Why I Don’t Use a Crypto Hardware Wallet

We recently covered the massive theft due to poor generation of seed phrases by the Coldcard Bitcoin hardware wallets on [Episode 229 of The Escape the Technocracy Podcast – Coldcard: The Devastation Begins]

This incident led to a lot of us scrambling. We were helping lots of people: friends, clients, and our audience as they tried to move their funds securely before they could become part of the $100+ million in stolen funds (and growing). To be fair, we haven’t recommended Coldcard wallets for many reasons for years, but it was a popular choice for many and so we joined the front lines in helping people move their funds out of these wallets.

The truth is—and I’ve always expressed this opinion when the topic arises—I don’t really believe in crypto hardware wallets. And I’ll explain why in a moment. But I’ll also say for starters that I know a lot of hardworking, entrepreneurial, and privacy/sovereignty minded people who work at these companies. Aside from Coldcard, they’re making an honest living. And I do think they produce a product that can have strategic value.

My job is not to defend any company or organization but to state my opinion with your best interests in mind, dear reader. If I had a company sponsoring me, of course, I would have a different opinion and would mentally justify it to myself.

I recently helped someone to transfer funds due to Coldcard vulnerability. We were about to set up an elaborate new hardware wallet that worked best with its own software: two new pieces of technology to get familiar with, and plenty of room for mistakes or procrastination and making sure the “right version was installed.” That’s when he asked me: “What is the point of a hardware wallet?”

An innocent and intelligent question. Since I’m not a believer I didn’t have a great answer, and simply regurgitated some of the talking points of hardware wallet advocates.

“Well if your device has malware on it then this malware could steal your seed phrase. Your phone is a ‘hot device’ because it has an Internet connection, so you are by definition vulnerable.”

The statement seemed particularly stupid seeing as he was right now exceedingly vulnerable to the Coldcard attack despite that device never touching the Internet; furthermore my friend had a newish (and fairly secure) phone with minimal apps. The truth is I don’t hear many stories at all of people having their seed phrase stolen by malware on their device: it’s definitely not common and certainly not as common as hardware wallet proponents would like you to believe.

Instead most people lose their funds by trusting exchanges like FTX, or setting up complex multisig wallets, or falling prey to common scams, or doing stupid maneuvers with their funds. Or by trusting companies like Coldcard that don’t support FOSS and thus produce inevitably flawed software. And many of the Bitcoin developers that I’ve talked to about hardware wallets have emphasized how unlikely it is to lose funds on a hot wallet, especially if you practice basic operational security on your device. And if you care about self-custody crypto you should be doing basic operational security. We’re a long way off from this money technology being for the average person. That’s why our goal at Escape the Technocracy remains to fortify people in their knowledge of tech in a holistic, adversarial way, and merciless way. If you refuse to take the steps to learn, then you will not and should not be part of the “crypto revolution.”

Gabriel Custodiet@WatchmanPrivacy

Some people update their firmware. We update with lead. @MissBitcoin_ vs a compromised Coldcard wallet The Final Showdown commences below...

4:53 PM · Aug 17, 2026 · 6.85K Views

8 Replies · 7 Reposts · 73 Likes

But there are other reasons to have a hardware wallet. I continued explaining to my friend: “Oh and then what if you’re traveling to another country with your phone and you lose it or it’s seized? That person can see your seed phrase.”

He responded: “Sure but what if I generate the seed phrase on this wallet, then delete the wallet from my device?”

I couldn’t see a huge problem with that. I could tell that he really wasn’t looking forward to setting up this hardware wallet. Indeed, the Coldcard wallet that he had been using before this not only did not protect him, but was hurting him in more than one way. His seed phrase was hours away from being stolen, and because he had poorly hidden his seed phrase back in his home country (his family couldn’t find it based on his instructions), and because he couldn’t send funds out of his software wallet without the permission of the Coldcard (also in a different country), he was going to have to make an international trip to solve the problem.

On the other hand, if he had his Bitcoin funds on a software wallet in front of him right now he could have created a new wallet and transferred in sixty seconds. I find that people who store their wealth and use it on hot wallets are actually less likely to lose their funds because they understand how all of this works. They’re nimble and experienced and actual crypto owners. Regardless, the hardware wallet he had selected explicitly to enhance his security was currently making him the most insecure Bitcoin holder on earth at this very moment.

