if anything is wrong.

Hardware Verification

Even though this will void your warranty, I highly recommend it. The Ledger is very easy to open with a simple spudger tool as shown below. Once you have access to the chips you can compare it to the pictures provided by Ledger and confirm that they are both the right model numbers and that no extra hardware has been added.

1. Opening Ledger 2. The exposed PCB 3. The reference photo

Can I trust it?

Cryptocurrency is all about tradeoffs in trust. Some people may be fine with 1 confirmation on a transaction and others may want 6 or more. In this case I have examined two probable avenues of attack and verified that there were no alterations to the hardware or software that I could find. This is good enough for me.

For others with lower risk tolerance, you may want to order directly from the supplier as other eBay vendors may not be as reputable. Even in that case, a nation state could intercept your mail if they really cared about your Bitcoin. If you are actually considering that case, HW wallets are probably not for you. You might want to use a TRNG (True Random Number Generator) like OneRNG with an airgapped Tails instance and then store your private key in Cryptosteel.

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