I have seen the future, and it doesn’t have any more stolen bitcoins.
Bitcoin has shown us what some suspected, but most didn’t know: that our computers and the current Internet infrastructure are inherently insecure. What do you do when you have extremely secure money, but your tools for using it are potentially full of spyware?
Hardware wallets for bitcoins, which are small devices that keep your money offline (read: safe), were pioneered by Trezor. Cold storage options already existed, but you couldn’t spend from traditional cold storage (paper wallets, brain wallets, etc.).
This was highly inconvenient for anyone who actually wanted to buy things with their bitcoins. Trezor fixed that problem, designing cold storage you could spend from with the first hardware wallet.
But many chose to pass on Trezor’s US$119 price tag, which left a lot of bitcoins insecurely hosted on hackable web wallets and exchanges.
Competition Breeds Low Prices
Ledger has answered the market’s call for lower-priced hardware wallets, and has delivered a keychain-sized offering for only US$36. It operates on a smartchip, which is that shiny golden thing you see in the corner of credit cards and in cell phone SIM cards.
The Ledger Bitcoin wallet is hierarchical deterministic (HD), meaning you can generate an infinite number of addresses from a single private key. The Ledger hardware wallet stores this private key offline, and will sign and send your Bitcoin transactions without exposing your private key to the Internet. All you have to do is plug it into your computer’s USB port and enter your PIN (which you establish upon first connecting the device to your computer).
The Ledger wallet is a perfect option for those who suspect that they have a malware-infected computer, too, as the device is not compromised by even the buggiest of machines.
The Hardware Wallet Stack
Shoppers should take caution that while Ledger’s API is open-source, the source code to its wallet device is “open spec.” This means that they’ve extensively documented their development, intentions, and varying pieces of source code, but that the full operating source code of the Ledger hardware wallet is yet to be fully disclosed. (Though neither was the Trezor’s at first, which the developers eventually remedied.)
As always, consult forums, the Bitcoin subreddit, and consumer review sites before making a final purchase. After all, you are your own bank now. And here’s to no more stolen bitcoins!
Did you enjoy this article? You may also be interested in reading these ones: