WEBVTT - Automatic transcript; recognition may contain errors. Reviewed for technical wording and speaker labels. Times match the published episode. 00:00:09.010 --> 00:00:14.670 Live from Mexico, this is the Van Wirdum Sjorsnado. I'm doing another episode 00:00:14.670 --> 00:00:20.430 without Sjors. Sjors will be back soon. But today I am joined by Lawrence Nahum 00:00:20.430 --> 00:00:25.810 and Ben Kaufman. We ran into each other here. And Lawrence told me, Lawrence is 00:00:25.810 --> 00:00:30.590 working on a new, well, you're working on a hardware wallet. And I figured, you 00:00:30.590 --> 00:00:34.290 know what, I've actually never... Sjors and I have never done an episode on 00:00:34.290 --> 00:00:38.410 hardware wallets, so maybe this is a good opportunity to just keep it going. And 00:00:38.410 --> 00:00:43.190 the other reason it's... Well, first, okay, let's... Lawrence, introduce 00:00:43.190 --> 00:00:44.870 yourself, please. Let's start there. 00:00:45.250 --> 00:00:50.960 All right, Lawrence Nahum, [unclear] Blockstream. I worked 00:00:50.960 --> 00:00:55.420 on various software wallets and now Jade hardware wallet. 00:00:55.560 --> 00:00:59.500 Yeah, the Blockstream Green wallet. That was your main project before this. 00:00:59.780 --> 00:00:59.860 Yeah. 00:01:00.100 --> 00:01:03.700 And now you're working on the Jade hardware wallet, also a Blockstream product. 00:01:04.240 --> 00:01:04.740 Yeah. 00:01:05.950 --> 00:01:06.270 Ben? 00:01:06.850 --> 00:01:09.990 Yeah, I'm Ben Kaufman. I'm working on Spectre wallet. 00:01:11.270 --> 00:01:17.010 Yeah, it's a way to use your Bitcoin Core node with hardware wallets, 00:01:17.190 --> 00:01:18.050 basically all of them. 00:01:19.930 --> 00:01:24.910 Yeah, so I wanted to do an episode on hardware wallets and I've never really, 00:01:25.070 --> 00:01:29.150 personally, I've never really written extensively about hardware wallets, like 00:01:29.150 --> 00:01:32.330 the trade-offs there are. And there is some, you know, debate and discussion on 00:01:32.330 --> 00:01:36.270 what are, you know, the best hardware wallets or what are the best trade-offs to 00:01:36.270 --> 00:01:41.450 make. And so I figured if I'm going to do this episode with a developer of one 00:01:41.450 --> 00:01:46.090 hardware wallet, I kind of want to have a neutral expert sitting next to me to 00:01:46.090 --> 00:01:50.110 kind of tell me, if Lawrence, if you're overselling everything like you always 00:01:50.110 --> 00:01:51.270 do. Everyone knows that you… 00:01:52.510 --> 00:01:58.240 so yeah, Ben is going to be my sort of sidekick expert today. So, yeah, I'll have 00:01:58.240 --> 00:02:02.180 questions for you here and there. If I don't understand something or if Lawrence 00:02:02.180 --> 00:02:04.060 is, you know, overselling it. 00:02:04.060 --> 00:02:06.240 I'll be watching him. 00:02:06.380 --> 00:02:11.360 And it's really cool to have you on as well, Lawrence, because when Sjors and I 00:02:11.360 --> 00:02:15.200 started our podcast, so you also do the Reckless Review podcast, right? 00:02:15.380 --> 00:02:15.800 Yes, we do. 00:02:15.980 --> 00:02:20.640 So when Sjors and I, when we started our podcast, we were sort of making 00:02:20.640 --> 00:02:25.540 benchmarks for ourselves, but we didn't want to disappoint ourselves. So we 00:02:25.540 --> 00:02:31.160 figured, Alright, our podcast needs to be at least as good as Reckless Review. So 00:02:31.160 --> 00:02:35.280 we set it like the lowest bar possible. So there's no way we could fail. 00:02:37.000 --> 00:02:42.580 So it's great you're on as well. Alright, let's start with a very 00:02:42.580 --> 00:02:48.250 basic question. Because what is a hardware wallet? Why do people use 00:02:48.250 --> 00:02:50.390 hardware wallets or what are they for? 00:02:51.500 --> 00:02:52.220 I'll start. 00:02:54.220 --> 00:02:58.280 And maybe before I say what a hardware wallet is, I'll say what a wallet is. A 00:02:58.280 --> 00:03:04.110 wallet is just some piece of software that holds your private keys 00:03:04.110 --> 00:03:09.310 and together with those, it signs your transactions and maybe generates addresses 00:03:09.310 --> 00:03:14.870 and so on. So a hardware wallet, it's just like a software wallet, but it has a 00:03:14.870 --> 00:03:18.970 much smaller surface of attack. So it's a device that is dedicated to one thing. 