Understanding hardware wallets
Bitcoin transactions are basically about the transfer of value tokens. But before a transaction can sail through, it must be verified as legitimate by the network.
The network will ask for a digital signature generated by a wallet associated with the address and then approve the transaction.
And so, besides storing your bitcoins, wallets also serve the purpose of providing digital signatures, in the sense that they hold your private keys.
There are four main types of wallets; web wallets, desktop wallets, mobile wallets, and the hardware wallets. But the difference between hardware wallets and the rest is that hardware wallets hold your private keys offline.
Hardware wallets give you total control of your bitcoins because nobody else can tamper with your bitcoin balance, and also you must physically sign any transaction coming out.
The beauty of hardware wallets is that they are immune to any kind of hack-job, simply because they don’t interact with software, which is where viruses lurk.
And so, hardware wallets allow you to have a safe bitcoin transaction using even a malware-ridden computer!
Previously, we reviewed KeepKey and saw that it was a great enough tool that you need. But what is the alternative to KeepKey?
For what Trezor lacks in terms of build design, it more than makes up with its security capacity and simplicity of use.
In this review, we are going to look at Trezor in a complete perspective, from which people invented the tool, to how to use it, and both its strengths and weak points.
Trezor is one of the three main items under the product-portfolio of a company named SatoshiLabs. The other two items are SlushPool and Coinmap.
SlushPool is a bitcoin mining pool, while coinmap is basically a map that pinpoints places around the world that accept bitcoins.
The founding members of SatoshiLabs have been involved in bitcoin since 2010, but they incorporated their company in 2013 and launched Trezor in 2014.
SatoshiLabs was created by a female, and two males: Alena Vranova, Marek Palatinus, and Pavol Rusnak, all of them citizens of Republic of Czech, where SatoshiLabs is based at.
Alena served as CEO of Trezor until January 2017, when she left the company. And at present, Marek is the CEO, while Pavol remains Chief Technology Officer like before.
Trezor is a hardware vault that provides maximum security for digital assets like bitcoins. It is also a transaction-signing tool that holds the private keys of a wallet offline.
Trezor is popular among bitcoin users for its convenience. There has never been a reported case of bitcoins stolen out of a Trezor vault. This has won the tool endorsement by both bitcoin enthusiasts and data security scientists.
In this age of advanced technology, security breaches could work from a higher point, and you’re never sure whether your shipped product was substituted, or even modified, or in a worst case scenario; had a “backdoor” inserted into its system.
My fears may seem unreasonable, paranoid even, but you have got to stick with the main players. In fact, if it were not for the delayed shipping one may experience by buying directly from Trezor, I wouldn’t even recommend Amazon as an alternative.
If you buy straight from Trezor, you’re gonna pay for it in cryptocurrency.
It costs $99
When you receive your box and tear it open, you’ll find the Trezor vault, a USB cable, a manual, and a plastic tag.
The Trezor vault is available in the market in three main colors: white, gray, black.
Like I earlier said, the design of Trezor is not as impressive as say, KeepKey, but still, its matte exterior and OLED screen earns it a small “wow”.
The device weighs around 13 grams; it’s so small you could enclose it inside your palm.
When you hold up the device, only two things stand out: the OLED screen and the two rectangular buttons, and at the base, there’s a USB port.
Trezor features an ARM Cortex M3 Processor.
If you went through high school and have the ability to follow instructions, installing Trezor is gonna be a walk in the park. I mean, it is so easy even your grandmother could nail it with her eyes half-shut.
When you first connect Trezor to your computer, you’ll be redirected to app store, from where you must download a Trezor-affiliated extension.
Next, you’ll enter your PIN, and through this step, key logging is rendered powerless because the PIN is only activated on your Trezor.
The ability to recover your wallet is one of the strong points of Trezor. During installation, you’ll jot down a 24-word seed on a special card and store it away; and this will help you regain possession of your digital assets in the event that you lose your Trezor.
Trezor, unlike KeepKey, uses a far complex method for seed generation. This guarantees double security for your device. And also, Trezor’s 24-word seed is far more secure than KeepKey’s 12-word seed.
