No matter whether you like or hate or don't care about cryptocurrencies, this is incredible stuff...
Now basically: every single attack that's been described as "theoretical" or "far-fetched" or "only existing in the mind of a paranoid person" did actually happen.
We're talking here about a tiny eSIM implant and a little CPU doing OCR on the fonts appearing on the hardware wallet's screen to read the secrets during set up. So the secure element ain't tampered with.
Not long ago the Coldcard hardware wallet had an issue where it'd fallback to a 32-bit only RNG that could be cracked and so many people got their coins stolen.
Now it's Ledger that sees tampered devices all around the world (in Asia for sure but now there are reports about reseller in the EU selling backdoored/eSIM'ed devices).
For people who own Bitcoin at this point one of the only thing kinda sensible to do is to use multisig schemes, like 2-of-2 or 3-of-3 multisig, where your split the secret over two or three different hardware wallet brands (meaning being able to sign a 2-of-2 wallets requires hardware wallets from two different vendors).
When Ledger hardware wallets came out and people said that seed (the list of words) could be intercepted and relayed by a channel bypassing the computer (here by using an eSIM), people would post explaining that people were nuts if they thought such an attack could be pulled off.
Yet here we are.
And Ledger is responsible for very poor security practices: for example it's impossible to use a Ledger hardware wallet in a fully airgapped/offline way. For you're forced to not only upgrade the firmware but also install the Bitcoin "ledger app" (or whatever that is called) after you entered your seed into the device.
Which is complete and total amateur hour.
In addition to that Ledger offers a service to "backup your seed": what could possibly go wrong with that uh?
I'm betting that we'll soon hear about hardware wallets getting drained due to the seed being exfiltrated through "randomness" in how transactions are built/signed (aka "kleptography").
And it's not just representative about people in the cryptocurrencies ecosystem: people simply don't understand computer security and don't understand the potential attacks nor the length at which attackers are willing to go to steal data/funds/ruin other people's lives.
At this point we've heard about chips' plans being modified before the chips are even built (only to lower the entropy of RNGs) [unrelated to cryptocurrencies btw], a worldwide backdoor attempt in SSH, eSIM sending secrets from hardware wallets with tiny attack surfaces.
You're not anywhere near paranoid enough.
It speaks a lot to the power of financial incentives. As soon as there's money in it, every conceivable attack to get that money has been tried. Which also mimics what happens in market economies: once there is money in it, every conceivable industry springs up, even things that are absurd or harmful. And money appears to be more powerful than things like laws or governments, in that things that are illegal but profitable happen, while things that are legal and unprofitable do not.
In some ways this is kinda encouraging, because it means that even in cases where society collapses and the government disappears, there are really only two fundamental technologies needed to reboot everything: money and contracts.
I kind of get what you're saying, though I'm not sure how much value money would have without a government to back it up. This is true even for cryptocurrencies. If society collapses and I can't convert to some fiat currency, I don't think I'd trade a bitcoin for six slices of bread.
The incentives lead us toward the classic "Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders." scenario.
https://www.insidehook.com/culture/story-tom-toro-new-yorker...
> I'm not sure how much value money would have without a government to back it up.
You don't need a government backed paper currency, you need a mint making precious metal coins. History has several examples like the mints at the Potosà silver mines or those by the East India Company that enabled trade without effective governments to back them up by just providing reliable coinage that spread to many other polities.
As long as there isn't some crazy inflationary force like colonizers arriving with an unlimited supply, we can use something as simple as beads or seashells for currency quite fine. It just means more labor overhead to create that currency in the first place.
doesn't even have to be coins
Somalia operated on paper money valued at the cost of producing it
I don't know enough about Somalia (or what time period you're talking about) to necessarily refute this argument, but I'd examine the definition of "operate" here before accepting this as a proven system.
"Currency without government" can and has existed, though you could argue circularly that whatever can "issue" a currency is a government of a kind.
How something comes to be is distinct from how it is used.
A currency can arise from any fungible, tradable, generally-durable commodity that the bulk of society decides to accept as being worthwhile. In prisons cigarettes often fill that role; in pre-agrarian hunter gatherer groups it's often little baubles like shells. Government isn't necessary for this, but social contract is. You need to have enough faith that your neighbor will accept the currency to accept it yourself.