00:03:19.110 --> 00:03:22.550 So unlike your mobile, where you can, you know, read the news, download video 00:03:22.550 --> 00:03:28.130 games, watch movies and so on, a hardware wallet does just one thing. And that's, 00:03:28.130 --> 00:03:33.910 you know, signing transactions, showing addresses and so on. And yeah. 00:03:34.480 --> 00:03:38.980 I think one big benefit, but correct me if I'm wrong, that goes for both of you, 00:03:39.500 --> 00:03:43.780 is that a hardware wallet isn't connected to the internet and therefore it can be 00:03:43.780 --> 00:03:47.880 hacked by outside parties in that way at least. Would you agree that's a main 00:03:47.880 --> 00:03:48.560 benefit or no? 00:03:48.860 --> 00:03:52.420 I don't agree in the sense that ultimately your laptop is connected to the 00:03:52.420 --> 00:03:54.820 internet and your hardware wallet is connected to your laptop. 00:03:55.130 --> 00:03:59.630 Right, at some point your hardware will just hit the internet indirectly. 00:04:00.070 --> 00:04:03.710 At least that's the most common case. I mean, some people use offline laptops and 00:04:03.710 --> 00:04:09.250 so on, and you can definitely do that, but there's some work involved. And, well, 00:04:09.570 --> 00:04:13.390 sometimes, you know, some devices use cable, some devices support cable as well 00:04:13.390 --> 00:04:19.330 as Bluetooth. Some devices support SD cards, and some devices maybe use 00:04:19.330 --> 00:04:24.720 QR code. But even those are still, like, a way to... To get, say, 00:04:25.260 --> 00:04:28.760 potentially code on those devices and maybe attack them. 00:04:29.260 --> 00:04:34.840 So if the main benefit is that it's a single-purpose computer, that's how you 00:04:34.840 --> 00:04:38.260 explain it, I think, right? If I summarize it in like one sentence, it's a 00:04:38.260 --> 00:04:42.360 one-purpose computer, why is that actually a good thing? Then why is that a 00:04:42.360 --> 00:04:44.420 benefit? Why is that something people want? 00:04:44.620 --> 00:04:49.980 It's because it's not just a single-purpose computer. It's a small 00:04:49.980 --> 00:04:54.880 single-purpose computer that has been hardened to 00:04:54.880 --> 00:04:56.040 minimize... 00:04:57.260 --> 00:05:02.160 You know, what you can do with it, and thus there's less surface of attack. So 00:05:02.160 --> 00:05:05.100 the more software, the more bugs, the more bugs, the more security issues. 00:05:05.860 --> 00:05:10.440 Because it's single purpose, it has less code, less software, and so less... 00:05:11.880 --> 00:05:16.780 There's bugs, but also depending on the manufacturer it may have some different 00:05:16.780 --> 00:05:20.760 kind of hardening. So maybe we'll get into that a little bit later. 00:05:20.860 --> 00:05:25.020 Yeah, we'll get into that in a bit first. Ben, do you agree with this? Is this 00:05:25.020 --> 00:05:26.200 the main benefit of hardware wallets? 00:05:26.540 --> 00:05:32.000 I would say so. I think not being connected to the internet is just one part of 00:05:32.000 --> 00:05:37.360 this, reducing the attack surface. So it's a very important one. 00:05:37.690 --> 00:05:42.530 But there is a lot more into it so it's not just not connected to the internet. 00:05:42.530 --> 00:05:48.370 It's also that it's very much minimized, like everything that 00:05:48.370 --> 00:05:51.950 you don't really need, it's just not there anymore. 00:05:51.950 --> 00:05:53.070 Yeah. 00:05:53.520 --> 00:05:59.510 So there's just less risk if there's less stuff, right? 00:05:59.990 --> 00:06:05.870 So let's get into some hardware wallets. We'll get into the Jade wallet in a 00:06:05.870 --> 00:06:11.110 bit, but let's discuss some of the trade-offs that hardware wallets have made 00:06:11.110 --> 00:06:15.130 over the years, because there are different designs of hardware wallets. The 00:06:15.130 --> 00:06:16.910 first hardware wallet was Trezor. 00:06:18.780 --> 00:06:23.560 So how does Trezor, for example, work? Why is that secure or why is that not 00:06:23.560 --> 00:06:24.800 secure? Maybe that's your opinion. 00:06:26.890 --> 00:06:32.670 Yeah, so Trezor is a USB device. There's two, I think, now. 00:06:33.470 --> 00:06:39.310 Trezor-T and Trezor-1. But basically, it's a small computer, a small device. I 00:06:39.310 --> 00:06:45.130 think it has a chip called the ST32 from ST Electronics. I think it's a French company. 00:06:46.980 --> 00:06:50.980 And yeah, they designed some firmware in C. 00:06:53.320 --> 00:06:57.200 You know, that drives the display and listens to button events. 00:06:57.420 --> 00:07:00.360 Maybe in case someone doesn't know, what is firmware? 00:07:00.800 --> 00:07:02.360 Firmware is software for hardware. 00:07:02.680 --> 00:07:05.880 Yeah, it's software specifically designed for a piece of hardware. 