We say, "self custody – hardware wallets." It sounds so simple. Until you dive in.
I was explaining to my parents that they should get a hardware wallet to purchase and self custody. I didn't want to just tell them exactly what to do, I wanted them to feel like they understood. So when they asked what to get, I started walking them through it.
First, choose a wallet that is bip39 compatible. I got my first "are you serious?" look. But we got past that. They said, "ok, so if the wallet is industry standard, then if that wallet breaks and I get another one, I just enter those seed words and I'm fine?"
Hmmm… not exactly. The new wallet will have to have the same derivation path, or you might not have access to the same addresses. So I told them to just buy the same wallet. They asked, what if that one goes out of business? Or if the government bans them and they can't get another HW. I said, just get a software wallet on your phone.
But then, I started thinking, would that support bip39 with the same derivation path?
I realized I need to do more research. And I've owned bitcoin for over a decade…
My parents were not interested in researching, they just wanted to be done with the conversation. Everyone buys bitcoin at the price they deserve. Apparently my parents deserve a future price…
The community really needs to come together and agree on some consistent rules (that will maintain backwards compatibility everywhere) that everyone can feel comfortable with.
From a brief search, I don't even think the bitcoin core software would support importing a ledger or trezor backup mnemonic.
Until the bitcoin ecosystem matures, bitcoin is great for techies and people willing to put in the effort to learn, but lazy speculators are going to continue to get wrecked on centralized exchanges and average people are going to continue to just read about it in the paper.
Edit: while I was posting this, another user was commenting:
Confusion about compatibility of seeds between software wallets. Kind of reinforces my point.