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How to hack a hardware cryptocurrency wallet

How to hack a hardware cryptocurrency walletHardware wallets are considered to be the most secure type of cryptocurrency wallet. However, nothing is 100% secure, and they can be compromised just as well. At the 35th Chaos Communication Congress, security researchers Thomas Roth, Dmitry Nedospasov, and Josh Datko demonstrated several ways to do it. But before …

  • 10 Jan 2019
7 min read
How to hack a hardware cryptocurrency wallet
Hardware wallets are considered to be the most secure type of cryptocurrency wallet. However, nothing is 100% secure, and they can be compromised just as well. At the 35th Chaos Communication Congress, security researchers Thomas Roth, Dmitry Nedospasov, and Josh Datko demonstrated several ways to do it. But before we jump into hacking, a little background on what a hardware wallet actually is and how it works. What is a cryptocurrency wallet? First of all, let’s talk a bit about what a cryptocurrency wallet is in general. To put it simply, a wallet is a cryptocurrency account. The “account” consists of a pair of cryptographic keys, one public and one private. These two keys have some resemblance to login and password pairs: The public key is used as a wallet address, and the private key is used to access coins — that is, to sign outgoing transactions. Another thing worth mentioning is how multiple public–private key pairs are generated in cryptocurrency systems for multiple wallets belonging to the same person. It might be inconvenient to store several completely independently generated key pairs. So what cryptocurrency systems really do is generate just one big number called a cryptographic seed and derive multiple public–private key pairs from the seed in a predictable manner for multiple wallets. This one big number — the cryptographic seed — is what a user of a cryptocurrency system actually stores. Unlike traditional financial systems, cryptocurrencies usually have no centralized authority, no registration mechanisms, nothing like chargeback insurance, and no account recovery options. Anyone who owns the cryptographic seed and therefore the keys derived from it, owns the corresponding cryptocurrency wallets. And if the seed is stolen or lost, so are the coins in the wallets. By the way, formally a wallet is a pair of public–private keys. However, most of the time means of storing those keys are also referred to as wallets. If you put it this way, a hardware wallet is a device that stores cryptocurrency wallets. Easy, right? Why would anyone need a hardware cryptocurrency wallet? As you can imagine, it’s a good idea to keep this Very Important Seed as safe as possible. There are plenty of ways to store the seed, each with pros and cons. The most convenient method is storing the seed either in your computer or smartphone, or, even handier, online. However, malware hunting for cryptocurrency wallets is not uncommon at all. As for the online wallet services, they can be hacked and even go bankrupt, with large amounts of coins disappearing. On top of that, further problems plague wallets, including phishing, payment information spoofing, loss of wallets due to hardware failure, and so on and so forth — so much so that at some point people decided to solve the mess by making hardware cryptocurrency wallets, dedicated devices designed to store cryptographic seeds reliably and safely. How hardware cryptocurrency wallets work The main idea behind a hardware cryptocurrency wallet is to store the cryptographic seed in a manner
Source: Kaspersky Lab official blogPublished on 2019-01-10
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  • 10 Jan 2019

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