I will say briefly that the problem of poor seed phrase generation with Coldcard is not endemic to hardware wallets. It’s not a hardware problem. It is a problem with hubris and abandoning FOSS as Coldcard did: a problem that could affect any tech company of any kind. That said, there are a few existential problems with hardware wallets that make them bad devices for surviving these kinds of specific attacks. This article is more generally about doing a reassessment of hardware wallets that I’ve been meaning to do for a while.

So here’s where we get to my issues with hardware wallets:

This is a security measure, but it has consequences. People forget how these devices work, how they connect to their software wallet, and store them in places that are difficult to access. Also it means hardware wallets are designed for savers, not spenders. Seeing as I don’t believe that a new money technology should be saved in its early decades (mostly sent and received and actually used), I disagree with this idea from first principles. But let’s say that you do believe in saving in a young and experimental new digital money, and you believe that the masses of people who bought their Bitcoin in late 2025 at its peak and subsequently saw it dip are going to fend off suicidal ideation and some day get their money back: you will still need to move these funds at some point. You might want to get out of Bitcoin, even partly, and it will be important to practice moving funds a bit so you know how the apparatus functions.

Hardware wallets require you to get the permission of the device in order to send funds: they are not just seed generation devices but “signing devices” that need to approve of your crypto transaction. The authority to transact, the private keys, reside on the hardware device. If you have your hardware wallet in a Swiss vault, then this means a trip to Switzerland.

BTW if you had one in a Swiss vault you could have been completely screwed over by the Coldcard situation.

Maybe you want the ability to cash out quickly. Having a hardware wallet requires a two-part action to make a transaction. You need the hardware wallet and an accompanying software wallet. Thus, hardware wallets absolutely discourage the use of Bitcoin or any cryptocurrency. The Coldcard situation emphasizes the value of having quicker access to your funds to be able to pivot on a dime; to say nothing of the importance of using these funds for practical and philosophical reasons. I don’t use a hardware wallet because it brings me further away from the actual value and actual use case of cryptocurrency.

This is the worst problem of hardware wallets. Even the “innocuous calculator look” of a Coldcard has become synonymous with Bitcoin wealth. It basically screams “torture me.” If an intelligent thief sees your distinct Bitcoin hardware wallet in your house you better hope he doesn’t decide to visit you again the next night: this time for a more personal conversation with you. Shipping to your house is a serious problem. The vast majority of hardware wallets cannot be bought in person and must be shipped directly to you: in fact this is recommended since buying a hardware wallet in a physical shop is quite risky. It could be a fake.

Even buying one at a conference means bringing it back home on a plane. When you ship the device to your house you end up giving personal information. When this data inevitably gets breached, thieves get access to these lists and use the email address and phone numbers to scam you (or your grandma). At the very worst they might show up to your house, knowing you likely own crypto. You could get tortured, and this is a reality and not a joke or theory. If you buy a hardware wallet you should absolutely ship it to a postal box, give a burner email, don’t ever give a phone number, and ideally don’t put it in your real name. Basically all the privacy stuff I’ve taught you over the years.

But that might not be enough. You still have supply chain attacks, which means that someone hijacks the supply before it reaches you. In August 2026 Trezor had their info breached on the side of their shipper.

Trezor@Trezor

We have some difficult news to share. Unfortunately, one of our shipping providers has experienced a data breach that exposed sensitive order data. This affects new customers in the US, UK, Sweden, Colombia, Brazil, Italy, and Portugal who received an order within the 90 days

12:54 PM · Aug 13, 2026 · 5.44M Views

1.93K Replies · 2.06K Reposts · 7.49K Likes

Of course this happened. Of course it will happen. If I was a thief looking for an easy payday, I would consider a supply chain attack. Cryptocurrencies are the most ideal thing to steal considering their sovereign and privacy attributes. Whoever stole the funds from Coldcard had been studying the company and its practices for a long time. Hardware wallets need immense airtight security across all sectors of their creation and shipment process: more than what they’re currently doing and probably what they’re capable of doing.

