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There is no full stop there... A password that is sufficiently long will never be cracked no matter the hashing algorithm in use. Passwords are easily transferrable and can be communicated to a third party in the event of an emergency. They also provide tunable security, where you can trade off security for convenience if you want.
Some (not all, I know) passkeys are tied to a device. Stolen device means stolen passkey, and it's potentially very difficult to recover from that. Passkeys are also locked to a certain standard, passwords have no such restrictions.
Tbh I don't understand the move for passkeys replacing passwords. They should become the second factor when a user wants additional security. They're perfect for that niche.
Passkeys provide a secure way to authenticate while also being convenient. With the tradeoffs you mentioned.
I don’t like the push for only allowing some vendors to issue keys and to not allowing exporting and backups. And password should still be an option.
Password can also very easily be stolen during phishing, while passkeys are phishing resistant.
And while a hardware passkeys can be stole and used, those who steal them will still need the pin to use them, and the two major hardware passkeys options now (Yubico and Token2) both have some pin brute force protection in their firmware to slow someone down long enough for an account to be secured another way.
As for passkeys on phones, they require the pin or biometric used to unlock the phones to be used.
"Difficult to recover from" was referencing setting all of your accounts back up. I should have also included "lost" and "broken" to make that more obvious. Many hardware (most? all?) passkeys do not allow for backup and restore.
But I do see an issue with stolen hardware passkeys being used for access too if they're a primary factor. With the mitigations you mentioned hopefully holding up.