Hardware wallets are physical devices for storing cryptocurrencies and tokens in a safer and more secure environment than the traditional software wallets. Where software wallets are often developed in open-source and generally more susceptible to hacking and theft, a hardware wallet is isolated from the Internet and has to be attached to your computer for the codes to be accessed, rendering your tokens more secure.
To date there have been no reported thefts of tokens or coins from a hardware wallet, however even hardware wallets do have their vulnerabilities.
The cost of a hardware wallet is higher than that of a software wallet and with the small returns many miners are seeing, the cost of the hardware wallet might not be easy to justify.
If you’ve invested in an ethereum rig, or cloud mining service, you definitely need a safe place to store your ether and an Ethereum hardware wallet is definitely a good bet. And of course you will in turn want a somewhere secure to put your physical wallet, and there are a variety of safe manufacturers out there that can help, but that is a separate discussion!
Trezor vs Ledger Nano S
Trezor was first to market with a hardware wallet for cryptocurrencies in August 2014. Each Trezor wallet has a unique passcode that prevents anyone from accessing your transactions should your wallet be stolen and in cases where you Trezor is lost or stolen; you can recover your tokens by accessing the wallet with this passcode. Trezor works with a long list of client wallets such as ArcBit, Chrome Extension, Electrum, Sentinel and Etherwall. Trezor is fully supported on Windows 7 and higher, OSX and Linux platforms as well as being compatible with most Android devices which have a USB on-the –go.
Trezor safely stores tokens for Bitcoin, Litecoin, Dash, Zcash, Ethereum, Namecoin and Dogecoin.
Trezor is a small device, about the size of a key, with a screen, which connects to your computer via a USB cable.
Trezor is slightly more expensive than some of the other hardware wallets available.
Ledger Nano S
The Ledger Nano is a slightly less expensive hardware wallet option comparative to the Trezor but offers a similar level of advanced security versus a software wallet, however it does not offer passpharse support.
A passphrase is an additional text the user creates when setting up the account, which is required when the wallet needs to be recovered, thereby adding another layer of verification. The Nano S requires the user to set up a PIN code that keeps device secure and after three failed attempts to enter the correct PIN code, the device will not be accessible.
The Ledger Nano S is very easy to setup can be done without needing to connect the device to a computer. The Open Bitcoin Privacy project voted Ledger wallets as the most private wallets available in their report in 2016.
The Ledger Nano S works with Bitcoin, Ethereum as well as Altcoins and is compatible with a variety of Cryptocurrency wallets.
You can find the ledger nano s for sale on sites such as Amazon.com or direct from the manufacturer.
Both the Trezor and Ledger Nano S have built in screens, which is advisable largely due to the increased security offered. Hardware wallets with a screen will display the generated password on the screen of the device, while wallets that do not have a screen will send the passcode to your phone.
As your phone is accessible via the Internet it does put the security of the passcode at risk. The screen also adds an additional level of verification when you are making payments.
If you’re interested in a hardware wallet you should also consider the ledger nano s vs keepkey.
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