Bitizen vs. Cold wallets: Trezor, Ledger

Hardware (cold) wallets are considered to be the most secure option, but actually it is not

Hardware wallet, also called cold wallet, is a physical hardware device that stores wallet’s private keys inside of it. Cold wallets are considered to be the most secure option for the users who want to fully control their digital assets. Long-term crypto holders, Bitcoin maximalists, crypto whales and institutional investors have a big interest in cold wallets and often use them to achieve their investment goals.

Trezor and Ledger

Trezor and Ledger are industry leaders in security, both companies provide wallets with private keys that never leave the devices. Both wallets are being connected online through a device just for the short period of time when a user has initiated a transaction and is ready to sign it.

Seed phrases as a single point of failure

Both Trezor and Ledger wallets support BIP39 (Bitcoin Improvement Proposals) seed phrases, which itself is a big vulnerability that may result in loss of all funds in case if the seed phrase is exposed by a user. Moreover, a user can also lose or forget the seed phrase, which will make the recovery of funds stored on Trezor/Ledger impossible. We believe that seed phrase is a risky backup and recovery mechanism, and it is a single point of failure for all wallets that have this feature.

Other security vulnerabilities

We should note that Ledger lost some public confidence after a breach of a marketing database in 2020 that exposed people’s contact information and led to a wave of phishing emails. The Trezor Model T offers Shamir Backup for improved private key security; however, Kraken’s security division could hack Trezor hardware wallets when they obtained the physical devices as part of vulnerability testing.

User Interface and User experience

For many users keeping a physical device in a safe place may bring extra stress due to fear of losing or someone stealing it. Besides, it requires some time to learn how to set a new wallet (writing down the seed phrase), and to get used to the user interface, buttons, passwords, connection etc.
Crypto investors are looking for an inexpensive hardware wallet for cold storage may prefer the cheaper Trezor One or Ledger Nano S. Still, they have to choose between the Ledger Nano X which is supporting Bluetooth, or if they want to enjoy navigating with touchscreen and pick the Trezor Model T (no Bluetooth, require a USB connection).

Ledger devices work with the Ledger Live application, available as a download for desktop or mobile devices. It lets users manage accounts, check real-time crypto balances, and send and receive funds. Both Ledger devices must connect to Ledger Live to complete the initial setup.

Although Trezor doesn’t currently have a mobile app, instead, users install either a Chrome extension or the Trezor Bridge that corresponds with their operating systems. Trezor offers the Trezor Suite as a desktop app, providing access to portfolio information and the incorporated exchange.

Both Ledger and Trezor have serious limitations for usage, making them less convenient for daily use than other types of wallets.

Bitizen Wallet

Bitizen wallet is a new generation Web3 wallet based on Secure MPC (multi-party computation) technology. Bitizen wallet is a mobile app that can be installed on iOS in AppStore or on Android in Google Play, so it doesn’t require buying any extra hardware device.

Designed by a team of cryptographic experts and blockchain engineers, Bitizen implements several cryptographic MPC protocols that provide a higher security than any hardware wallets.

Secure MPC Technology

First of all, Bitizen wallet completely removes private keys and replaces them with multiple independent encrypted key shares created separately on different devices. Via MPC Distributed Key Generation Protocol the new wallet’s key shares are created on user’s mobile phone, Bitizen’s server, and reserve a key share for a user’s secondary device, for example a laptop/desktop, second mobile phone or iPad, which can be connected to the main device via Bluetooth. To sign a transaction, these multiple key shares jointly compute a signature through MPC/TSS Signature Generation Protocol. Besides, to provide an extra security level, Bitizen also supports the MPC Key Shares Rotating Protocol.

More Secure Than Cold Wallets

Bitizen’s security measures guarantee that only the user himself can initiate, jointly compute the signature and co-sign it either with Bitizen server, or with his both devices. Hacking a Bitizen wallet does not make any sense – the private key never exists in the wallet or on the server; hacking any of them for an encrypted key share is not enough to sign a transaction. Hacking both ends or both user devices is very unlikely; moreover, rotating key shares make hacking Bitizen’s server an obsolete action.

Seedless

Bitizen wallet also doesn’t support seed phrases – another single point of failure of all traditional wallets. Instead, it implements its own 3FA backup and recovery solution, including biometric verification (face scan), email and user’s personal cloud storage. If any of the security checks are not available for the user, Bitizen has extra suboptions for recovery.

Users can also do a manual recovery even without a Bitizen server – by collecting his key shares and decryption keys from email and personal cloud storage – ensuring that wallet can be restored even if Bitizen server is hacked or down.

Bitizen’s UI and UE

Bitizen wallet is a mobile app with an intuitive design, looking familiar even for people with no prior experience in crypto and zero knowledge about blockchain. The whole process of installing an app and creating a backup with 3FA authentication (scanning face with camera, adding email and iCloud/Google Drive/Dropbox cloud storage) takes less than a minute, and the wallet is ready and good to go. Bitizen wallet is also “fool-proof”, helping users quickly adapt without risking funds safety. Bitizen also has a built-in Web3 browser, with easy navigation and Bitizen’s DApp selection.

Conclusion

Both Trezor and Ledger offer hardware solutions that help millions of users keep their crypto. However, the physical wallet’s safety and seed phrase are still the key vulnerabilities. Also, cold wallets require time and effort to learn how to use them, they are not convenient for daily life and while using Dapps. We believe that the MPC-based Bitizen wallet is more secure than cold wallets as it removes the seed phrase, has a more advanced 3FA backup and recovery solution, and is easy to carry on mobile phones. Besides, Bitizen wallet has a simple interface and can be easily integrated with any Dapps. That is why we believe that MPC-based wallets like Bitizen will get bigger mass adoption as a secure way to store crypto than cold wallets in the future.