There is a saying in crypto: Not your keys, not your coins.
While this is true, it’s also worth considering what exactly “your” means. If, for example, you store your cryptocurrency private key in an unsecured text file located on your hard drive, your coins may be “yours”, but they are relatively easy for hackers to steal.
With a hardware wallet is another matter.
Why use a hardware wallet?
A hardware wallet is a device designed specifically to keep your cryptocurrency safe. It’s usually a small gadget with no other use case than to store your BTC, ETH or whatever digital asset you want.
Hardware wallets almost always have a “secure element” that includes a chip designed to keep your data safe from malicious apps and attacks. They also usually have a password that allows you to access the data stored in the wallet.
Yes, you can choose to access your bitcoins through an app on your computer or phone. But these devices do millions of other things Furthermore securing crypto. You probably have dozens of apps installed as well as access to various websites and services, thus increasing the chance of something malicious sneaking in.
Conversely, crypto hardware wallets have only one application for the following purposes: sending, receiving and securing your crypto. That’s it. Nothing else goes in or out.
Testing Trezor Safe 3
For the purposes of this article, I used the recently released Trezor Safe 3 (Bitcoin Edition), a $79 wallet from Trezor. This particular hardware wallet is interesting because it is even easier to understand and use than other devices; it is specially designed to protect your bitcoins. No fuss, no complications: You keep your bitcoins safe with Trezor Safe 3, keep them somewhere safe (no pun intended) and never touch them until you need to access them.
The Trezor Safe has two buttons and a small, 0.96-inch monochrome OLED display. It is connected to your computer via a USB-C port. It’s a simple device with a unique purpose — and many users will appreciate that.
Setting up Trezor Safe 3
Setting it up is easy. Download and install the Trezor software, unbox the device itself, and connect it to your computer via a USB-C cable. The software will recognize the device, update its firmware and launch a tutorial on how to use it.
After initializing the device, you will be asked to create a recovery seed. This is basically your crypto key expressed as a string of English words (usually 12 words). Write these words down on paper (Trezor provides two handy sheets of paper for this purpose). Do not show them to anyone; keep them in a very safe place.
An optional step you can take is to create a PIN for your Trezor. You should definitely do it. If you don’t, anyone with physical access to the device can hack your cryptocurrency. Choose a PIN that you won’t forget and preferably something that only you know.
Moving your bitcoin to the hardware wallet
Let’s say you bought bitcoins on a crypto exchange and now want to move them to a safer place (This is a good idea, by the way. In the crypto world, exchanges have been known to get hacked or go bankrupt.)
After setting up your Trezor Safe 3, connect it to your computer and open the Trezor app. Go to “Accounts – Receive” and confirm that the address on the computer screen matches that of the device itself. Don’t ignore this part. If your computer or the Trezor software is compromised, malware can try to trick you into sending the coins to the wrong address.
Press Receive to see your receiving address. Always double-check the address in the software and on the device itself before sending or receiving coins.
Credit: Ministry of Finance
Then, depending on where you’re sending the bitcoins from, you can either scan the generated QR code with your phone or copy and paste the address when the exchange you’re sending from asks you to do so (check that the address is correct more time in this moment).
After you send your bitcoins to the hardware wallet, it will usually take a few minutes for them to show up in your Trezor software. Once they’re there, you’re done. You can turn off your wallet and store it in a safe place.
Sending coins is the reverse of this process. Connect your Trezor, launch the Trezor software, press “Accounts – Send”, select the amount you want to send, make sure you have the correct receiving address, review all the details one more time and click “Send”.
Things you should never do
While hardware wallets are among the most secure methods of protecting crypto, they only work if you follow certain precautions. Here is a list of things you should never do:
1. Keep your private key in an unsecured way or share it with anyone.
Your private key, which is a long string of characters, or the recovery seed, usually a set of random words, gives you complete control over your Bitcoins and other cryptocurrencies. While setting up your hardware wallet, you will be prompted to save this list of words as a backup. But it must be stored securely, for example in a safe. If you just keep it on your desk or store it in a computer file, you’ve compromised the security you get from a hardware wallet.
You can write down your restore point on a piece of paper, or you can pick up Trezor’s Keep, an analog device made of metal that allows you to store your restore point without worrying about fire damage.
Credit: Ministry of Finance
2. Lose your backup
Keeping your private key secure may sound like an unnecessary hassle. Is your hardware wallet not enough? Well, in theory it is, but it can be lost, stolen or simply damaged. You should have a backup. And yes, you should keep it safe; see point number one.
3. Lose your hardware wallet (especially without a PIN)
Losing your physical device is terrifying, but it’s not the end of the world.
if you have set a PIN to protect your coins. If it’s PIN-protected, someone who finds the device won’t be able to easily access it. And if you have taken precautions and stored your backup safely, you can restore your coins. The Trezor recovery process is simple and consists of entering these 12 words from your recovery seed. It will take a few minutes given that the Trezor doesn’t have a keyboard, but thankfully you probably won’t do very often.
Is this it?
It’s a lot. There’s nothing too glamorous about securing your crypto with a hardware wallet. This is similar to keeping gold and jewelry in a safe. From time to time you should connect your wallet to your computer and run the accompanying software to see if the device requires any important updates. But if you don’t plan to send, receive or use your cryptocurrency, you should mostly leave your hardware wallet in place – until it’s needed.