> With an HD wallet you get a 24 word seed (see BIP39) and if anything ever happens to the wallet you just buy a new one and restore from the seed.
You can do exactly the same with paper wallets, for what it's worth. Think of the paper wallet as you hardware wallet's backup. Store it securely in 2 places and you're ok.
> If the wallet is stolen, damaged in a house fire, crushed by some accident etc. you're done.
This is incorrect. Hardware wallets typically come with a recovery seed. Even if the original device gets destroyed, the seed helps you to get access to your addresses/crypto. This covers against all of the scenarios you mentioned.
For example, I just updated the firmware on my device this afternoon. Before I did it, I'm double-prompted to make sure I have my recovery seed in case the update fails.
As for storing in a password manager, you certainly could. I used to print my wallets out back in the day. The hardware just makes the process a bit easier and makes mistakes on my part less likely.
A better way to store your coins is to to get a HD hardware wallet like the Ledger Nano S, or KeepKey. These paper wallets are too vulnerable to destruction. With an HD wallet you get a 24 word seed (see BIP39) and if anything ever happens to the wallet you just buy a new one and restore from the see. To protect your seed you can carve the words into a block of brass which has a high enough melting point that it should survive a house fire. You can use something like a Bantam Milling machine if you don't want to do it by hand.
For smaller amounts of money there is also OpenDime. They don't provide a back-up mechanism though so if the hardware goes your money is lost forever.
> Well the big difference is that keys can't be accessed in a hardware wallet.
In theory.
> If you accidentally plug in the USB drive into some untrusted box, you could potentially have everything stolen.
This is like saying that no one should own a gun because you might point it straight at your own head and pull the trigger.
> You still have this option with a hardware wallet. eg:
Yes, that is true, but a hardware wallet is an extra piece of hardware that needs to be actively used to provide HD wallet keys for transactions. If all a person wants to do is store BTC for the very long term, then this approach is more complicated and hazardous than storing a non-HD wallet key pair on some physical medium; this is because a hardware wallet failure can result in loss of the ability to sign transactions, and chances are you're storing the seed phrase separately. Again, just for long term storage, there's next to no advantage between storing a seed phrase for an HD wallet and storing private and public keys. Depending on what a person intends to do with their money, a hardware wallet may provide zero value over the least complicated approach. Unless someone is paranoid over other people or the government knowing their balance, a single public address is more straight forward than managing an HD wallet.
Your wallet can be reconstructed from that seed phrase. Writing it down and putting it somewhere safe is one way to back it up, securing your funds against drive failure.
Hardware wallets like a Ledger allow you only once, on initialization, to backup the initial random seed to paper in the form of 24 english words via the BIP39 standard.
You can use this seed by hand or on a duplicate device to deterministically recreate all keys be they webauthn, pgp, bitcoin, or otherwise.
>If you only have bitcoin on a single hardware wallet, then if that hardware wallet fails to work one day, then you're boned.
By "only have bitcoin on a single hardware wallet", I meant the case that the user did not back up their seed phrase (such as to a piece of paper). I was trying to hint that the best setup would be multiple paper wallet backups (or the seed phrase written onto multiple papers; I'm not sure it's useful to call that something other than a paper wallet) combined with a hardware wallet for actually making transactions.
No. Don’t use paper wallet. Use a standard software wallet and save the seed phrase words somewhere real safe. Paper wallets are too easy to mess up the change address for new users.
Not screwed, because a hw wallet can easily be backed up by writing down the 12/24-word seed in a safe/hidden spot.
Our discussion thread demonstrates that more education is needed around hardware wallets, as most people have no idea how they work or even that they exist.
Having a couple hardware wallets in different places + a paper backup split in a couple pieces gives you enough redundancy not to worry about this. Source: my own experience of close to 10 years now.
> One thing I really want to be able to do with a blockchain system is to put my wallet in cold storage—like, in a safe
AFAIK, you can generate a paper wallet with any blockchain system. You're keys are rendered as a QR code and/or series of words (there is a name for this protocol that hopefully someone else can remember!), and you can then print and store it.
Hardware wallets are also a thing for some systems, such as Bitcoin.
Hardware wallets use a seed to generate key pairs using a cryptographic random number generator. The seed is usually a sequence of words which you backup on a piece of paper.
If the hardware wallet is destroyed you can simply generate the keys again with either a new hardware wallet or a software one.
The title is crap and the comments point out the obvious solution of a paper wallet and a backup.
Personally I find all of this high-security hardware wallet stuff to mostly be marketing wank. A paper wallet is as safe as your normal wallet, which is usually "good enough".
Even if you're storing a ton of coins, you might be better off with a paper wallet in a safety deposit box, rather than risking issues remembering passwords, etc.
Physically stealing a hardware wallet is typically not usefull because they are PIN-protected. And you can back them up by writing the 12/24-word seed in a safe/hidden spot.
I don’t believe the marketing of hardware wallets, I held comfortably for nearly ten years with piece of papers, and even in my password manager for small sums. The probability of burglary x they find the paper x they know what it is order of magnitudes less than an entity you give them online disappearing with them. A seed is just a few words, no recourse if you lose them but not that complicated either.
You can do exactly the same with paper wallets, for what it's worth. Think of the paper wallet as you hardware wallet's backup. Store it securely in 2 places and you're ok.
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