- Passphrase Capability
- Multi-signature Support
- Limited App Capacity
Crypto investors who want a wallet to use with their multisig
Crypto investors who own many coins
Crypto investors who want an inexpensive wallet
Hardware wallets allow you to store coins in what is called 'cold storage'.
Cold storage is the method by which private keys or other information is kept away from any contact with the internet, where security is easily compromised.
Methods of cold storing Bitcoin and other cryptocurrencies (such as paper wallets) have evolved over time.
Hardware wallets are one of the newest iterations and generally considered to be a good method for all users.
They are easily accessible and are a good balance of security and functionality.
Launched in 2014, Ledger is a global company specializing in secure blockchain applications and devices. The company boasts sales of 1.5 million wallets in 165 countries to date.
Ledger has demonstrated a high degree of engagement with the community at large by providing abundant support and addressing specific issues and risks. High-quality information has been forthcoming in regard to their firmware updates. We've even written about some of the more common firmware update issues here and here.
However, some view the bluetooth capabilities as an added vulnerability, as bluetooth is seen more and more as a security loophole than an advantage.
It's up to you to decide if the added convenience of bluetooth is worth the trade off of potentially less security, though Ledger claims this is not a tradeoff at all.
With the high degree of risk present in managing digital assets, due diligence of a hardware wallet begins with opening the package.
As of 2019, the Ledger Nano S branding is clearly visible on the outside of the box and is shrink-wrapped in plastic.
The box contains:
Backup and Info Cards
The box is nicely made and worth keeping for easy storage.
To use the device, you are first instructed to download the Ledger Live software for your computer or mobile device. This is necessary for you to authenticate the device, manage apps, create wallets, accounts and transactions.
The use of dedicated software is an improvement over the first iteration which utilized Chrome plugins.
Next you are prompted to create a passcode to secure and configure the Nano S device itself. Once this is complete you are presented with your 24 seed words, which you must confirm individually back to the device after you have recorded them.
Before going any further, you should complete a check to determine your device is genuine and hasn't been compromised.
Once the seed words have been confirmed you may use the “manager” section of the Ledger Live software to install the wallet apps on the device.
Only once the a specific app for each cryptocurrency has been added may you create accounts for it. Installation takes about a minute per app.
One drawback, however, is the limited number of apps which you may install at any given time. The maximum number of apps is 4 or 5 depending upon what selections you make. This is the most glaring limitation of the Nano S.
Accounts, portfolio, send/receive and the manager are all on the left side menu in Ledger Live. Unlike the apps on the device, wallet accounts are essentially unlimited and can be renamed as desired.
This may not be clear to novice users, however. While the naming convention and context of a wallet address being an “account” is useful for conceptual purposes, it indirectly encourages the practice of address reuse which sacrifices privacy.
Sending and receiving is straightforward once the apps have been installed and the desired wallet accounts have been created. Transactions are created in Ledger Live and then confirmed on the device as depicted below.
One small annoyance was understanding if the wallet should be unlocked before or after you begin creating the transaction. It is best to open the wallet and unlock it but wait until prompted to open the app until Ledger Live instructs you to do so.
The display allows you to confirm the address and amount before manually completing the transaction.
After the transaction has been sent, the details can be copied to the clipboard and links to a block explorer are available. The device itself will log out after a predetermined amount of time for security reasons. The Ledger Live software also has this set to default but can be disabled if you wish.
The top menu item aggregates all your wallet balances into one countervalue of your choosing. You may select from several fiat currencies, BTC or ETH and it displays the change in balance over spans of a week, month or year.
From the settings menu you can also export your transaction history in CSV format which makes accounting quite easy.
The Ledger Nano S is a worthy cold storage device, especially for newcomers. While the buttons, display and connectivity options have been improved upon with the Ledger Nano X, these are creature comforts.
The slightly smaller feature set of the Nano S won’t diminish the experience of a long-term HODLer who will most likely leave the device unused for long periods of time.
With the Nano S storing your keys offline and your seed words kept as backup in a secure location, the logical next step is to add a Billfodl to the picture. Committing your seed words to stainless steel will dramatically reduce the risk of fire, flood, chemical spill or most other catastrophe erasing your funds.