Why You Need A Hardware Wallet Now

Bitcoin Magazine recently posted an article, 8 REASONS TO USE A BITCOIN HARDWARE WALLET. The article makes a strong case for the need for secure crypto key storage growing at the same (or faster) rate as the value of your Bitcoin.

Of all the options available — software wallets, paper wallets, “brain wallets” — Bitcoin Magazine urges readers to choose a hardware wallet, for the following reasons:

1. Keep your crypto keys offline, protected from remote attacks because with hardware wallets your keys never leave the device. To move your bitcoin, you author a transaction using wallet software, send it to the hardware wallet, sign it on the hardware wallet itself using your private keys, and then send it back to the internet-connected wallet software for it to be broadcast to the bitcoin network.
2. Protect against physical attacks with hardware wallet security features such as a secure element, firmware verification, and PINs for first-layer defense.
3. Provide a smaller attack surface. Unlike laptops and desktops, hardware wallets are built with specialized hardware that simplifies their functionality to very specific tasks and limits their connectivity to the internet and other devices.
4. Prepare for increasing values. Even if you hold only a small amount of Bitcoin, history suggests you are better off treating your holdings as though they are worth 10x what they are today. Be prepared for upward price swings which tend to happen quickly — in these cases, already having your crypto in a hardware wallet is like having the proverbial bird in the hand.
5. Confirm addresses on-device. Because bitcoin transactions are irreversible, you need to be certain when sending that the bitcoin goes to the correct address. With hot wallets, malware could replace a real address with an attacker’s address in the UI, or swtich the receiving address in your computer’s clipboard. Hardware wallets have a physical screen that allows you to verify an address prior to sending bitcoin.
6. Generate your own entropy in an ideal environment. All hardware wallets depend on entropy — i.e. randomness — to generate seeds, and seeds are the “master secret” that generates your bitcoin private keys. Hardware wallets uniquely allow you to do so in a way that’s convenient and secure.
7. Travel more securely. Traveling with crypto keys on a laptop computer or mobile device is risky because these devices are usually hot (internet-connected), have more limited physical protections, and have larger attack surfaces.Hardware wallets offer convenience and security if you need to keep one or more bitcoin keys on your person while traveling.
8. Enhance the security of multisin set-ups. Requiring more than one key (multi-sig) to spend bitcoin adds security and redundancy to your wallet, making them useful for securing larger amounts of bitcoin.

So the experts at Bitcoin Magazine says, use a hardware wallet. But here’s the thing — these inarguably good reasons to take self-custody of your crypto have historically not been enough to overcome the historical fatal flaw of the hardware wallet category. This flaw is so bad, so fundamental, that most cryptocurrency investors do not hold their assets in a hardware wallet. This in turn causes most people thinking about investing, or just having recently invested, to conclude they, too, don’t really need a hardware wallet. After all, “hot wallets” (aka software wallets) are ubiquitous and easy to use, and there must be a good reason that so many people skip the step of owning a hardware wallet, right?

This problem that has haunted hardware wallets is one of design. As Steve Jobs once said, ”Most people make the mistake of thinking design is what it looks like. Design is not just what it looks like and feels like. Design is how it works.”

User experience in the hardware wallet category has been famously lacking. While the primary mission of the category is to protect crypto holders from hacks, scams and rugs, hardware wallets have failed to achieve mass adoption, i.e. they have been unable to overcome the inertia of their (lack of) design.

Now, if you’re an expert in the field of crypto, you probably have a hardware wallet, but if you’re the average crypto holder, you are likely taking your chances leaving your digital assets in a hot wallet online. It’s not even a matter of speculation but one of simple math, as the top two hardware wallet brands have sold about ~5 million units in a market of 250 million crypto holders.

But until the benefit of keeping your crypto on an exchange no longer outweighs the traditionally awkward and often anxiety-inducing user experience of using a hardware wallet, the average crypto holder is going to continue down the risky road of relying on custodial exchanges to safeguard their crypto. It’s a little bit like buying a Tesla Model X and then letting the car park attendant take it home on the promise he’ll take good care of it for you, just call him when you need it. Of course you’d never do that — but people take a similar risk when it comes to their crypto, leaving it in a hot wallet vulnerable to scams that get every more sophisticated and plentiful.

A hardware wallet that only experts can use defeats the entire point of crypto. What we need in this space are hardware wallets as simple and intuitive as hot wallets and exchanges; we need devices that can be used as easily and nearly thoughtlessly as our other secure devices, e.g. phones and laptops. What we need — what we’ve been needing for awhile now — is a hardware wallet like Hito, designed for the average person to self-custody their crypto in a device as easy to use as an iPod. The Hito wallet even looks like an iPod, with the same slim shape, two inch full color screen, and high quality tempered glass and metal construction.

With the Bitcoin halving just days away, with the historical lifts that follow the halving, more crypto holders than ever will be thinking about security for their assets. Will 2024 be the year of the UX breakthrough for hardware wallets? Will this be the year you HOLD your digital assets in a hardware wallet? What do YOU think?