Are you the new proud owner of some cryptocurrencies? If so, you might want to immediately start thinking about keeping them safe. Storing and safeguarding your crypto holdings is one of the fundamental aspects of investing in cryptocurrency, given the large scale of cryptocurrency theft that occurs. In most cases, stolen cryptocurrencies are rarely recovered, unfortunately.
Storing your crypto holdings with an exchange or a free online wallet isn’t exactly safe either, because hacks and viruses primarily come from the internet. Exchanges such as Binance and Coinbase are susceptible to attacks, and your funds are also exposed to liquidation or regulatory risks that could befall these companies when you give them custody over your holdings. As long as your coins are stored online, the risk exposure to hacks and theft will remain high.
One of the most highly secure methods to store your cryptocurrency is through the use of hardware wallets, otherwise known as cold storage or cold wallets. Currently, two companies that make hardware wallets stand out in the market: Trezor and Ledger. This guide will review the product offerings from these two based on several key criteria to look out for when deciding to purchase a hardware wallet.
What is a Hardware Wallet?
The term cold storage is used to imply that hardware wallets are not connected to the internet, therefore minimizing the risk of your crypto holdings being compromised. They are physical wallets that store your cryptocurrencies and contain private keys that are stored in an offline mode. With hardware wallets, you are completely in control of the storage and management of your own money, rather than relying on traditional institutions or any other 3rd parties to handle your transactions. They allow users to privately store their cryptocurrencies on the blockchain and sign off on any transactions in a secure manner.
The way it works is simple, plug it into a USB port on your laptop or computer with an internet connection, and enter your pin when making transactions. Often times, hardware wallets look just like a USB thumb drive but with a display screen and some buttons. You will also most likely have to download the relevant software on the device that you connect the hardware wallet to in order to utilize the wallet. This is where you can view and manage your crypto portfolio and perform transactions. The hardware wallet contains a private key to sign off on transactions. The private key is stored offline in a hardware wallet, making it invulnerable to malicious online attacks and malware.
When activating your hardware wallet for the first time, a combination of 12-24 safety words will be generated for you. This is your seed phrase, and you should guard it with your life. The seed phrase grants you access to your hardware wallet, and should you lose or break your hardware wallet, you can always replace it with a new one and access your crypto holdings with the seed phrase in a few simple steps, provided you have the same exact seed phrase with you. Write it down physically, avoid storing it online, and keep it in a safe box like how you might with your passport or valuable jewellery. If you lose your seed phrase, there’s no way you can retrieve your stored funds. Anyone with your seed phrase will be able to access your wallet, so guard it well.
Hardware wallets are also protected by an encrypted PIN code that users generate. The wallet automatically locks out after 3 unsuccessful tries. Anyone who wants to access the wallet from there on will have to enter the 12-24 word seed phrase, which is done on the device itself thus preventing any exposure to online hacks and keeping it safe from viruses or keyloggers that may be present on your computer.
As mentioned, losing or damaging your hardware wallet is not an issue. This is because your coins are not directly stored in the wallet itself but on the blockchain. The hardware wallet merely helps you to sign off any transactions you make. Use your seed phrase, which acts as a recovery phrase, to gain access to your coins on a new hardware wallet.
Whether it’s Trezor or Ledger, just be sure to only purchase these hardware wallets from a legitimate source and not from any 3rd party vendors. Purchasing hardware wallets from an unreliable source has the possibility that the firmware is replaced before you receive the device, compromising the security of the wallet.
Trezor vs Ledger: Technical Specifications
Now that you’re familiar with what a hardware wallet does and how it works, let’s get straight into our review of two of the more popular ones out there, Trezor and Ledger. We’ll compare the latest hardware wallet models for both companies, the Trezor Model T and Ledger Nano X. In the first category, let’s discuss the design and ease of use for each device based on their respective technical specifications.
