If you’re looking to buy a hardware wallet, you probably already know what it does for the most part.  We are going to compare the 2 most popular wallets Trezor and Ledger

In case you don’t know what they do and why, or you just want a quick recap, We are going to have a refresher on how hardware wallets work and why they’re a good idea. Essentially a hardware wallet holds your private keys offline to protect them from remote attacks while still providing a convenient way to use your crypto. 

Lets start with how you store and spend cryptocurrencies. 

Cryptocurrencies don’t actually exist physically and interestingly, they don’t even exist digitally.  If you have some bitcoin on a computer hard drive or a usb flash drive, what is on the drive is not a digital file which you could point to and say “this is a bitcoin”.  What is stored on your drive is simply a key to unlock access to the bitcoin on the blockchain ledger. 

Your crypto is controlled using a public address where people can send you crypto, and a private key which you use to send money from your address to another address.  Imagine it being a little like email.  A public email address can be given out to anyone, so they can send you emails.  However, you keep a private password so you can log in to your email account to send email messages to others from your account.  If you write down your email address and password on a piece of paper, it doesn’t mean that all your emails are on that piece of paper.  It is just the means to access it.  (This is not a perfect analogy since, you can actually download a file that is an email message, but you can’t download a bitcoin or other cryptocoin) 

Why do you need a cryptocurrency wallet. 

Public addresses and private keys are not easily readable.  They consist of a long string of characters.  They are not convenient to read or type out.  Wallets are software or devices that hold your address and private keys and make them available when you need them.  Generally speaking wallets can be divided into “Hot wallets” or “Cold wallets”.

Hot wallets

Hot wallets are usually software wallets on devices connected to the internet.  For example, apps on your phone or desktop pc as well as wallets on active exchanges.  Hot wallets are easy to use and transact with, however since they are connected to the internet, they are vulnerable remote attacks by hackers.

Cold wallets

Cold wallets are kept offline, disconnected from the internet.  For example, Paper wallets, which are simply a piece of paper (or other physical item) with the key and address written on them.   Since most of the malicious attempts to gain access to your crypto are via remote hacks from the internet, having the keys offline, protects them from attackers and keeps them safe.  However, these are less convenient to use so typically are recommended for long term storage.  Hence cold wallets are safer to store crypto with but less convenient to use.

In the same way you don’t carry all the money you own in your wallet, you probably don’t want to keep all your crypto in a hot wallet.  Hot wallets can be thought of as the wallet you carry with you daily, while cold wallets are your bank account or safe that you keep the bulk of your money in.

Either way, it is very important to keep your private key safe and private.  It is with this key that you can access your cryptocurrency and send it to others.  If someone got hold of this key, they could take any currency held in the related address.  You will find this point reiterated over and over everywhere you read about crypto

Hardware wallets

Hardware wallets attempt to combine the security of cold wallets with the ease of access that hot wallets offer.  They are physical devices that look like a flash drive.  The devices can be kept disconnected from the internet, at which point it is as safe as a cold wallet. 

When you want to send crypto, you simply connect to a computer or mobile device, enter your pin and send your funds.  The most significant feature about hardware wallets is that the private key never leaves the hardware wallet, as the transaction validation is done on the hardware itself.  The payment details of the transaction are sent to the wallet, where they are signed following confirmation on the wallet itself.  This signed transaction is sent back to the PC.  This means the private key is never exposed.   This also means that a hardware wallet can be used on pc or mobile device that you don’t trust or may have been compromised.

These hardware devices are used in conjunction with wallet software on the PC or mobile device.  This wallet software is where you manage your transactions and display balances.  The software on the PC does not hold the keys itself.  As a result, both Trezor and Ledger work with third party cryptocurrency wallet software and exchanges.

Vulnerabilities

Both Trezor and Ledger have strong encryption and the hardware has yet to be hacked or compromised without having access to the physical device.  However, as with most technology the weak link is the human factor.  The $5 wrench attack and the “evil maid” attack are vulnerabilities of hardware wallets just like any other wallet.  However, they refer to weaknesses exploiting human behaviour rather than the technology. 

