Best Hardware Wallet 2021: The ultimate comparison
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Here you will find everything about hardware wallets, how they work, which hardware wallets are available, what advantages and disadvantages a hardware wallet has, whether a hardware wallet is worthwhile for you and where you should buy a hardware wallet.
What is a Hardware wallet?
A hardware wallet is, as the name suggests, a device for your wallet. Hardware wallets are a very secure way to protect cryptocurrencies such as Bitcoin, Ethereum, Litecoin or Dash from access and to store them safely.
To store your digital coins, the device is used in conjunction with a computer or smartphone. The computer and smartphone act as a bridge for your digital currencies, the device stores your private keys to the respective currencies and they never leave the device. Hardware wallets are a form of cold storage, the private keys are kept offline and are therefore absolutely secure. And only if you have your private keys to your coins do you really own your digital currencies.
Generation of private keys
How Hardware Wallets Work: Private Key Generation
From now on, it gets a bit more technical and explains how hardware wallets work. This is interesting for those who want to know more about why hardware wallets are so secure. It is not necessary to know how they work "under the bonnet" to use them.
It all started with BIPs (Bitcoin Improvement Proposals), which are proposals to improve Bitcoin. One improvement was that instead of using long complicated sequences of numbers and letters for the private key, one could use a series of words (BIP39). This sequence (seed), usually 24 words long, is used to create private keys for a digital currency.
And this process is used by hardware wallets (not only for Bitcoin). When first created, the devices randomly generate 24 words and then use them to create addresses and private keys for digital currencies.
Private Key Definition
How Hardware Wallets Work: Private Key Definition
"A Private Key is a form of cryptography that allows a user to access their cryptocurrency. A Private Key is an integral part of Bitcoin and Altcoins. Its security structure helps protect a user from theft and unauthorised access, and serves as a kind of signpost to that user's wallet"
Transactions
How hardware wallets work: Transactions
Digital signatures are used to send cryptocurrencies. These signatures ensure that the digital currencies really belong to you. You can compare signatures to a signature. Only when I sign that I am sending a Bitcoin to another person is the Bitcoin transaction executed.
With a hardware wallet, you first create a transaction with your computer or smartphone. However, the transfer is not yet signed; the computer or smartphone would not be able to do this. Therefore, the transaction including all details is sent to the hardware wallet. When the device, i.e. the user in this case, wants to make this transaction, it signs it and sends the signed transaction - by physically pressing buttons - back to the computer and only then is the transaction made.
The first setup
The initial setup is pretty much the same for all devices. First you buy one of the devices - either directly from the provider or via Amazon - and wait for your package to arrive. Sometimes it can take longer for the devices to be back in stock at the individual providers.
check seals and closures
When your unit is delivered, the first thing you should do is check that all seals and fasteners are intact. If any seals are broken or torn, you should contact support. It could be that someone has tampered with your device and wants to steal your cryptocurrencies later. The Ledger Nano S and the Ledger Blue do not have seals and locks, they have built-in software that checks if the device has been tampered with.
connect the device and start the installation
Most devices require software to be installed for use. In addition, a manual or a link for a manual is sent with each device. Follow the instructions and carry out the individual steps.
create a secure backup
This is the most important point: You are shown sequences of words that you have to write down. Now you should be meticulous. Check each word a few times and write them down carefully. This sequence of words (recovery seed) is the most important thing and your key to your digital credit. Anyone who has this sequence of words can access your coins.
As this step is extremely important, here are a few notes. Most hardware wallets send you a piece of paper on which you can write down the words. In addition, you should write down the words again on a second sheet of paper. If you want to be on the safe side, order a set of punch letters* and punch your words on fireproof and stainless material.
Afterwards, you should store your Recovery Seed in a safe place, for example in a fireproof safe*. Optionally, you could also laminate your word sequence.
You should never copy your Recovery Seed with a printer, write it down by hand (or use a typewriter). Printers have memory and this can be read.
Set PIN or password
The devices offer the option of setting a PIN or an (additional) password. These encryption options serve to protect your wallet from access by third parties. Be sure to choose a strong PIN or password to protect yourself as best as possible.