After you have installed the device successfully, the OLED screen of your Trezor will display the main menu.
It is worth noting that Trezor will be as effective as the complementary software you use.
Wallets that sync with Trezor
Desktop wallets; Electrum, Multibit and Green Address
Android wallet; Green bits, and Mycelium
Web wallets; myTREZOR.com
What’s the target market?
Of course, Trezor should be bought by anyone who feels it is right to buy it.
But if you care to hear my opinion, Trezor would suit someone with a “loot” of bitcoins.
As you may know, the value of bitcoins is on the up and up, and at present, one bitcoin is worth over $1000.
This means that even two bitcoins may soon be worth a fortune!
In the near future, we are going to see a rise in bit-startups, i.e. businesses that offer bitcoin-related services or simply businesses that accept bitcoins. I think such businesses must use hardware wallets like Trezor to cold store their digital wealth.
Trezor also suits a trader that’s looking for profit in bitcoin exchanges like Coinbase. Once you buy bitcoins, transfer them into cold storage, and you could trade via myTREZOR.com with a hot wallet without compromising your vault security.
The makers of Trezor, SatoshiLabs, are planning to advance their technology, and specifically, they intend to scale Trezor into a digital vault that would be used to store even fiat currency!
This is a praiseworthy ambition, considering that they’d save you and me from the ruthless banks.
Another point of strength about Trezor is that it is customizable.
Trezor integrates very well with other apps, for instance, software wallets, and in this way, users have freedom of choice, at least when it comes to their wallet interface.
In the Trezor 2, which is still being developed, more advanced customization options will be made available.
In keeping with the bitcoin’s philosophy of “free love”, the makers of Trezor made its source code available.
This means that the tool can be reviewed by the developer’s community and improved where necessary.
This development is geared toward making available only the best version of Trezor.
The device utilizes modern cryptography, as understood by giants like Nick Szabo or “Satoshi Nakamoto”. Even if a hacker attempted to side-channel, still they’d be helpless against the device.
The issue about Trezor’s size in the context of security is a double-edged sword; on the one hand, its small size makes it an inconspicuous gadget, and thus a thief would easily miss it, and on the other hand, that size increases your probability to misplace it.
But the biggest security aspect of the Trezor comes down to private key generation. While most other hardware wallets utilize a standard random algorithm to generate private keys, Trezor uses multiple different sources, which render malware powerless against it.
Trezor allows you to sign every outbound transaction, which means there’s no transaction that’s ever going to induce an “Aha, I just got scammed out of my bitcoins!” reply. You’ll have total control of your digital wealth.
You’ve got to be careful when entering the PIN because the system is designed to have bigger delays after every login error attributable to incorrect PIN.
Like I earlier said, there is no recorded case of bitcoins having been stolen from Trezor or any other hardware wallet. However, some circumstances are beyond the beyonds, and they make for a real security gap.
Let’s look at some of the conditions in which Trezor may fail to protect you from losing your bitcoins.
- Malpractice leading to corrupted device
Supposing your device fell into the hands of some “bad guys” in the process of shipping, is there a limit to what they can do? Would they modify your device? What if a shipping company is in league with such “bad guys”? Obviously in this case you’d be at risk of losing.
- Faulty product
Have you ever ordered for a machine, and when it came, it couldn’t work as it was supposed to? Now what if the scale of error was minor, and that the machine worked just fine, except that it presented a security breach unbeknownst to you. Same could happen, you know.
- Address swaps
Malware could swap receiver’s address with its own, so that you sent bitcoins to the wrong address, effectively scamming you. This is why you need to pay one last look at the receiver address before you confirm transaction. Also, you may do well to label your addresses.
- Random number generator
It is hard to verify the “randomness” of the generator. Perhaps the generator follows a complex algorithm system to generate the numbers, which is not “random” at all, in which case, it could be compromised and bitcoins stolen.
- Bad integrations
Your support devices could be compromised and lead to the loss of your digital wealth.
I’d say that Trezor is not big a deal as KeepKey is, but still, it is a nice enough gadget that any bitcoin user should have. At $99, you get value for your every last coin.
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