Cryptocurrencies have the advantage that they can be spent worldwide, instantaneously, with little friction, while most commodities require that you be physically present to exchange them. They're also significantly easier to store and more resistant to garden-variety theft, as long as they're secured by passphrases. But they exist in the uncanny valley of requiring electricity and Internet. It is fairly unlikely that the government collapses and yet you still retain always-on electricity and Internet. What will you use to pay the electric company, and how do you enforce the contract that they keep providing you power?
There's perhaps an interesting role for a digital cryptocurrency that does not require always-on connectivity, eg. something that can be carried over SneakerNet for local transactions, and then automatically syncs up with the global system when the community regains Internet connectivity. In actual conflict zones today, people seem to get intermittent electrical & Internet connectivity, eg. the electricity will come on for an hour a day with rolling blackouts, and then you try to get everything charged in that one hour. And there are enough solar installations out there that several communities are likely to retain significant power even in the event of a societal collapse. But current crypto's consensus mechanisms aren't built for intermittent connectivity: you'd need to build and design something that is eventually consistent, where a weeks-long fork does not result in two competing cryptocurrencies.
> A currency can arise from any fungible, tradable, generally-durable commodity that the bulk of society decides to accept as being worthwhile. In prisons cigarettes often fill that role; in pre-agrarian hunter gatherer groups it's often little baubles like shells. Government isn't necessary for this, but social contract is. You need to have enough faith that your neighbor will accept the currency to accept it yourself.
Are cigarettes really currency in this case? Aren't they more like one of many possible barter units? Can't you also price things in ramen packs in prison?
Similarly, I thought the sea shells thing had been sort of debunked. In that scale of society you don't need currency, you know the guy. David Graeber summarizes this rather intuitively. Why would you need to give a guy a sea shell in a "hunter gatherer group"? You're gonna see him every day of your life and everyone is gonna know/remember he owes you one. It would be like giving your sibling a sea shell because you did them a little favor or something. It doesn't actually happen that way because it would be a complete waste of time, just actually return the favor next time. I believe the sea shell thing is more like a gift, rather than a currency. Like you might give someone a flower to tell them you think they're swell. Presumably you think that because they helped you at some point. That doesn't make it currency. People just liked giving each other shells.
I think on most modern theories, currency really comes about from conquest. The idea is as you expand these informal IOUs are not enough. You don't want to have to lug around ramen packs or cigarettes. So at the point of a sword or w/e you say hey take this coin and give us food and then you honor the coin enough and people trust it, not because it's "fungible, tradable, generally-durable commodity that the bulk of society decides to accept as being worthwhile" but because if you don't accept it the government will kill you. And if you do accept it then not only will they not kill you but they'll give things back to you later, which you will end up being a positive incentive for everyone. Now instead of a presiding over a killing field you've created a market. But without the threat of the state, it is not coherent. That's what government is.
That's basically what it says on American money. "This note is legal tender for all debts, public and private". So sure a business can refuse you service, that's a separate issue. But if you have a debt in the United States and you try to give them US dollars and they refuse and say, no thanks actually we demand cigarettes - well now they are breaking the law, aka inviting the wrath of the state. So everyone uses dollars because the last thing anyone wants is to be in debt and think a pack of ramen is gonna work and they just get to say no thanks cigarettes for me please.
And of course, you also don't want to get impaled on a spike by a dude who looks suspiciously like that guy on the coin you probably should have taken.
Currency is used for trade between multiple distrusting groups, credit is used for trade within a social group. There was an article recently on HN about the highland tribes of Papua New Guinea [1] and it described how the natives would trade amongst tribes using shells.
You actually see this on a small scale today in the functioning of many small communities, eg. you don't actually exchange currency to pay the host of a party, but you are expected to reciprocate and host sometimes yourself if you want to keep getting invited. There's a surprisingly large amount of these unpaid micro-transactions that happen, eg. my wife has gotten free childcare, free advice, free (used) furniture, free baby clothes, etc, all in the heart of Silicon Valley, because she reciprocates and also gives away her old furniture, baby toys, baby clothes, advice, introductions, childcare, etc. But when we have to pay the contractor for work on our house, we need dollars. When we buy a computer, we need dollars. When we buy all those goods that we give away new, we need dollars. That again reinforces the "credit is for people you know, currency is for people you don't" distinction.
