Trezor is the first mass-produced bitcoin hardware wallet and is on pace to reach customers’ hands next month. Hardware wallets, as opposed to the software wallets currently in use, allow users to store their bitcoins off of personal computers but maintain the ability to transfer bitcoins conveniently.
The wallet is able to sign bitcoin transactions while connected to a computer via USB, without allowing the computer access to private information. Gavin Andresen, the lead developer of bitcoin-Qt, stated in June that wallet security is the largest concern in the coming year and that hardware wallets will be hugely beneficial.
Bitcoin’s history is storried with software attacks that have led to stolen bitcoins. One of the earliest known bitcoin thefts allegedly occurred in 2011 when the security of a user’s personal computer was compromised, offering an intruder access to the victim’s unencrypted wallet file from which 25,000 BTC was emptied. Trezor should be the first step in alleviating these types of concerns.
Trezor is founded by Marek “Slush” Palatinus, the inventor of pooled mining and operator of one of the largest pools, which controls an estimated 10% of the total hash rate of the bitcoin network. He’s joined on the project by Pavol “Stick” Rusnak, a well known Prague coder. The team opened preorders for their device in June with two models available. The metallic design is planned to begin shipping in October and sells for 3 BTC, while the plastic model will ship in November for 1 BTC. Three days ago they received their first metallic cases from the manufacturer and initial testing allowed them to operate the buttons, use the screen on the device and connect to the computer perfectly.
The wallet is operated by an ARM microcontroller with 128 KB of RAM, as well as a hardware random number generator for signing transactions. Users will be able to interact with the device using a 0.96” OLED monochromatic display as well as two tactile buttons, used for canceling or approving transactions.
The bitcoin protocol uses private keys to sign transactions, which ensures that only the true owner of the address is able to transfer funds from it. Trezor uses a deterministic wallet based on a series of 12 random words to generate private keys to use. This allows the user to backup the private keys by storing the 12 word code in a secure location in case the wallet is lost or stolen. Software on the device is open-sourced, allowing users to easily audit the code and ensure proper security measures are taken.
In order to transfer bitcoins from the wallet users must go through a four-step process:
Trezor will be a major step for bitcoin wallet security. Many secure methods, such as paper wallets or cold storage computers disconnected from the internet, have the potential to provide high levels of security but with significant impairments to ease of use. Trezor will need to undergo significant testing to its hardware random number generator and support of software libraries before it is ready for mainstream adoption, but given its team’s rich lineage they seem prepared for the task.