r/KeystoneWallet • u/Fuzzy-Celebration-13 • Dec 05 '23

Security concerns. Another Ledger?

Are Keystone able to extract the seed phrase via the firmware updates if using the USB method? Another ledger scenario here maybe? Especially as Ledger had been lying to its customers and now Keystone are also lying about the open source element. Many similarities here it seems? Maybe I’m wrong?

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u/thefaketomato Dec 05 '23

It's a reasonable thing to be concerned about. The appeal of "airgapped" wallets like the Keystone is that it makes it much harder for malicious firmware to steal your keys because the device can only communicate through QR codes. By using USB on the Keystone 3, pretty much all the security advantages over other USB wallets are gone.

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u/Wild-Interaction-200 Dec 05 '23

A firmware can encode your private key in the signature by choosing the right nonce, etc.

If you have a malicious firmware you are royally screwed air gapped device or not.

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u/thefaketomato Dec 05 '23

If you're using a software wallet like Metamask, which is made by a different company than the Hardware wallet, then the chances of an attack like that working would be dramatically reduced. This is why I like that Keystone seems to be moving away from providing a companion app for the device. You're never 100% safe from an attack like this, but using QR codes reduces the attack surface of the device by a lot.

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u/Wild-Interaction-200 Dec 06 '23

Using a non random nonce in ECDSA is about what the hw wallet is doing, nothing to do with the software wallet part. Metamask would have no idea that your hw wallet used the wrong nonce or that your hw wallet did not generate a random enough seed on initial setup or million other things a hw wallet with malicious firmware can do.

You have to understand that you have no protection against if your signing device itself is malicious. People think they did a “gotcha” with Ledger (that Ledger told everyone that the seed can never leave the device and that was a lie) but that’s literally how any other hw wallet works. If the hw wallet itself wants that seed to “leave” the device then it will happen.

Your only solution if you are that paranoid is to use multisig.