Hardware Wallets – An essential tool in crypto

With the advent of cryptocurrencies, many things changed. But one in particular has fundamentally changed the way humans hold assets – the ease of self-custody.

For the first time in history, you can hold all your assets yourself, in a very convenient way. However, this also posed problems. Being able to store one’s own wealth made these people targets of hackers, instead of the banks. A solution was needed, and several manufacturers delivered.

At this point in time, the history of hardware wallets is long. It’s important to recap what’s been happening, and discuss where we may be headed into the future.

The origins

The idea of what came to be the first Hardware Wallet emerged after a Bitcoin conference in 2011 between two known Bitcoin pioneers: Stick (Pavol Rusnák) and Slush (Marek Palatinus). While building a single-purpose device to store their coins, they realised that they were actually filling a void in the market. This led to them commercialising the device in 2013, and effectively being the first ones on the market with the hardware wallet offering.

How the story evolved…

It wasn’t long until competition flooded the market, with KeepKey releasing their solution.

Several other smaller scale manufacturers released their own device. But at this point it was time for some innovation – by letting go of cables. CoolWallet was then amongst the first to release a hardware wallet syncing via wireless technologies. This innovation was controversial from the start. People assumed it’d be possible to probe for sensitive information, something that was debunked as time went by.

After these, it was time for a company that became one of the big players to come into market – Ledger. They’ve released their own device, bringing a few innovations, such as support for storing SSH keys, supporting other coins beyond Bitcoin, as well as eventually releasing a device with Bluetooth support as well.

As new wallets were developed, software was updated to support these, especially from the major brands. Renowned software wallets like Electrum and Metamask became popular ways to interface with hardware wallets.

Heavy competition from Ledger also led Trezor to improve their own wallets, with the original Model One receiving support for different coins, and new models being released since its inception to rival Ledger’s features.

Growing pains

With hardware wallets being devices that are primarily security focused, they were the target of scrutiny. Trezor’s software was never of big concern due to its open source nature, but its hardware was, with their wallets being the target of exploits. There are known flaws in both Trezor Model One (the original one) and Model T devices. However, these are not trivial to execute and require physical access to the devices.

Ledger was always targeted for being a closed source wallet. This has changed in recent years, but is still a tension point for some in the community. More recently, in 2023, Ledger fueled further controversy on their wallets by offering a seed recovery service. This has generated a considerable backlash from the community as a whole, who questioned how a hardware wallet company capable of launching a service that would essentially put one’s keys online, countering the advantages of actually owning their wallets. This has taken many to boycotting Ledger devices and moving their funds elsewhere.

The future of wallets

So where do we go from here?

Manufacturers have realised that to bring self-custody to the next big wave of crypto users, it has to be made as simple as possible. From this need, seedless wallets were born. Cypherock was amongst the first to bring a seedless solution based off of cards between which the keys are split. Manufacturers such as Tangem take this a step further, developing cards that interact with an app on your phone to confirm transactions, with an extra layer of security consisting of biometric verification to sign one’s transactions. Apps like these allow people to manage several assets on different networks, all while being online and enjoying the security of having their keys stored offline, on the companion cards.

In addition to all this, Trezor just released a new product last week, further refining their well known design and bringing quality of life improvements that’ll certainly please newcomers.

Key takeaways

Whether you prefer wired or wireless devices, you need support for multiple assets or just one, there are already very good options for you to being your self-custody journey, both from renowned brands and newcomers. And while you can’t go wrong with traditional wired Trezor or Ledger wallets, we see many advantages in embracing the future of seedless wallets and going all out on this new tech!Regardless of your choice, the important thing is that you choose something – and journey towards self-custody and self-sovereignty, two values we value highly at AmaZix! These are values that we feel are important and that we pass on to the communities we manage. If you align with our ethos, perhaps we can assist you and your communities! Click here and reach out to us to know more.