Not your keys…

Your crypto portfolio is coming along nicely. That BTC you bought a couple of years ago sits slowly powering up its thrusters for another moon shot. You have a healthy amount of ETH ready for the launch of version 2.0 next month/year/lunar cycle. Your XRP sits there looking embarrassed while your ADA oozes confidence. You log into your exchange account every so often to see how it’s all doing and ponder your next move.

If you have a few hundred dollars locked up in your portfolio and it’s all kept on a reputable exchange then you don’t have too much to worry about. The best exchanges have good security procedures in place and spend a lot of money every year on maintaining them. And, in the unlikely event that the worst does happen, it’s not as though you’ve lost the family silver.

Unlikely, yes. Impossible, no. Exchange hacks have happened before, with catastrophic consequences. Many grizzled crypto veterans still shudder to remember the Mt. Gox fiasco, while the BitGrail saga still resonates throughout the space.

hardware wallet crypto
Not your Keys, Not your Crypto. Image via Shutterstock

In both cases hackers made off with millions of dollars in crypto and investors were left staring in dumb horror at their computer screens. These are two of the worst examples, though there have been other, more recent breaches. Lessons have been learnt and security tightened, but the threat remains.

In other cases, the exchange itself has been the villain of the piece. The QuadrigaCX scandal reads like a treatment for a Hollywood movie, but caused untold misery to those it affected.

There are plenty of exchanges out there that are either downright shady, or else don’t invest enough in their security, or are simply badly run. But it’s worth remembering that, if you store your coins on an exchange – no matter how well-regarded and secure it may be – you do not control them. The private keys to your crypto are held by the exchange and if something goes wrong there is little or nothing you can do about it.

…Not Your Crypto

The best exchanges make security one of their top priorities. Most insist that users complete KYC (know your customer) procedures when registering. Two-factor authentication is usually required to log in and withdrawals are frequently limited to specific, whitelisted wallet addresses.

Any exchange worth considering will keep most of its funds in cold storage, without access to the internet. The drives with all the users’ private keys are then sometimes stored in secure vaults with air gaps and armed guards. The digital gold is treated as though it were the solid, shiny stuff. The top exchanges also have insurance which means that if a breach does occur, any investors affected will be reimbursed.

Binance Crypto Hack
Binance Hack of $40m. Image via Bloomberg

You can rest assured though that the hackers won’t have given up. There’s too much money to be made (or stolen) and in some cases the hackers have some pretty powerful interests behind them. Technology is advancing all the time and the shiniest padlocks can end up looking rusty.

And quite aside from the threat of theft is the question of ownership. You’ve paid for your crypto, you will decide what to do with it, so you should have the keys to it. In these matters it pays to listen to experience and those who have been knocking about the crypto ranges for a while will tell you that keeping your coins on an exchange is a bad idea.

Take Control of Your Crypto

Once you’ve decided to forgo keeping your coins on whichever exchange you might be using, you have three main options. The first is to store them on a mobile wallet – basically an app for your smartphone. There are a few of these out there and they are a good option for those who may hold only a few hundred dollars worth in their portfolio.

These mobile wallets give you more control over your crypto and allow you greater freedom to use it to pay for goods and services. They do of course have one major downside, which you will probably have spotted: they’re still connected to the internet and therefore still vulnerable to attack.

The second option – and the one most likely to appeal to anyone born before about 1970 – is a paper wallet. Yes, paper… I seem to remember it now. Here you print out your private keys (usually in the form of a QR code) and keep them somewhere safe. There are benefits to doing it this way, of course. If you intend to hodl your coins for years to come then putting the keys in a drawer and forgetting all about them will stop you ever spending or selling them.

Bitcoin Paper Wallet
1 Million Bitcoin Dollars!. Image Source

As long as the piece of paper is kept safe and not lost or stolen, or put in the recycling by a well-meaning partner who has finally lost patience with you for not clearing out the study, then all should be well.

The third option is the one which concerns us today and is by far the best for those who hold a decent amount of crypto and want to keep it safe. Whether you’re a minnow or a whale or somewhere in between (a barracuda?) then a hardware wallet is what you should be using to store those coins.

Hardware wallets are physical devices which store your private keys and keep them safe from any outside attack. They can be plugged into your computer (much like a flash drive) to enable you to manage and spend your crypto, but all aspects of any transactions and validations are done on the device itself. Even if the computer being used is infected with malware or otherwise compromised, the hardware wallet remains secure and nobody else can get access to the private keys.

