Hardware Wallet Doesn't Store Private Keys to Surpass Cold Storage

A payments technology company has created a hardware wallet that addresses the "Flawed approach" used for cold storage - and eliminates the physical storage of private keys.

Instead of storing private keys on a device - a "Potential security problem" - Bitfi says it has developed technology that does not store any data or private keys.

Instead, the company's hardware uses a deterministic algorithm to calculate the private key at the moment of a transaction.

This technology is meant to overcome the risk of total loss should a hardware wallet be lost, seized or stolen.

The company says that those who own its wallet have the option to memorize their passphrase.

Combined with no physical storage of private keys, the company argues this better protects users against attacks - as memorizing a shorter phrase eliminates the need to write down a seed, something a malicious actor could access.

The company says it eliminates the possibility of wallet funds being lost if a physical device is stolen by ensuring that no data is stored on the hardware itself, meaning that hacking the wallet is "Fruitless." This approach also offers greater protection to users in the event that their wallet is damaged or lost following natural disasters such as fires, floods or earthquakes.

Bitfi argues the practice of storing private keys on hardware wallets and connecting such devices to a computer creates an unacceptable risk of this sensitive information being obtained by hackers or malware, especially during physical attacks.

Making amendsLast year, Bitfi described its hardware wallet as the "World's first unhackable device" - but the company has now withdrawn this claim.

Both bounty programs have subsequently been closed, but the company says it will soon introduce a new program with the launch of the new DMA-2 wallet.