Overview: Hardware Wallets
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|---|---|---|---|
model | Ledger Nano S | Trezor One | KeepKey |
Manufacturer | Ledger | SatoshiLabs | KeepKey Inc. |
Weight | 16g | 12g | 54g |
Size in mm | 98 x 18 x 9 | 60 x 30 x 6 | 60 x 30 x 19 |
Supported currencies | > 23 | > 12 | > 23 |
screen | |||
Touch screen | |||
interface | USB | USB | USB |
to buy |
Hardware Wallets in comparison
Trezor One - Open Source Hardware Wallet
The Trezor One (formerly Trezor) is an open source wallet that supports multiple cryptocurrencies. The design of the wallet is sleek and feels good in the hand. At only 12 grams, the Trezor One is lightweight. Nevertheless, this device with an OLED display is extremely robust. The device costs €89 without shipping and VAT, with express shipping and tax, the Trezor One costs just under €130.
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Packaging and scope of delivery
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Conclusion
Technical data for the Trezor One
- Size: 60 x 30 x 6 mm
- Weight: 12 grams
- CPU: 120 MHz integrated ARM processor (Cortex M3)
- Screen: OLED with 128×64 pixels for up to six lines of text (good for transaction details)
- Withstands temperatures from -20 to +60 degrees Celsius
- Colour/design: Available in black and white &
- Price: 130 € including express shipping
Ledger Nano S - the affordable hardware wallet
The Ledger Nano S is a relatively inexpensive wallet that supports a variety of cryptocurrencies. The device weighs 16.2 grams and has an integrated screen. In addition, the Nano S has a protective cover made of stainless steel. The Ledger Nano S costs €94.01 including tax and shipping costs¹ and is thus significantly cheaper than the Trezor One.
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Technical data of the Ledger Nano S
Size: 98 x 18 x 9 mm
Weight: 16.2 gram
Chip: ST31H320 (secure) + STM32F042
Materials: Stainless steel and plastic
Price: 94,01 € including shipping
Ledger Blue - the luxury class
The Ledger Blue is the luxury class among the devices. This high-end device is equipped with a large LED touchscreen and, like the Nano S, supports a variety of different cryptocurrencies. The Ledger Blue costs €272.51 including tax and shipping costs.
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Cryptocurrencies
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Packaging and scope of delivery
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Wallets and features
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Conclusion
Technical data of the Ledger Blue
Size: 97 x 68 x 10 mm
Weight: 90 gram
Chip: ST31G480 (secure) + STM32L476
Bluetooth support
Materials: Zamak (frame) and plastic (shell)
Price: 272,51 € including shipping (current price at the seller)
Advantages of a hardware wallet
The devices offer a number of advantages. Here is a list of the most important advantages:
Pros
These are some of the advantages that a hardware wallet offers. In addition, some devices - such as the Trezor HW - are open source and the code is therefore publicly accessible.
Disadvantages and dangers of a hardware wallet
Cons
However, devices do not only have advantages. The biggest disadvantage of devices is the cost. You have to pay for the highest possible security. In addition, the devices do not protect you from all dangers. If you send the coins to the wrong address, they are gone forever - even this wallet does not protect you from that. In addition, you could unknowingly download a virus that manipulates cryptocurrency addresses, sending the digital currencies to the wrong addresses.
Of course, the devices also have attack surfaces. In the past, possible attacks were detected, but these could be closed within a very short time by an update. However, these attacks can or could only ever be carried out if one was in possession of the device.
Is a Hardware wallet worth it?
People often ask themselves whether a hardware wallet is worth it at all and whether it is better to invest the money in digital currencies. The question is justified and the answer depends on many factors.
First of all, the basic principle: Yes, a hardware wallet is worth it. You spend money once and are protected from malware, stock market hacks and the like. In addition, you can actively use the digital currencies.
A cold wallet is a wallet for cryptocurrencies that cannot be compromised because it is not connected to the internet.
The terms "hardware wallet" or "offline wallet" are also used as synonyms. A cold wallet stores the user's address and private key and works in conjunction with compatible software in the computer, but has no connection to the network itself!
What to do if the hardware wallet is defective?
It doesn't matter if the device is defective. It is only important that you have written down the sequence of words (usually 24 words) on paper and kept it safe. With this sequence of words, you can always restore your hardware wallet and with it all your digital credit that was on your device.
If the package is defective shortly after delivery, you should contact the respective manufacturer and check whether they will send you a new one.
If you have destroyed the device, you can consider either buying a new hardware wallet from the same manufacturer or you can look for software wallets where you can enter the sequence of words. However, you have to keep in mind that you have to work through the word sequence for each digital currency separately, i.e. for Bitcoin you need a software wallet, for Litecoin, for Ethereum, etc.
What to do if your hardware wallet is stolen?
If your wallet is stolen, you should not panic. Most of the time, the device will offer to create a PIN when you first set it up. Without this PIN, thieves can't access your digital assets. And with the Ledger, if you enter the PIN incorrectly three times, the credit will be deleted; with the Trezor, each incorrect entry increases the time until you can enter the PIN again. So the devices have some protective mechanisms to guard against theft.
Nevertheless, you should act. As soon as you realise that your device has been stolen, you should transfer your coins to another secure wallet. So first restore your digital balance and transfer your coins to another hardware wallet.
However, if your seed is stolen, things will look very bad for you. The thief can use it to restore your wallet and thus your entire balance and transfer your coins to his wallet...
Restore Hardware Wallet
When the device is first set up, a seed (a sequence of words) is created. All subsequent addresses are generated from this seed. And you need this seed to restore the hardware wallet.
So you need the word sequence and a hardware wallet for the recovery. Then you connect the HW to a computer.
The recovery now depends on the provider:
- To restore the Trezor HW, you need either a new Trezor or a deleted Trezor. Then call up the website for the Trezor wallet and you should see a button or text with "TREZOR Recovery". The individual details must then be given and the words typed in. The instructions for recovering a Trezor HW can be found at the link.
- To recover a Ledger HW, you also need either a new or a deleted Ledger Wallet. Then connect it to the computer and when the device shows "Configure as new device ?" you have to go to the next view: "Restore configuration". Then create a new PIN and enter the sequence of words. You can find the instructions for restoring the Ledger Nano S under the link and for the Ledger Blue you can find a video here.
Hardware wallet vs. paper wallet
A paper wallet is a form of cold storage. A "paper wallet" has exactly one receiving address and an associated private key. These are printed together (possibly encrypted) on a sheet of paper.
In this sense, the hardware wallet is also a "paper wallet", instead of an address and a private key, words are written down. However, it is more like a paper wallet 2.0, because the devices can do a lot more. For example, the devices make it easier to create private keys. You don't have to know anything about software for (paper) wallets and how to use them securely. The devices can also be used actively without any problems; with a paper wallet, you first have to import the private key into a wallet software. In addition, with a paper wallet you only ever have one address. To create a second address later, you have to go through the same effort again.
However, you have to buy the devices, a paper wallet only needs some paper and ink and is therefore much cheaper. If you don't want to use your cryptocurrencies for a long time and are technically more talented, you can also use a paper wallet.
Hardware wallet vs. software wallet
A software wallet for the computer or smartphone can be used actively and therefore has an advantage over the paper wallet. The biggest problem or danger with software wallets is the attack surface.
The wallets for the computer or smartphone store the private keys to your digital assets locally. Attackers can now try to steal your private keys via various attack vectors. The environment of software wallets is vulnerable and malware can steal your entire balance. That's why you should only store small amounts on a "hot wallet" for your smartphone or computer.
With hardware wallets, on the other hand, the private keys are not stored on the computer or smartphone. They are stored on the device and cannot leave it. This means that the device does not have the same vulnerable environment as a desktop wallet.
Buy Hardware Wallet on Amazon or Ebay
You should always buy the popular devices directly from the providers - even if you buy them from Amazon or Ebay. Usually, the devices are cheaper on the website of the providers, as they do not have to pay any fees to the individual platforms. You should never buy the devices from unknown or dubious third parties.
In the past, it has happened that Ebay sellers offered the devices cheaper and sent along a completed recovery seed. Laymen trust the offer and use the already installed devices
This Ebay seller, for example, had sold a Ledger Nano S Wallet and included the completed Recovery Seed as a kind of scratch card. The buyer used the Nano S and stored his cryptocurrencies on it. Only to discover after some time that all his digital currencies had been stolen. In total, 25,000 pounds were stolen from him.
Therefore, never trust an unknown source. Rather, buy the hardware wallets directly from the providers.
FAQ
A wallet can be compared to a bank account. It is used to send, manage and receive cryptocurrencies. In turn, a hardware wallet is a device that has been developed to perform these functions. A hardware wallet is also used to protect cryptocurrencies from access and to keep them safe.
You can buy a hardware wallet on the website of the manufacturer itself or from an official partner.
In order to store the coins really securely, you need a hardware wallet. These are usually USB sticks on which the private data is stored. The big advantage is that the coins are stored offline as long as the USB stick is not connected to an online-capable computer. Hardware wallets are very suitable for the long-term storage of Bitcoins and other cryptocurrencies.
To protect cryptocurrencies from thieves, malware, viruses, etc., you definitely need a hardware wallet. Because hardware wallets are the most secure thing you can find on the market so far.
