[keyb0ardninja]

I must be missing something, but can someone explain what's the point of a hardware wallet? Why not just use a password manager?

Hardware wallets seem to have so many downsides, as far as I can understand.

You can keep multiple copies of your password manager's database (something like a kbdx file), but you won't have multiple copies of the hardware wallet. Therefore a single point of failure. If the wallet is stolen, damaged in a house fire, crushed by some accident etc. you're done. Also, can't the firmware of the hardware wallet possibly have some unknown bugs that might cause some failure in the future? Is the hardware failure-proof? No possibility of manufacturing defect etc.?

Secondly you've to buy a hardware wallet and whatever the cost, it's not free. Whereas an open source password manager like keepass is completely free (as in freedom as well as beer).

[quickthrower2]

Hardware wallet protocol involves a key phrase and password you keep secure elsewhere. You need either wallet + password, or if the wallet breaks, you can buy a new one and initialize it with the seed phrase and then use the same password.

You could use a multi purpose computer, e.g. a phone or PC and software to do the same, but they are more complex devices with more avenues to exploit them, e.g. a keylogger plus something than can upload your keepass file means you're robbed.

[rglover]

> If the wallet is stolen, damaged in a house fire, crushed by some accident etc. you're done.

This is incorrect. Hardware wallets typically come with a recovery seed. Even if the original device gets destroyed, the seed helps you to get access to your addresses/crypto. This covers against all of the scenarios you mentioned.

For example, I just updated the firmware on my device this afternoon. Before I did it, I'm double-prompted to make sure I have my recovery seed in case the update fails.

As for storing in a password manager, you certainly could. I used to print my wallets out back in the day. The hardware just makes the process a bit easier and makes mistakes on my part less likely.

[nemo1618]

The point is that your keys never reside on a general-purpose, internet-connected computer. It greatly reduces the attack surface.

As for SPoF -- hardware wallets are initialized with a seed phrase. You can make as many copies of the seed phrase as you like. You don't even need to load them onto a new device if yours is lost or stolen; the phrase alone is sufficient to re-derive the keys on any computer (although you will sacrifice some security if you decide to recover that way).