Trezor and Ledger
Online security is a huge concern these days. We all know that. If you have sensitive information, your safest option is to take it offline, or onto a closed, secure intranet. That’s what the DoD and agencies like the NSA have been doing for decades. And even that didn't help them in the age of WikiLeaks.
For black hat hackers, cryptocurrencies are more lucrative than data. It is basically cold, hard cash, in a digital form that is easy to transfer across the world, and anonymously at that. This is why online wallets and currency exchanges are increasingly coming under the crosshairs of cybercriminal operations in recent years.
The situation is worse now because of the growth of these currencies. More folks are showing an interest in investing is currencies like Bitcoin, Ethereum, and other “alt-coins.” When you invest in cryptocurrency, you need a wallet to store the keys to the currency. There are multiple options out there at the moment, all with their own strengths and weaknesses:
PC Software Wallets
One of the simplest and most accessible options. Install the software on your PC, and you are golden. The keys are in your control. But if your PC is stolen, or hacked, or destroyed, you lose the currency. Unless you make secure backups elsewhere.
Another type of electronic wallet, but this time stored online in the cloud by third-party companies. They hold the keys for you and take care of the security and backup aspects. These wallets are often free and commonly provided by popular cryptocurrency exchanges. However, you are basically putting your trust in others, and if they screw up and get hacked, you lose your money.
One such online wallet that some might use is that provided by LocalBitcoins.com. Many people like LocalBitcoins for some of their convenient features. They provide support for many different kinds of payment, including credit card, gift cards, cash, and even paypal. You can even buy Bitcoin in China on this platform. You can even use Alipay and WeChat to buy Bitcoin.
Basically an app that works as your Bitcoin wallet. Many online wallets come with dedicated apps. An excellent option to store smaller amounts of bitcoins for use on the go, in shops and other points of sale.
A very convenient choice if you want to gift someone some bitcoins offline. Print the keys on paper, using something like WalletGenerator or BitcoinPaperWallet, and pass it along in an envelope. You can also store these in a safe deposit box or locker like regular paper currency. Obviously susceptible to fire and water damage, as well as theft.
Trezor vs Paper Wallet
Some people might wonder which is better, a paper wallet or a hardware wallet like Trezor. When you store coin to paper, you're basically making an inaccessible, but unhackable safe.
It's like taking dollar bills and trading them for a gold bar to stick under your floorboards. Very secure, but you aren't going to be able to spend any portion of it without bringing it all back up and into a wallet. So, if you plan on spending any portion of your savings, a hardware wallet is a better choice.
The sensible options when you want to go the DoD/NSA/Big corporations route and store large amounts of cryptocurrency offline. They can go online, to enable transactions, but otherwise stay secure offline. Difficult or impossible to hack, and safe as long as you can keep them in your possession (duh!). They look and feel like USB flash drives. Trezor and Ledger are among the most popular options out there, which is why I have decided to focus on them today.
Why Use a Hardware Wallet?
Take a quick look at the different wallet options mentioned above like Trezor vs. Ledger. Leave out paper wallets as more of a niche/situational alternative. Then you are left with basically two types of cryptocurrency storage: Electronic wallets and Hardware wallets.
Electronic wallets all share the same fatal flaw: they all reside on devices that connect to the internet on a regular, if not constant basis. What is common between a server holding cloud data, a home PC, and a mobile phone? They can all be hacked remotely. Firewalls can be breached, software vulnerabilities can be exploited, and your data can be accessed, viewed, and copied.
When third-party servers are hosting your wallets online, you have zero control over their safety and security. If we are talking about massive amounts of cash, that is not something most of us are comfortable with, especially these days when cryptocurrency exchanges are getting robbed.
In the case of mobile and PC-based wallets, you do have some control and responsibility regarding the safety of your money. However, you can easily become the victim of a phishing attack. Plus you always have to worry about security patches and backups, not to mention the actual safety of the device itself.
It is this weakness that hardware wallets like Trezor and Ledger focus on overcoming. Moreover, they do that using one simple logic: stay offline, and the hackers cannot gain access. However, beyond that basic premise, these devices also add extra layers of security. To use these wallets, you will have to add your security codes and passwords.
If I can oversimplify things a bit, the whole process is not that different from using a debit card or a credit card. Plugging the wallet device into a PC is like swiping a card at POS device or ATM. The transaction can only be enabled if you provide the authorization using the correct password/code.
As long as you keep the device and passcode info secure and safe, your cryptocurrency is secure. This is the main draw behind these hardware wallets. They put the keys to your cryptocurrency in your own hands. You have more control, and hackers have no way to access the keys remotely.
The best thing to do is to incorporate all these different wallets into your cryptocurrency storage strategy. Use electronic wallets to hold the loose change, and hold the main stash offline in a hardware wallet. That way, you get a balanced mix of safety and convenience.
The history of modern hardware wallets begins with Trezor. The device was designed by SatoshiLabs, a bitcoin-based company in the Czech Republic. They were founded in Prague in 2013, and work on cryptocurrency safety and security. The first Trezor device was launched to the public in 2014. It was the first ever hardware wallet for bitcoin to sport a display. The name “Trezor” means a “safe” or “vault” in Czech and many other Slavic languages.
