Interested in learning how to safely store your cryptocurrency in a secure environment? With hardware wallets, you’re always protected and to teach you the ins- and outs.
Table of Contents
What is a hardware wallet?
For storing your cryptocurrency, we recommend purchasing a hardware wallet, also called Bitcoin locker or Bitcoin safe. This is the safest wallet to store and use your crypto. A hardware wallet is an offline device which you can connect to your desktop.
The biggest advantage of such an offline wallet is that you can store, receive and send Bitcoins or altcoins more securely. This is because the wallet is not continuously connected to the Internet, making it less likely to get hacked. Hardware wallets enable you to connect to different websites and exchanges without having to provide your private keys, meaning these are always safely stored on your device only. This makes it one of the most secure ways to interact with these decentralized applications.
Storing cryptocurrency via a wallet is also known as “Cold storage”. This means that you store your password, the so-called private key, offline. Other ways of storing crypto are a paper wallet, brain wallet or a wallet on an offline computer.
Why use a hardware wallet?
In the past many Bitcoins & altcoins have been stolen because online wallets were hacked, as it’s much more vulnerable. By storing your cryptocurrency on a hardware wallet they are stored offline, with the keys safely stored in your hardware wallet rather than providing it on multiple locations. It’s easy to use and pretty efficient for transferring your crypto.
How does a hardware wallet work?
The moment after you purchase and start using a hardware wallet you connect it to your computer and configure it. You set a pincode or password and write down the wallet seed on the supplied card. It is important that you fill this in correctly and double-check it.
The seed phrase should be kept in a safe place, and never be shared with anyone. So if your hardware wallet breaks or is lost, you can use the seed phrase to restore your wallet and access your funds on a new device.
What are the best hardware wallets?
When looking for the best hardware wallets, we compare a couple of characteristics with each other:
- Price/quality, based on your wishes
- When can you best use this wallet?
- Are you looking to store solely Bitcoin or also altcoins?
- Are you using the hardware wallet for storage, or for active trading purposes?
If you want to trade more actively then ease of use may be of importance. When choosing a hardware wallet, also pay attention to the number and type of cryptocurrency the wallet supports.
To help you choose the best wallet we will compare a few of them.
Ledger Nano S
- Safety: The Trezor scores the highest in terms of security. The Ledger Nano S, Bitbox and Keepkey have had problems with security in the past. This makes these wallets a less secure choice as far as we are concerned. The Trezor has experienced the fewest security problems and comes out on top as far as we are concerned.
- Ease of use: In terms of ease of use, the Trezor & Ledger Nano S are a very good choice. Via the webpage you can click on ‘wallet’ and then you can log in with your device to get to an overview of all your wallets. For both wallets you only need to update the firmware once in a while so you have the latest version and your hardware wallet remains secure.
- Track record: From the track record you can see how long a product has been on the market in reality tested without too many major problems. The Trezor and the Ledger Nano S are the forerunners in this, Keepkey and Bitbox were introduced at a later stage. The longer a product exists the more it has been developed and the smaller the chance of serious problems arising in the future. The developers of these hardware wallets are not sitting still either and continue to develop their products to ensure quality.
- Open source: Preferably, you want a wallet whose programming language is accessible to everyone. We also call this ‘open source’. In an open source wallet, anyone can check the wallet for errors and suggest improvements. For both the user and developer this is a way to improve security. This reduces the chance of errors remaining that could allow a hacker to gain access to your wallet. For example, an example of the most well-known open source wallet is the MyEtherWallet (MEW) of the Ethereum blockchain.
- Hidden wallet: A hidden wallet “hides” a portion of your coins in your wallet, so to speak. Several hardware wallets have this option. This is a good way to secure your coins even better. If someone manages to get hold of your password, your coins are not immediately visible. This reduces the chance of theft considerably. Examples of wallets that have this feature are the Ledger Nano S and the Trezor (note: this is an advanced feature, found in the account settings).
- Altcoins: There are several wallets in circulation, some are better for storing Bitcoins and others are again more suitable for Altcoins. In fact, almost all wallets can store ERC-20 tokens, these are tokens that use the Ethereum blockchain. The majority of all crypto currencies are so-called ERC-20 tokens. You can then transfer these tokens to your hardware wallet quite simply via the Ethereum address. All known wallets support this.
Both the Ledger Nano S and the Trezor are excellent choices for any investor looking to securely store their crypto currency. Both of them can be used to your advantage and their functions are similar. In this regard, it is mainly a matter of preference. However, to ensure the best security we still recommend you go for the Trezor if you’re in doubt.