Buying a Hardware Wallet

The excruciating (but mercifully temporary) inability to log into my cryptocurrency exchange illuminated my need for a hardware wallet to safely store my beloved bitcoin and alt coins. Phone-based wallets exist, but considering the sketchy places I’ve trolled on my phone, it seems a security risk. The safest place to store cryptocurrency is OFFLINE, and that means an unplugged hardware wallet.

A hardware wallet is basically a flash drive. But unlike cheap USB sticks handed out freely at tradeshows and conferences, hardware wallets are more durable and most have additional security features.  The most celebrated hardware wallets by nerds in the know are Trezor, Keepkey, and Ledger Nano S.

These three wallets don’t have an operating system, which means they can’t harbor malware. Apparently, they are safe to use even on a computer that DOES have malware. That’s especially important because you may not even know you have malware.

These three wallets have a Liquid Crystal Display screen which also improves security and makes them easier to use. Apparently wallets without LCD screens rely on inputting information into your computer which is sent to the wallet. If your computer is compromised with malware, the information could be stolen and never make it into your wallet.

Physical buttons on the wallet also let you securely navigate the interface – that means, to make selections and enter passwords. Apparently this is a big security bonus because someone who may be controlling your computer remotely is not able to control physical buttons, and therefore cannot control your hardware wallet (i.e. steal from it). From what I read, it appears the Ledger Nano S and Trezor have physical buttons but the Keepkey does not.

Something to note is NOT ALL WALLETS ACCEPT ALL CRYPTOCURRENCIES. And if you’ve read my earliest posts, you’ll know I have a somewhat diverse portfolio. KeepKey won’t support my Bitcoin Cash, ZCash, Ripple or Monero. Trezor won’t support my Ripple or Monero.  Ledger Nano S is the only wallet supporting Ripple but won’t support Monero (what’s up with no wallets supporting Monero??).

KeepKey not supporting 4 of my cryptocurrencies and lacking physical buttons eliminated it as a possibility. That leaves Trezor and Ledger Nano S.

Ledger Nano S appears to support all my cryptocurrencies except Monero. Bloggers enthuse about Ledger Nano S’s sleek design but I don’t plan to display it. In fact, I plan to hide it.

I did read something about Nano S only holding 3 currencies at a time, which is confusing. The more I read, the more confused I get. Apparently you can load a currency onto Nano S, then erase it and load another, then erase it, until all of your currencies are loaded but only a few can remain on the stick. I also read that the value doesn’t actually RESIDE on the wallet device, which is also hard to comprehend. The idea of ERASING my digital currency freaks me out. I guess I’ll have to buy a Nano S and try it to see for myself. Maybe I really do need to buy a Trezor wallet too so I don’t have to erase anything from the Nano S.

Bloggers encourage purchasing hardware wallets from Amazon.com and rarely discuss buying from the manufacturer’s Website. I suspect Amazon covertly sponsors many blogs.  The trouble with Amazon is the wide price variance for identical products. And many of the vendors have bad ratings, or no ratings, or sell other non-crypto and even non-tech items, which seems unseemly. If I’m buying a device to protect assets worth thousands (maybe hundreds of thousands?) of dollars, I need to believe I’m buying something legitimate.

On Amazon, the Trezor wallet price varies from $99 to $145 – sometimes from the same vendor!  A black version is $99, a white version is $94.99 and a grey version is $145. I can’t imagine anyone would care enough about the color of something so few people would see.  Upon closer inspection it seems like the grey one with the higher price comes with the USB cable, box, and instruction manual, which could account for the $44 difference.

Some vendors accurately identify the Trezor Wallet’s manufacturer as Satoshi Labs. But one vendor says it’s manufactured by Mom Made Foods. WTF?? I need more confidence in my purveyor of crypto security than that. According to many bloggers, you MUST check if your hardware wallet arrives FACTORY SEALED to ensure someone didn’t compromise it. If it doesn’t come factory sealed, you should send it back and get a refund. Also, don’t buy a used wallet.