Barter is used when a previous currency system collapses. The currency is no longer guaranteed to be accepted, so people want hard goods that they know they can use. But barter is an unstable equilibrium: as you mentioned, currency is just barter where one particular good becomes so widely accepted that people will take it not because they want it, but because it can be traded for other things that they want. There are reports of the Bosnian War [2] that described how alcohol and ammo quickly became pseudo-currencies because they were universally accepted and could easily be traded for what you actually needed.
Graeber isn't wrong, but as an anthropologist he over-indexes on the within-group interactions. There are lots of documented examples of currency emerging spontaneously from trade between groups where the groups all mutually decided that one type of object had value.
[1] https://news.ycombinator.com/item?id=49708431
[2] https://www.scribd.com/document/664716931/How-I-survived-a-y...
In some prisons, it's fish packets from the commissary.
https://fee.org/articles/how-a-fish-became-prison-currency/
> It speaks a lot to the power of financial incentives
Also, to the power of modern-day cryptography that rubber-hose and evil maid (backdoors) are the only viable (even if expensive) alternatives.
> the government disappears, there are really only two fundamental technologies needed to reboot everything: money and contracts
Both of which require "governance", but post-collapse, it may be of form that may not benefit the collective.
It doesn't demonstrate the security of cryptography, just that entities exist with sufficient skill and knowledge for supply chain attacks but lacking cryptographically relevant mathematics.
It doesn't prove the hardness assumption, if it did we could trot forward any toddler and ask if it knows the factors to some RSA product, and "prove" hardness assumption for factoring integers...
Sir Terry predicted this, in his C. M. O. T. Dibbler character[0].
I was just thinking about click fraud, and how I'll bet that a significant number of clicks on sites are now being driven by simple (they don't need to be too complicated) LLMs.
[0] https://discworld.fandom.com/wiki/Cut-Me-Own-Throat_Dibbler
I always wonder to what degree these omissions are really accidents. There must be some fraction where 'the hacker did it' was baked in from day #1. Not saying that that is the case here but I've seen some pretty questionable stuff that is supposedly very secure (bank security tokens for instance), where there was ample space left in the devices and no anti-tamper measures beyond the case being glued shut. Some even have replaceable batteries for convenient access to the interior right behind the keyboard.
After the Hezbullah pagers incident, the basic assumption has to be that every possible supply chain attack you can think of is realistic.
And yet, you could point that out to lots of people that place hardware in extremely sensitive locations and they most likely won't believe you because to do so would require a lot of prepwork. And right next door sits a few hundred million worth of gear...
I consider my phone compromised and will not do banking on it at all. The rest of the world is living in blissful ignorance that will burn them some day.
This is a big part of my problem with crypto and why I'm bearish on it breaking through to normies. Traditional financial institutions just seem so much safer all in all, not to mention having far better UX.
The big thing traditional institutions give you is logs of everything. Sure if I get your account number I can take all your money - but there are traces of that and so it is easy to arrest me after the fact.
Don't give out your account numbers, there will be a lot of hassle should an evil person get it. However you have a reasonable change of getting your money back in a couple years. (this is also why you get warning about some countries - a few will not cooperate with traces and so the money is lost)
There's also the Federal Deposit Insurance Corporation (in the US).
I think it also encourages us to rethink specialized and hardened advices versus general ones.
The same attack on every desktop and laptop would be... significantly harder.
I don't get hardware wallets that have you enter the key on another device. Or don't show the transaction on the hardware device's screen, with every destination and amount, with a button to confirm on the device. Or trusting a wallet to generate a random seed. Or not using the most entropy possible (e.g. 24-word seed). Anything less is dropping the ball.
Got worried there for a second about the mokka pot I got through Amazon instead of Bialetti.
Would love to hear people's thoughts on this excerpt from the Epstein files in light of these disclosures:
--------------
From: Vincenzo lozzo
Sent: Monday, July 2, 2018 8:04 AM
To: jeevacation@gmail.com
Subject: Ledger wallet warning
Attachments: image1jpeg; Untitled attachment 00284.txt
In case you hold any coins in it, please don't spread this as they h=ven't released any of the information yet.
