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If you haven’t noticed lately, Bitcoin, Ethereum, Litecoin and other alternative digital currencies are growing massively in popularity, largely because of their rapid rise in value, and it seems that everyone wants a piece of the action (including myself!). And although it’s not exactly mainstream technology (yet), I’m pretty sure it will be in the next few years. More and more people have heard of Bitcoin and its alternatives thanks to news coverage in mainstream media such as the Guardian in the UK and the Washington Post in the US.
Now, as Bitcoin and alternative digital currencies grow in value, the need to be able to store these crypto-currencies safely and securely has never been greater.
There are different ways you can store Bitcoin and other altcoins. You can store them in desktop wallets (such as the Bitcoin client), mobile wallets that are a bit more useful than desktop wallets as you can pay in crypto for things on the move and online wallets which are web-based wallets that store your private keys online.
You can even make paper wallets, which offer maximum security but paper can obviously degrade and is at risk of being stolen.
Storing coins in software, desktop or paper wallets is fine, but if you want you wallet to be more secure (why wouldn’t you?) then you should use a hardware wallet.
What is a hardware wallet?
A hardware wallet is basically a tamper-proof, physical electronic device that allows you to store private keys, securely in a protected area on the device, and in an offline setting. So in other words, they’re not connected to the Internet. They kind of behave in a similar way to a paper wallet, which if you’re not familiar, is a paper document that contains copies of the public and private keys that make up a wallet. Hardware wallets are more sophisticated than a paper wallet when it comes to spending and receiving cryptocurrencies.
The main advantage of a hardware wallet is obviously security. To date, there has not been any major incidents in terms of vulnerabilities or cases where funds have been stolen by hackers (at the time of writing at least). Even if hackers did manage to get at the keys, they aren’t stored in plaintext, so they’d be completely worthless.
The other great thing about hardware wallets is that they can’t be attacked by viruses.
Some hardware wallets have security grid cards, and some have a little digital screen so that you can verify transactions. Even in the case of damage to your hardware wallet, you can restore your cryptocurrency safely and easily with the recovery phrase.
Granted, no-one can guarantee that any method of storage is secure, whether it’s software or hardware based, but many Bitcoiners believe there are many significant advantages of using a hardware wallet, and what’s more, there’s a bunch of these devices to choose from on the market.
Cryptocurrency Hardware Wallets
So if you’re thinking of buying Bitcoin and other Cryptocurrency and see them as a long-term investment, then I personally recommend that you order a secure hardware wallet. If you do decide to get one but not sure which one to go for then keep reading, as I’ve handpicked the best ones.
Ledger Nano S Cryptocurrency Hardware Wallet
So first up then is the Ledger Nano S Crytocurrency Hardware Wallet – a sleek, compact product from a French startup.
Features include physical buttons that you can use to check and confirm transactions that you can see on the OLED display and there’s support for the FIDO Universal Second Factor authentication standard that you will find on Google, Dropbox, GitHub or Dashlane.
The device is battery-less and you simply connect it to a PC or mobile device via USB. But only you can access the device as you have to enter a 4-digit PIN everytime it is plugged into your computer.
The Ledger Nano S now supports nine cryptocurrencies (including Bitcoin) and also runs dedicated companion applications. You can use the Ledger Manager to browse through the apps catalogue and also update the firmware so that you can benefit from the latest security features.
Trezor bitcoin wallet
The Trezor Bitcoin hardware wallet, created by SatoshiLabs, actually looks like a small calculator but with an OLED screen, so it’s pretty minimalistic in design (less things to hack?). It’s also pretty compact, sturdy and uses the latest cryptography standards.
The device can be used to store your bitcoins in a secure way and also protect a variety of alternative digital currencies such as Litecoin, DASH and Zcash.
What’s great about this device is that you can also use it with the Trezor Password Manager and sync your encrypted passwords to your private cloud.
Another great feature is that should the device get stolen, lost or damaged, you can easily regain access to all your coins just by restoring a small paper-based backup of the entire Trezor device contents.