The company has witnessed massive growth since the launch of Trezor. In 2015, they expanded their presence to over 100 countries across the globe. The CEO of the company, Marek Palatinus, cut his teeth in the bitcoin business with Slush Pool, one of the oldest mining pools in Bitcoin history. Trezor has seen exponential growth ever since cryptocurrencies became mainstream in the last couple of years.
SatoshiLabs has seen its value grow into millions thanks to a surge in demand for Trezor since 2016. A new and upgraded version of the device, named Trezor Model T was released in mid-2018 after spending several years in development and testing.
Launched in 2014 as a collaboration between eight blockchain security experts, Ledger has its headquarters in Paris, France. The company has two variants of their eponymous hardware wallets, called the Ledger Nano S and Ledger Blue. The current version of the Ledger Nano S was launched in 2016.
Thanks to strong consumer demand, the company has grown in size in recent years. The company currently has offices in San Francisco, California, and Verizon, France. In 2017 alone, Ledger sold nearly a million units of their hardware wallets, providing stiff competition to Trezor, who is the industry leader when it comes to sales numbers. The rise is pretty stark when you compare its numbers in 2016: they only sold 30,000 units that year.
The recent upheavals in the cryptocurrency world have put strong winds in the sails of this French company as well. Like SatoshiLabs, they have received keen interest from investors, raising around 75 million dollars in Series B venture capital financing rounds last year.
New cryptocurrencies have been appearing like mushrooms after the rains in the last couple of years. So that does provide a serious challenge to both Trezor and Ledger when it comes to delivering compatibility and support. The newer, more obscure altcoins tend to struggle the most, and for a good reason. You will find that most of the big names find a mention on the list of both wallets. However, there are also some notable absentees.
Trezor - Supported Currencies
Trezor - Currencies NOT Supported
Ledger Nano S - Supported Currencies
Ledger Nano S - Currencies NOT Supported
As is quite clear, Ledger holds a significant advantage over Trezor as well as compatibility is concerned. It has almost all the coins on the Trezor list, along with support for a host of the lesser known alt-coins. Please note that the below lists are not exhaustive by any means, and are subject to change, as the companies update their device firmware. Please check the official pages for the most up to date list of supported currencies.
Trezor Setup & Usability
Trezor is available for sale from the manufacturer website, and also from Amazon. Do note that you should only buy this product from an official Trezor store. Any device purchased from third-party sellers on sites like eBay may not be secure.
When bought from the official store, the Trezor arrives hermetically packaged and sealed to prevent any chance of tampering during transit. Trezor is an HD wallet that can store your private cryptocurrency keys. It is like a small computer, with a dedicated display, microprocessor, and storage.
Setup of the device involves multiple steps. The steps are straightforward, but this is a high-security device. You cannot skip or fool around with the setup process. It does feel a bit complicated, and beginners can get confused.
First of all, you have to connect the device to your computer using the USB. Then a visit to the myTREZOR website will get things rolling. An automated process is initiated, and you are asked to download a Chrome browser plugin. Once the plugin is opened, you have to input the PIN the device generates and displays on its screen.
Your computer screen will show a nine-digit keypad filled with question marks. To input your in, you have to use a separate keypad with random numbers that are displayed on your Trezor. The machine generates this keypad randomly. The whole point of this convoluted process is to prevent any keylogger (or even a person with complete access to your PC) from stealing the PIN.
After this, you have to write down a 24-word password, or seed. The device randomly generates this seed for you. You will need this seed to recover your cryptocurrency stored on Trezor if the original device is destroyed/lost/stolen. This seed is your backup. So you have to be extra careful about safely storing this seed. Trezor provides a paper to write this seed down. You should either store this paper in a safe or use a durable metal device instead, like the Billfodl.
The whole setup process can be completed in under 10 minutes. You can even set an additional passphrase after generating the seed to add an extra layer of security in case your Tresor gets stolen. And yes, it is a common complaint among Trezor users that this initial setup can be a bit complicated. However, it is well worth it for the extra safety it offers.
Usability, on the other hand, is effortless. You need to input your PIN everytime you want to make a transaction. Also, you have to authorize the transaction with the press of a button on the device.
The Ledger S Nano is another hardware wallet with a built-in screen. It is slightly cheaper than Trezor, and also has a different design and architecture inside. The device is available online at the manufacturer website. So it is highly recommended that you buy it from official channels only.
Like the Trezor, Ledger Nano S also uses a PIN code and 24-word seed for authentication and backup. But setup process is slightly different for the Ledger. Once you connect the Ledger device to your computer, it prompts you to visit the official site to set the PIN. But the PIN is set on the device itself, and not using your PC browser in any way. The four-digit PIN can be set using the device buttons.
Once the PIN is set, you have to write down and store the 24-word seed, just like in the case of Trezor. You get a paper card along with the box for this purpose. Once written down, the device will ask you to input four random words from the seed to finish the setup process.
