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How to Use a Cryptocurrency Hardware Wallet

by | May 21, 2018

Cryptocurrency Hardware Wallets

A hardware wallet is the most secure way of storing cryptocurrency. It allows you to store your private keys offline (and thus out of reach of hackers) in a secure, encrypted hardware device and because it is a stand-alone device, it is not vulnerable to computer viruses.

Most hardware wallets come with a display screen and require you to use a pin code when setting up or logging in to the device which provides another layer of security. Because you enter your pin code on the device and not on your computer plus a transaction is confirmed and signed on the device while not revealing the private keys, it is impossible for hackers to steal your private keys.

The Ledger Nano S or Trezor are such hardware wallets. They also provide a recovery phrase that will allow you to restore your wallet in case of loss, theft or destruction of the device.

Where to Buy Your Hardware Wallet

In order to ensure your wallet purchase is an authentic, secure hardware wallet, you will want to purchase your wallet directly from the manufacturer.  Avoid purchasing your wallet from a third-party site like Amazon or eBay. There have been cases of people purchasing their wallets from other sources and they were not authentic or the integrity of the wallet had been compromised.

How to Use a Hardware Wallet: Ledger Nano S

The Ledger Nano S is a popular hardware wallet that provides a high level of secure storage for cryptocurrency. This article provides a step-by-step guide to initial setup of the Nano Ledger S, how to download the wallet apps for different cryptocurrencies and how to check your account balance.

To set up your Ledger Nano wallet, please refer to any or all of the following resources:

  1. Ledger’s User Guide on its own website
  2. Legder’s set-up videos on YouTube
  3. Ledger’s video on how to configure a new device
  4. and/or follow the steps below.

Ledger Nano S Hardware Wallet

Initial Setup

  1. Open the Ledger Nano box and remove the wallet.  It will look like a USB Drive with a display.
  2. Remove the welcome kit from the box – this includes the Getting Started guide, cable and accessories.
  3. Take out the Configure Your Device and Recovery Sheet inserts from the Welcome kit. Please note that the Recovery Sheet should not have seed words written on it; in such case the device is compromised! You are the person that is supposed to write down the seed words as described further in the process.
  4. Visit start.ledger.wallet.com and follow the instructions to configure your device.
  5. Connect the wallet to the cable.  A “Welcome” will appear on the display screen. Press both buttons to begin.
  6. Choose “Configure as new device” by pressing the button above the check. You will then be prompted to create a pin code. Use the up and down buttons to create your pin.  You will see a check after you have entered a 4 digit pin, but you can create a more robust pin by creating an 8 digit pin. Press both buttons to confirm your pin code. Write your pin code down in a safe place.
  7. The first word of your recovery phrase will appear after you confirm your pin code. Enter each word in sequence on the Recovery sheet, provided in the welcome kit. It is very important to enter each word in sequence on the recovery sheet, it provides a full backup of your accounts and configuration. Press both buttons on the Ledger Nano, once you get to the last word of the recovery phase. You will have 24 words in total.
  8. Store the Recovery Sheet in a safe place. Make a copy and store it at a different location. If you accidentally lose the seed words, there will be NO possibility to restore your wallets if something happens to the device!

Download Ledger Wallet Apps

  1. Visit www.ledgerwallet.com/apps to download apps for your wallet.
  2. Under the heading Wallet Apps,  select the Bitcoin and Altcoins App.
  3. Click Install at the bottom of the screen.
  4. The Ledger Wallet Bitcoin window will appear – Click the Add to Chrome button in the upper right corner of the window.
  5. A pop-up window will appear to confirm you want to add the app – Select “Add App”.
  6. The Bitcoin App icon will appear in your Chrome Apps screen.
  7. Repeat these steps for the Ledger Ethereum Wallet app.  For Ethereum and ERC20 tokens, besides using the app from ledger, the device can also be used to login and directly transact with MyEtherWallet.

Similarly, the Ledger wallet can also be used to safely login and directly interact with decentralized exchanges like EtherDelta and Idex.

