How does TREZOR work?¶
The Bitcoin protocol works by sending signed notes of payment across the Internet. These messages (which are referred to as Transactions) are signed using a special algorithm. In order to sign a Bitcoin transaction, you need to have a special key or password. TREZOR holds that key. Since TREZOR’s job is to help you securely sign Transaction messages, you can think of your TREZOR as a modern-day stamp.
(image credit Petr Kvashin)
TREZOR is better than an ordinary mechanical stamping mechanism, however. Each TREZOR has a PIN code. If your TREZOR gets stolen, thieves cannot misuse it to steal your money. Due to TREZOR’s clever design, even if the computer with which you use your TREZOR is hacked, the hackers will never know your PIN.
In contrast to the various pieces of software and web services that allow you to store your Bitcoins TREZOR is secure. Software and web-based solutions keep your Bitcoin signing keys either on your computer or worse, on the Internet! When you use such a service, hackers can easily steal your Bitcoins by hacking your computers or hacking the servers of the services that you use.