Cryptocurrency Hardware Wallets: Exploring Security

Cryptocurrency Hardware Wallets: Exploring Security – We’ll illustrate using our ZERO hardware wallet as an example, the world’s most secure solution for storing your crypto.

Learning about crypto often starts with the what and why questions – ‘What is a cryptocurrency hardware wallet?’ and ‘Why do I need one?’ – before moving on to the how. ‘How does a cryptocurrency hardware wallet work?’

Cryptocurrency Hardware Wallets: Exploring Security

To answer that question, you need to appreciate the difficulty of meeting conflicting usage needs. Consumers want total offline security, but with transaction efficiency. To explain how that’s possible, we’ll take you under the ZERO hood and explain our unique methodology for reducing risk.

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To spend funds with a cryptocurrency address you need to connect to the blockchain – via the internet – and provide two signatures unique to that address. The public key only specifies its location (address) and the private key, which enables any crypto associated with that address to actually be spent.

As the name suggests, the public key is meant to be shared, while the private key – like a password – should be kept for your eyes only and protected at all costs.

This is where the name crypto-currency comes from; Money is protected by cryptography. The math allows crypto to function as decentralized money, free from central authority – with all the problems associated with that. But being ultimately responsible for your money via private keys presents a paradox.

The cryptography used to generate private keys is mathematically almost impossible to crack, but if they are stolen or lost, there is no way back. So any storage device must be designed to maintain the zero sum nature of private key ownership; But that’s not all, because users want their crypto cake and eat it too.

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Like any other money, holders of crypto want to exchange it, so different crypto wallet solutions have emerged, trying to balance these conflicting needs.

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Crypto hardware wallets are a preferred choice solution for offline security. They are small purpose-built pieces of computer hardware – comparable to flash drives – with an operating system that can generate and manage private keys offline. Cold storage – the industry term for keeping keys offline – is the most effective form of security.

The challenge facing hardware wallet manufacturers is to provide cold storage and ease of transactions. This means hardware wallets ship with companion software that runs on a laptop or mobile phone and provides a bridge between online blockchain and offline storage; The challenge is to minimize the potential security blindspot of opening transactions.

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Finally, given the zero-sum nature of private keys and the potential for hardware, software, or human error, you need an analog fail-safe in case any or all of them are lost, stolen, or irretrievably damaged.

Crypto hardware wallets are sometimes called Hierarchical Deterministic (abbreviated HD). They combine the private keys for all addresses into a manageable piece of information, 12-24 phrases (often described as mnemonics) generated during device setup and called a seed.

A hardware wallet provides a seed recovery path if the device is lost, stolen or damaged. The challenge is to provide a practical and safe way for the consumer to take ultimate responsibility for their seed. And a way for those who want to inherit the seed to retrieve it if the user isn’t around.

Using our backgrounds in computer science, cryptography, and personal (painful) experience of crypto hacks, three years of conducting ‘what if’ methodology, applying visible, mutually exclusive requirements. By eliminating the risks, we eventually arrived at a completely new approach to crypto cold storage consisting of three components:

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The microchip in the ZERO hardware wallet generates a seed during the device setup process, which is only required if the user loses access to the device. But what if the seed is truly random? It affects its security.

The chip used by the wallet must be certified for TRNG (True Random Number Generation). It uses one of the strongest TRNG certified key generator chips available, which is also CC EAL5+ certified – EAL is the evaluation assurance level, a scale running from 1-7).

It puts it at par with or better than the competition or any government or bank expansion. This is a powerful process that allows a completely random secret key to be generated arbitrarily.

But what if the device is tampered with before delivery in a way that disables or compromises the TRNG process?

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The standard solution to this is to use a tamper-evident seal on the packaging, which provides visual assurance that the package has arrived uncontaminated, but does not consider the deeper levels of potential compromise. The device takes a three-tiered approach to tampering risk.

ZERO uses a robust metal outer device casing, tightly sealed to a tamper-proof screen. Each of the internal components such as the secure element, microcontroller unit and firmware also have their own tamper-proof features.

Anti-tamper measures must also account for non-physical, side-channel attacks. ’s metal casing protects against radio frequencies, otherwise an attacker could pin it down, reducing the range of potential private keys.

At the second level, ZERO tamper is obvious, so in the event that someone successfully opens the device, it is obvious to the end user because:

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Tamper evidence is also included in the setup process through “cryptographic verification”, a challenge sent by ‘servers’ that requires a unique secret key response that proves it’s authentic.

The third level – Tamper Responsive – ensures that if someone tries to open the device, or tamper with it, the device responds by wiping itself.

We can’t share exactly how we achieve this – or we’ll have to kill you. We’re kidding, but some security features are intentionally kept secret to make hackers’ jobs easier.

In our desire to make the device as resistant as possible to any tampering, we have developed a unique way to make key generation more random and secure by involving you, the user, in the process.

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It combines user interaction from your fingerprint – and input from your environment – during key generation (via an in-built light sensor) to generate what’s called genuine entropy (randomness). This approach works better than conscious user inputs; No offense, but people can guess implicitly.

Those inputs act as a salt to make the generated key truly personal to the user and random enough to be collision resistant.

It doesn’t mean it has a built-in airbag, it just means the chances of two individual keys being the same is 2256, which is equal to the total number of atoms in the universe.

Brute-forcing a key is statistically nearly impossible with currently available computational methods. This is also the strength of SHA256 – the cryptographic algorithm used to generate Bitcoin’s private keys.

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Including these inputs in the key generation process provided after the device leaves the factory can assure the user that only they know it. This is called User’s Eyes Only Principle.

One of the biggest points of potential vulnerability is when a device receives firmware updates, which require a stream of data from the Internet. This is inevitable given the need for improvement and patching, and is the only case where ZERO requires a USB connection, but managed in a way that minimizes risk.

To receive new firmware, ZERO boots into a separate, empty partition, exclusively for the purpose of receiving the update, which is cryptographically signed by secret keys.

It also invokes Integrity Verifier, a trademarked technology (ARM®TrustZone®) that checks that the software stack side of the platform is free from unintended changes during the update process and that extraneous tasks are not running.

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So the new firmware is verified and received alone. That partition provides complete separation between the update process and any software running the device.

Integrity Verifier also runs at every boot to continuously verify that only original software is running, without unauthorized modifications, ensuring authenticity and integrity.

To prevent the possibility of malicious firmware being attached directly to the chip – aka flashing – any debugger access is disabled. Even if the chip is exposed, there will be no way to modify the currently loaded firmware, as we repeated the ‘what if’ process and addressed the possibility of modifying the bootloader responsible for firmware verification.

Using basic hardware and firmware authentication protections provided by the Micro Processing Unit (MPU) TrustZone® module, its contents are encrypted and the corresponding part of the chip is locked from write access.

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Any attempt to access the chip in any other way will trigger it

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