00:07:06.220 --> 00:07:11.840 Yes, and usually, maybe I'm wrong, but I think usually it goes without operating 00:07:11.840 --> 00:07:17.640 system and it's like bare bone to the iron, to the hardware, to the metal. 00:07:18.220 --> 00:07:18.620 Right. 00:07:18.880 --> 00:07:19.300 Yes. 00:07:21.470 --> 00:07:24.330 Not in all other wallets, but yes, most of them. 00:07:26.110 --> 00:07:30.530 Right, so Trezor is a piece of hardware, which is a piece of firmware, and that 00:07:30.530 --> 00:07:34.990 firmware secures your private keys and can be used to sign transactions. 00:07:36.180 --> 00:07:38.520 Usually through another wallet, like Spectre for example. 00:07:39.100 --> 00:07:40.600 Green supports Trezor too. 00:07:40.740 --> 00:07:44.640 Right, and then you broadcast that to the Bitcoin network. That's how it works. 00:07:44.760 --> 00:07:50.360 So the main purpose is that it secures your keys in that sense. Now I think one 00:07:50.360 --> 00:07:56.360 of the... trade-offs of Trezor. So it's usually secure 00:07:56.360 --> 00:08:01.760 in that sense until someone gets a hold of your actual Trezor. 00:08:03.120 --> 00:08:07.100 Is that sort of one of the trade-offs or one of the problems there? 00:08:07.240 --> 00:08:12.280 Not necessarily. So Trezor is open source, the firmware is open source. I think 00:08:12.280 --> 00:08:15.440 the hardware is also open source or at least used to be. 00:08:15.520 --> 00:08:16.940 From what I know it's open source. 00:08:20.530 --> 00:08:26.190 And yeah, it has some, it tries to, you know, prevent extraction of keys 00:08:26.190 --> 00:08:31.510 and, you know, unless you know the PIN or the passphrase, it prevents you from 00:08:31.510 --> 00:08:32.050 using it. 00:08:33.590 --> 00:08:37.490 But basically unless you use a passphrase, it doesn't have physical security. 00:08:38.710 --> 00:08:44.370 Because a number of independent companies or people manage to extract 00:08:44.370 --> 00:08:47.250 the secret, the private keys, the seed, the mnemonic. 00:08:47.450 --> 00:08:51.630 Yeah, physical security is what I refer to, like if you actually get the device 00:08:51.630 --> 00:08:52.430 in your hands. 00:08:52.710 --> 00:08:57.870 Unless it has a strong passphrase, in which case you can't. You can extract the 00:08:57.870 --> 00:09:01.990 mnemonic, but then without the passphrase, you cannot get the keys. 00:09:02.210 --> 00:09:07.900 Yeah, let's separate that out real quick. So there's PIN. Every hardware wallet 00:09:07.900 --> 00:09:12.180 usually has a PIN code. You just need to put the PIN in. Yeah, um… 00:09:13.460 --> 00:09:17.760 but, and then there's the private keys to you know, so you need a PIN to unlock 00:09:17.760 --> 00:09:22.520 the private keys basically, but if you get it back Sorry, and then there's the 00:09:22.520 --> 00:09:27.180 passphrase which you mentioned. Yeah, so if you use a passphrase which is just a 00:09:27.180 --> 00:09:29.620 password or just a long version of a password. 00:09:29.620 --> 00:09:33.080 It needs to be strong; if it's like in a dictionary, then it's trivial to brute force. 00:09:33.080 --> 00:09:38.480 Yeah, so if, if you have a Trezor and someone uses it with a passphrase then it's 00:09:39.000 --> 00:09:44.020 as secure as the passphrase at least. The problem is sort of that the PIN doesn't 00:09:44.020 --> 00:09:48.020 provide the security in case of a physical attack. Am I saying this right? 00:09:48.240 --> 00:09:48.580 Yes. 00:09:48.900 --> 00:09:53.790 Yeah. And so how would this physical attack, like, how does it work? Or is that 00:09:53.790 --> 00:09:54.250 even known? 00:09:55.550 --> 00:10:01.360 Basically, you open the case of the Trezor and you, 00:10:01.780 --> 00:10:05.600 in [unclear], it's called the glitch. You glitch it. There's various kind of 00:10:05.600 --> 00:10:07.700 glitches. Power glitches is one. 00:10:09.320 --> 00:10:14.200 I'm not, you know, an expert in the sense that I've never glitched hardware or 00:10:14.200 --> 00:10:19.300 never done this. But basically, yeah, you... I also heard that sometimes they use 00:10:19.300 --> 00:10:22.120 laser to glitch Trezor. 00:10:23.780 --> 00:10:29.540 And by glitching it, you basically change the instructions. 00:10:30.700 --> 00:10:36.420 And if you time it right, it works really well and you can 00:10:36.420 --> 00:10:38.100 bypass the PIN protection, for example. 00:10:38.320 --> 00:10:38.700 Right. 00:10:38.920 --> 00:10:40.380 And you can extract the [unclear]. 00:10:40.560 --> 00:10:45.960 Right. So that's the main downside of Trezor. The main upside, I think, and you 00:10:45.960 --> 00:10:49.920 did mention this, but I want to make this more clear, is that it's completely 00:10:49.920 --> 00:10:54.360 open source. So we know exactly what the device is doing, what the firmware is 00:10:54.360 --> 00:10:56.260 doing, how it all works. Is that right? 