Usability of the Ledger is simple and comparable to Trezor. You use the PIN to unlock the device. There are multiple apps you can download, depending on your choice of cryptocurrency. Ledger also provides a Ledger Manager software to manage all these different apps. You will have to download them using your browser.
Both devices have in-built monochrome displays that remind you of old MP3 players or your car stereo deck from the 1990s or early 2000s. The Tresor OLED display is much bigger and taller, like an old Nokia mobile screen, with around 4-5 lines worth of space. It is big enough to show a miniature 9-digit keypad. The display text is white.
The Ledger display is shorter and broader, capable of showing two lines of text. Though tiny, it is still capable of showing all the information you need, like seed words, menus, addresses, and transaction amounts. The text display is blue. Overall, I find the larger Trezor display to be easier on the eye, and more comfortable to work with.
I have already listed all the compatible cryptocurrencies for both devices in another section. Trezor uses the in-house Trezor Wallet as default for all your cryptocurrency transactions. But if you want to use a different wallet, they do have support for third-party wallets like Electrum 2.0 and Multibit HD.
But in most situations, you should find the default Trezor more than adequate to handle all your supported coins. The major ones like Bitcoin and Dash work smoothly, but transferring coins from myetherwallet have shown some hiccups in the past.
Ledger uses a different system for the Nano S wallet device. There is a Ledger Manager that you can use to download separate apps for each cryptocurrency that you use. You can download three other apps for coins like BTC, ETH, and Ripple, to name a few.
Personally, I find the Trezor system to be more streamlined. But of course, the fundamental disadvantage is that Trezor has lesser number of supported currencies. For example, Trezor Stratis support is non-existent at the moment, to name one popular alt-coin. The best Ledger wallet feature is its flexibility and ability to work with more altcoins out there.
The product specifications indicate that the device measures 60x30x6 mm, or 2.4x1.2x0.2 inches. It weighs just 12g or 0.42oz. The device is like a USB stick or dongle, but broader than average.
The Ledger Nano S is virtually indistinguishable from your average USB stick. It has the same shape and size. The official measurements are 98x18x9 mm or, 3.8x0.7x0.3 inches. It has a swiveling cover to protect the small display, which makes the device longer when opened. The Ledger is marginally heavier at 16.g or 0.5 oz.
Both devices are incredibly compact and easy to store and carry around. This also makes it quite easy to misplace them, if you are not careful that is.
Appearance & Durability
Trezor is available in three colors, black, grey, and white. The device is made from plastic with a matte, anti-scratch finish. The device looks robust enough and can handle quite a bit of punishment. But it is just water resistant, not waterproof. And the plasticky bits have a fair amount of flex, especially around the buttons. Overall, there is quite a lot of room for improvement, as far as fit and finish levels are concerned.
The Ledger is available in the standard black plastic case, with a metallic swiveling cover. The device has two buttons, which work quite smoothly. Overall, it is not much better than the Trezor when it comes to building quality and ruggedness. It does have a better design, with the slender shape and swiveling metal cover. But like the Trezor, its overall build quality is decent, not on the level of high-end products like iPhones or anything.
Both devices are rugged enough for occasional travel. I would not personally recommend carrying them around on a keychain or anything of that sort. That is not their intended purpose anyway. You should be using a mobile wallet for use on the go. For something that stays at your home most of the time, both these devices have enough ruggedness on offer.
You cannot rule the eventuality of these devices getting into the wrong hands. Physical theft of the device is always a possibility. But the question is, can the thief crack these devices and get his/her hands on your coins? For that to be possible, some or all of the following things will have to happen:
As you can see, a fair few things have to happen for the bad guys to get their dirty hands on your money with these wallets. If you have some patience for a longish read, check out this Wired editors experience after forgetting his Trezor PIN and losing the seed code. This will give you an idea of how tough it is to unlock one of these things.
You can do several things to avoid losing your money along with the device. The most important thing to do is not to leave the vital information lying around the house, or in your wallet, PC, or mobile devices. If at all possible, keep them offline, in separate secure locations, preferably on fireproof materials. And never, ever leave them all in the same place, i.e., your Trezor/Ledger, the PIN, and the seed. If you allow that to happen, then you pretty much deserve to lose the cash!
Both Trezor and Ledger provide excellent value for money, but only for their target customers. That is a fundamental fact that you have to keep in mind. People who invest a few hundred dollars may not find much use in a device that costs almost a 100 bucks on its own. These are best suited for people who have thousands or tens of thousands invested in cryptocurrencies.
They both have their pros and cons, as I have already tried to outline. In short, if you invest only in the major coins like BTC, BTH, or ETH, Trezor is more than enough for your needs. It also has a more robust security system with an additional layer.
The best Ledger wallet utility can be had by guys who put their money in lesser-known alt-coins like Ark, Komodo, Neo, or Stealth. In Trezor Stratis and other alt-coins are not directly supported. Pick one hardware wallet based on your cryptocurrency tastes and preferences for best results.