This developer is working to bring hardware wallet support to Bitcoin Core

Bitcoin Core developer Andrew Chow is working to bring hardware wallet support to Bitcoin Core to offer more security and enable a broader range of script innovation. 

This long-term project of Chow’s started three years ago when he personally experienced the inconvenience of the current system. After purchasing a Trezor hardware wallet, he realized he couldn’t easily use the wallet without utilizing Trezor's Web wallet and giving away the public key.

"I don't want to use Trezor's web wallet," he told The Block. "I ran Electrum for a while, but it's really tedious to run your own Electrum server. So at that point, I thought why not just get hardware wallet support into Core so I can use my own hardware wallet with my preferred software wallet."

Beyond this "selfish motivation," as Chow put it, he believes the proposed upgrade would bring security benefits to all users by allowing them to use their hardware wallets with a full node.

"It's good for the ecosystem to have a full node that supports hardware wallets so that people who care about their key security can use a software that helps them with their chain privacy and security," he explained. "Otherwise, with every other software, you're basically just giving away your public keys and addresses to someone else who can spy on you."

However, the project has proven to be more difficult than Chow initially envisioned. The Bitcoin Core wallet as initially built is somewhat outdated and not designed for the script-focused system that Bitcoin has evolved into, he said. 

"Originally, everything was based on keys and signatures," Chow explained. "But now we're moving into a world where we want things to be based on scripts. And the core wallet just was not designed for this."

As a result, Chow has been rewriting the whole program for the Bitcoin Core wallet just to get started. Already three years into the project, he estimates that at least one more year of work needs to go into the proposal before it is completed.  

PSBT and HWI

As the first step to achieving this ambitious goal, Chow in late 2018 released PSBT, an interface for Bitcoin transactions that are not fully signed.

Chow then came up with Hardware Wallet Interface (HWI), a Python library and command-line tool for interacting with hardware wallets. With these two tools, servers can achieve hardware wallet integration even though Bitcoin Core does not directly support it. 

According to Chow, wallets including Wasabi, BTCPay, and Coldcard are currently using these tools to connect to hardware wallets.

Descriptor wallets to support complex scripts

Right now, Chow is working on the last stage of the project: building direct hardware wallet support into Bitcoin Core. To do so, he is rewriting the current program for the Bitcoin Core wallet into what he calls "descriptor wallets."

Pieter Wuille, another Bitcoin Core developer, came up with a concept called script descriptors. Currently, public keys, private keys, scripts, and other metadata all feed into each other when users try to sign a transaction. Script descriptors, on the other hand, allow users to import a couple of descriptors, rather than all the individual keys and scripts, to obtain their addresses. 

Chow's descriptor wallets build on Wuille's script descriptors and would give automatic support for hardware wallet multisignature with the integration of miniscripts and other complex scripts.

"The existing system is centered entirely around keys. We take a private key, get its public key, then we manipulate it into different addresses," Chow explained. "But if you want to do cool, weird scripts like miniscript where you can just have some arbitrary policies, you can't do that with how the Core wallet is set up now."

"Descriptors produce a script which contains keys that come from a hardware wallet," he continued. "This is changing the focus from keys to scripts."

Moreover, Chow has worked out a simple algorithm for signing, which would enable secure signing for any multisignature input without the wallet having to know of the multisignature's existence. This would also allow "dumb signers" who do not necessarily understand the inner workings of a script to sign it easily.

"They don’t have to understand scripts or Bitcoin," he said. "They just have to make an easy digital signature."

Wuille previously said that Andrew’s descriptor wallet is one of the proposals about which he is most excited.

"[Chow’s project] is a big effort to revamp the idea of what a wallet is," Wuille said at this year’s MIT Bitcoin Expo. "Just seeing the functionality of Bitcoins scripts that have been there all along actually become usable – at least within bitcoin core, but hopefully affecting other projects too – that's something I'm really excited about."