00:10:56.500 --> 00:10:56.780 Yes. 00:10:57.520 --> 00:11:02.680 Right. And then, okay, so that's Trezor. And that's sort of, I think, and that's 00:11:02.680 --> 00:11:06.540 why, that's one of the reasons I mentioned Trezor as first. I think that's sort 00:11:06.540 --> 00:11:11.600 of on one end of that spectrum, of the sort of security trade-off spectrum, is 00:11:11.600 --> 00:11:15.660 that it's all open source, you know exactly what it's doing, but if someone gets 00:11:15.660 --> 00:11:20.840 their hand on the actual device and didn't use a strong passphrase, then it can 00:11:20.840 --> 00:11:24.960 be extracted in the way you just explained. So that's sort of one end of the 00:11:24.960 --> 00:11:29.140 spectrum. As I understand it, on the other end of the spectrum, there's something 00:11:29.140 --> 00:11:32.500 like Ledger, which uses a secure chip, I believe. 00:11:32.660 --> 00:11:33.260 A secure element. 00:11:33.620 --> 00:11:35.140 Yeah, so how does this work? 00:11:35.600 --> 00:11:41.100 Well, it's a chip that has extra protection both in terms of glitching 00:11:41.100 --> 00:11:44.960 and in terms of... 00:11:48.090 --> 00:11:53.890 All sorts of known attacks, basically. Whatever it's decapping the 00:11:53.890 --> 00:11:58.770 chip, whatever it's glitching it, whatever it's tampering it with temperature or 00:11:58.770 --> 00:11:59.910 whatever you can do. 00:12:00.210 --> 00:12:04.090 Maybe I should first ask, and maybe you were answering that question, but just to 00:12:04.090 --> 00:12:08.410 make the question very clear then, what is a secure element? Why is it secure? 00:12:08.510 --> 00:12:09.870 Why is it even called that? What is it? 00:12:10.050 --> 00:12:15.820 It's a chip, like the same that Trezor uses, but it has extra protection. So Ben 00:12:15.820 --> 00:12:20.360 was talking about decapping or uncapping. That's the process of removing layer by 00:12:20.360 --> 00:12:25.180 layer the material until you can actually see the 00:12:25.630 --> 00:12:31.530 secrets of the of the chip and secure elements tend to 00:12:31.530 --> 00:12:37.110 have extra protection against that so that basically it's very hard to use like 00:12:37.110 --> 00:12:42.880 an electronic microscope to read into the chip. say the flash to extract the key 00:12:42.880 --> 00:12:46.920 or whatever. I think I'm not, you know, again, an expert on this, but I believe 00:12:46.920 --> 00:12:52.300 it has like a little, like an electrical net that will destroy as soon as you, it 00:12:52.300 --> 00:12:55.000 will prevent you from reading. And if you try to move it, it will destroy the 00:12:55.000 --> 00:12:56.460 circuit, something like that. 00:12:56.520 --> 00:12:58.600 Right. It's essentially a tamper-proof chip. 00:12:58.960 --> 00:13:03.480 But then, but then, but then it comes; usually those chips come with NDAs or in 00:13:03.480 --> 00:13:08.640 any in any capacity it's um like the tool chain often it's not uh available to 00:13:08.640 --> 00:13:12.580 third parties unless they sign the NDA or it's not open source and so on. That's 00:13:12.580 --> 00:13:13.640 usually the downside. 00:13:13.640 --> 00:13:18.600 Yeah, so that's it. That's a trade-off there. So the benefit is because of this 00:13:18.600 --> 00:13:23.320 secure element this physical physical attack cannot be done. 00:13:23.320 --> 00:13:29.300 They can. It's a matter of price. So, maybe with Trezor, I heard that 00:13:29.300 --> 00:13:33.060 you can get equipment for, say, $200 to extract the key. 00:13:34.260 --> 00:13:36.160 And is that software? 00:13:36.840 --> 00:13:37.400 It's hardware. 00:13:37.540 --> 00:13:41.140 Some hardware tools, yes, but it's very cheap. 00:13:42.100 --> 00:13:45.260 It used to be more expensive, but basically it's some hardware that allows you to 00:13:45.260 --> 00:13:50.320 glitch it at the right time so that some instructions get executed or don't get executed. 00:13:50.380 --> 00:13:54.260 And that kind of hardware does not exist for the secure elements or it exists, 00:13:54.440 --> 00:13:55.840 but it's just way more expensive. 00:13:56.020 --> 00:14:01.860 Basically, I don't, I mean, it exists. It's way more expensive to extract 00:14:01.860 --> 00:14:03.440 because you're going to have far more failures. 00:14:04.960 --> 00:14:09.380 And, you know, maybe we're talking about $200 for Trezor, maybe we're talking 00:14:09.380 --> 00:14:12.860 about $200,000 for Ledger, or maybe even $2 million for Ledger. 