Heard any horror stories of people losing all their cryptocurrency? Whether it be by getting your trading platform hacked or a disaster like FTX, security of your digital assets is important.
Back in 2019 I began looking for a way to improve the safety around storing my digital tokens. After a ton of research I chose a crypto hardware wallet, the Ledger Nano X. I immediately signed up for their affiliate program. I will walk you through some of the secure storage options, how to set it up, and some of the challenges I faced actually using it.
Storage Security Concerns
Your US dollars, and many fiat currencies, have a well-established ecosystem to keep your money and wealth comfortable and secure. We have a (rather highly-regulated) banking system to store dollars and transfer them. We have federally-mandated programs like FDIC to insure your bank deposits. And we have technologically sophisticated private sector companies like Visa, Mastercard, and PayPal to facilitate payments with our dollars while countering fraud.
But this ecosystem has taken nearly a hundred years to achieve, and we find ourselves taking for granted the level of consumer protection we have reached. The ecosystem is still not perfect, but the cryptocurrency market has not been around anywhere near as long so with that, comes challenges we must face in securing our portfolio.
Some challenges we face are identity theft and hacking attacks. Some have shared their experiences publicly with these challenges, like Mike Dudas and Ryan Selkis faced getting hacked via phone porting. The ecosystem is still being developed, and risks are prevalent. In 2023 Chainanalysis reported $20 billion in illicit trading in 2022, of which they do not call out which specifically was due to hacking, but in October 2022 had tweeted that number hit $3 Billion for that point in the year. Chainanalysis maintains a striking visual timeline of how this has increased over time. The escalation of attacks, and their increasing audacity, is all too clear.
Hacks, fraud, and scams are part of every new cultural and technological revolution. But digital currencies have changed and will continue to change the way we use money. So let's learn how to leverage new developments to ensure your investments are secure.
How do I keep my Cryptocurrency Secure
Nobody likes to lose money. So when you have something of value, like Bitcoin or Ethereum, where do you put it to keep safe? Enter the cryptocurrency wallet. It’s a secure way to store your cryptocurrency assets. If you want to buy and hold cryptocurrency, or use it as a currency to buy and sell products, you need an online wallet account.
Cryptocurrency is decentralized, as in it doesn’t rely on a bank as the central way to store the value. The entire network and ledger allows for storage of assets; there is no longer a need for a single institution to be there to protect and oversee it. The benefit is that this helps drive the price down by reducing overhead.
There are concerns arising over the storage of your crypto assets in digital wallets. One cannot go to someone for liability to recover stolen assets like you can when you store your money at a bank, so hardware wallets were developed as a measure of added security.
In fiat banking you can login to see the money in your account. In the US regulated banks must follow a set of regulations that ensure the solvency of the assests you are storing. Cryptocurrency wallets aid in the security of the storage like the private key unlocking the right for you to buy, sell, or spend your currency. Though there are no regulations to ensure the safety yet of when you use the trading platform to store your tokens.
Growing Use of Cryptocurrency Wallets
Aditya Thakur and Rahul Verma wrote a paper on An Empirical Three Phase Analysis of Crypto Market in the International Conference on Advanced Research in Management publication where they showcase the growth of wallet use in the crypto space. They provided a global view of data.
The Best Crypto Wallets for 2023
As the cryptocurrency market has grown, so has the ecosystem around it. Today, there are a number of providers of digital wallets and manufactures of hardware wallets. Many reviewers now break out cold wallets or those based around hardware, and hot wallets, or many that are software based. Below I’ve collected some of the better reviews and commentaries that survey your options:
Digital vs Hardware Wallets
A hardware wallet is a physical device that digitally stores your cryptocurrency. The primary reason that you’d have a hardware wallet is to keep your currency isolated so that it cannot be accessed without the physical device. Just like the cash you hold in your leather wallet, your cryptocurrency cannot be taken from your hardware wallet unless someone physically acquires it, the keys, and your passwords. But unlike a leather wallet, which can simply be opened and your hard-earned bills removed, hardware wallets have a wide range of security features.
Many people I’ve tried to explain the concept of a crypto hardware wallet to try to equate it to an Apple Wallet, in that you’re storing a means of payment on a physical device. Apple, Samsung, Google, and others have built mobile applications to store credit card and other payment data for shopping at retailers using your phone. Cryptocurrency hardware wallets instead store value through digital currency like Bitcoin while adding a layer of security to the storage.
I chose to buy the Ledger Nano X due to the top rating by Anisa Batabyal of Coinswitch back in 2019. My review is focused on the Nano X, but I understand the device is very similar to the Nano S with the addition of Bluetooth capabilities.
The Ledger Nano X comes with the USB connector, a getting started booklet, the device itself, and a keychain.
I have no idea what to do with the keychain as it does not appear to fit well in the loop and I do not intend to carry it around everywhere I go... yet.
Upon taking the device out the first thing I wanted to do was begin to transfer my coins stored in my Coinbase wallets over to my fancy new hardware wallet. The getting started notebook helps walk you through initial software setup and secret key storage. Ledger provides a space in the getting started booklet to write down each of your secret keys or suggests storing the keys in cold storage. To achieve cold storage you can save txt files on your own external drives, not connected to the internet, or use services like Amazon Glacier and Google Coldline. Cold Storage means that the file is offline, physically separated from being connected to the Internet. The Ledger site offers more detailed instructions and background on this topic, digital asset custody.
You could just write the key combo on the notebook, Ledger provides, and store it somewhere safe in your home, which is what I did. Keeping your keys online, storing your password in a file on your laptop, or connected cloud service can be unsafe. Each way can be, and increasingly is, hacked.
In order to store or trade any cryptocurrency each token requires a different application to be downloaded and installed on the device. After installing Ledger Live I had to go through and install Bitcoin, Ethereum, Zcash, Stellar, and Tezos.
This was when my experience began to fall apart. I multi-tasked while installing and connecting my accounts as there was a loading wait time through a few steps. This slowed everything down. When I would take my attention away, waiting for a download or install, I would need to re-enter the password into the ledger device every time. I am new to the whole process so likely there are better ways to manage, but it started to drive me crazy using the interface and the two small buttons to enter the 8 digit code every time I turned away.
Buy & Trade Cryptocurrencies
I prefer to leverage the Coinbase platform because of the Coinbase Earn program. You can earn $10 by signing up for an account, and in the Earn program you can collect well beyond the $10 by watching educational videos on new coin offerings.
Trade offs: Cost, convenience
I’ll be honest - it was a pain to have to continually enter the codes. Plus, there is a transaction cost to move from your trading platform wallet, like Coinbase Wallet, to the ledger wallet address.
I haven’t had to engage with Customer Support at all yet, but I did end up crashing the device, which required a repair.
The independent ratings, security, broad range of currencies available, simplicity, comfort of going with an established company, and my relationship with Ledger, allow me to recommend the Nano X. I would just qualify my recommendation by factoring in the total amount and number of currencies being stored.
3 independent authors that rate Ledger number 1 wallet, so it is not just my opinion. If you Buy a Ledger Nano we look forward to hearing about your experience in the comments below or via our contact form.