You’re a progressive person, you value your time and like to feel the pulse of technology development. You see cryptocurrencies’ price continuously rocketing through the roof and ask yourself “Why not?”. And so you’re buying Bitcoin (or any other digital currency you find appealing).
If you read our previous articles, you already know how to purchase Bitcoin using one of the popular Bitcoin online broker platforms. You’ve used our instructions to buy Bitcoin on, let’s say, Coinbase. The prices keep soaring and you realize you’ve made very nice profit.
However, the security solutions offered by online wallets and exchanges are no longer enough for you. You are looking for a completely different level of protection for your assets. Knowing that North Korean hackers have stolen $90,000 worth of Bitcoins last year, you want to stop being worried about your digital money. What can you do in this situation?
Hardware wallets – adding a new dimension to Bitcoin security
Using an offline hardware wallet appears to be the most effective solution. Hardware wallet is a special device that allows you to keep your private keys away from Internet and even from your computer. Ledger Nano S and Trezor are two of the most popular hardware wallets in the marketplace. Both devices were released with an open-source code, which means you won’t have to throw it away if the companies fold. We tested both of them to see if there’s any differences.
Ledger Nano S
Ledger Nano S looks like a USB stick. The only difference is that your Ledger will have a screen. This way you can run the device independently from the PC. Even if the computer is infected with malware, your cryprocurrency stays safe. Two buttons on top of the device allow you to control pretty much everything, from setting your PIN to scrolling through the menu.
Ledger set-up is incredibly simple. All you need to do is follow instructions on the screen. They will guide you through the menu and help you set a PIN and a so-called “passphrase”. The passphrase is very important because it allows you to transfer your data to a new device should your current one get broken or stolen. All it takes is to enter your 24-word passphrase.
Next step is downloading a few Chrome extensions: one for operating your hardware and then there’s also extensions for your wallets depending on which cryprocurrency you wish to store. As of now, Ledger supports Bitcoin, Ethereum/Ethereum Classic, Ripple, Litecoin, Dogecoin, Zcash, Dash and Stratis. If you want to make a transaction, the program will require you to confirm the action by pressing a button on your Ledger. Moving money without confirmation is impossible.
Pros: Ledger is a compact hardware with a simple two-button operation. Supports most of the cryprocurrencies. Quite cheap as compared to Trezor.
Cons: Sometimes, the build quality appears to be somewhat questionable. During our test, we would press the button once and the system would take it as two clicks. It can cause some difficulties during the initial set-up.
This hardware wallet provided by a Czech company (Trezor means “vault” in Czech) is very similar to Ledger. The wallet too has its own screen, which means you won’t need to worry, even if your PC is infected with malware. Set-up process is also similar to its rival: your digital currency will be protected with a PIN and a 24-word passphrase. The main difference between the two wallets is the interface.
Whereas Ledger will ask you to press the buttons until you’ve input your desired PIN, Trezor displays the numbers from 1 to 9 in random order, and asks you to click the corresponding numbers on your PC’s screen.
Chrome extension by Trezor looks glossier than the Ledger’s. While both devices have a similar functionality, Trezor looks like a more expensive product thanks to the glamorous visuals. Lack of Ripple support by Trezor is, probably, the only major downside. Ripple is the only cryptocurrency that is invested in and supported by traditional financial institutions, so being able to store it offline would have been nice.
Pros: High productivity – applies to both, the software and the hardware.
Cons: Higher price, supports less cryptocurrencies.