00:14:13.320 --> 00:14:17.760 And even then, it's much less guaranteed that you will manage to do that. It's 00:14:17.760 --> 00:14:19.980 way more risky because it's temper-proof. 00:14:20.200 --> 00:14:23.380 Yeah, because the thing is, you don't care about, like, sometimes you care about 00:14:23.380 --> 00:14:27.260 extracting something from... these secured element chips and if you burn one you 00:14:27.260 --> 00:14:31.560 don't care because you can you know buy more and try until you succeed um but in 00:14:31.560 --> 00:14:35.520 case of a Bitcoin wallet you do care about succeeding on that specific wallet 00:14:35.520 --> 00:14:38.540 that has the coins; otherwise you know you don't really care about breaking an 00:14:38.540 --> 00:14:39.020 empty wallet. 00:14:39.020 --> 00:14:44.710 Right. So, because of the secure element it's much more expensive 00:14:44.710 --> 00:14:46.310 to extract the mnemonic. 00:14:47.550 --> 00:14:49.290 That's always the word I'm struggling with. 00:14:49.470 --> 00:14:49.710 Mnemonic. 00:14:49.870 --> 00:14:55.150 Thank you, Lawrence. That's much, yeah, or the private keys, basically. So that's 00:14:55.150 --> 00:15:01.130 much harder to extract. The trade-off is that you don't know 00:15:01.130 --> 00:15:04.050 exactly what the chip is doing. Is that it? 00:15:04.910 --> 00:15:06.270 That's part of it, I would say. 00:15:06.690 --> 00:15:08.970 But even with the other chip, like ST32. 00:15:10.230 --> 00:15:12.130 I mean, it's not open source. 00:15:12.270 --> 00:15:16.490 The chip itself, I mean, the chip of all the hardware wallets out there [unclear] 00:15:16.490 --> 00:15:21.050 open source. I think Trezor is working on an open source chip. In fact, maybe an 00:15:21.050 --> 00:15:26.200 open source secure element. But basically all the chips out there are currently 00:15:26.200 --> 00:15:30.820 not open source. The spec may be open and the toolchain may be open, but not 00:15:30.820 --> 00:15:34.840 always. Like for secure element, it tends to be closed and it tends to be covered 00:15:34.840 --> 00:15:35.280 by NDA. 00:15:36.500 --> 00:15:39.700 Okay, so what is the problem with that then exactly, in your own words? 00:15:41.770 --> 00:15:43.550 If there is a problem with it. 00:15:44.030 --> 00:15:48.670 For example, with Trezor, there's a few clones and if someone has 00:15:48.670 --> 00:15:54.550 somewhat basic electronic skills, they can build one 00:15:54.550 --> 00:15:58.820 themselves and flash the firmware themselves and whatnot. 00:15:59.240 --> 00:16:04.880 You mean if someone else wants to sell hardware wallets, it's very easy for them 00:16:04.880 --> 00:16:10.660 to take Trezor's firmware, their work, and sell hardware walls themselves? Is 00:16:10.660 --> 00:16:11.240 that what you're saying? 00:16:11.520 --> 00:16:16.560 Yeah, there's plenty of Trezor clones, and even COLDCARD uses a 00:16:16.560 --> 00:16:21.800 firmware that originates from Trezor in terms of... You know they 00:16:21.800 --> 00:16:24.160 forked it from Trezor early on and then they moved on. 00:16:24.160 --> 00:16:28.640 Right, but I'm interested in what are the problems for users? Why is it for a 00:16:28.640 --> 00:16:33.020 user for me if I want to secure my private keys why is it the problem for me to 00:16:33.020 --> 00:16:35.940 use a secure element or is it not a problem for me to use that? 00:16:36.750 --> 00:16:41.810 I would say it's mostly that they are covered by NDAs usually and they're closed 00:16:41.810 --> 00:16:47.690 source mostly which adds to you know it adds to the obscurity and risk 00:16:47.690 --> 00:16:53.530 in terms of you are not necessarily knows what the stuff is doing so sometimes 00:16:53.530 --> 00:16:59.030 it can be with the chips too and like normal but this basically just adds another 00:16:59.030 --> 00:17:03.230 layer where you don't know what things are what's going on. 00:17:03.230 --> 00:17:06.820 So what's the worst that's could be going on then, too? 00:17:07.200 --> 00:17:11.040 Well, so, for example, each other wallet has a random number generator, and 00:17:11.040 --> 00:17:16.500 maybe the keys generated are all known by Ledger. Now, 00:17:16.740 --> 00:17:21.380 it's also possible with Trezor, to be honest, because the chip used by... 00:17:22.460 --> 00:17:26.660 But Trezor could do that. So it could be hidden in hardware. But my point 00:17:26.660 --> 00:17:30.860 previously was like, if I wanted to, and forget about commercializing, I could 00:17:30.860 --> 00:17:35.740 build a Trezor from scratch and flash it and use it. At Ledger, I simply couldn't. 00:17:37.230 --> 00:17:40.590 Yeah, right, but that's the commercial argument. I'm still interested in it. 00:17:40.830 --> 00:17:42.910 No, it's even for build it like a DIY. 00:17:44.510 --> 00:17:47.610 Oh, just as a matter of better understanding what it's doing. 