Repeat these steps for the Ledger Manager app, which is under the heading “Management Apps”.

Check Your Bitcoin/Altcoins Balance in your Ledger Nano S

  1. Connect the Ledger to your computer.
  2. You will enter the pin code you created during initial setup.
  3. At the home screen, select Bitcoin or the wallet you want to use and press both buttons.
  4. Go to Chrome apps on your computer and launch the appropriate wallet.
  5. A window will appear with your account balance.

How to Transfer Bitcoin from an Exchange (Coinbase Example) to Your Ledger Nano Hardware Wallet

Below are step-by-step instructions on how to send Bitcoins from an exchange to your hardware wallet.  For a video explanation from Ledger, check out this link.

  1. Connect the cable that came with your Ledger Nano, to your wallet and the other end (USB) into your computer
  2. Once your Ledger wallet is connected to your cable, it will power on. You will be prompted to enter the PIN code you created during your initial setup.  Enter your PIN code to unlock your wallet.
  3. Open Chrome apps from your computer.  Launch the Ledger Wallet Bitcoin app.
  4. After you unlock your wallet, the app screen will appear, select the Bitcoin app. Press both buttons to select the Bitcoin app, which will trigger the Ledger Bitcoin Wallet window to open on your computer. If the Wallet app doesn’t open automatically, you can open it yourself manually.
  5. The Ledger Bitcoin Wallet will allow you to select Bitcoin or Bitcoin Cash.  Click the option for Bitcoin.
  6. You will then be prompted to Select Legacy or Segwit addresses. Select the option for Segwit.
  7. A window will appear with any prior bitcoin transactions.
  8. Go to your Coinbase account (or any other exchange account), and Select Accounts and then Select Bitcoin and press send. You will be prompted to enter a Bitcoin address.
  9. Return to the Ledger Wallet Bitcoin window, Select Receive from the top left corner of the menu bar, and new window will appear with a QR code.  With one of the latest updates, you are required to confirm the receive address on your ledger device.
  10. If you are using the Coinbase app on your phone, you can scan the QR code with your phone by pressing the QR icon on the Bitcoin address line.  Your phone’s camera will transition to Scan Code mode. Place your phone in front of the QR code on your computer and you’re your Ledger Nano Bitcoin address will automatically populate in the Bitcoin address line of the Send feature on the Coinbase app.
  11. If you are using your computer, copy the Bitcoin address above the QR code, by highlighting it and then press Control+C  on your keyboard to copy the address.
  12. Return to the Coinbase window, and paste the Bitcoin address by pressing Control+V on your keyboard, into the BTC recipient address field.
  13. Double check the Bitcoin address is correct when you paste it in the address field. Check the first 5 characters and the last 5 characters and make sure they match. If the address is wrong, even by one character, you bitcoin would be lost forever.
  14. Enter the amount of bitcoin you would like to send to your wallet. You can send all of your Bitcoin stored in your Coinbase wallet, by selecting Send Max. Press Continue and the Confirm Send window will pop up.
  15. The Confirm Send window will provide your transaction details.  Confirm the amount of bitcoin you are sending is correct and the BTC recipient address is correct. If you have 2-step verification set up, you will need to get the code from your authentication app and enter it in the field and press Confirm. A popup window will appear, indicating your transaction is on the way.
  16. You can check your Dashboard on Coinbase and the Recent Activity section will show that the transaction is pending. Coinbase will send you an alert via email that your bitcoin transaction has been sent to your Ledger Wallet.
  17. Launch the Ledger Wallet Bitcoin app from your Chrome apps on your computer.  Select Bitcoin and then Select Segwit. The transaction window will open and you will be able to see the Bitcoin transaction from Coinbase. It may show unconfirmed in the transaction time, but it will be confirmed by the bitcoin network and the status will change to confirmed.

Disclaimer:

This article was written to the best of our knowledge with the information available to us. We do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing we write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

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