Products - Bitcoin Hardware Wallets
“To date there have been no verifiable incidents of Bitcoins stolen from hardware wallets.”
- Bitcoin Wiki https://en.bitcoin.it/wiki/Hardware_wallet
No sooner than you acquire Bitcoin, one of the first things you’re going to read on the internet as you research is that “it’s not safe to leave your coins on the exchanges” (such as Coinbase, Bittrex, et al) ...
This is in fact true, to an extent. The mantra is that you don’t truly “own” your coins if you don’t own/hold your own private keys (see https://en.bitcoin.it/wiki/Private_key). ALL exchanges hold the private keys to the online wallets which they provide.
The possible dangers include - but are not limited to - the exchange’s website being hacked and currency being stolen, or one of their own employees actually “going rouge” and disappearing to a faraway country with untold millions in stolen currency.
However, purchasing a hardware wallet is not generally considered a needed “first step” by any means - to some it’s even more of a geeky accessory. I DO recommend it, as much safer than long term storage of funds on any exchange, but waited over a year myself before even thinking about it. In truth, I didn’t even know enough to be concerned about it - ignorance is bliss!
Many wait until they have acquired several thousand dollars worth of bitcoin before worrying about long term storage and tighter security. Exchanges - as the name suggests - are best suited to exchanging one type of currency for another (such as using USD to buy Bitcoin, or using Bitcoin to purchase “alt coins”), but wallets are likewise best suited for long term "cold storage" (disconnected from the internet) wherever possible.
(Note that not all wallets support all coins - do your own research to find what will best suit your needs, or set up a consultation with me for assistance.)
Exchanges typically have amazing security and even insurance to protect the coins they hold for you in their online wallets (aka “web wallets” or “hot wallets”). Coinbase for example even stores over 97% of its currency offline (acc to its website) in cold storage, to reduce such risks. Nonetheless, the commonly understood “best practice” is to view your online exchange wallet(s) as a checking account, where you hold some of your assets for making transactions on exchanges, and genuine online purchases with your digital currencies. A good hardware wallet will be the wisest decision for long term storage of digital currency which you own solely as an investment and don’t plan to sell anytime soon - i.e., your “savings account”.
Even if you’re not my client, as a Certified Bitcoin Professional I do have something of an ethical obligation to make you aware that wallets are considered safer than exchanges. They can cost around $100 USD in however, so you need to simply consider whether you actually own enough Bitcoin (and/or other alts) to warrant the expense - i.e., simple risk/reward ratio planning. There are also such things as “paper wallets” and “brain wallets” which cost literally nothing and are extremely secure, but in my practice I choose to focus on the simplest solutions for non-technical people who are still new to purchasing digital currencies.
Hardware wallets (aka “cold wallets” or “cold storage”) are not connected to the internet, and therefore your Bitcoin is never subject to hackers, so long as you keep your passwords secure. Some store their hardware wallets in a dresser, some in safety deposit boxes. But if you lose your hardware wallet (or say if your house burns down) you actually have not lost your bitcoins! You’d just need to buy another wallet, and re-enter your passphrases (aka “recovery seed”) and you’ll still have access to everything stored on the original wallet. While perhaps difficult to understand, your Bitcoins, etc, are not actually stored in the wallets ; just your private keys for accessing your Bitcoin, and your keys can be restored with your recovery seed phrase, if ever you lose your hardware wallet.
Sound difficult? No worries! If and when you choose to purchase one, setting up your hardware wallet with you is something I can help you with. You certainly don’t need professional help to do this, as most hardware wallet providers offer easy to follow online tutorials.
While there are more and more wallet options every day, Trezor (my first) and Nano Ledger S are among the most popular and well-reviewed hardware wallets currently on the market. (Read about more here.)
Without making a hardware wallet purchase, Exodus is a very popular free desktop wallet, and there are many, many apps for telephone wallets (I currently like the BRD app for newbies).
The information here is by no means exhaustive, and I recommend that you continue to do your own research before making any decision, and please see all of my DISCLAIMERS here.
Pro Tip : ONLY purchase a hardware wallet directly from the manufacturer. DO NOT purchase from online re-sellers (such as individuals on Amazon, E-bay, etc) as there is a risk of tampering before you receive the wallet. All of your assets could be stolen, as happened here.