Curriculum
Course: Crypto Wallets
Login

Curriculum

Crypto Wallets

Wallets

0/9

Wallet Security

0/3

Rabby.io

0/5

Exodus Wallet

0/1

MetaMask.io

0/11

Phantom SOL

0/2

Proton Wallet

0/1

Hardware Wallets

0/3

Trezor Hardware Wallets

0/3

Tangem Card Cold Wallets

0/10
Video lesson

What Are Cold Hardware Wallets

Protecting Your Cryptographic Assets:
Why a Hardware Wallet is Crucial

Secure Your Bitcoin: The Essential Need for a Hardware Wallet

In the age of digital currencies, the very basis of our financial dealings is evolving. It’s like playing poker with a full deck, except every card is a secret and the dealer can easily shuffle them away from your grasp. As Anthony from Trezor articulately explains, a hardware wallet is crucial for anyone engaging with Bitcoin. This lesson provides a deeper understanding of this essential tool for your crypto security.

By delving into this topic, you will learn the following:

  • Safety First: Grasp the critical differences between a hardware wallet and other storage methods.
  • Private Key Management: Understand how private keys work and why their security is paramount.
  • Backup and Recovery: Learn about the importance of recovery seeds and how to secure your funds even when disaster strikes.
  • Navigating Hardware Wallets: Gain insights into setting up and using your Trezor hardware wallet effectively.

Overview of Hardware Wallets and Their Importance

In Anthony’s lesson, he underscores the most crucial tenet of Bitcoin and cryptocurrency security: “A Bitcoin wallet doesn’t actually hold any Bitcoin. It holds the private keys which lets you control those Bitcoin.” With Bitcoin being a digital asset, the mechanisms for safeguarding it diverge dramatically from traditional banking methods.

The principal thesis in this discussion revolves around the necessity of hardware wallets as a defense against the vulnerabilities associated with online wallets. Those who opt for online wallets inadvertently expose their private keys, making them susceptible to potential hacks and theft. Anthony points out that these keys can be “found” rather than guessed, emphasizing the importance of keeping them safe from online threats.

In summary, the lesson stresses that achieving optimal security involves utilizing offline solutions, thereby significantly minimizing the risk of theft.

Steps to Follow in Securing Your Bitcoin

  1. Understand How Bitcoin Works: Grasp that your Bitcoin is actually a representation of private keys.
  2. Choose a Hardware Wallet: Purchase a reputable hardware wallet, such as Trezor.
  3. Setup Instructions: Follow the on-screen instructions to set up your Trezor.
  4. Generate Keys Offline: Create your private keys offline to ensure they’re not exposed to the internet.
  5. Connect to Third-Party Wallets: You can still use third-party wallets while keeping your keys secure on your Trezor.
  6. Backup Your Recovery Seed: During setup, ensure you securely back up your recovery seed.
  7. Consider Additional Protection: Optionally, explore metal backup solutions for ultimate long-term security.

The critical point in this sequence is ensuring you back up your recovery seed. Failing to do so could cost you access to your assets—a sobering thought for crypto investors.

Deeper Analysis of Hardware Wallets: Strengths and Weaknesses

Strengths of Using a Hardware Wallet

  1. Offline Security: The most compelling argument for a hardware wallet is its offline nature. By generating and storing private keys entirely offline, you mitigate the risks associated with internet hacks. Technology can fail, but when keys are stored offline, they become significantly more secure.

  2. User-Friendly Tools: Anthony puts potential users at ease, noting that unlocking the complexities of wallets is straightforward with Trezor’s software suite. Innovations in user interface design mean that even novices can navigate the process.

  3. Long-term Solution: A hardware wallet signifies a sustainable investment in security. With evolving functionalities, these wallets adapt to changes in the crypto ecosystem, providing a reliable method to safeguard assets.

  4. Easy Access and Backup Options: As Anthony mentions, losing a Trezor doesn’t equate to losing funds as long as backup protocols, such as recovery seeds, are followed. This layered protection offers peace of mind, fostering long-term engagement with cryptocurrencies.

Potential Weaknesses and Considerations

  1. Initial Costs: Hardware wallets aren’t free, and their purchase may deter some potential users. While they present clear security benefits, the financial barrier could lead new investors to opt for less secure options.

  2. Technical Setups: Despite their ease of use, some remain intimidated by the initial setup. While minimal learning is required, a section of potential users may need more assistance.

  3. Physical Loss or Damage: Even the most advanced technology cannot prevent accidents. Users must consider potential physical damage or loss incidents, highlighting the continual importance of recovery seeds.

Importance of Understanding Bitcoin Security

The conversation surrounding hardware wallets naturally extends into the broader cryptocurrency and blockchain environment. As digital assets gain traction, the risks associated with online exchanges will continue to evolve. The need for hardware wallets reflects a crucial piece of the puzzle in securing personal wealth within this decentralized paradigm.

Many successful cryptocurrencies and projects underscore the significance of secure key management. Projects like Ethereum and decentralized finance (DeFi) platforms acknowledge the need for user-friendly solutions to safeguard private keys. Moreover, DeFi offers a plethora of tools that align with the hardware wallet philosophy of holding privates keys independently.

