Every week I give myself a new major crypto task to complete and this week it is to select a hardware wallet. For this exercise I will be building an article as I go through the process, and I honestly didn't select one until finishing the article.
What is a Hardware Wallet? Private Keys vs Public Keys
A hardware wallet is a set of "private keys" that you store offline. The private keys are what is needed to access or send your crypto. Public keys, on-the-other-hand, are used to receive crypto and thus can be shared with no downside (unless you see someone sending crypto to you as a downside). For example, if you would like to send me some BTC as a thank you for writing this article feel free to send it to my "public" address - 37DpB3u4dMNTY5kL1io523J2rAV5ghnNZF
Because you store your private keys offline (in a "cold" hardware wallet), your crypto is much safer. A private key is similar to your email password, once given away whoever holds that private key has equal rights to the crypto due to the decentralized nature of our beloved digital currencies.
A Hardware Wallet does not actually store your Crypto
This was an area of confusion for me and why I was originally hesitant to use a hardware wallet. In using online or "hot" wallets, my crypto seemed to be stored within that wallet itself when I first got into the crypto space. A hardware wallet doesn't hold your crypto, it just holds the (private) keys to access it. This was critical for me to understand as I like to have my crypto work for me earning interest, etc., so the thought of my crypto just sitting there on a hardware device not growing outside of simple price appreciation was not very appealing.
What a hardware wallet is basically doing is controlling the keys to access your crypto even though it is stored on an online platform.
Where else can I store my crypto? Exchanges and Digital Wallets
I'm actually a pretty big fan of storing crypto on exchanges. As someone still fairly new to crytpo, I like to try to keep things pretty simple if I can in a complex crypto world. I can simply buy and store my crypto all right on the exchange. It is very important for these exchanges to keep your holdings safe there or the public will simply lose faith in a particular exchange which would be a death blow. So, what happens if the exchange gets hacked and your crypto gets stolen. Well from what I can tell, and this does happen, they take the losses and reimburse you back your crypto. But since you don’t have a private key to access your crypto, you don’t technically “own” it with an exchange and many have big issues with this.
To help offset this we have digital wallets. This can be often opened on the exchange themselves or downloaded on a computer or as a mobile application. These digital wallets give you control over your private keys, but they do come with their own set of risks. You could lose your crypto if your device is lost or damaged. More importantly, digital wallets are "connected" to the internet much of the time leaving you vulnerable.
Hackers, Malware and Phishing oh my...
And herein lies the problem with being connected and just really think about how often your devices are connected to the internet. About a month ago, crytpo.com admitted they lost about $30M to hackers. If one of the biggest exchanges in the world can get hacked, don't you think you can to?
Google Cloud is previewing a new feature called Virtual Machine Threat Detection to help defend its customers from malware that can gain access to your private keys stored online. If Google is working on trying to solve the problem, you can bet it exists. If a malware program steals your private keys, you can bet they end up in the hands of someone who is more than happy to transfer all your crypto to their own wallet.
We have all heard of phishing schemes in which you get a legit looking email from let's say a major exchange you happen to use. There is a call to action, and you click on the link, log in and poof your crypto is soon gone. The phishing site mirrors the site you were expecting, and you didn't notice the internet address was one letter or character off until it was too late.
Now to the BIG Question - Which Hardware Wallet is right for me?
After reading reviews, blogs, and watching Youtube videos the answer really depends on your individual circumstances and preferences. There are a number of different options out there, but I narrowed my search to my two of the better-known hardware wallets in the end. I considered a few that didn't make the final list including BitBox02 since it only supported 5 cryptocurrencies and the Ellipal Titan which didn't support Windows and utilizes a camera system that I don't really like.
I also considered the lower end models from both of the options below, but decided the extra features are worth the extra price. If you want to go the cheaper route, these other models are well worth a look.
Ledger Nano X vs Trezor Model T
In the end it came down to two companies that have been in the hardware wallet industry since crypto was still in diapers. I looked at six key differences between the two and then picked my personal winner.
Platform - both support Windows, Linus, Mac and Android. Ledger Nano X also supports iOS and Chrome OS. Edge - Ledger Nano X
Supported Coins - both support over 1,600 coins with the Ledger Nano X supporting a few more but not enough to make a difference. Even (slight edge to Ledger Nano X)
Open Source - while the Ledger Nano X does have a lot of open-source code it is not fully open source like the Trezor Model T and can't' be made available for third-party testing. Edge - Trezor Model T
Interfaces - both support USB-C with the Ledger Nano X also supporting Bluetooth and the Trezor Model T supporting microsSD. Edge - Ledger Nano X (for me personally)
User Interface - The Trezor Model T offers a larger touchscreen with a simpler interface in full color. Edge - Trezor Model T
Cost - Ledger Nano X sells for $149 while the Trezor Model T sells for $215 according to their official sites. Edge - Ledger Nano X
My Personal Winner - the Ledger Nano X
Again, this comes down to personal preference and both look to be great choices. For me, there are two key factors that gave the Ledger Nano X the edge. First, it supports iOS and as an iPhone user this is critical. Second, I like the fact that the Ledger Nano X supports Bluetooth technology so I can connect it to my computer without physically having to connect. The Ledger Nano X has had a mobile application out for some time and the lower price point means I can invest the difference into more crypto. I also like the design of the Ledger Nano X with its metal case versus the plastic of the Trezor Model T but I can also see how others would prefer the look off the Trezor.
Final Pieces of Advice
There is no perfectly safe way to store and hold your crypto but a hardware wallet does offer and additional level of security which is a good idea once your crypto net worth is at a point that needs it. Ledger's customer database got hacked with personal information such names, addresses and email addresses stolen. Personally, I will use a different email address than I use for most of my crypto transactions when ordering one as a result. Meanwhile, Kraken Security Labs was able to hack a Trezor hardware wallet in 15 minutes due to a "device vulnerability" which has since been corrected.
When buying a hardware wallet, please do so directly from the manufacturer. It may be tempting to buy a hardware wallet from Amazon or another online marketplace but doing so could put you at risk. If someone tampered with the device, they could hold your private keys as well giving them access to all your crypto. Be sure to get your hardware wallet directly from the manufacturers website and you will be able to tell if the packaging has been tampered with in anyway.
So, what hardware wallet do you use and what do you like/dislike about it? I'll wait a day or two before finalizing my order so you can change my mind before I pull the trigger.