The Trezor Model T is made from plastic, while the Ledger models come with a protective brushed stainless steel casing and a body that is also made from plastic. The stainless steel does make the Ledger more durable and more able to withstand any force or impact should you drop it by accident.
Both Trezor and Ledger come with a display screen on the wallet. This is where you can view your seed phrase and transactions performed. The Trezor Model T has a bright color LCD display at 240×240 pixels and is wider than the Ledger’s Nano X. The Trezor Model T also features a touchscreen, making it more convenient to use. You will have to use Trezor or Ledger’s display to perform important functions, so a wider screen does make it easier to navigate and see.
Trezor Model T has a size dimension of 2.52in x 1.54in x 0.39in and weighs 22g. It’s slightly wider than the Ledger Nano X, which has dimensions of 2.83in x 0.73in x 0.46in but weighs heavier than the Trezor Model T at 34g. Overall, both are relatively small in size and you can easily bring them anywhere with you.
Both Trezor and Ledger come with two buttons to navigate the interface on the device. The buttons on Trezor models are wider apart compared to the Ledger models, which would mean that you are less prone to making a typo when navigating the interface.
Trezor Model T uses a USB-C connector, which means that it’s perfect for connecting to mobile phones or a USB-C and Thunderbolt port on your computer. On the other hand, the Ledger Nano X has a USB-C port on the product that connects to a USB-A port on the computer. It comes with one USB-C to USB-A cable in the box, so there’s no need for you to buy an adapter. However, you will have to buy an adapter if your computer doesn’t have any USB-A ports or if you’d like to connect to a mobile device that uses USB-C type connectors. Similarly, the Trezor Model T comes with a USB-C cable, and an adapter will be needed if you wish to connect it to a USB-A port.
Supported Operating System (OS)
Trezor currently supports all major computer operating systems such as Windows (version 10 or newer), MacOS (version 10.11 and higher), and Linux. On mobile devices, Android is supported whereas iOS and Windows Phone are not yet supported. On the browser front, ChromeOS is not yet officially supported, but Trezor would work via Google’s WebUSB. As for Ledger, it is compatible with 64-bits desktop computers (Windows 8+, macOS 10.10+, Linux) excluding ARM Processors. It’s also compatible with smartphones that run on the iOS 9+ or Android 7+.
Trezor vs Ledger: Comparison
You don’t want to end up purchasing a Trezor or Ledger only to find out that it doesn’t support your favourite cryptocurrency. That being said, both Trezor and Ledger support over 1,000 different tokens. Both wallets also support all ERC20 tokens on the Ethereum network. However, do take note that Trezor’s software (Trezor Suite) does not offer full support on some ERC20 tokens, which means that you will have to use another application such as Exodus or anything similar to store the token on your Trezor wallet. Ledger on the other hand offers full software support and will have no need for you to use another application to store ERC20 tokens on its wallet.
Be sure to check the full list of supported cryptocurrencies for the Trezor and Ledger wallets:
We’ve come to one of the most important aspects to consider when it comes to purchasing a hardware wallet. Between Trezor and Ledger, both are overall highly secured devices with good track records, but with some notable differences in the way they approach security.
Both Trezor and Ledger wallets generate their private keys offline using the display, protecting it from any malicious online attacks and malware. Both wallets have the PIN code security feature and will generate a unique 12-24 word seed phrase for you upon setting up the wallet. There’s also another layer of security feature called the Passphrase to add on if you’d like. The Passphrase enables you to add an additional 25th word of your seed phrase that grants you access to an entirely new wallet that can’t be accessed with a regular 12-24 word recovery phrase. This can be useful if you’re setting up multiple wallets within the device and don’t want to ‘put all your eggs in one basket’. Just like the seed phrase, it’s important to remember and write down your Passphrase, and store it in a safe and offline location. Better yet, memorize it so that there’s absolutely no chance of anyone finding your Passphrase. Remember, if you lose or damage your hardware wallet, you will need the Passphrase (if you’ve set it up) as well as the seed phrase in order to access your crypto.
