PROTECTING YOUR CRYPTOCURRENCY
Keep your investment safe
PROTECTING YOUR CRYPTOCURRENCY
Keep your investment safe
Having just bought yourself a Bitcoin or an alternate cryptocurrency that you believe will do well over the long term the next step is securing this investment. So what can be done to protect your coins and your hard earned money? To start off with let us look at which ways to store your cryptocurrency are least safe, and which are most safe. The list below ranks them in order of least safe to safest.
Least safe – leaving coins on exchange
More safe – move coins to ‘hot wallet’ (a wallet on a computer connected to the internet)
Most safe but hassle – move coins to ‘cold wallet’ (a wallet on a computer not connected to the internet)
Most safe and convenient – move coins to hardware wallet eg. Ledger Nano S / Trezor / KeepKey
Therefore the number one rule to remember to protect your coins is that ONLY a hardware / cold wallet will be truly secure but due to the cold wallet being incredibly hasslesome to move your coins the hardware wallet represents a far easier way to keep your coins safe from hackers and also to transfer them relatively easily when required!
Understanding the key concepts behind hardware wallets and keeping your funds safe
Lets go through the basic concepts of hardware wallets prior to reviewing the top hardware wallets available today.
1) A hardware wallet gives you access to the private key to the wallet. With a traditional bank the bank essentially is responsible for your funds and holds the private key to the account but lets you access your funds through a debit card. With cryptocurrency however YOU own the private key to the account. This means that only you can access the funds in the wallet and no one else BUT should anyone get access to your private key they have access to ALL your funds. Therefore the most important thing is this private key remains private with only you knowing it. However since your the only one who has the private key losing it means you will lose your funds.
2) When your funds are on an exchange then you do NOT own the private key, but rather the exchange does. In view of this you are not in control of those funds and essentially the exchange is. This means should the exchange collapse or be hacked your funds will certainly be lost.
3) Keeping your funds in a hot wallet connected to the internet is dangerous as should your computer be compromised then the hackers may get access to your private key and funds.
4) When purchasing a hardware wallet one of the first things you do is setup a private key. The private key would be incredibly complex if given to you in its binary form so instead its given to you as 24 separate words known as your ‘seed.’ You MUST ensure to write down these 24 words in the CORRECT order on the paper supplied and LOCK this away somewhere safe where no one can access it. Writing these words incorrectly or in the wrong order will mean should your hardware wallet be lost or stolen you will NOT be able to recover your funds. Furthermore, anyone who gets access to this 24 word phrase will get access to your ENTIRE account. It is therefore STRONGLY recommended that you NEVER put this 24 word seed online in any shape of form (no drop box accounts, no word documents on your computer, no photographs of it etc.) The only way to ensure it is never online is to write it using standard pen and paper and locking it away in a fireproof and waterproof safe to ensure it is safe. It is recommended to have a spare copy in a separate location to the device again in a trusted secure location. Most of the devices offer the ability to create a passphrase – this is an extra word on top of the 24 word seed. Consider using this for extra security in case your 24 word seed is compromised however remember if you ever forget this word you will lose access to your funds.
5) When sending transactions from your hardware wallet the private key never leaves the device so even if using a compromised computer your private key will be safe as will all the funds in your hardware wallet. All that will ever be known is your public key (ie. your wallet address) which people can send funds to. For this reason hardware wallets are the ONLY secure way to store your funds.
6) In light of the recent increase in people being attacked and forced to give their private key it is best not to speak to anyone about your cryptocurrency, and not to carry your hardware wallet around where people can identify it as such.
If you follow the rules above your cryptocurrency will be as safe as possible.
We will review the top hardware wallets on the market today based on several parameters and you can decide on which one suits you best.
Ledger was founded in 2014 and introduced the Ledger Nano S in 2016. The device is shipped to you without a seal, as it features a secure chip that if tampered with will not authenticate when you try to use (by a technology known as cryptographic attestation). The device is very small and very sleek and comes complete with a keyring to add it to your keychain, although we suggest that the device is hidden out of sight at all times of others. After receiving the device you simply use the supplied USB to connect it to your computer and power it on. When you turn it on you will go through a few tutorial steps and then be prompted to create a PIN between 4-8 digits. Following this you will set it up as a new device and create your 24 word seed, with great care taken to carefully write this down on the supplied paper. Once created you will have access to the preinstalled Bitcoin and Ethereum wallets and FIDO U2F 2FA. Other wallets can be installed and it can be used with Myetherwallet to hold ERC20 tokens however doing so will disable the built in Ethereum app. Always ensure to ONLY order from Ledger themselves via their official website – click the buy now link below to purchase your Ledger Nano S today from Ledger directly.
The Trezor was released in 2014 by SatoshiLabs. The device comes shrink wrapped and has 1 metallic silver seal on each end of the box. Furthermore the box is glued strongly making it impossible to open without ripping it, so should this not be the case when opening yours beware of possible tampering. The device is slightly larger than the Ledger nano S and comes complete with a keyring, which again we do not recommend using as you do not want others to see the device. Once opened simply plug the Trezor into your computer using the supplied USB. You will be asked to go to mytrezor.com from where you will install the Google Chrome extension. You will be asked to create a PIN. Next your 24 word seed will show up on your device word by word and again ensure to carefully write each word. Your Trezor is now ready to use and you will have access to a Bitcoin wallet from where you can send and receive transactions. Other wallets can be added to store other coins. The Trezor has been hacked in the past through someone getting hold of the physical device but Satoshilabs have fixed that bug and no hacks have been done since. ONLY ever buy your Trezor from SatoshiLabs via the official website – click the link below to purchase your Trezor directly from SatoshiLabs today.
The KeepKey is the newest company of the three having been founded in 2015. It uses the same firmware as Trezor and created a device that is more slick albeit larger than the Trezor. The device arrives in a black cardboard box that is shrink wrapped. It comes with a single metallic silver seal. To get started launch keepkeywallet.com from where you install the Google Chrome extension. Once installed you simply open the application and plug the device into your computer with the supplied USB. You will be prompted to enter a pin, and then you are given a 12 word seed. Once safely written down you hold the button on the KeepKey to start using your device. You will then have access to your Bitcoin wallet and can install other wallets to store different coins. Always ensure to ONLY order from KeepKey directly via the official site – click the link below to purchase your KeepKey directly form the KeepKey official website.