Keeping your bitcoins on an exchange wallet where it is susceptible to all kinds of cyber attacks is very risky. Same can be said about storing them in mobile wallets for convenience. When you work your fingers to the bone to invest your money in the crypto assets, you would love to keep it somewhere where not even air can touch your asset.
According to a chart published in Trezor Blog, the biggest perceived threat for crypto users is remote attack which means malware attacks, computer viruses and various other remote threats and that is always a massive area of concern for crypto users. Hence, never keep your crypto stored in online wallets, particularly if you have a large portfolio and you want to store for the long term.
Therefore, the safest place for storing bitcoins or altcoins for long time is hardware wallets. Although it still remains imperative for you to choose the best hardware wallets and buy them from a reliable source as a hardware manufacturing defect or compromise in the shipping could cost you a fortune by losing your hard earned funds.
These hardware wallets are not connected to internet which makes them the safest and most reliable place for storing crypto assets among all the options we have got.
In this article, we are going to talk about how to store your bitcoins/altcoins in the safest way, i.e, how to store them in a hardware wallet.
Choosing best Hardware wallets
Before we dive into the pool of tutorial on how to use hardware wallets, it is mandatory for you to know which hardware wallets serve the best purpose. Ledger and Trezor are two best hardware wallets going around in the world. Ledger is a France based company while Trezor was built by Czech-based company SatoshiLabs much before Ledger came into existence.
Both these companies provide different variants of wallets and you could pick one depending upon your needs which involves the storage size and then obviously the cost of them are different too. The cheapest hardware wallet comes at over 4200 Indian rupees or 58 US Dollars at this point while the most expensive variant of hardware wallets can be purchased at over 43,000 Indian rupee and roughly 600 US Dollars.
Of course these prices don’t include the custom duties which is applied when we import a product. In India, one can add extra 2400-3700 rupees to pay for custom duties if the cost of the wallet is 10,000 INR. For people, who already have a huge portfolio in crypto, this doesn’t look like a heavy price to pay for securing their crypto but for someone who is new to crypto and isn’t that wealthy, this might be a problem.
However, once you check the benefits of these wallets, you would be extremely tempted to buy and use these regardless of your portfolio.
Setting up the wallet
Now that you have the brand new hardware wallet in your hand, the next step is it to activate the wallet. You need either a phone or a personal computer to make it work. A Hardware wallet is a small device whose work is based on a pair of keys – Public key and Private key. While public key can be accessed by anyone to send you crypto, make sure you never ever show your private key to anyone.
Public Key : Public key in this context works like your address to which crypto can be sent. It is an unique string of letters and numbers specifically attached to your wallet and anyone can send you crypto using this key.
Private Key : It comes with your hardware wallet and it is highly confidential. Imagine you are working as an undercover agent for your country and you have got a highly confidential secret which you can’t share with anyone apart from the top level people of your organization. In this case, you can’t share your private keys with anyone trustable too otherwise you will risk losing your crypto.
In hardware wallets, private key is a set of a couple dozen words, all placed at a respective number in the device. This whole set is also called recovery phrase. The wallet asks you to pen down those words in an exactly same sequence they come with and once you confirm those phrases in exactly same order, you are good to use the wallet.
The wallet also asks you to set a PIN of 4 to 8 digits which works like a password every time you open the device. That pin should also stay with you but even if it has access to someone else, he/she can’t steal your crypto as long as you don’t give them access to your private key/ recovery phrase, which comes into picture after you set up your pin.
Using the wallet
After noting down the recovery phrase, now you have to connect the wallet to a PC using USB cable or an android & iOS device using bluetooth. Now before you may think that it is not making any sense since the wallet still has to be connected online and that increases the chances of hacking and stealing your fund, it’s important for you to know that your recovery phrase (private key) still remains offline at a piece of paper.
Once you connect the device to a phone or computer, you will have to download the ledger live app in case you are using a Ledger device. You can either click here for download or go to the official website of ledger and download from there. If you are using a Trezor device, all you have to go to their homepage using the browser you use to surf internet and connect your device without downloading any app.
After installing the ledger app, it will ask you to connect your wallet once again on your phone or PC. After which it will show you a giant list of cryptocurrency apps which you will need to install within the app itself. You don’t have to install all the apps but only the apps of the crypto assets you own or you’re interested in storing. For example, if you want to store bitcoin and Ethereum in this wallet, you just have to install their apps and skip the rest.
Creating crypto accounts
Now that you, for example have installed the bitcoin app on the ledger live, you will be asked to create an account. You will have the option to choose from 3 accounts – Segwit, Native Segwit and Legacy. The differences between these three is not that huge but still good enough to be mentioned here.
Segwit charges a nominal fee on transferring bitcoin funds while Native segwit charges even less but the problem with native segwit is that not all the exchanges support it. Legacy is the most expensive account and you might not want to opt for that. Usually, people go with Segwit just for convenience as it is backed by all the exchanges but if your exchange backs Native segwit too, this is the best option since this is cheapest.
Once you click on ” Continue ” button after choosing the account of your convenience, you are all set to access your crypto coins.
Storing bitcoin/altcoin in the wallet
Here comes the final stage where we will be learning about how to take your asset from an exchange or any other online wallet and store it in a hardware wallet. Some of the wallets pay a hefty interest on the coins tempting you to keep your asset stored with them but you wouldn’t want to compromise on the safety of your bitcoin just for some interest, right?
To make sure you receive the coin in your wallet from some other wallet, all you need to do is to open the ledger live app, go to accounts and choose the one you have already made. You will have the option of ” receive ” there clicking which will generate an address for your ledger on your mobile or computer screen.
Copy that address, go to the exchange wallet or wherever you have stored your digital currency up until that point, click on withdraw, enter the amount of bitcoin or whatever crypto asset you want to store in the hardware wallet ( mostly people start with withdrawing a small amount of asset initially just to ensure whether the device functions properly or not ), paste the wallet address you had copied earlier, double check and confirm it to see you are not sending the coins to a wrong destination, enter the OTP you receive on your email and there you go, you have successfully transferred your cryptocurrency from an unsafe place to the safest place on the earth in just a few minutes.
It is important to note here that only the process of transferring the fund has taken a few minutes and the actual transfer may take a lot longer but don’t fret, it will ultimately reach your wallet. The date and time by which your funds will be transferred will be known to you by the app itself and instead of waiting stressfully in that period, you can go about your day usually as the bitcoin transfers require multiple confirmations which take a lot of time unlike the traditional banking system.
- Keep your recovery phrase/private key at a safe place where no one can access it but since it is just a piece of paper, make sure you keep it at a place where it doesn’t erode. You can even buy a metallic cover to protect it.
- Always copy and paste the address of your wallet instead if writing it manually as in the case of latter, you may end up writing incorrect address sending your precious asset to the wrong place which then, is untraceable and the transaction is irreversible.
- If waiting to receive your crypto makes you anxious, you can always put the hash address on blockchain network to check the status of transaction.
- Apart from never sharing your private key with anyone under any circumstances, never click a picture of the recovery phrase on your phone. Don’t even think of doing that as in that case, your private key gets connected to online world which then, serves no purpose of hardware wallet.
- The address of your public key may change time to time so don’t panic when you see a different public key address when you use the app next time.
- Absolutely do not forget your PIN. You can note it down as well and keep it safe like your private key. Remember in this decentralized setup, you are your own bank and you are responsible for the safety of your assets.
Once you follow the steps mentioned in the article and do’s and don’ts attached with it, you can happily sleep or can worry only about the theft or robbery in outside world as your bitcoin/altcoin will be stored in the safest way, at the safest place on the earth.