Trezor’s approach to security lies in simplicity, meaning that they minimize the construct of the hardware wallet so that there are not many ways a hacker can gain access to it. It does this by limiting the modes of communication on the device. Trezor’s wallets don’t include features such as WiFi, bluetooth, fingerprint readers, batteries, or NFC. On the Trezor Model T, the seed phrase is entered using the device itself, so even if your computer had been infected by a key-logger, your information is not in any danger of being stolen. Trezor is also fully open source in its design and firmware, meaning that users can easily modify and build on top of the software.
As mentioned previously, you should always take precautions and ensure that you are buying from an official vendor when purchasing a hardware wallet. With Trezor, you may want to take note that every new and legit Trezor product comes with a holographic seal to identify its authenticity. Check that it’s not a fake holographic seal, and if it is fake, do not use the wallet which may have already been compromised.
Ledger wallets use the highly secure Blockchain Open Ledger Operating System (BOLOS) and a highly advanced security chip called Secure Element, but have a closed-source firmware. The Secure Element chips have the highest level of certification and is considered best practice in the security industry. You are likely to find similar chips in things that contain highly confidential and private information such as credit cards and passports. The Secure Element chip is responsible for executing all applications in the BOLOS environment, including to generate and store private keys. Secure Element provides protection from several types of attacks that traditional chips won’t be able to withstand. This includes side-channel attacks, fault attacks, and software attacks.
A Note on Security
While there is currently no industry consensus on which security feature is the best method, it’s important to note that neither is guaranteed to be 100% secure. Security is a constantly evolving field as hackers become more inventive and new attacks take different shapes and forms as time goes on. Overall, both Trezor and Ledger’s security are considered high level and offer the best method of protection for storing your crypto holdings compared with any other method being used.
It’s important to adopt safe practices when it comes to securing your crypto holdings and owning a hardware wallet. Here are some additional tips on safeguarding your crypto:
- Never store your recovery phrase / seed phrase on a device that can be accessed online, such as a smartphone, computer, or tablet.
- Write down and keep your recovery phrase / seed phrase in a place that is safe from all the elements as well as a place where it’s difficult to be found by anyone other than you.
- Do not take any pictures of your recovery phrase / seed phrase.
- Never use a hardware wallet that has been set up by someone else.
- Do not buy hardware wallets from an unofficial vendor or third parties.
Seeing as both Trezor and Ledger wallets are almost at par with one another in every aspect, it all boils down to the pricing of their hardware wallets to most people.
Each company currently has two wallet models for sale. Here’s a price comparison of the models:
The Trezor One and Ledger Nano S are first generation hardware wallets from the two companies. They are still on sale in the market and have a slight price difference between them.
The Trezor Model T and Ledger Nano X are the premium hardware wallets from both companies. These models have significantly more features compared to the first generation wallets. From the table above you can see clearly that the Ledger Nano X is significantly cheaper than the Trezor Model T.
If it all comes down to pricing as your deciding factor in choosing between Trezor and Ledger, Ledger is the clear winner. To top it off, they might even throw in free shipping depending on your current location. A comparison on every other major category such as security features, supported cryptocurrencies, and ease of use yields almost the same level of competitiveness from each company, and both have delivered on those fronts. Therefore, it would make sense to go with the wallet that is better priced.
Whether you decide to go for a Trezor or Ledger hardware wallet, know that hardware wallets are currently the safest means of keeping your cryptocurrencies safe from hacks and malicious attacks on the internet. It is by no means 100% guaranteed to be safe, but you can at least sleep better at night knowing that you have your holdings protected via a wallet that stores it’s private keys offline.
Timothy is a news broadcast producer with a keen eye for television and a pair of tuned ears for the dulcet sounds of radio. Besides exploring new ways and mediums to tell a good story, he is also a passionate writer and musician who could play a sleazy guitar riff on the fretboard at any given moment.