Top 5 Best Hardware Wallets

There are a number of hardware wallets on the market and choosing the right one can be tricky. That’s why we’ve put together a handy guide to our top five below. There are a few things to weigh up before choosing which one is right for you and we’ll consider all of these in relation to each wallet:

  • Security: Although hardware wallets are the safest option out there, some are more secure than others.Coins supported: All hardware wallets will store BTC, ETH and most other top cryptocurrencies. However, if your portfolio includes some lesser-known altcoins, then some wallets may not be suitable.
  • Price: If your portfolio is relatively small then chances are you won’t want to pay top dollar for a device to store it on. As with any product, prices for hardware wallets vary.

One final point to remember when buying a hardware wallet is to always buy it directly from the maker. There have been a few instances of unscrupulous types buying a wallet, extracting the seed words and then reselling the device. When the unsuspecting buyer then loaded their crypto onto it, the scumbags were able to remove their funds using these seed words.

Avoid buying your wallet from ebay or anywhere else where it might have been interfered with and order straight from the supplier’s website. Most of them also offer free shipping, unless you happen to live somewhere particularly exotic.

So, armed with this knowledge, let’s take a look at the best hardware wallets on the market.

1. Ledger Nano X

Top place on our podium goes to Ledger’s Nano X. For those that don’t know, Ledger is a company that is based in France and they are considered the standard in the hardware wallet market.

The Ledger Nano X is the premier product in the Ledger stable and is more expensive than the entry level Nano S. This device stores over 1,250 different cryptocurrencies. Your ledger device will connect with your PC through a USB cable that is connected to your PC.

Ledger Nano X Wallet

Get your Ledger Nano X From the official store

Then, through the use of the Ledger Live software on your PC, you can manage your coins. Your private keys cannot be accessed from your computer or device. Ledger is incredibly secure and to date there have been no vulnerabilities or exploits.

Although most of the crypto can be managed through the use of the Ledger Live software, there are many that have native wallets not supported with the software yet. However, given the popularity of the Ledger hardware devices, many of them have integrated with it in order to allow users to securely store their keys.

Yes, the Nano X is more expensive, but it has everything that the Nano S has, while also coming with bluetooth connectivity, a slightly larger screen and the ability to store 100 apps, as opposed to the five available on the Nano S.

  • Price: $119 (£94/€105)
  • Coins supported: 1,000+ Full list here

You can also use the Nano X with your mobile’s Ledger Live app, making it a better option if you want to access your crypto while on the go. It’s compatible with both iOS and Android, which should keep the vast majority of smartphone users happy.

There’s not much separating the two Ledger devices and most people would probably be more than happy with the cheaper Nano S. However, for all-round features (and still a lot cheaper than the Trezor Model T) the Nano X deservedly takes the number one spot.

2. Ledger Nano S

The Ledger Nano S model is the entry level device on offer by the Ledger team. It is considered as the nearest competitor to the Trezor Model One which we cover below. Both cost roughly the same, however the Nano S edges ahead of both the Trezor One and Model T.

It supports more coins than the Trezor devices, has integration with a number of DeFi applications and enjoys a pristine security record. You also do not have to install a bridge and can use the device through the Ledger Live software.

Ledger Nano S
Authorising Transaction on Ledger Nano S. Image via Ledger

Although the Ledger Nano S supports over 1,000 coins, one of the main drawbacks is that you have a limit of only 5 apps on the device at the same time. That means that if you would like to store more than 5 cryptocurrencies on the device, you will have to uninstall and install apps regularly.

  • Price: $59 (£47/€52)
  • Coins supported: 1,000+ Full list here

However, when you consider that the Ethereum app can be used to store your ETH and any other ERC-20 tokens that you hold, it suggests that the device should be able to handle your portfolio without too many problems. Ledger also supports staking coins such as Tezos, EOS and Tron among others, so if earning those staking rewards is your thing then Ledger has you covered.

3. Trezor Model One

The Trezor brand is a creation of Prague-based company Satoshi Labs (Trezor means ‘vault’ in Czech) and the first device was launched back in 2013. The Trezor One is another good, cheap option that benefits from being able to store a whole load more coins than the KeepKey.

The company has also formed a useful partnership with Exodus Wallet (the best mobile wallet out there) which allows for some interoperability between the two. This means that for those users that are more comfortable with the Exodus UI, they can use the software while storing their keys on the Trezor.

My main gripe with the Model One is that, although it supports an impressive number of coins, for some reason holders of XRP, EOS, Tezos, Monero and Cardano will be left disappointed. I don’t know why this is the case and to many of you it may not matter, but to me it’s a glaring omission. These are some of the top altcoins around and lots of the crypto evangelists I know (myself included) have at least one from this list in their portfolio.

