A few weeks ago, I bought my first piece of digital property, a cartoon pig.
My Rave Pigs NFT is still in my possession, along with $63 worth of ether, the second-largest criptocurrency by market cap, and the native coin to the Ethereum blockchain. My wallet is a self-custody wallet.
In the unlikely case of a bankruptcy, the company could absorb users' holdings of the digital currency, according to the first-quarter earnings report.
This would only affect the exchange and not the wallet users. I was thinking about how to best store digital coins when I heard that the funds are secure and there is no risk of bankruptcy. Is exchange, digital wallet, or physical wallet more secure?
I bought a hardware wallet and tried it out. Here is what I found.
One of the most popular companies offering hardware storage gizmos is Ledger, and I was able to get the Ledger Nano S at a local Best Buy. The person that directed me asked if I was a millionaire. I am not.
The Apple-ification of the product is the first thing I have to note. It looks like the iPod Shuffle if you squint. It is with a heavy heart that I say goodbye.
The directions made me connect the device to my laptop and download the app. You cannot drag random files onto the device in my Mac Finder.
There was software involved in the setup process. Is the biggest perk of the physical wallet free of hackable software capabilities? I was reassured by the app that my private key and password were never exposed online.
The first thing to do was to know my name. You use the buttons on the side of the screen to scroll and click, but I set up a PIN and it was a password.
I wrote my PIN in a secure location. If you lose access to your assets, you only get three tries to guess your PIN.
My new private key was created by my recovery phrase.
The gadget warned me that it was your only backup to restore your accounts.
It was time to connect my coin. There is an option to use an existing software wallet with a hardware wallet, so I connected my holdings on the Coinbase wallet to the Ledger wallet via a chrome extension on my computer.
I can see my holdings in real-time on the Ledger Live app if my ledger is plugged into my computer.
I wanted to see if I could completely extricate myself and my holdings from the platform, even though keeping it on the exchange is different than keeping it on the wallet.
You need to have no funds in your account before you can get rid of it, and it costs money to get rid of it.
I will save that task as well as moving my NFT on OpenSea for another day.
The process was somewhat annoying and the conclusion was a bitlimactic.
I think the feeling would be different for a user with large holdings who can now sleep easier knowing there is more in the way of bad actors looking to steal it.
Users want the safest option possible in a space still fraught with security issues, which is why they prefer software wallets.
Douglas Borthwick, chief business officer at INX, told me this week that the hardware wallet is similar to putting something in Fort Knox.
As small as my holdings are, it is nice to know I have protection.
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