The “$5 wrench attack“ refers to a popular XKCD comic that explains that someone doesn’t need a multimillion dollar computer cluster to attempt to crack the encryption on your laptop(which would fail since 4096 bit RSA is uncrackable) when they can just beat the password out of you with a $5 wrench. 

https://xkcd.com/538/

The evil maid attack, simply refers to someone, such as an “evil maid”, who has access to a device left unattended by the user in an unlocked state.  This can be protected against by using a pin/passphrase that you would memorise and is required when using the device.

While it is important to highlight these types of attack on operational security, it is also important to note that the weakness not in the devices themselves.

Comparison

Some key facts about the 4 hardware wallets we are talking about.

App compatibility

Both Trezor and Ledger are compatible with many third party wallet software

• Ledger Nano X is the only one with Bluetooth capability
• Trezor only deals with 10 currencies natively on the main wallet app.  There is a beta wallet available which is used for feature testing and offers many more coins and features.
• The newer version all use USB
• Ledger is smaller and more inconspicuous
• Trezor has a better screen

Which should you buy

The setup of the both are relatively painless processes which have similar steps.  These involve recording a seed phrase to recover the contents should anything happen to the device itself and setting up a passphrase/pin to add further security. 

What about the Ledger hardware wallet

Compared to the Trezor devices, Ledger devices look more inconspicuous as they look almost exactly like a USB flash drive. 

The nano S is the previous model of hardware wallet created by Ledger, with the nano S being the newer, upgraded, more expensive model.  Physically, the Nano X is bigger, has a larger, higher resolution screen, has the buttons on the front rather than the side.  It also has Bluetooth capability and a larger storage capacity for apps.

Why buy Nano X over Nano S

A quick note about apps on the Ledger – each crypto currency that you want to use needs to install its own app on the ledger hardware.  So, if you want to use bitcoin, Litecoin and Ethereum with your ledger, you need to install the respective apps for each. 

Many people complain about the annoyance of having to uninstall apps to make space for other apps when you don’t have enough space on the Nano S.  the increasing size of the apps and the upgraded firmware has also meant some have complained that they can’t fit more than 3-4 apps on the Nano S anymore.  In addition, there are slowdowns when the storage is full. 

The Nano X can handle more apps than there are currently available.  You can literally install all the available apps without issue.  This makes the user experience much more stable compared to the Nano S.

When upgrading firmware, the experience is vastly improved on the Nano X; another common complaint from Nano S users. 

The layout on the device, once set up and used, is almost identical.  The differences would be the slightly bigger screen and the better placement of the buttons, which once again add to the improvement in user experience. 

The Bluetooth capability added to the Nano S has become a divisive topic in the crypto community.  Is it a giant attack vector creating a huge security hole or a great improvement on user experience? 

So far there have been no vulnerabilities found on the ledger that have used Bluetooth.  The connection is a limited connection and is only used to send transaction data that would otherwise be sent via USB anyway.  Furthermore, any action on the ledger, whether via Bluetooth or USB, requires physical confirmation on the ledger device itself i.e. you have to press the physical button to confirm the action.  The question remains as to whether it is necessary at all.

The main benefit that having Bluetooth adds to the functionality of Ledger is the ability to conveniently use it with your phone.  This frees you up from your desktop and is one of those things that you don’t know you missed until you use it. 

While it is still technically possible to use Ledger without Bluetooth, you need to have USB-OTG adaptor and a phone that supports USB-OTG. 

Overall, this improvement in the user experience, is what is needed in the crypto space in general to drive adoption and ease of use. 