Amazon has fewer vendors of the Ledger Nano S, but still a wide and confusing mix of prices and product offerings. Some bundle the wallet with a bunch of (seemingly unnecessary) accessories like a carrying case, lanyard, USB cable, Micro USB adapter, and even a ball point pen for almost $150. Some offer just the Ledger Nano S (no cable, no manual) for as low as $72. Personally, I want a manual, and I’m willing to pay extra for it, but I don’t want to buy a bunch of stuff I don’t need. Unfortunately, I don’t know what is necessary and what is superfluous. I’m also concerned that some of the accessories may be after-market and not as durable as the wallet. I don’t want a cable to fail when I’m transferring my digital currency.

It’s not that I don’t trust vendors on Amazon, I don’t trust people in general and prefer to buy directly from the manufacturer. I’m confident the wallet manufacturers will sell what I need: If I need a cable, they will provide an approved cable. If I need a manual, they will provide a manual.

Although I prefer buying directly from the manufacturer, both Trezor and Ledger are overseas and priced in Euros. They both accept payment in Bitcoin which, ironically, I won’t spend because its value keeps appreciating. If Bitcoin’s value was more static, I would enjoy avoiding my credit card’s infuriating foreign currency transaction fees.

In addition to Bitcoin, Trezor’s Website accepts credit cards, while Ledger’s Website accepts credit cards and PayPal.  Both Websites warn their prices do not include taxes and duties. I loathe imagining the hassle of coordinating my  schedule with the delivery guy to write a check for the import tariff. I also wasn’t sure where I put my seldom-used checkbook. Buying from Amazon would be so much more convenient. But that nagging voice in my head (which I’ve regretted ignoring in the past) won me over.  My distrust of online merchants supersedes my lust for convenience.

I decided to buy only one to see how nightmarish the overseas delivery would be. I chose Ledger because it gave 2 non-Bitcoin payment options, and the Ledger Nano S is compatible with 7 of my 8 cryptocurrencies. I wanted to see if I could in fact store them all together on the one stick or if there really was a 3 currency limit. If I could store them all, I wouldn’t need to buy another wallet. If it truly did limit to only 3 currencies, I would store my Ripple, Bitcoin, and Bitcoin Cash onto the Ledger S, and I would buy the Trezor wallet to store my Ethereum, Dash, Litecoin, and ZCash.

I first tried using my credit card on the Ledger site, but the online overseas transaction triggered a security block. So I tried the PayPal option (using the same blocked credit card) and it succeeded. This seemed illogical but I was glad it worked. A confirmation email claimed I would receive my Ledger Nano S in 3 days.  Of course these 3 days fell within the Thanksgiving holiday, complicating calculations of its expected arrival (i.e. when to work at home).  The following Monday I was shocked to see it arrived without any attempt to collect taxes, tariffs or duties. I felt stupid for expecting aggravations.

That night I bought the Trezor wallet from the Trezor Website. The Trezor Website doesn’t accept PayPal, so I first called my credit card company for permission to use my card for an online overseas transaction. The transaction worked, and a confirmation email said to expect my Trezor wallet to arrive in 3 to 5 business days by DHL. I’ve never had a good experience receiving shipments from DHL but I hoped for the best, given the success of my Ledger Nano S purchase.

Four days later, a DHL email announced my package’s scheduled arrival by end of day. I was already at work and considered going home to await the delivery, expecting to write a customs/duty check. When I got home I was shocked to see the package arrived without a request for customs or duty. So it seems if you’re in the continental US purchasing from the Ledger or Trezor Website, you can ignore the stern warning about taxes/tariffs/duties.

Now I’ve got to unpack these wallets. I hope setting them up is as effortless as buying and receiving them.

The Price of Impulsiveness

It took me 4 years to finally buy into Bitcoin. During this time, I learned about alt coins. Alt coins were hundreds of dollars at the most – much more palatable for my budget than the almost $4,000 Bitcoin I finally bought.  The day I bought my 1 Bitcoin, I bought a bunch of alt coins. I didn’t want to procrastinate and get priced out of them the way I almost got priced out of buying Bitcoin. (Read my Bitcoin-buying procrastination sob story here.) I learned the hard way that “panic buying” is not a good strategy. Some of my alt coins appreciated, some held at their purchase price, but some nosedived.