As DeFi innovates the financial landscape, the principles of robust security and user empowerment remain paramount. As Anthony pointed out, there’s power in maintaining control over your assets, transcending the limitations of traditional finance. And the decentralized nature of blockchain technology aligns perfectly with these advancements.

Wider Outlook and Impact

As the cryptocurrency industry continues to expand, the importance of hardware wallets will loom larger on the horizon. May it be through evolving regulatory frameworks, emerging technologies, or increasing awareness, the potential of hardware wallets extends far beyond individual security.

The anticipated rise of digital currencies in mainstream markets signifies a broader shift in financial paradigms. This evolution could reshape economic structures, lower entry barriers for users, and nurture a culture of financial independence. The impact of decentralized technologies—especially if integrated with innovations like artificial intelligence—could spawn entirely new approaches to asset security.

In essence, anticipating future developments hinges on how effectively users embrace tools like hardware wallets and new technologies. The marriage of utility, security, and accessibility will define the trajectory of innovations.

Personal Commentary and Insights

Having engaged in the cryptocurrency domain for years, I’ve observed a remarkable shift in how individuals regard asset management. The emergence of hardware wallets correlates with an increasing desire for security and ownership throughout the crypto landscape. Many users are beginning to realize that autonomy over their financial resources does not just mean holding digital assets but also safeguarding them against unforeseen threats.

Moreover, I believe that as technologies advance, user-friendly innovations in hardware wallets will cater to increasingly sophisticated capabilities—potentially integrating biometric security elements, for instance. My experiences advocate for compelling solutions that nurture a culture of education and self-safeguarding. The crypto landscape is an evolving challenge, and it’s imperative that users equip themselves with the right tools.

Conclusion

In conclusion, the lesson on hardware wallets provides invaluable insights into how individuals can secure their Bitcoin. From understanding the mechanics of private key management to implementing robust backup protocols, this knowledge fosters a sense of confidence in navigating the cryptocurrency realm.

As we look toward a future where cryptocurrencies continue to reshape financial landscapes, hardware wallets stand as a transformative solution. The roadmap to financial independence and security remains firmly in our hands.

Quotes:

  • “A Bitcoin wallet doesn’t actually hold any Bitcoin. It holds the private keys which lets you control those Bitcoin.”
  • “When you use a hardware wallet your keys are created and stored offline completely safe from online attacks.”
  • “You’ll still be able to access your funds as long as you back up your recovery seed during the setup process.”

 

 

 

Securing Your Future: The Importance of Hardware Wallets

In today’s digital world, cryptocurrencies like Bitcoin represent a revolutionary shift in how we think about money. But with this new paradigm comes a crucial responsibility—securing digital assets. Understanding the importance of hardware wallets is fundamental for anyone looking to dive into the crypto space, ensuring the safety of one’s investments while also contrasting with traditional financial storage solutions.

Core Concepts

  1. Bitcoin Wallet
    A Bitcoin wallet does not store actual Bitcoin; instead, it holds the private keys that grant access to them. In traditional finance, physical cash is stored in wallets, but in the crypto realm, digital security revolves around safeguarding these cryptographic keys.

  2. Private Keys
    These are unique, randomly generated numbers that control your Bitcoin. Think of them as a secret code needed to access your funds. In traditional finance, this is akin to having a PIN to access your bank account, but with the additional hurdle of securing it from online threats.

  3. Hardware Wallet
    A hardware wallet is a physical device that stores your private keys offline, away from internet exposure. Traditional bank vaults protect your physical assets, much like how hardware wallets protect your digital ones from being stolen online.

  4. Recovery Seed
    When setting up a hardware wallet, users create a recovery seed—essentially a backup to restore access should the hardware be lost or damaged. This aligns with traditional banking practices where account recovery methods are provided for lost access.

  5. Trezor Suite Software
    This user-friendly interface guides users through setting up their hardware wallet and managing their keys securely. It enhances the experience by simplifying access—as banks do with mobile apps for account management.

  6. Online Wallet
    An online wallet stores private keys on the internet, making them more vulnerable to theft. Comparatively, traditional electronic banking presented vulnerability prior to evolving encryption methods; the same concerns exist in crypto with online wallets.

  7. Meta Backup
    These sturdy metal storage solutions protect the recovery seed from physical disasters like fire or water damage. This is similar to how people secure important traditional documents in fireproof safes.

Understanding these concepts is crucial for newcomers to crypto as they provide a solid foundation for securing digital assets. In a world where hackers can make millions in seconds, learning how to protect your investments is primary and non-negotiable.

Key Steps

1. Understanding the Role of a Hardware Wallet

  • Hardware wallets are a secure way to protect your private keys.
  • They eliminate online exposure by storing keys offline.

Explanation:
When you invest in Bitcoin, understanding that it doesn’t reside in a wallet, but rather your keys do, changes how you approach security. Like keeping valuables in a safe instead of merely leaving them unattended, using a hardware wallet prevents unwanted access to your digital assets.

