Last Updated on
NEW YORK (InsideBitcoins) — While many bitcoin enthusiasts look at hardware wallets as the “holy grail” of cryptocurrency security, the reality is these devices are still a bit too expensive and impractical for most people to use. Bitcoin-focused hardware devices, such as the TREZOR, are awesome in the eyes of a bitcoin user, but they don’t make much sense to the average person on the street. After all, purchasing a $100 wallet just to be able to use bitcoin securely is not exactly the best sales pitch for digital currency.
Having said all that, bitcoin hardware wallets could still have a bright future. That is, if they end up being about more than just storing bitcoin private keys.
An all-in-one hardware device for security
Although computer geeks have known this for quite some time, the plethora of security issues involving the computers we use on a daily basis are now becoming more obvious to the mainstream. Many have become more security conscious in the aftermath of the Snowden revelations, but real solutions for enhanced security of passwords, communications, and data are still not available to the masses. This is where hardware devices come into play.
The types of hardware wallets that can be used to sign bitcoin transactions offline can also be used to securely log in to websites, store passwords, encrypt and decrypt messages, and take care of many other enhanced-security measures. These sorts of hardware devices already exist for multi-factor authentication, but bitcoin is basically bootstrapping more advanced versions of this hardware.
The secure online identity system
In the near future, these hardware wallets could be plugged into secure online identity systems. The same bitcoin address that stores your bitcoins could also be used to log in to websites and build an online reputation.
Instead of using a password manager and receiving a two-factor authentication message on your phone every time you want to check your email, you could simply click a button on your bitcoin hardware wallet to access all of your digital cash, social media accounts, and messaging applications.
Log in and pay for services anonymously
As the use cases for hardware wallets expand outside of the bitcoin ecosystem, these devices can also create new applications that would not have otherwise been possible. For example, subscription-based content models suddenly become rather practical if everyone has bitcoins and their online identity stored in a hardware device.
Instead of media outlets tracking as much of your online activity as possible and selling that data to advertising companies, content creators could offer an opt-out option where there is no need for advertisements or tracking user activity. With a $1 bitcoin payment to the content creator, access could be granted to the owner of that bitcoin address for one month.
The login process is as simple as signing a message with the same bitcoin address that was used to make the original subscription payment. The audience member now has access to all of the content on that particular website, and the content creator knows nothing about who is consuming the content. This type of monetization model could be used to increase traffic from viewers and readers who are wary of sites that use various tracking and analytics scripts.
Coming to a TREZOR near you
It should be noted that this isn’t some sort of pipedream. The development team behind the TREZOR is already working on BitID software that is compatible with their hardware devices. As time goes on, it’s becoming clear that these hardware security solutions are about much more than bitcoin.
You can follow @kyletorpey on Twitter.