ColdCard Wallet: The Best Hardware Wallet for Bitcoin?

Beginner Perspective of ColdCard Wallet

The ColdCard hardware wallet is a bitcoin-only wallet, which is open-source and popular among cypherpunks. It has an easy-to-use interface and is ultra-secure. It stores all the seed words in a specialized chip, which is specially designed to store secrets.

Moreover, all code is open source which the users can compile themselves. The True Air-Gap operational feature of the wallet makes it the only hardware wallet that does not need to be connected to a computer, whatever be the need.

It can perform the entire operation without being connected to a computer, starting from seed generation to transaction signing. It also has a host of enticing features, including its full-sized numeric keypads, bright, 128X64 pixel OLED screen, USB-C port and MicroSD card slot for backup and data storage.

History of ColdCard Wallet

The ColdCard wallet comes from the house of Coinkite. The company was founded on March 1st, 2012, and has its headquarters in Toronto, Ontario, Canada. Coinkite has raised CA$125,000 so far from the only funding round it had on March 1st, 2013. It was a seed round. Since then Coinkite has continue to iterate on the ColdCard with updated versions every couple years.

The house of Coinkite also comes with a plethora of products and services. Apart from Coldcard, which we will discuss in detail in the segments to come, there is Opendime, Blockclock Mini, Seedplate, Coldpower, Blockclock, Terminal, and the Bitcoin Server.

Opendime is the world’s first and only real physical Bitcoin (it comes on a memory stick), while Blockclock Mini is a Bitcoin data display. On the Blockclock Mini, you can see blocks as and when they are published. If you connect Opendimes to it, you can see your balance, fiat value, and deposit QR. The Coinkite Seedplate is a Bitcoin backup metal plate, while the Coldpower is a no data, 9-volt battery to USB adapter. Apart from Blockclock Mini, Coinkite also has Blockclock, an electro-mechanical display data visualizer. Coinkite also has a stand-alone terminal, which is a fully decentralized and self-contained Bitcoin Terminal and Wallet. Finally, with Coinkite’s Bitcoin Server, you can self-host your Bitcoin projects securely.

Peter Gray, the co-founder, and CTO of Coinkite is a world-renowned developer and technology leader. Apart from Coinkite, he also serves as a co-founder and CTO of Ripe Apps Inc., president of Conalgo Inc.

Best Features of ColdCard

As indicated earlier, the full-sized numeric keypads of the ColdCard wallet serve perfect for entering the PIN, easily and quickly. Its bright OLED screen displays all the information critical to a transaction with utmost clarity. Although it comes in simple packaging and plain design, without any designer boxes or redundant cables, it is delivered through a secure supply chain that carries a tamper-evident numbered bag. For perfect verification, the bag number remains recorded on the device. The MicroSD card slot for ColdCard, used for backup and data storage, is perfect for offline signing by transferring the unsigned/signed transactions on sneakernet.

Owing to the PSBT feature of ColdCard, it is possible to interoperate between Bitcoin hardware wallets. From the very beginning, ColdCard wallet has based itself on BIP174. The advantage of BIP174 is that it introduces a binary file format that all hardware wallets can use. Apart from ColdCard, other players with PSBT compatibility include BitcoinCore, Electrum, BTCPay, Specter-Desktop, Wasabi Wallet, Fully Noded, Unchained Capital, Casa, BlueWallet, Coldcore, and Sparrow.

The unique encrypted backup feature of ColdCard makes it possible to write an encrypted file to MicroSD with a few clicks. It is a simple text file and proves enough for all your vendor switching and lock-in avoidance needs. The encryption is verifiable. Any user of the wallet can perform the verification with a desktop 7z program. Users often do not prefer encrypted backups as there is the chance of passphrases getting lost. For this set of users, ColdCard offers clear-text backup-file output.

The hardware wallets often face the issue of changing outputs. Fraudulent software traps them into showing incorrect details of a transaction. To combat this challenge, ColdCard carefully analyzes the contents of the PSBT file and the transaction itself.

The analysis includes verifying UTXO details of inputs being spent and studying the change outputs, which should be coming back to the same wallet.

Owing to Coinkite’s experience in the field of Bitcoin, ColdCard wallets come with the best trust minimization features. What makes it the best trust minimized wallet in the market are its open-source software, provable dice rolls, clear plastic case, open standards for file formats, and tamper-resistant shipping bags. The open standards for file formats include BIP174, 7z encrypted archives, simple JSON/text files, et al.

Is a ColdCard Wallet Safe?

ColdCard wallet comes with unmatched all-around security features. It comes with a real crypto security chip, and the private key stays stored in a dedicated security chip.

ColdCard wallets support BIP39 passphrases for you to create an unlimited supply of distraction wallets. The feature proves useful for organizational purposes as well as individual funds and accounts.

Unlike most Bitcoin wallets that trust the main microprocessor with their most valuable information, ColdCard leverages two secure elements. The ColdCard uses Microchip’s ATECC 608A to store critical information, such as the 24-word seed phrase for your BIP32/BIP39 wallet.

While the chip is immensely powerful and controls the communication with complex challenges and SHA-256 responses, it is difficult for the attacker to hack the wallet with the security element removed from the system. Even when there is no secure element, and the main micro secrets are fully known, an attacker gets a limited number of 13 tries before the secure element bricks itself. The device also has MicroSD slot of easy back up.

On top of that, there are advantages to encryption. Assume there is some critical security bug in the secure element, and it has completely exposed the secret information it holds. Even in that case, the Bitcoins remain safe as the ColdCard wallet encrypts the contents of the secure element with a one-time pad known only to the main micro.

To resist vulnerabilities stemming from people having physical access to your wallet, ColdCard signs its firmware with a factory key. During boot-up, the signature of the firmware and every byte of flash memory verifies itself through the Green/Red light set.

One of ColdCard’s most unique security elements is the pin code duress feature. It’s essentially a fake sub-wallet where you can store a small amount of BTC to thwart potential thieves when under duress. It essentially solves the infamous “wrench attack” as popularized by the following meme:

ColdCard hardware wallet also comes with probably the best supply chain protections available in the market. Each bag used in ColdCard delivery is unique and comes with a number code. The bag number, in turn, stays coded into the ColdCard’s secure element. Apart from the clear plastic case, ColdCard covers the secure element and other sensitive parts of the wallet with epoxy, making it harder to remove the chips and change the wiring around them.

Potential Deal Breakers of ColdCard

The wallet is only for Bitcoin and does not support any other cryptocurrency. Not even Ethereum, which is the second largest cryptocurrency, and it doesn’t sound like there are plans to add support for altcoins in the future.

That downside might be a positive for Bitcoin maximalists who only care about BTC. In theory a Bitcoin-only wallet will have less attack vectors than a wallet with compatibility for hundreds of different altcoins.

Secondly, the secure element that makes the wallet’s security standards stand out from the rest also makes it impossible for the wallet to have a factory reset. If you have forgotten your ColdCard PIN, the provider can do nothing.