2. Setting Up Your Trezor Hardware Wallet

  • Acquire a Trezor wallet from the official website.
  • Follow on-screen instructions for a secure setup.
  • Create your private keys offline.

Explanation:
The Trezor wallet is designed for simplicity. Clarity during setup ensures all users can create a secure environment for their investments. This parallels opening a bank account, where clear guidelines ensure that your assets are safe and easily accessible.

3. Backing Up Your Recovery Seed

  • Write down your recovery seed during setup.
  • Store it in a safe location away from your hardware wallet.

Explanation:
Losing access to your wallet is a nightmare scenario. By backing up the recovery seed, you ensure that in the event of loss, recovery is possible. Think of this as keeping an extra set of keys for your house in a trusted location.

4. Connecting to Third-Party Wallets

  • Your Trezor can connect to various third-party wallets for flexibility.
  • Ensure that these wallets are reputable and secure.

Explanation:
Using third-party wallets is like utilizing a trusted banking app to manage your accounts; however, the security of your keys remains paramount. Connecting your wallet to a third-party app adds functionality without jeopardizing your security.

5. Long-Term Protection Measures

  • Consider metal backups for your recovery seed.
  • Regularly review and update security practices.

Explanation:
The goal is to ensure that your backups are as secure as possible. Much like revising security measures for valuables over time, regularly assessing your crypto security practices keeps your investments safeguarded against emerging threats.

Crypto Connection: Hardware Wallet vs. Online Wallets

  • Hardware wallets are immune to online hacks, while online wallets are vulnerable.
  • Events like the Mt. Gox hack, where an exchange lost massive amounts of Bitcoin, showcase the risks associated with online storage.

Many cryptocurrencies and blockchain projects advocate for the use of hardware wallets due to their offline nature, and this approach is a game-changer in how individuals manage security, representing a significant advancement over traditional online banking systems.

Real-World Applications

Historically, several major hacks in the crypto space have led to thousands of Bitcoins being stolen from online exchanges, demonstrating the need for secure storage solutions. In contrast, traditional banking has implemented various cybersecurity measures to adapt, yet the risk still exists. As a result, hardware wallets are becoming a standard practice for serious crypto investors today.

Cause and Effect Relationships

The adoption of hardware wallets arises from cyber theft instances in the crypto world, leading many to adopt more secure practices. In traditional finance, adapting to threats often results in fortified security measures; the same logic applies to the crypto realm where heightened risks necessitate upgraded security solutions.

Challenges and Solutions

  1. Challenge: Loss of Hardware Wallet
    Users may panic if they misplace their hardware wallet.
    Solution: By backing up the recovery seed, funds remain accessible.

  2. Challenge: Complexity of Setting Up Hardware Wallets
    Newcomers might find setups daunting.
    Solution: User-friendly guides provide clarity and ease of access.

Common misconceptions include the idea that all online wallets are secure; unfortunately, this is often not the case. Blockchain technology offers decentralized tracking and management, eliminating single points of failure while providing mechanisms for security that outshine past financial trends.

Key Takeaways

  1. Understand Private Keys
    They are the core of your cryptocurrency security – safeguard them.

  2. Use Hardware Wallets for Security
    Reduce your attack surface by keeping your keys offline.

  3. Always Back Up Your Recovery Seed
    This is your safety net; misplacing it can lead to irreversible losses.

  4. Explore Third-Party Wallets with Caution
    Ensure they have solid reputations before connecting.

  5. Keep Security Practices Up to Date
    Regularly review your methods to counter evolving threats.

  6. Invest in Metal Backups
    Protect your recovery seed physically to guard against disasters.

  7. Embrace Learning
    The crypto landscape is constantly evolving, so stay informed!

Putting these takeaways into action not only builds a strong foundation but also equips newcomers for a secure ride in the crypto world.

Discussion Questions and Scenarios

  1. How do private keys compare to a bank account PIN in securing assets?
  2. In what ways might the hardware wallet revolutionize digital asset storage?
  3. What are the potential drawbacks of relying solely on an online wallet?
  4. Discuss scenarios where a recovery seed might fail to restore access to an account.
  5. Compare how traditional banks have adapted to cyber threats over the past decade versus how blockchain technology addresses these concerns.
  6. What steps can be taken to ensure hardware wallets stay secure as technology advances?
  7. Reflect on whether hardware wallets will become obsolete with advancements in blockchain cybersecurity.

Glossary

  • Bitcoin Wallet: A digital method for storing and managing Bitcoin.
  • Private Keys: Unique identifiers needed to access and control Bitcoin.
  • Hardware Wallet: A physical device designed to securely store private keys offline.
  • Recovery Seed: A backup phrase that allows for the restoration of a wallet.
  • Trezor Suite Software: Software that assists users in managing their Trezor wallet.
  • Online Wallet: A web-based service that stores private keys, typically less secure.
  • Metal Backup: A durable method for securely storing your recovery seed to withstand physical damage.

As you wrap your head around the integral role hardware wallets play in securing digital assets, you’re better prepared to navigate the crypto landscape. This lesson is just one stepping stone in the broader Crypto Is FIRE (CFIRE) training plan that seeks to empower your financial literacy through cryptocurrency education.