00:17:48.110 --> 00:17:53.910 Also extra security in both terms of supply chain attacks. So if you're building 00:17:53.910 --> 00:17:59.830 it your own, there is much less risk in that. And also in terms of the 00:17:59.830 --> 00:18:01.590 hardware security. 00:18:03.870 --> 00:18:09.850 Trezor would want to execute some retirement attack and hide something 00:18:09.850 --> 00:18:14.070 in the chip. And if you're building it yourself, you cannot really do that. 00:18:14.950 --> 00:18:19.510 Right, got it. Is it going to be summarized into saying the secure elements 00:18:19.510 --> 00:18:22.970 require more trust? To some extent, 00:18:23.050 --> 00:18:23.770 I would say, yes. 00:18:24.170 --> 00:18:29.350 So it requires some more trust in the wallet developer to an extent. 00:18:30.290 --> 00:18:34.450 And the manufacturer of the chips themselves. 00:18:35.050 --> 00:18:41.050 Right. So these are sort of the two polar opposites or the 00:18:41.050 --> 00:18:46.110 two extremes within the hardware wallet space a little bit. On the one hand, you 00:18:46.110 --> 00:18:52.070 have Trezor that is completely open source in all its ways, but that comes 00:18:52.070 --> 00:18:57.570 with a trade-off that a physical attack is possible, or at least affordable, I 00:18:57.570 --> 00:19:01.730 guess. And then on the other end, you have Ledger, which has a secure element, 00:19:02.230 --> 00:19:07.310 which is therefore not as expensive or it's much more expensive to perform a 00:19:07.310 --> 00:19:12.130 physical attack on, but it requires some level of trust on the wallet 00:19:13.040 --> 00:19:14.200 provider and the developer. 00:19:14.540 --> 00:19:19.800 And it's only partially open source. Ledger has some open source parts, but it's 00:19:19.800 --> 00:19:20.640 only partially open source. 00:19:21.220 --> 00:19:25.200 Yeah. Ben, you agree this was sort of fair enough? 00:19:25.600 --> 00:19:28.560 In that sense, yes. At least from that aspect, yes. 00:19:28.880 --> 00:19:32.960 Okay, so then there are other hardware wallets. 00:19:34.970 --> 00:19:39.190 Before we get to Jade, let's discuss one other hardware wallets. It's the 00:19:39.190 --> 00:19:44.770 COLDCARD. COLDCARD. Yeah, they have a security model that sits in between of 00:19:44.770 --> 00:19:45.290 these two. 00:19:45.510 --> 00:19:51.240 Kind of, yes. So it has two chips. And so 00:19:51.760 --> 00:19:56.840 Trezor and Ledger use a chip, I said, called ST. I mean, from a company called 00:19:56.840 --> 00:20:02.800 ST. I believe that COLDCARD has one chip from ST and one chip from Atmel. 00:20:03.490 --> 00:20:07.870 The ST is almost the same as Trezor, if not the same as Trezor. It's an ST32 or 00:20:07.870 --> 00:20:08.590 something like that. 00:20:10.390 --> 00:20:16.370 While the Atmel is a secure chip. I mean, some people call 00:20:16.370 --> 00:20:20.890 it a secure element, some people call it a secure chip. But it's not used, unlike 00:20:20.890 --> 00:20:25.830 Ledger, it's not used to sign transactions. It's only used almost as a black box 00:20:25.830 --> 00:20:31.060 to hold the keys against your PIN. And if you get the PIN wrong, 00:20:31.300 --> 00:20:35.960 I don't know how many times it will delete the secret. So when you get the PIN 00:20:35.960 --> 00:20:39.720 right, it will provide the key to the other chip. The chip will do whatever it 00:20:39.720 --> 00:20:45.260 needs to do while Trezor-style until it's powered or until you log out, say, 00:20:45.660 --> 00:20:51.360 of the wallet. And then it will disappear from memory and 00:20:51.360 --> 00:20:53.120 will be protected by this Atmel. 00:20:53.510 --> 00:20:59.230 Right. So two chips. One of them is pretty regular, same as what something like 00:20:59.230 --> 00:21:04.860 Trezor uses. And the other is more like what Ledger uses. Not quite. 00:21:05.020 --> 00:21:05.560 Not quite. 