In the ever-evolving world of cryptocurrency, securing digital assets has become a top priority for both individual holders and institutional investors. Among the various storage solutions, hardware wallets stand out as one of the most trusted methods for safeguarding private keys. Recently, a pivotal discussion hosted by ChainNode brought together two industry experts—Liu Lixin, hardware lead at Cobo, and Guozi, head of BITHD—to explore the critical role of open source development, security chips, and the future trajectory of hardware wallet technology.
Their insights revealed a growing consensus: open source is not just a trend—it’s a necessity for trust, transparency, and long-term security in crypto custody.
Why Open Source Is a Prerequisite for Trust
When it comes to managing cryptocurrency, users are often told: “Not your keys, not your coins.” But what happens when you don’t fully trust the device holding those keys?
Guozi made a compelling point during the AMA:
“For hardware wallets, open source is a prerequisite. The reason is simple—every hardware wallet must ‘prove its innocence.’ If you don’t open source your code and design, you simply can’t do that.”
This idea aligns with Linus’s Law from software development: “Given enough eyeballs, all bugs are shallow.” In other words, public scrutiny leads to stronger, more secure systems. While most users won’t personally audit or compile firmware from GitHub, the existence of open source allows independent developers, security researchers, and even competitors to verify that no backdoors exist.
Projects like Trezor, BITHD, and even Ledger (to a large extent) have embraced this principle. With full access to hardware schematics and firmware code, anyone can build an identical device—effectively proving that the original product behaves as advertised.
👉 Discover how transparent crypto tools are shaping the future of digital ownership.
What Does “Fully Open Source” Really Mean?
True openness goes beyond just releasing code. As Guozi clarified, a fully open-source hardware wallet includes:
- Complete hardware design files
- Full firmware source code
- Transparent version history
Even in hybrid models like Ledger’s dual-chip architecture—where a main processor runs open firmware while a secure element handles private key operations—the approach still promotes verifiability. Users can replicate the main logic and choose their own secure components, maintaining control over their security stack.
Security Chips: The Last Line of Defense
While open source addresses trust in software and design, security chips serve as the physical guardians of private keys.
Liu Lixin emphasized a crucial truth:
“There’s no such thing as absolute security. A qualified hardware wallet simply reduces the probability of a successful attack to the lowest possible level.”
Many so-called “hardware wallets” on the market skip using dedicated security chips. These devices may offer marginal improvements over software wallets but fall short against sophisticated threats.
The real power of a security chip lies in its ability to:
- Generate and store private keys in an isolated environment
- Ensure true randomness in cryptographic operations
- Resist side-channel attacks and tampering
Cobo Vault, for example, integrates multiple layers of protection beyond just the chip itself:
- Supply chain verification: A built-in authenticity check ensures the security chip hasn’t been disabled or replaced during manufacturing or shipping.
- Tamper-evident design: Any physical attempt to open the device triggers irreversible alerts.
- Passphrase support: Adds an extra layer of protection—even if someone steals your recovery seed, they can’t access funds without your custom passphrase.
- Metal backup plates: Help preserve seeds against fire, water, or corrosion.
These features collectively ensure that even if an attacker gains physical possession of the device, they’re left with nothing more than “a brick.”
Addressing Real-World Threats: Backdoors and Physical Attacks
Two primary threats loom over hardware wallet users:
- Internal backdoors (malicious code planted by manufacturers)
- External attacks (hacking attempts via software or physical access)
Open source directly mitigates the first risk. If all code is publicly available, any hidden backdoor becomes exponentially harder to conceal—especially under community scrutiny.
As for external threats, BITHD’s offline cold storage model makes remote hacking nearly impossible. Physical attacks require significant resources and expertise. And with BITHD’s password account feature enabled, even stolen seeds are useless without the user-defined password.
This layered defense model reflects a broader shift in crypto security philosophy: shift from "trust-based" to "proof-based" systems.
The Human Factor: Often the Weakest Link
Interestingly, both experts agreed that technological flaws are often less dangerous than human error.
Liu Lixin pointed out:
“Compared to hardware vulnerabilities, human mistakes—especially in how seed phrases are stored—are far more likely to result in lost funds.”
Common pitfalls include:
- Writing down seeds on paper that can be lost or damaged
- Storing backups in insecure locations
- Reusing passwords or passphrases across devices
This underscores the importance of user education alongside technical innovation. A perfectly secure wallet is only as strong as its user’s habits.
👉 Learn how next-gen custody solutions are combining technology with user empowerment.
Frequently Asked Questions (FAQ)
Q: Does open source make a hardware wallet automatically secure?
A: Not automatically—but it enables verification. Open source allows experts to audit the code, detect vulnerabilities, and replicate the device. This transparency builds trust and reduces reliance on blind faith in manufacturers.
Q: Can I build my own hardware wallet from open-source designs?
A: Yes. Projects like BITHD and Trezor provide complete blueprints and firmware. With basic electronics knowledge and tools, enthusiasts can assemble functional clones—proving the system’s integrity.
Q: Is a security chip enough to guarantee safety?
A: No single component guarantees total security. The chip must be integrated into a holistic design that includes tamper resistance, supply chain checks, and secure user workflows.
Q: What if I lose my hardware wallet?
A: As long as you’ve securely backed up your recovery phrase (and optional passphrase), you can restore access on another compatible device. Never store backups digitally.
Q: Are all open-source wallets equally safe?
A: Open source is a foundation, not a guarantee. Implementation quality, update frequency, community engagement, and additional security layers determine actual safety levels.
Q: How do I verify my device hasn’t been tampered with?
A: Some wallets, like Cobo Vault, include built-in authenticity checks. These tests confirm the security chip is active and unmodified before use—critical protection against supply chain attacks.
The Road Ahead: Openness as a Standard
The conversation between Liu Lixin and Guozi highlights a clear trend: the future of hardware wallets is open, verifiable, and user-centric.
As crypto adoption grows, so does the need for transparent custody solutions. Open source isn't just about code—it's about restoring user sovereignty. When combined with robust hardware security and smart usage practices, it forms a powerful defense against both digital and physical threats.
👉 Explore how open standards are redefining trust in decentralized finance.
The journey toward truly secure self-custody continues—but with open collaboration and relentless innovation, we’re moving closer than ever to a world where users have full control over their digital assets.
Core Keywords: hardware wallet, open source, security chip, self-custody, private key protection, cold storage, supply chain attack, firmware audit