.Thinking about getting a hardware wallet but haven’t yet? We have a few reasons that should make you reconsider:
- Over $460 million in bitcoin hijacked from Mt. Gox (June, 2011)
- Bitstamp hack leaves $5 million in bitcoin missing (January, 2015)
- Popular exchange Bitfinex hacked in $72 million bitcoin heist (August, 2016)
- $655,000 in Verge taken in hack of CoinPouch wallet (November, 2017)
- More than $60 million in cryptocurrency stolen in NiceHash hack (December, 2017)
It’s often mistakenly stated that Ethereum or Bitcoin has been hacked. In reality, apps, online wallets and exchanges are what actually gets hacked. Thieves go where the action is. The acceleration in value of cryptocurrencies has made any intermediary that holds cryptocurrency a target.
One line of defense any holder of cryptocurrency should consider? A hardware wallet.
TL;DR We use the Ledger Nano S hardware wallet to hold our cryptocurrency.
The Ledger Nano S, a popular cryptocurrency hardware wallet.
What is a hardware wallet?
A hardware wallet for cryptocurrency is a physical device that stores your public and private key set and allows you to access Bitcoin, Litecoin, Ethereum and other alt coins. The hardware wallet has algorithms that manage the keys and allow you to transact on the blockchain network just like the wallets that you find online or through exchanges like Coinbase or Poloniex. A hardware wallet will generate it’s own private key on the device so it is only accessible to the user who holds the wallet, as opposed to stored on a server somewhere else.
Hardware wallets minimizes the risk of your wallet being hacked, contracting a virus, or having your currency stolen.
What are other types of cryptocurrency wallets?
Web/online wallet – These store your keys on a remote server managed by a third party company. The risk of web wallets is that they could be hacked or accessed by someone else, or the company managing the server could have issues or errors leading to your wallet being compromised.
Desktop wallet – This type of Bitcoin wallet or other cryptocurrency wallet is stored on the desktop of your computer as opposed to an external server. Like any desktop application, it runs the risk of a computer crash, contracting a virus, or being accessed if your computer is hacked.
Smartphone wallet – A smartphone wallet can either be an application that stores your currency and private keys, or one that accessed a server on the web where they are stored. These are essentially the same as a web wallet or desktop wallet, but on a smartphone.
USB drive – This is different from a hardware wallet. Many people store their private keys on a USB stick, also known as a flash drive or thumb drive. The issue with a USB drive is that when it is plugged into a computer, software on that computer can access the drive and taint or steal the private keys.
Paper wallet – It is possible to keep your private key and wallet address printed on a piece of paper. Some paper wallets have a QR code in addition to your wallet address printed on it. Paper wallets are excellent for security, but are lacking in the practicality department.
What are the advantages of a hardware wallet?
The biggest advantage of using a hardware wallet is that the keys, currency and information stored on the wallet can only be accessed if the wallet is in your possession. Hardware wallets minimizes the risk of your wallet being hacked, contracting a virus, or having your currency stolen.
- The encrypted hardware wallet requires levels of manual security such as a pin code to confirm before a transaction takes place.
- For cryptocurrency to leave your hardware wallet, you will have to confirm the transaction on that device (not on your computer). This keeps anyone else from being able to hack in and transfer your currency.
- Hardware wallets can host multiple cryptocurrencies. Many online exchanges or wallets will be specific to only one cryptocurrency.
- The hardware wallet is immune to viruses on your computer since it can’t be accessed by other applications.
- Your private keys are never exposed to your computer, meaning that even if your computer gets hacked, the hacker still will not be able to access your coins.
You can think of most other wallets as online bank accounts or a credit card, while a hardware wallet is more like a safe in your home or office.
You can think of most other wallets as online bank accounts or a credit card, while a hardware wallet is more like a safe in your home or office.
Common hardware wallets
There are a number of brands and manufacturers of cryptocurrency hardware wallets. The most popular include:
KeepKey
KeepKey touts itself as the Simple Cryptocurrency wallet supporting Bitcoin, Ethereum, Litecoin, DASH and other cryptocurrencies.
Ledger Nano S
The Ledger Nano S is simple, but secure hardware wallet that is portable, easy to use and allows for multiple cryptocurrencies.
Ledger Blue
The biggest difference between the Ledger Nano S and the Ledger Blue is the Blue’s large touchscreen interface.
Trezor
Trezor is a simple hardware wallet supporting popular coins including Bitcoin Litecoin, Dash, Zcash and Ethereum.
Cheaper alternatives
There are a number of other wallet brands out there with varying levels of security, functionality and support for alt coins. Many of these will work just fine for most users, but don’t have the history and stature of a Ledger or Trezor wallet.
The hardware wallet we carry: Ledger Nano S
Our pick: the Ledger Nano S
The cryptocurrency hardware wallet that we use and trust is the Ledger Nano S.
It is a small and easy-to-use device that you can set up in minutes. The safety and security features are best in class. And, it has a small OLED screen to verify activity and transactions. It is FIDO® Certified for two factor authentication and supports multiple applications and cryptocurrencies. Finally, while it is more expensive than some of the pure commodities out there, it is safer and more functional than the alternatives.
Cryptocurrencies the Ledger Nano S supports
The Ledger Nano S provides wallets for Bitcoin, Litecoin, Ethereum, Dash and the other major cryptocurrencies as well as a number of alt coins. Secure the following cryptocurrencies with Ledger Nano S:
- Bitcoin (BTC)
- Bitcoin Cash (BCH/BCC)
- Bitcoin Gold (BTG)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- NEO (NEO)
- Ripple (XRP)
- Stratis (STRAT)
- ZCash (ZEC)
- Expanse (EXP)
- UBIQ (UBQ)
- Vertcoin (VRT)
- Viacoin (VIA)
- Stellar (XLM)
- Stealthcoin (XST)
- Digibyte (DGB)
- Qtum (QTUM)
- Other Alt Coins
Runner up: KeepKey
Runner up: the KeepKey hardware wallet
Picking a winner wasn’t easy. The Ledger Nano S barely got the edge on KeepKey’s hardware wallet, so we felt it was worth noting. The KeepKey device is solid, well made and easy to use. KeepKey’s security is on par with it’s rivals and it is straightforward to use.
If you’re looking for something with a bigger screen than the Nano S, but not as large as a Nano Blue, give KeepKey a look. One point of concern is the low number of cryptocurrencies the KeepKey currently handles. We’re hoping to see the list expand in the near future.
Cryptocurrencies KeepKey supports
- Bitcoin (BTC)
- Dash (DASH)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Litecoin (LTC)
- Namecoin (NMC)
- Testnet
If you have another preferred hardware wallet that you would like to recommend or any questions about cryptocurrency hardware wallets, feel free to leave a comment below.