Another feature that stands out for me is the fact that Trezor code is open-source which means that any technical decisions are made collectively by the wider developer community.
The Trezor is also really easy to use and is Windows, OS X and Linux friendly.
Ledger Nano S – Cryptocurrency Hardware Wallet With MintCell Magnetic USB Cable
The Ledger Nano S with MintCell Magnetic USB Cable is the same device as the Nano S above, so it has support for nine cryptocurrencies has PIN protection and has a paper wallet backup functionality for immediate recovery of your assets in case of loss or destruction of the device.
The only difference with this device is that it comes with a MintCell Magnetic USB cable. This is a really handy addition to have because it protects the port from dirt, lint, and damage over time with use. I’m sure you’ll agree that there’s no point protecting your keys if you’re not going to protect your hardware too. The quick magnetic connection helps with this so there’s no fumbling, scratching, or bending.
You can also buy the Ledger Nano S Bitcoin Wallet Bundle With VUVIV Micro-USB Adapter and USB-C Adapter so that you can connect to a variety of laptops and phones including MacBooks!
KeepKey: the Simple Cryptocurrency Hardware Wallet
The Keepkey cryptocurrency hardware Wallet is bigger than the Ledger or Trezor and offers an anodized aluminum case which in my opinion makes it look nicer than the others. It looks pretty futuristic too if you ask me.
Like the other devices I’ve listed, it offers a micro-USB connection, and a 3.12? OLED screen display so that you can verify and confirm your transactions.
I guess one unique selling point with the Keepkey is that you can connect with the Shapeshift exchange in a more secure fashion.
Like the others, the Keepkey also stores private keys for multiple cryptocurrencies, and you can even create your own custom firmware on the device as well (if you’re so inclined).
The Digital Bitbox hardware wallet is a new product created Shift Devices AG, which is a Swiss-based company. One thing you’ll notice about the Bitbox is that it’s smaller and more minimalistic than the other hardware wallets that I’ve previously listed.
The device connects directly to a computer with a USB connection like the others, but this device actually comes with a recovery micro SD card, which I think is quite a cool feature.
Other features include support for FIDO Universal 2nd Factor (U2F), support for both Android and iOS, but is native only so it avoids the security risks associated with browser extensions. It is also Tor and Tails OS compatible for additional privacy.
In terms of the actual hardware, the device is portable and durable and has an epoxy-filled case made from the same material used in bullet-proof glass – so pretty robust then! Also private keys are kept on a high-security chip that prevents physical extraction (with a 50 year lifespan). Also, it’s a single piece of hardware, so no cables or batteries, and no display either (unlike the other devices), though there’s less things to go wrong I suppose.
Bear in mind though that at the time of writing the device is a fairly new hardware wallet on the market, and there are only a few reviews online.
But if you’re looking for some simple and robust that does the job of keeping your keys safe, then you should definitely consider this wallet.
Downsides to hardware wallets
So the good thing about hardware wallets is that they’re great for keeping your keys safe when you’re offline and not connected to the Internet. But like any product, they’re not perfect and there are some drawbacks.
One of the drawbacks to hardware wallets is that should you ever forget or misplace your recovery seed key and/or PIN code, then you won’t be able to access your coins.
So basically it’s imperative that you remember your PIN code.
It’s also a wise idea to write down you backup seed key on a piece of paper and store it somewhere safe. It’s probably also wise to make a few copies and store them in separate places.
As the popularity in cryptocurrency increases, the demand for hardware wallets also increases. And for good reason, because these devices can help protect you against bad actors online and they ultimately provide you with the peace of mind that your money is safe.
So in my opinion, they’re a reliable and worthy investment, however I’m not sure the same can be said about cryptocurrencies, though I definitely think cryptocurrencies will have a huge part to play in the future.
So whilst this is not an extensive list of devices, they are the best out there at the moment, and who knows, there may more devices to choose from in the future, particularly as cryptocurrencies become more mainstream.
Let me know in the comments what you think about hardware wallets. Also if you have a hardware wallet yourself already, it would be great if you could share your experiences!