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Author: Admin | 2025-04-28
Of bitcoin addresses (with public and private key pairs generated for each address), all from a single seed phrase. How do hardware wallets generate seed phrases? Hardware wallets generate seed phrases by generating a seed and mapping it to a list of 2,048 words. Hardware wallets use various methods to achieve randomness, such as random number generators (RNGs). In many hardware wallets, the RNG firmware runs on an isolated microprocessor called a secure element installed inside the physical hardware wallet. Other wallets use a combination of internal and external sources to generate entropy, the most popular example of the latter being dice rolls. Stores seeds, seed phrases, and private keys Once generated during initialization, your bitcoin wallet's seed (and associated seed phrase) is stored inside the hardware wallet. If the hardware wallet uses a secure element, it generally resides there and cannot be exported from the device in plain-text form. A hardware wallet's limitations for exposing the seed are part of what make it secure. Hardware wallets are a form of "cold storage" because they store seeds in an environment that is isolated from the internet. Due to their limited attack surface, a hardware wallet can theoretically be connected to a virus-infected computer (not recommended!) and still protect your wallet's seed. Signs transactions The primary use case for hardware wallets is to securely sign transactions—which authorize spending from your bitcoin wallet. In a singlesig wallet, one signature from one hardware wallet is enough to move your bitcoin. In multisig wallets, generally, two or more signatures from separate hardware wallets are required to transfer funds. A 2-of-3 multisig involving 2 Coldcards and one collaborative custody partner. To sign transactions, hardware wallets must communicate with the wallet software on a desktop or smartphone. Depending on the hardware wallet model, it may connect to your device by USB, Bluetooth, or NFC. Fully air-gapped (i.e., not directly connected to the internet) solutions are also available, including using a camera, QR codes, or SD cards to transfer data between the hardware wallet and your device. Connecting your hardware wallet to an internet-connected device may seem counterintuitive for an offline "cold storage" solution. However, as mentioned above, even with a wired connection, your wallet's seed and corresponding public and private keys remain isolated, keeping them safe. How hardware wallets sign transactions Signing a transaction with a hardware wallet involves a series of steps. At no point during the process does a private key leave the hardware wallet or touch an internet-connected device. Only the transaction data (signed and unsigned) moves between the wallet software and the hardware wallet. Typical steps for signing a transaction Create an unsigned transaction in the wallet software: specify the amount, fees, and receive address. At this point, the transaction cannot be sent to the bitcoin network because it is not yet signed. The software passes the unsigned transaction to the hardware wallet via whatever connection you're using (wired, air-gapped, QR code, etc.). The hardware wallet displays the transaction details for you
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