Continue to Next Lesson

Join us for an exciting exploration into the next lesson, where we delve deeper into crypto fundamentals, preparing you for the journey ahead in igniting your passion for finance in the digital age!

 

Read Security Details Transcript

Security of Cold Wallets

  1. Introduction to Cold Wallets and Transaction Signing:

    • Explained by Whiteboard Crypto, the video focuses on the ideal management of cold wallets for cryptocurrency.
    • A typical crypto transaction requires two inputs: the private key, which confirms ownership, and a partially signed transaction that includes transaction details like amount, date, and recipient.

  2. Various Security Methods for Managing Private Keys:

    • The video explores several security methods, ranging from entirely theoretical (using only mental capabilities) to practical solutions involving physical devices.
    • Methods discussed include using hardware devices that are either open-source or designed for a single use, which enhances security by limiting exposure to potential threats.

  3. Criticism of Ledger Nano X:

    • The device was initially believed to secure private keys within a hardware enclave, inaccessible to external parties.
    • It was later revealed that the device could regenerate private keys outside of its secure storage, creating a vulnerability and causing distrust among users.

  4. Advocacy for Open-Source Software:

    • Emphasizes the importance of transparency in software used in crypto wallets.
    • Open-source software allows users and developers to inspect the code for malicious elements, significantly reducing the risk of hidden vulnerabilities.

  5. Security Spectrum and Practical Recommendations:

    • Security is not absolute but exists on a spectrum from highly secure to vulnerable systems.
    • Practical recommendations include using devices with no internet capabilities, verifying software source codes, and destroying devices after a single use to prevent data recovery.
    • The video concludes with a call for a cautious approach, acknowledging that no method is entirely foolproof but some provide significantly better security than others.

 

Step-by-Step Guide Setting Up Your Cold Wallet

Step 1: Introduction to Cryptocurrency Security

  • Welcome to the world of cryptocurrency security. In this guide, we’ll explore the different methods of securing your digital assets using cold wallets. We start by understanding the basics of signing a cryptocurrency transaction, which is critical to ensuring that you are the rightful owner and spender of your crypto.

Step 2: Understanding Transaction Signing

  • A cryptocurrency transaction typically requires two inputs:
    1. Private Key: This is your secret key used to sign transactions. It’s essential for verifying your ownership of the cryptocurrency.
    2. Partially Signed Transaction: Think of this as a blank check with the amount, date, and recipient already filled in. This is usually prepared by the wallet software you are using.

Step 3: The Process of Signing

  • To perform a transaction, you need to use your private key to sign the partially signed transaction. This signature process converts it into a fully signed transaction, confirming the legitimacy of the transaction.
  • After signing, the transaction doesn’t get processed immediately. It needs to be broadcast to a pool where miners or validators add it to the blockchain. For instance, Ethereum transactions go into the Ethereum memory pool before being added to the blockchain.

Step 4: Ensuring Transaction Validity

  • Others can verify a signed transaction to confirm your identity as the signer and validate that you have enough coins to complete the transaction. If everything checks out, the transaction is added to the blockchain and becomes part of the global ledger.

Step 5: Advanced Security with Unique Signatures

  • It’s crucial that each transaction has a unique signature. This prevents others from copying your signature to authorize transactions fraudulently. The uniqueness is ensured by cryptographically using your private key based on the specific transaction details.

Step 6: Concerns with Hardware Wallets (e.g., Ledger Nano X)

  • Recently, it was discovered that devices like the Ledger Nano X could potentially recreate your private key outside of its secure storage. This realization has led to a significant shift in trust among its users.

Step 7: Importance of Open Source Software

  • To avoid security risks associated with closed-source software, it’s recommended to use open-source hardware for your crypto transactions. Open-source allows you and the community to inspect the code for any malicious elements.

Step 8: The Concept of Security as a Spectrum

  • Understand that perfect security does not exist; it’s a spectrum ranging from high to low security. Your goal is to find a balance that minimizes risk while maintaining practicality.

Step 9: Building the Perfect Cold Wallet

  • Best Case Scenario: Ideally, you could generate and sign transactions in your mind without ever exposing your private key or seed phrase. However, this is highly impractical for most people.
  • Second Best Scenario: Use a hardware device that is open source and air-gapped (no internet capabilities) to input your seed phrase and sign transactions. After use, destroy the device to ensure it can’t be compromised.

Step 10: Practical Application with QR Codes and Encrypted Data

  • Encrypt your seed phrase and store it as a QR code. Use a secure device to scan the QR code and input a passphrase to decrypt it, allowing you to sign a transaction securely.
  • After completing transactions, consider destroying the device if it might store a decrypted version of your private key or seed phrase.

Step 11: Using Old Tech for New Security

  • Repurpose an old laptop by removing all network capabilities and use it to sign transactions offline. Transfer the signed transaction using a USB drive or display it as a QR code to a connected device for broadcasting.

