Until there's a YubiKey 4C nano, I'll wait. Having something of that size sticking out of my computer is not really practical. Not having it inserted defeats the whole point.
How so? I would keep this on a keychain or lanyard (it looks rugged enough to handle that sort of environment). When I need to authenticate, I plug it in, when I'm done, I unplug it. That seems a lot more secure than leaving it in the computer all the time. If someone gets my computer and the YubiKey is always installed, that sort of defeats the purpose of having a separate hardware security device. In that case, why not just use Keypass?
I've had the standard USB version on my keys for about a year at this point. They're in my back pocket and take a bunch of abuse. Still works just fine.
Direct physical access to your computer is not the only thread. Even if you have in your computer all the time it gives you better logins, easier and safer. Specially protection from phishing.
When I leave my computer out of my eyes it usually locked (unlock with password), so I don't expect somebody to quickly go in and do something. If I leave for longer, I sometimes pull the Nano out and put it somewhere I don't lose it for a while.
The advantage of your system is that you can use the U2F screen unlock instead of the password.
Why do you need to keep it in? I have the blue U2f key and it's much larger. I just keep it on my keychain and only insert it while signing into something that requires it.
This isn't something you should leave plugged in. It's a key after all used for authentication. Keep it on your keychain or in your wallet and plug in as needed.
The security is that it requires physical presence (your finger completing a circuit) to perform authentication. Leaving it plugged in doesn't detract from that.
I'm kind of wondering what the benefit is over having something like Yubikey at all instead of something that's just software when you just leave it in all the time.
Trust: a hardware token has a very limited interface where it can be attacked compared with a general purpose computer or phone.
Take the devices you use: how many exploits have there been in the last year where an attacker who could get you to click on a link, view an image, etc. could run code on the device? Maybe you have something like the iOS sandboxing between application which would stop a compromised browser from compromising your authenticator app but there are many cases where attackers have been able to bypass that.
Using a hardware token prevents almost all of those attacks and means that if you are compromised you'll have an easier time regaining control. They also have some nice benefits such as not running out of battery when you need them in an emergency.
I specifically use it to store my gpg/ssh keys on it. The keys are generated on the device and have never been in any computer's memory. The key answers challenges from an SSH server with the appropriate response. I do not want to insert something dangling off my key every time I do git push.
If your SSH private key is on the Yubikey then you will not lose your private keys. Even in the case of U2F, the attacker will not figure out your U2F private keys or even all the places you are registered.
His point, which is correct, is that you'll persistently lose access to your server anyways, because a backdoored SSH client is almost as bad as a compromised key. I use a Y4 for SSH, but it's good to be clear-eyed about the limitations.
In my opinion it's not worth the effort (and certainly not $50). It makes marginally +X harder to exploit yet marginally +X inconvenient to use = typical security through obscurity.
My bad, it's not what classic "through obscurity" means. Instead I meant something that makes exploitation more "obscure" (you need to be prepared to hijack a server vs simply leak the key).