This might seem unfair, but popularity does present a few problems. First is that many people get in to hardware wallets as their first entry into cryptocurrency. They’re basically told they need to: “If you can’t afford a $150 device you can’t afford to be in Bitcoin!!!” They therefore don’t have the tech background or operational security or understanding of end-to-end encrypted permanence or even understanding of crypto and can easily make mistakes. In other words: they’re not the kind of people who should ever own Bitcoin or crypto.

Using a hardware wallet from Day 1 of their crypto journey means they also never actually learn how to use Bitcoin, which is a problem not just philosophically but for their ability to use it and send it; to get comfortable with software wallets, verifying software, and updating, and keeping up with the latest news of the tech they use. How many Coldcard users do you think are aware of what’s happening and have moved their funds? A small percentage. Most people were just told “Buy this device, I’ll walk you through it, you never worry again.” Hardware wallets reach a much wider audience than they should. So does cryptocurrency generally.

You know from my work that I disdain magical devices. Because there is no such thing. Everything comes at a cost. Convenience means destroying something else. There is no “privacy phone” and there is no perfect cryptocurrency device that protects your wealth and keeps it private. Privacy and sovereignty are mindsets, not devices. They require an investment of understanding technology and systems in order to achieve them. Privacy is knowledge, not software—and definitely not hardware. Magical devices are bad because they present the illusion that the device is offering them something that they themselves are meant to offer the device. Hardware wallets breed incompetent users.

So what’s the alternative? It’s easy to bash, but difficult to create. And believe me I don’t take pleasure in taking down hardworking people creating companies and interesting tech designed to help people. But my only commitment is to the truth. First I would say that we need to stop recommending hardware wallets so broadly, and we need to stop recommending Bitcoin and other cryptocurrencies as well. When people understand the need for censorship-resistant transactions, they will gain the knowledge and find themselves into crypto. I stopped encouraging people to get into crypto years ago because I realize I was putting the cart before the horse. The average person needs a much higher level of tech awareness first; and if that doesn’t happen, it doesn’t happen.

Crypto (or Bitcoin) will remain for now, as it should, for the 1% of people who have enough tech savviness or interest, and the correct amount of self-knowledge to know they want to use them properly. Bringing in more under-educated—or people uninterested in learning—is simply bringing in more lambs to the slaughterhouse. They’re not an asset to the community, and they are a danger to themselves and others. Who do you think is responsible for these crypto scams? This money doesn’t just disappear into the ether. At Escape the Technocracy we’ve personally tracked stolen funds in various scams to the Lazarus Group in North Korea. Is your grandma that you brought in to self custody when she shouldn’t be in self custody going to get her funds stolen and fund five people getting killed in North Korean death camps? Maybe, maybe not.

If you want to be an asset to cryptocurrency, then use it. That’s it. You can proselytize by example. If you want to accelerate that teaching then give them a tiny amount and let them spend it. Maybe also receive it. For 99.9% of people this is all they ever should do with cryptocurrency.

So who are hardware wallets for? Those who have a significant amount of funds (for me that would be at least $10,000 but possibly more than that) that they are not using on a day-to-day basis. They’re for people who have already learned how to buy hardware without revealing their name, home address (NEVER ship a hardware wallet to your home), real email address, or real phone number. They’re for tech savvy people who understand the entire system of sovereign crypto. In the hands of this privacy-educated person—who represents a tiny dot of the population—a hardware wallet can offer the security that it’s intended to. Provided of course that wallet generates high randomness in its seed phrase. As for me? I’d still prefer to own any funds I own in a hot wallet; if I’m feeling fancy I might get a dedicated Google Pixel phone, convert it to GrapheneOS, and use it exclusively for a wallet that protects my seed phrase. Like a hardware wallet, this device doesn’t travel with me and doesn’t get used for anything else. But I don’t believe in saving crypto, so I’m not even going to go this far.

One final note: our live Access Internet Anywhere workshop with Steven Harris happens August 21 at 2pm ET, and this is your last chance to get in before we go live. We know some of you missed the early-bird discount, so use code STAYCONNECTED for 50 USD off. Valid on this event only.

The Coldcard scramble proved the point: the moment you most need to move funds, get information, or communicate is exactly the moment your connection fails you. This four-hour live event teaches you battle-tested, private ways to get online from anywhere on earth—satellite, cellular, long-range Wi-Fi, and more—with extended Q&A to solve your specific terrain and threat model. Disconnection is death; a recording is yours to keep even if you can’t attend live.