Step 12: Exploring Low-Cost Security Solutions

  • Investigate low-cost projects like SeedSigner, which allow you to scan a QR code of your encrypted private key, enter a passphrase, and sign transactions securely. When powered off, these devices erase all data, offering a secure, reusable option.

Step 13: Understanding the Risks with Ledger and Similar Devices

  • Be cautious with devices that claim high security but have potential vulnerabilities, such as the ability to extract private keys through complex manipulations.

Step 14: Continuous Learning and Adaptation

  • Stay informed and adapt your security measures as new vulnerabilities and technologies emerge. Always strive for the best possible security that balances practicality with robust protection.

Conclusion:

  • Keep exploring and adapting your approach to cryptocurrency security. Remember, no system is infallible, but being educated and cautious can significantly minimize your risks.

 

Cold Wallet Security For Your Cryptocurrencies

In the rapidly evolving world of cryptocurrencies, securing your digital assets is paramount. Cold wallets, which store your cryptocurrency offline, are considered one of the safest methods to protect your funds from online threats. This comprehensive guide delves into the nuances of cold wallet security, drawing on a detailed explanation from the popular “Whiteboard Crypto” YouTube channel and seasoned insights from the world of decentralized finance (DeFi).

Understanding Cold Wallets and Transaction Security

A cold wallet is essentially a way to store your cryptocurrency that keeps the private key (the critical piece of data used to authorize transactions) offline at all times. This separation from the internet shields your assets from online hacking threats, malware, and other vulnerabilities that hot wallets (which remain connected to the internet) face.

Transaction Signing Basics: Every cryptocurrency transaction involves key elements:

  1. Private Key: Your secret identifier, crucial for signing transactions and proving ownership.
  2. Partially Signed Transaction: This is akin to a pre-filled check that specifies the transaction amount, recipient, and date.

How Does Signing Work? When you sign a transaction with your private key, it transforms from partially signed to fully signed, making it legitimate and ready for submission to the blockchain network. However, the transaction isn’t executed immediately—it joins a pool of other transactions waiting for validation by miners or validators.

The Security Spectrum of Cold Wallets

Security in the realm of cryptocurrencies isn’t black and white but a spectrum with varying degrees of safety and risk. Here’s a breakdown of the security levels you might consider:

  1. Ideal Security (Theoretical): Imagine conducting and signing transactions entirely in your mind, using a perfect recall of your seed phrase (a series of words generated by your cryptocurrency wallet at creation) and complex mental calculations. While secure, this method is practically impossible for most.

  2. High-Security Practices:

    • Using Air-Gapped Devices: Devices that never connect to the internet or other networks are termed “air-gapped.” For enhanced security, you might use a device just once to sign a transaction and then physically destroy it to ensure it cannot be compromised.
    • Hardware Wallet Vulnerabilities: Recent insights, particularly concerning popular hardware wallets like the Ledger Nano X, reveal that these devices might recreate your private key outside of their supposedly secure environment. This revelation underscores the importance of transparency and the potential risks of closed-source software.

The Importance of Open Source in Security

Open-source software in hardware wallets allows users and developers to verify there are no backdoors or other security threats embedded in the software. This transparency is crucial in building trust and ensuring that your device does only what it is meant to do—securely store and use your private keys.

Practical Steps for Securing Your Crypto Assets

  1. Evaluate Your Security Needs: Consider how much security you need based on the value of your assets and your risk tolerance. No solution is foolproof, but understanding the trade-offs between convenience and security is crucial.

  2. Choose the Right Cold Wallet: Research and select a cold wallet that offers the level of security you are comfortable with. Whether it’s a completely air-gapped hardware device or a securely designed paper wallet, make sure it meets your criteria for security and usability.

  3. Regularly Update Your Knowledge: The field of cryptocurrency is constantly changing. Stay informed about new security threats and advancements to ensure your protection methods remain robust.

  4. Implement Multi-Factor Security: Consider using multiple forms of security, such as biometric verification, multi-signature requirements, or time-locks, to add additional layers of protection to your transactions.

  5. Physical Security: Remember, physical security is as important as digital. Secure your physical devices in safe locations and consider using tamper-evident seals to detect unauthorized access.

Conclusion

Securing your cryptocurrency involves a careful balance of technology, personal discipline, and continuous education. By understanding the fundamentals of transaction signing, recognizing the importance of open-source software, and implementing robust security practices, you can significantly reduce the risks and safeguard your digital assets. Remember, in the world of crypto, being well-informed and cautious is your best defense. Whether you’re a seasoned investor or a newcomer to the crypto space, taking proactive steps towards comprehensive security will ensure that your investments are protected now and in the future.