I really thought I did my homework. I wanted to diversify my crypto-portfoio to reap as many gains as possible. I used the money that wasn’t sufficient to buy a second Bitcoin to buy the alt coins Bitcoin Cash, Monero, Dash, Ethereum, Litecoin, ZCash, and Ripple.

Bitcoin Cash was created on August 1, 2017 as an offshoot of Bitcoin to make transactions faster. Anyone with Bitcoin on August 1, 2017 suddenly also owned Bitcoin AND Bitcoin Cash. (You can read why I did not own Bitcoin on August 1 here.)  I assumed the swift climb of Bitcoin’s valuation would happen to its twin Bitcoin Cash. Within 2 weeks its price bounced erratically between $200 and $400. In late August it shot up to almost $800. The first 2 weeks of September it was in the $500’s. I bought in mid-September, believing it would continue to climb. What a mistake. Within a week, Bitcoin Cash declined dramatically. It turns out I bought at the top and it may never reach that price again. For all of October it was worth about 60% what I paid for it. The lesson here is to not buy something that’s only a few months old. There’s not enough data to make an informed decision. And don’t buy something that everyone else got for free. Fortunately I only bought 1. Now that it’s November, Bitcoin Cash is valued $50 MORE than what I paid for it. So I have to amend my “lesson learned” to “hold your nose and hope for the best”.

Monero seemed like the next big thing: quick transaction processing and true anonymity (Bitcoin only provides pseudoanonymity).  In 2016, Monero saw incredible gains. I wanted to ride the swift and steep rise I missed with Bitcoin. Monero’s price peaked in early September at almost $150. I bought it a week or so later on the downswing at just under $100. In my enthusiasm, I bought a bunch of Monero. Now it’s holding at around $88, still less than what I paid. I wish I only bought 1, or waited until its price flattened.

Dash seemed promising too. It is another truly anonymous alt coin. I followed its climb to $387 in August and figured it looked like Bitcoin-like opportunity to ride the upswing to double-digit gains. It turns out that August price was the peak. I bought at less than its peak price, but its valuation has since declined. I’m losing about $30 a piece on Dash. If I looked at its performance curve before buying, I would have followed its inclination a little more before committing.

Ethereum enjoyed the most news coverage of all alt coins. Its blockchain is the foundation of “smart contracts” which promises to revolutionize government issued ID, legal contracts, and supply chain tracking. In 2016 Ethereum traded for around $10. In the summer of 2017, it skyrocketed to $371, then fell to $150 in mid-July, then climbed again to $386 September 1, then dipped to $250 in mid-September. I bought on the upswing at just under $300. It’s been bouncing around the low $300’s. I’m glad I didn’t buy at a spike, but I wished I would have waited to buy in at a dip. I’m not losing but my impatience did miss on some great potential gains.

Litecoin was developed by the eggheads at MIT, so I figured they knew how to build a robust, revolutionary digital currency. Litecoin wasn’t expensive and I splurged on a handful of them. To date, the price hasn’t changed much. I’m glad it’s not losing value, but I’m disappointed it’s not appreciating either. I didn’t have to enter the market when I did, and I could have used my funds to buy something that was appreciating, like ZCash.

ZCash offers privacy and selective transparency in some transactions. It claims to provide extra security compared to other digital cash. All I know is it’s the only Alt Coin that was a good buy at the time. In the spring it was under $100 but I bought in the fall for under $200. To date ZCash gained about $30 each.  I wish I bought twice as many as I did.

Ripple has been a fun experiment. Ripple’s stated goal is to see “big companies lose their control over the flow of other people’s money just as they’ve lost control over the flow of information.” I personally would enjoy witnessing the demise of big banks that constantly rip me off with countless fees. Ironically, Ripple is backed by Google, a big company itself. At 18-cents each, I bought a shit load of Ripple and felt like a kingpin. When its price soared 10 cents, I reveled in my genius. It has since fallen back to my original purchase price. I’ve stopped reveling.

Enthusiasm and FOMO drove my alt coin purchases. I should have exercised restraint and bought based on fact and reason instead of emotion. I expect over time most or all of these currencies will appreciate, but I could have made my money work harder. Next time I have funds to play the crypto market, I’ll be smarter and hopefully see stronger returns.

What alt coins have you invested or dabbled in? Share what you would have done differently with the clarity of hindsight.