As for what is worth, the other wallets seem just as bad
--------------
Links:
https://www.justice.gov/epstein/files/DataSet%2011/EFTA02501...
https://www.justice.gov/epstein/files/DataSet%2011/EFTA02507...
https://www.justice.gov/epstein/files/DataSet%209/EFTA008603...
https://www.justice.gov/epstein/files/DataSet%2011/EFTA02505...
I don't own any crypto, but if I did, I'd probably choose to use a multisig setup with 2+ signers, including at least one (regularly pentested) software wallet.
It depends what you do with your coins. Hardware wallets are meant to be used for people that frequently trade and need to sign transactions.
I always thought it is stupid to HODL using a hardware wallet. For HODLing, just get a random computer (no mailorder) and run debian13 with electrum (it is in the official repo, not an external package hence protected by standard debian safeties). Once you generated you keys, back them up and either wipe the machine, or at least airgap it.
Extra bonus: Raspberry pi 5 runs debian 13 out of the box.
Here I am using an iPhone app like I have been for a decade, feeling safer than ever. I'm really glad I didn't jump on the hardware wallet trend.
Not sure if your comment invalidates the context: your iPhone app (or hardware or iOS, etc) could have a bug that was not discovered yet. It's all about attack vectors, and opponent motivation and resources.
Even iPhone apps:
https://www.reddit.com/r/Bitcoin/comments/1x46gnh/a_fake_cry...
It always depends how much money you got in the wallet. People in the crypto space go super paranoid, 2-of-3 signing schemes with top-notch security, hardware legers, metal-plated keys that are burried in the woods etc, and in the end they hold less than 1000$ in the wallet... All safety measures should be chosen relative to the amount you are actually securing.
The idea reminds me somehow of bank card ATM skimmers from old times like this one (2009): https://www.consumerreports.org/consumerist/heres-what-a-car...
> this is incredible stuff...
Is it? The theory and even the implementation is literally a gas station credit card skimmer for crypto. I do agree that anyone dismissing attacks on Ledger was foolish, but mostly because Ledger is an obviously low-quality product on even a cursory inspection, not because we need to become even more paranoid conspiracy theorists.
> So the secure element ain't tampered with.
Back in the day, RSA SecurID hardware tokens were completely physically sealed, with no room for a backdoor. Tampering with them in any ways destroys them or makes it physically obvious. That's a physically secure design. This Ledger thing looks more like a consumer toy.
Not to contradict your point, but in 2011 RSA's SecurID backend servers were hacked. TOTPs require shared secrets, and their server had all the secrets to the SecurID keyfobs they managed. Security is hard.
Multiple crypto-experts said that the safest crypto wallet is a recent iPhone in airplane mode which is only used for this purpose. Because it's much harder to implant that your average hardware crypto wallet.
Why is it harder to implant?
I'm going to guess it's a number's game, you might be able to do it with an iPhone but it's not guaranteed to go to a crypto user, whereas the other one is a bespoke system for the purpose.
I presume because iPhones have a secure TPM and nobody is targeting them for crypto supply chain attacks.
The hardware is much more sophisticated, miniaturized, and high-speed, and the supply chain is much more generic; a Ledger is a really primitive piece of hardware with a simple display interface and a ton of empty space inside it. An iPhone has no wasted space and extremely high-speed onboard buses that would be hard to sniff. Additionally, with Ledger, you know that every customer is going to be using the device to access crypto, so it's an easy target nearer the head of the supply chain. With an iPhone, you have no idea what end-user to target the implant against.
You can walk in to an official Apple store and buy an iphone direct almost anywhere in the world. Crypto thieves would have to have compromised the entirety of Apple's supply chain and found space inside the iphone to fit a whole spy chip (of which there is basically none).
Or just a single apple store sales employee...
right, so you'd have to know the store with your victims upfront, know which ones to give these highly expensive implanted iPhones to (or have a lot of units), be able to always bring enough for the specific colors the customers want....
On the other hand, the attack surface of an iPhone is huge compared to a dedicated hardware wallet, and it's hard to keep it in airplane mode and actually transact your coins.