 

Read Video Transcript
Why you need a hardware walletđź”’ 
https://www.youtube.com/watch?v=mYIzFR–5tw
Transcript:
 Bitcoin Wallet  Bitcoin Wallet  Bitcoin Wallet  Hi, I’m Anthony from Trezor and I’m here to explain why you need a hardware wallet if you’re planning to use Bitcoin.  Bitcoin is a fully digital asset, the first of its kind, and that requires us to change how we think about security.  Bitcoin Wallet  A Bitcoin wallet doesn’t actually hold any Bitcoin.
 It holds the private keys which lets you control those Bitcoin.  Those private keys are essentially a huge random number that would take millions of  years for a computer to guess.  Using an online wallet, your keys are exposed to the internet from the moment you create  them.  To steal your Bitcoin, those keys no longer need to be guessed but they can be found instead.
 When you use a hardware wallet your keys are created and stored offline  completely safe from online attacks.  Don’t worry if this all sounds complicated. Your Trezor hardware wallet  and the free Trezor suite software will help you through everything.  Just set it up and follow the instructions on screen and you will create your keys offline where they will be safe forever.
 You will still be able to connect to all your favourite third party wallets, but your keys will be kept safe offline on your Trezor.  Generating and storing your private keys directly in your Trezor offline is the best way  to keep your coins safe. Get yours today from Trezor.io.  What happens if you lose your Trezor hardware wallet?  You’ll still be able to access your funds as long as you back up your recovery seed during the setup process.
 Check out our video how to set up a Trezor hardware  wallet for more information on how to do that. For long-term protection check out  our range of metal backups on the Trezor shop.
 