Trezor Model One
The Trezor Model One Box Contents. Image via Trezor

I must be honest here and say that neither of the Trezor wallets on this list are all that aesthetically pleasing, though that’s just my opinion. Both look a bit too much like something you’d use to remotely open a garage door, if you ask me.

  • Price: $55 (£44/€49)
  • Coins supported: 1,000+. Full List here

Not that this has any bearing on how well they do the job of storing your crypto, but they lack the design elegance of the KeepKey and Ledger models. The Trezor One just edges ahead of the KeepKey because of its superior coin support, but it won’t win any beauty contests.

Something else that you need to know about the Trezor devices is that there was a vulnerability that was discovered by the folks over at Kraken labs. The vulnerability used “vaultage” glitching in order to extract the private keys from the device.

While this may be troubling for some, it would have required someone to have had physical access to the device in order to carry out the exploit. So, if you don’t think that you will be in a situation where someone would have their hands on your hardware wallet, then you should be relatively safe.

4. Trezor Model T

The Trezor Model T is the flagship product on offer from the guys over at Trezor. This comes in at $165 and is hence over $100 more than the Model One. It is debatable whether the few added benefits of the Model T is worth that hefty price tag – and hence my placement on the list.

One of the most obvious benefits of the Model T over the Model One is that you have more coin support. This includes some of those obvious omissions that I have mentioned above such as Cardano, XRP, EOS etc.

  • Price: $165 (£130/€146)
  • Coins supported: 1,000+ Full list here

Another great benefit of the Trezor Model T over the model one device is that it has that user friendly color touch screen. I found this to be way more efficient than having to shuffle with the buttons on both the Model One device as well as the ledgers.

Trezor Model T
Get Your Trezor Model T From Official Store

Setting up the Model T is also pretty quick. All you will need to do is install the bridge and ensure that the firmware is up to date and that should be it. Annoyingly however, the software is not iOS compatible, so if you’re using the Trezor software in your browser then be warned that it won’t work with Safari.

So, if you are looking to store those additional coins that are not supported by the Model One then you can consider the Model T. However, if you are not going to then you are perhaps better suited to get the Model One or the cheaper Ledger Nano S device.

5. KeepKey

Coming in last on our list is the KeepKey hardware device. You can’t fault KeepKey on price, as for less than $50 you’d struggle to find a better hardware wallet. It’s also beautifully designed, with a bigger screen than any of its rivals. KeepKey was bought by Shapeshift back in 2017, so the wallet has full integration with the Shapeshift platform and its exchange.

Keepkey Hardware Wallet. Image via KeepKey

KeepKey’s security was compromised when rivals Ledger found a way to extract pin codes from the wallet, although this required having physical possession of it. The glitch was later fixed in an update.

  • Price: $49 (£39/€43)
  • Coins supported: Around 40+. Full list here

The main drawback with KeepKey is its relative paucity of coin support in relation to the other wallets on this list. It natively supports Bitcon, Bitcoin Cash, Bitcoin Gold, Dash, Dogecoin, Ethereum, Kyber Network, Litecoin and DigiByte and can be paired with MyEtherWallet to allow support for any ERC-20 token.

This is still a pretty limited list in comparison to its rivals and could well prove unsuited to anyone holding a particularly diverse portfolio.

Keep it Secret, Keep it Safe

Whichever wallet you choose, you still need to mitigate against the risk of it falling into the wrong hands. All wallets have pin codes, as well as seed words and phrases used for access and recovery. It goes without saying that these should be known only to you.

Write them down and keep them somewhere safe, away from prying eyes. Some people with large portfolios take their security extremely seriously. Guy, for example, keeps his wallet in one safe deposit box and his seed words in another, both in separate locations.

Technology can keep us safe only up to a point. If someone manages to get hold of both you and your hardware wallet, then there’s not much that can be done to then stop them forcing you to hand over your pin code or seed words with the aid of a weapon and some threatening gestures (a $5 wrench attack if you want the technical term).

There are two steps you can take to reduce this risk though. One is a hidden wallet feature that enables you to set up extra wallets on your device which only you know about. Both Ledger and Trezor offer this, though it’s a bit on the fiddly side.

And the other? This step is the simplest of them all: keep your crypto on the QT and don’t go flashing your shiny new wallet about. After all, do you really want anyone knowing how much XRP you loaded up on back in the day?

Featured Image via Shutterstock

Posted by Mike Jenkins

Mike is a professional altcoin dabbler and investor from London, United Kingdom, with over 4 years of experience in the field. Mike has risen to stardom in the crypto space, thanks to being a childhood friend of Coin Bureau’s Guy the crypto guy. He is a strong advocate of the Altcoins and the opportunities that can be found in some of the more exotic corners of the space.