It seems that we have been favouring the Nano X quite heavily but we should mention that there is nothing specifically “wrong” with the Nano S.  It is not a bad device and there’s a reason Ledger is one of the most popular hardware wallets.  It is just that the Nano X is a much better device.  So when would you choose the Nano S over the X?  If you were planning to HODL long term, and didn’t need to use it frequently on a day-to-day basis, then the savings the Nano S provide justify dealing with the slight annoyances, that you don’t have on the Nano X.  On a day to day basis however, you will forget the extra $40 that you shelled out and get frustrated by the constant installation/uninstallation, slightly smaller screen and plugging in to your pc.

You can buy the Ledger here

Trezor

Satoshi Labs was the first company to come out with a Hardware wallet.  The first mover advantage along with a solid product, has kept Trezor as one of the top hardware wallet names in the world. 

From a design perspective Trezor is very different to Ledger.  For the internals, Trezor prefers Open source solutions while Ledger relies on a secure element chip which is a closed source black box.

We are going to continue to focus on the usability to help you decide which one to buy. 

There are currently 2 models of the Trezor, the Trezor One and the Trezor Model T.  The Trezor one was the first model, which featured 2 physical buttons, a monochrome screen and a slightly smaller form factor.  The Trezor Model T was released in 2019 and had notable upgrade of colour touchscreen.  It also featured a USB- type C connector instead of a micro usb type B.

Many people who have used both Trezor and Ledger agree that Trezor is more user friendly of the two.  The main reason behind this is probably the fact that unlike the ledger, the Trezor doesn’t need you to manage special apps for each crypto.  This means no installing/uninstalling apps before being able to use the hardware wallet for the currency you want.  It also means that no worrying about whether there is enough space on your nano S.  However, the Trezor does have a limited number of native apps on the main Trezor app currently.  Trezor provides a beta wallet that is used for testing which and may not be 100% stable which supports many more cryptocurrencies and tokens.  In addition there are a number of third party wallets to support non native apps. 

Trezor uses the Trezor Bridge client software.  This is a piece of software that is installed on the desktop, but you don’t open the software itself.  This software works in the background and is simply the bridge to allow you to use the device.  To manage your device and crypto, you use the trezor website.  On the site, once you have connected your Trezor device, you will be asked to label your device and crypto accounts.  When initially setting up you will also be asked to update the firmware (assuming a newer firmware is available) and asked to choose a pin too. Some people worry that if the site or trezor company was to fold, then they would lose their crypto.  However, your crypto is backed up with a seed phrase so can be moved off the trezor device.  Even without the site, Trezor is compatible with many 3rd party wallets.

Should you buy the Trezor one or Trezor Model T

When first setting up the Trezor, just like with Ledger, you are provided the recovery seed to write down and asked to choose a pin.  On the Trezor one, you enter the pin by clicking on a blank key pad on your pc, whilst referring to the numbers displayed on the Trezor device.  While on the Trezor model T you can simply use the touchscreen to enter the pin. 

Having a touchscreen does add a slight improvement in security as you are not entering your pin with your mouse on the PC, but honestly this is probably negligible.  The usability of the touchscreen is a bit questionable however. The screen is only just big enough to be usable.  So if you have big fingers this may not be a huge benefit.

Model one has native support for fewer crypto currencies.  These are the mainstream currencies that most people who get into Crypto will use.  There are some major coins that are not supported on the Trezor One. These are Ripple, EOS, Cardano, Monero, Tezos, Ontology and Binance chain

The Model T natively supports these coins which allows you to manage your coins directly on the Trezor site..  Having it all in one place and natively supported is the most important distinction between the One and the Model T.  This distinction will be the basis of your decision on whether you choose to purchase the one of the T.  The model T also supports Shamir Backup which is a new method for backing up your keys which is a new feature considered more secure.

Summary

We run through our decision process below.  Unless you have a specific exception or feature you need, our overall winner is the Trezor One.  It can do most things and the user experience is great.  While the Trezor Model T is a better device, the Trezor one still holds its own. 

You can buy the Ledger here

You can buy the Trezor here. 

You should always buy hardware wallets direct from the manufacturer