Cold Wallet Guide – 13 Tips to Not MessUp!
https://www.youtube.com/watch?v=56KGEc88Coc
Transcript:
 Here are 13 cold wallet tips that I want to share with you because if you don’t know them,  you could potentially lose a lot of money. How do I know this? Well, I’ve had a lot of my viewers  share some horror stories with me that have ended up in some less favorable results. And if they had  a video like this that they could have watched, all of these mistakes could have been avoided.
 So I made the video. Tip number one, understand the purpose of a cold wallet. How does it work?  Why is it more secure than the alternatives like keeping your crypto on an exchange or in a hot wallet like Metamask or Trust Wallet? And all  you really need to know is that crypto wallets and cold wallets, they don’t actually store any  crypto at all.
 What they do store is your wallet’s private key, which is used to access your crypto,  which is stored on the blockchain. And the special thing about cold wallets is that it keeps this  private key on the physical device, which is offline versus a hot wallet or a software wallet that keeps your private  key stored on the software, which is connected to your internet connected device, such as your phone  or computer, making it more susceptible to hacks.
 Also, cold wallets are self custodial wallets,  meaning you remain in full control of your private key and thus your crypto.  A cold wallet is much more secure than a crypto exchange because the crypto exchanges are non-custodial, meaning they actually own your private key and technically they control your  crypto.
 And I know this seems a little far-fetched, but I have a friend who has had thousands of  dollars worth of crypto stored on a popular crypto exchange, Coinbase, and he has not been able to  access it for about two years. Just recently,  about a week ago, he was able to regain access to his crypto. But again, he had no access to it,  literally couldn’t touch it for over two years, all because he wasn’t using a self custodial  wallet. And more importantly, a cold wallet.
 Tip number two, understand that cold wallets are not  immune to hacks, a cold wallet can still be hacked. Now it’s very rare  that someone actually packs a physical hardware wallet device. And when hackers have gained access  to a hardware wallet, they do need physical access to it so that they can use special tools to hack  it.
 And in the rare occasions where this has happened, obviously you need someone who’s really  knowledgeable and is able to understand how to hack a hardware wallet. But when this has happened, the hardware wallet manufacturers have released updates to prevent this from  happening again in the future. But it’s really important to know that you’re not immune to hacks  just because you’re using a hardware wallet. What’s more likely to happen is falling for a scam.
 And  that’s why my third tip is to educate yourself about the most popular crypto wallet scam,  which is a phishing scam. Now,  if I had to guess, this isn’t an official number, but if I had to guess, 99% of crypto wallet hacks  are not hacks at all. It’s people falling victim to phishing scams.
 So it’s not the hardware wallet’s  fault. It’s actually your fault. The reason why this scam is so effective is because scammers  attack you from all angles, social media, email, text messages, phone calls.  Literally, they’re coming at you from everywhere.  And I know what you’re thinking.  Oh, I would never fall for this.  Yeah, that’s what they all say.
 Usually the scam operates in two ways.  Firstly, a scammer will reach out to you.  Of course, you won’t know they’re a scammer unless you have gone through this before or you’re aware of the scam.  And they will use fear tactics such as your crypto account is closing or there’s an issue with your hardware  wallet and you need to confirm your account by going to this website and entering your seed  phrase and really all they’re trying to do is make you freak out so that your judgment is impaired  and you do the one thing that you’re taught not to do which is enter your seed phrase. Secondly a
 more deceptive method involves the scammers directing to a phishing website which this could be a popular website  or rather modeled after a popular website whether that’s like a crypto exchange or a decentralized  exchange and then they have you connect your wallet and sign a transaction and when you sign  this transaction with your wallet what you’re actually doing is signing approval for the scammer  to access your wallet and all of your funds. And then it’s pretty much their wallet at that point,
 and they can do whatever they want with your crypto. Usually they send it to their own wallet  and then cash out. Fortunately, this can be avoided, especially if you are aware of the scam  and you just don’t click on random links and you don’t enter your seed phrase anywhere online.  But there is another risk that a lot of people don’t think of  before they even get a hardware wallet,  which happens to be my fourth tip,  and that is to purchase your cold wallet  directly from the manufacturer.
 Buying a cold wallet from a third-party supplier,  whether that be an influencer’s website or from Amazon,  is a huge risk because you could end up buying  a fake device or one that’s modified  so that it’s already compromised  before you even receive it. Then you go and you load up your crypto on it.
 And  basically the seller’s just waiting to steal your crypto. Now there are still risks. Even if you buy  an authentic wallet from a trusted website like Amazon, you could end up receiving an older model  that maybe the company doesn’t support anymore, or you could actually get a worse price because a lot of these wallet manufacturers  actually offer discount codes for influencers  to give out to their viewers sort of as a value add.
 And that said, I do have a discount code  for nearly every single hardware wallet on the market,  which I’ll leave in the description of this video.  So if you do find a hardware wallet that you want,  you can use my discount code and save some money.  But ultimately, you’re getting the best deal and the most trusted product by buying  directly from the manufacturer’s website.
 But before you buy cold wallet, make sure you understand  tip number five, how to choose the best cold wallet for you. Now, most cold wallets, they all  do the same thing. They securely store your private key, which keeps your crypto safe. So here are the  things that I look for in my cold wallet when I’m buying one.  First, check to see that it supports the crypto that you want to hold.
 If it doesn’t support the crypto you hold, then you can quickly determine that is not  the wallet for you because it pretty much makes it unusable.  Now, where can you check this?  Almost every wallet manufacturer will have a coin support list on their website.  So just go to the  website of whatever wallet you are considering getting and go to that coin support list.
 And  usually you can search whatever coins you want just to make sure that it supports it. The next  thing I look at is user friendliness. Now, if a wallet is going to be too difficult to use,  especially if you’re someone who is not very tech savvy, then that’s probably not the wallet for you.  Now, this is easier said than done, because obviously, if you don’t who is not very tech savvy, then that’s probably not the wallet for you.
 Now, this is easier said than done  because obviously if you don’t have the wallet,  how are you supposed to test if it’s user-friendly or not?  So the best option for this, in my experience,  is to go to YouTube and watch someone use the wallet,  watch someone set it up,  do transactions and interact with it.  And from that, you can quickly determine  if that wallet is going to be simple enough for you.
 Third is security. Now, the main security features that I look for in if that wallet is going to be simple enough for you. Third is security.  Now, the main security features that I look for in my cold wallet is that it supports  a 12 or 24 word seed phrase, which most cold wallets do.  Second is a secure element chip.
 This is the same kind of chip that is used in bank cards and electronic passports to  store sensitive data.  In the case of your hardware wallet, it’s used to protect your private key  and sometimes your user generated PIN, which is another thing that I look for in hardware wallets,  either user generated PIN or passcode, which keeps someone else out of your wallet.
 And then there  are some other security features that are worth looking into, but aren’t, you know, essential,  I guess. One is a passphrase or a hidden wallet. And the other is Shamir backup,  which are just different methods for creating a more secure seed phrase. And lastly, is cost  doesn’t fit your budget, you don’t have to spend a fortune to get a secure hardware wallet.