00:21:05.990 --> 00:21:11.650 But the important thing is that in Ledger model, all the operations for signing 00:21:11.650 --> 00:21:16.650 transactions happening on the secure element itself. On the COLDCARD, it's not 00:21:16.650 --> 00:21:21.270 happening on the secure chip, it's happening on the normal chip. The only thing 00:21:21.270 --> 00:21:25.610 the secure chip is used for is storing the keys themselves, but they are getting 00:21:25.610 --> 00:21:29.430 loaded into the other chip while the COLDCARD is actually in use. 00:21:29.730 --> 00:21:34.710 Yeah, that I got. But you also mentioned the secure element isn't quite as 00:21:34.710 --> 00:21:39.890 secure, or how do I think about that then? Or is it just a secure element that 00:21:39.890 --> 00:21:40.370 does less? 00:21:41.750 --> 00:21:45.950 I mean, in principle, you could say it's a secure element that does less. I heard 00:21:45.950 --> 00:21:51.410 of it as a secure chip, but not exactly a secure element. And so 00:21:51.410 --> 00:21:56.430 another thing that secure elements tend to do, and the code that you run on it is 00:21:56.430 --> 00:22:02.090 very important as well, is that it makes it harder to extract the key 00:22:02.090 --> 00:22:07.780 by means of listening. So at some point… someone was trying 00:22:07.780 --> 00:22:12.780 to extract the private key from a Trezor by signing lots of times and trying to 00:22:12.780 --> 00:22:18.640 capture because it wasn't a constant time code, so signing different 00:22:18.640 --> 00:22:23.340 things meant that it would take you know different lengths and of time, and and 00:22:23.340 --> 00:22:28.200 that is enough information to eventually extract the private key and secure 00:22:28.200 --> 00:22:33.180 element tend to have not only hardware accelerators for crypto but also 00:22:34.510 --> 00:22:39.230 you know, tend to leak less in terms of, you know, electromagnetical 00:22:39.230 --> 00:22:40.990 information. 00:22:41.330 --> 00:22:41.710 Right. 00:22:43.070 --> 00:22:49.010 So in any case, in the COLDCARD, there are two chips and one of the 00:22:49.010 --> 00:22:54.950 chip, which is sort of the secure elements, in this case, in the 00:22:54.950 --> 00:22:58.250 sense that we just discussed, and that just holds the private keys. Does it 00:22:58.250 --> 00:22:59.310 generate the private keys? 00:23:00.330 --> 00:23:03.270 I think with COLDCARD you have various ways you can generate the private keys 00:23:03.270 --> 00:23:08.110 even with coins or dice or like externally. I'm not sure which chip they use 00:23:08.110 --> 00:23:12.150 between the two to create the private keys. 00:23:12.490 --> 00:23:18.250 I'm not sure about the initial randomness but they also offer you to use 00:23:18.250 --> 00:23:19.850 dice rolls I think. 00:23:20.350 --> 00:23:25.070 So is there, what kind of trust is there, if any, is there still trust involved 00:23:25.070 --> 00:23:29.910 there? Like what would be the worst case scenario there then if the secure 00:23:29.910 --> 00:23:35.270 element turns out to not be secure or turns out to be backdoored or there? 00:23:37.310 --> 00:23:43.150 There can always be a bad… even if the mnemonic is completely random and it's not 00:23:43.150 --> 00:23:47.810 like backdoor, like the generation of the mnemonic itself. It is still possible, 00:23:47.970 --> 00:23:52.230 for example, to leak some of the private key information while signing Bitcoin 00:23:52.230 --> 00:23:58.130 transactions. And for people it will look like noise, only for the guy who put 00:23:58.130 --> 00:24:03.030 the backdoor, he will be able to actually read that. So there's always some risk, 00:24:03.050 --> 00:24:08.790 I would say. But usually it's not, I would not say it's a very high 00:24:08.790 --> 00:24:09.470 risk usually. 00:24:09.690 --> 00:24:15.470 You think the risk compared to, for example, the Ledger, you know, polar, that 00:24:15.470 --> 00:24:20.270 side, you think the risk is in fact diminished by using two separate chips? 00:24:20.490 --> 00:24:25.530 No, I think it's more or less the same in that sense, I would say. From that 00:24:25.530 --> 00:24:27.950 aspect, I think it's more or less the same. 00:24:28.350 --> 00:24:34.280 I would say it sits in the middle between... Trezor and Ledger. I think Ledger 00:24:34.280 --> 00:24:38.840 is a little bit more secure. But it's a nice design because you can keep the rest 00:24:38.840 --> 00:24:43.000 of the source and this chip is not used for almost anything other than securing 00:24:43.000 --> 00:24:48.100 the money. Obviously, the chip could have some error or some bugs or some other 00:24:48.100 --> 00:24:53.060 problem that allows to bypass the PIN or to extract the key somehow. 00:24:53.780 --> 00:24:57.390 But at the moment, there's no known… issues with that. 00:24:57.670 --> 00:25:03.290 So at least there you can sort of inspect or understand more parts of you know 00:25:03.290 --> 00:25:07.570 how the wallet works compared to a Ledger where in a Ledger sort of everything 00:25:07.570 --> 00:25:12.150 happens in the dark to call that. Well, I don't know, is that is that a good way 00:25:12.150 --> 00:25:16.710 to put it? So, well with the OpenDime more parts of it are open and therefore… 00:25:16.710 --> 00:25:21.300 Oh, sorry what did I say? OpenDime? Yeah, COLDCARD yeah, COLDCARD with the 00:25:21.300 --> 00:25:24.960 COLDCARD, more stuff is happening in the open then. And therefore, you can sort 00:25:24.960 --> 00:25:29.440 of verify more of it and see what's, you know, there's less room for attack again. 00:25:29.740 --> 00:25:30.440 Yeah, right. 00:25:31.040 --> 00:25:36.060 Okay, so the COLDCARD uses two chips. One of them is a secure chip, secure 00:25:36.060 --> 00:25:39.400 element, whatever you want to call it. The other is a regular chip. The secure 00:25:39.400 --> 00:25:45.340 chip only stores the private keys and the rest is open source. Therefore, there's 00:25:45.340 --> 00:25:49.910 less, you know, you have a better idea of what's actually happening and what's 00:25:49.910 --> 00:25:53.810 going on so that's why it sort of sits in between the Trezor where everything is 00:25:54.660 --> 00:26:00.280 open source but it has this downside that you can extract the keys if you have 00:26:00.280 --> 00:26:05.080 physical access to the device and you don't use that extra passphrase; and then 00:26:05.080 --> 00:26:10.600 on the other end Ledger where it's all sort of in a secure element so you can't 00:26:10.600 --> 00:26:14.720 extract the keys but there's the trade-off that you don't really have the same 00:26:14.720 --> 00:26:17.960 level of knowledge or control of what's actually happening. 00:26:17.960 --> 00:26:23.080 Yeah, to give you an idea, um once you put the PIN and the the 00:26:23.080 --> 00:26:28.680 private keys are loaded on the non-secure chip in the COLDCARD technically at 00:26:28.680 --> 00:26:33.970 that point you could try to extract the keys. But, you know, if someone takes 00:26:33.970 --> 00:26:38.950 your COLDCARD from, you know, your desk or something, usually 00:26:38.950 --> 00:26:40.650 it's not, you know. 00:26:40.810 --> 00:26:44.450 They can't get the private key because these are still locked in the secure chip. 00:26:44.570 --> 00:26:44.750 Exactly. 00:26:45.170 --> 00:26:50.350 Right. So, yeah, that's sort of the main, I think, yeah, sort of the, or at least 00:26:50.350 --> 00:26:54.330 to give an idea of what hardware wallets are and what the different trade-offs 00:26:54.330 --> 00:26:59.180 are that they make. So now let's get to your hardware wallet, Jade wallet. 00:26:59.500 --> 00:26:59.640 Yeah. 00:27:00.020 --> 00:27:05.920 So what trade-offs does the Jade wallet make? Why is there a new hardware 00:27:05.920 --> 00:27:06.500 wallet needed? 00:27:07.430 --> 00:27:12.530 Well, so let me start from the chip because it's 00:27:12.530 --> 00:27:14.830 continuing the conversation we just had. 00:27:15.050 --> 00:27:15.250 Yes. 00:27:15.950 --> 00:27:20.710 It doesn't have a secure element. It has a chip with some security features such 00:27:20.710 --> 00:27:23.610 as a secure boot and flash encryption. 00:27:28.060 --> 00:27:33.760 Basically, the secure boot part means that you cannot flash any firmware on it 00:27:33.760 --> 00:27:38.980 that is not signed by Blockstream unless you get a DIY version. 00:27:39.260 --> 00:27:41.540 Flashing it basically means copying it. 00:27:41.780 --> 00:27:44.960 No, no, no. Flashing as in upgrading the firmware, upgrading the software on the 00:27:44.960 --> 00:27:50.260 device requires a signature that is checked during flashing and bootloader. 00:27:53.770 --> 00:27:59.490 And the flash encryption works by some eFuses. eFuses are 00:27:59.490 --> 00:28:05.370 basically a part of memory of the chip that, once written, cannot 00:28:05.370 --> 00:28:11.250 be rewritten. And specifically, these eFuses are only readable by 00:28:11.250 --> 00:28:17.080 hardware, which means you cannot read the key that is then used 00:28:17.080 --> 00:28:21.420 to encrypt the flash, which, in the case of Jade, is using AES. 00:28:23.600 --> 00:28:29.500 This sounds very complicated to me right now. So let's break this down. First of 00:28:29.500 --> 00:28:33.500 all, there's one chip in the Jade or two? Well, 00:28:34.180 --> 00:28:40.000 there's only one chip when it comes to running the firmware or touching your 00:28:40.000 --> 00:28:45.880 private keys and so on. There's actually a couple more chips. One, it's used to 00:28:45.880 --> 00:28:52.040 control power to the display or power to the camera and so on. 00:28:54.490 --> 00:28:56.690 There's one main chip for security. 00:28:56.790 --> 00:28:58.930 It doesn't have a secure element. 00:28:59.830 --> 00:29:04.250