You can use QR codes or USB sticks to sign offline transactions, same as with a hardware wallet.
"crypto-experts"
How about if you build your own airgapped hw wallet? There should be plenty folks here who would be capable of doing so. (Doesn't even have to be the most hardened and audited implementation ever since you won't release this to anybody.) This makes you vulnerable to purely very targetted attacks.
As long as the cost of sucha single-target attack isn't substantially below its potential upside, you should be safe.
Otoh, it's only meaningful if you have more than just toy assets in there.
There should be a range between those two though that would contain lots of folks comfortably.
> How about if you build your own airgapped hw wallet?
Also known as buying a laptop, removing the WiFi card, and putting stock Ubuntu on it.
Yeah, the problem with "crypto hardware wallets" is the same as the problem with "secure phones for drug dealers" - they are an extremely juicy targets, you KNOW that any user of them is your target.
> or "only existing in the mind of a paranoid person" did actually happen.
This reminds me of the 2020 case where a union organizer thought there was a spy camera inside a utility pole outside his house. It was in a conspiracy subreddit, so it seemed like the deranged ramblings of a ravingly-paranoid stranger. But they found the addresses of the IP cams and had plenty of evidence to corroborate it.
Now, Flock cameras are just normal.
I think the 2020s will be defined by this trend. "Things which only existed in the minds of a paranoid person" becoming normal parts of daily life.
Most large cities in the world have had thousands of public CCTV cameras for decades. Traffic enforcement cameras have been super normal for even longer.
I am not talking about those. These cameras were targeted and pointing directly into peoples windows, set up by the local police department, under the guise of being electric utility boxes.
Here are two sources on the matter:
https://www.reddit.com/r/conspiracy_commons/comments/gin79z/...
https://www.fox13memphis.com/news/activists-find-camera-insi...
In August 2020, this was unbelievable, and it would have been considered reasonable (if wrong) to dismiss OP as paranoid, especially for the subreddit they posted in.
> Now basically: every single attack that's been described as "theoretical" or "far-fetched" or "only existing in the mind of a paranoid person" did actually happen.
It's predictable: The ROI of attacking cryptocurrencies in this manner is high enough to make expensive attacks worthwhile. It doesn't make other expensive attacks on typical end-users worthwhile, and they remain far-fetched.
Ah, but typical end-users is only one class of targets, industry is another and there the pay-off can be substantial.
> No matter whether you like or hate or don't care about cryptocurrencies, this is incredible stuff...
> Now basically: every single attack that's been described as "theoretical" or "far-fetched" or "only existing in the mind of a paranoid person" did actually happen.
Huh? Nothing here is theoretical or far-fetched. Hardware attacks of this sort have been documented for decades and basically part-and-parcel for most intelligence agencies, from the US govt installing backdoors in Cisco hardware to the exploding pagers for Hamas. This is not even the first hardware wallet attack documented on the internet (although it might be the largest-scale one).
It's just that hardware attacks are complicated, expensive, and risky, so they're usually done in a targeted manner. The only news here is that the crypto community painted a gigantic target on their backs by inventing a currency that can be taken from them with zero recourse, broadcasting it to the world that they own a lot of it, and then buying cheap hardware from overseas retailers to "protect" their assets. So all of sudden, it was profitable and relatively low-risk to cast a wider net.
It's fascinating in the sense that we're discovering from first principles why the financial system works the way it does. The damage caused by cryptocurrencies has been really pretty staggering, for little real benefit.
It is far-fetched because it is an attack by thieves on consumers, not a state intelligence agency and intelligence targets. It's far-fetched for me to fly an B-2 bomber, but it's been commonplace for US government for decades.
I remember chatting with about AI a few months ago about the issue of foreign RAM sticks being able to cooperate with websites to serve different files/instructions, undetectably. Scary stuff.
Are you sure whatever the LLM said was actually credible though?
This is why I sold my bitcoin early - all those years of reading Phrack. Sure, it was $300 at the time and I could have made more, but I had no idea how to securely _store_ it. Still don't.
You are king sensible. Well done. Just $90,000 per BTC worse off ha ha.
I had 3 whole bitcoin. Lol.