 Which  leads me to tip number six, expensive doesn’t mean more secure, or a better wallet. There are  plenty of hardware wallets on the market that are under $100, and in my experience,  they’re all just as good as the more expensive options  that are anywhere from two to even $400.  So really what you’re paying for is brand,  which I guess you could say reputation,  something like Ledger or the Engrave Zero,  which is nearly $400,  is just known to be a more premium wallet, but it doesn’t  actually mean that it is a more secure device. Sure, it has some fancy features like a touchscreen
 and maybe some different security features that other wallets don’t have, but really you can get  away with the security features that I previously mentioned and have a really secure device that is  pretty much unhackable. But even the most secure  cold wallet won’t keep your crypto safe if you don’t know tip number seven, which is learn how  to store your seed phrase with longevity in mind.
 Now, one thing to know is that your seed phrase  is not attached to the physical wallet. So if you lose your hardware wallet or it breaks,  your crypto is still okay, assuming you still have your seed phrase. And  that’s why it’s so important to learn how to store it safely. So how do you store it safely? Well,  most people, they’ll create a new wallet and they’ll write down their seed phrase on a sheet  of paper.
 And then they’ll take that sheet of paper and store it in an at-home safe, or maybe  a safety deposit box or bury it in their backyard, which is a, it’s a good step in the right direction,  but paper degrades over time. And you know, it’s just really not the best solution. Now,  a better solution is to get a metal seed phrase plate. Now this one right here,  it’s solid stainless steel. It’s waterproof, fireproof and corrosion resistant.
 So that way,  if I spill my coffee on it or my dog gets a hold of it,  it’s not going to get destroyed. I’ll leave a link to this exact seed phrase plate in the  description of my video. There are plenty of them. You can look them up on Amazon as well.  But this one, in my experience, has been the best plate just because it’s super thick.
 I also have  a discount code so you can save a lot of money on this exact one If you want something like that tip number eight always test your seed phrase when you initially generate it  So you get your new hardware wallet you create a new wallet with a new seed phrase  And you want to test that because imagine if you send crypto to your wallet  But you wrote down your seed phrase wrong and let’s say you reset your wallet and you go to import your seed phrase  That has your crypto on it  But the seed phrase you wrote down is the wrong seed phrase.
 Well, guess what?  You lose access to your crypto forever.  Now, some hardware wallets will have you re-enter your seed phrase after you initially generate it,  which if it has you enter the entire seed phrase and confirms that you entered it correctly, you’re good to go.  That’s testing your seed phrase.
 and confirms that you entered it correctly,  you’re good to go.  That’s testing your seed phrase.  But other hardware wallets will only have you enter four of 12 or eight of the 24 words,  which you could still mess up  if that’s how your wallet is.  I had this personally happen to me.  I generated a 24-word seed phrase.
 I entered, it was like eight or 10  of the words in that phrase.  And it was like, okay, you’re good to go.  Then I reset my wallet and I went to import that seed phrase again because i was testing it and guess what it didn’t work because i had wrote one of the words down incorrectly or rather  in the incorrect order now imagine if i had sent crypto to that wallet i literally would have lost  all that crypto something else you should test which is tip number nine, test small transactions first. Sending crypto is really scary. Not because
 it’s hard, but because if you make one simple mistake, your crypto is gone forever. If you  send your crypto to the wrong address, say goodbye to your crypto. So let’s say you set up a new  wallet. And this is especially true if you’re new to hardware wallets or just crypto wallets in general.  You should send a small test amount.
 Say you’re sending like $20 worth of Bitcoin.  You know, send that $20 first before you send your full amount.  This will cost a little extra money because you’ll have to pay for two transactions instead of just one.  instead of just one.
 But it’s worth knowing that you’re sending crypto the right way to the right wallet using the right network versus sending all your crypto to the wrong wallet address or the  wrong network and losing all of it. So it’s definitely worth doing a small test transaction  and paying for those transaction fees. This next tip is one of the most important tips on this list.  And that’s how I’ve kept my crypto safe over the years and have never been hacked.  tips on this list and that’s how I’ve kept my crypto safe over the years and have never been hacked and that is to use a dedicated cold storage wallet.
 Now a lot of people get their hardware  wallet and they send crypto to it but they continue to use it like a hot wallet or like a crypto  exchange so they’re connecting it to random websites and trading crypto on it which you can  do with a hardware wallet but not if you’re storing all of your crypto on that wallet  because as we know,  hardware wallets are still prone to phishing attacks.
 So if you have all your crypto stored on one device,  which you’re also using to connect to these random websites,  you are still risking losing all of your crypto  to a phishing scam.  So you need to have separate wallets.  One is a dedicated cold storage wallet  that you only send have separate wallets.
 One is a dedicated cold storage wallet that you only  send and receive crypto with. And the other wallet, you could use the same wallet if you wanted to,  but you’d have to use two different seed phrases. So it’s just easier to get a completely separate  device. But the other one is the one that you can use to trade. So you can have enough crypto on  there for your transactions, but you don’t want to keep all your crypto stored on that one  transaction device. You want to have a dedicated cold want to keep all your crypto stored on that one transaction device,
 you want to have a dedicated cold storage wallet so that your crypto remains safe. But a dedicated  cold wallet is just one aspect of a comprehensive risk management strategy. Now, another thing you  want to do is diversify your crypto, which I kind of touched on. But basically, don’t put all your  eggs in one basket, you should be storing your crypto on different wallets.
 Again,  the most important thing is to have a dedicated cold storage wallet. But you know, you don’t have  to keep all your crypto on one device or one seed phrase. That way, if you do fall victim to a scam,  and you lose your crypto, you’re not losing all of your crypto. So definitely diversify your crypto  holdings. Next tip, you should be regularly auditing your cold wallet.
 This will help you detect any unauthorized transactions  or maybe any software updates that need to happen.  So this can help you have a little more time  in case you notice something funky going on  to get your crypto out of your wallet  or if you just need to update your wallet,  you’ll notice that once you sign on.
 Now, regularly, I would say is once a month, maybe once a week if possible,  but at least once a month, you can just sign into your wallet and check your portfolio. That’s one  simple way to check if there’s any fishy activity. Or if you know how to read the blockchain using a  blockchain explorer such as Etherscan for Ethereum, you can just put in your wallet address into the explorer  and that’s going to show you all your transactions so from there you could see if any transactions  that you didn’t authorize were made and you can also view your entire portfolio for that specific
 network at least next tip and arguably the most important tip on this list is to do your own  research don’t take my word or the word of some other influencer online.  You need to come to your own conclusions, form your own opinions, especially if you’re curious  about something, put in the time and effort to do your own research.
 Now, of course, I do my best to  share everything that I learn with you and be as accurate as possible, but I’m not perfect. No one  is. That said, if you are looking for some of my favorite cold wallets,  you can check out five of my favorite ones in this next video right here. As always,  thanks for hanging out with me. I’ll see you in the next one. Peace.
Previous
Next