What Is a Hardware Wallet And How Do You Set One Up?
When we talk crypto and NFTs you have to bring up security. While there are several ways to protect yourself, you can lose your assets and even your NFTs due to things that are not your fault. One of the most famous hacks in the entire crypto-sphere was MT. Gox, at one point it was handling over 70% of all bitcoin transactions worldwide. Over the years, hackers were able to skim bitcoins from customer accounts stealing over 740,000 bitcoin (approximately 31 billion dollars today). All without the customers having any idea and without any fault of their own.
One of the ways to prevent this from happening to you is to have a hardware wallet. Often referred to as ‘cold storage’ devices, a hardware wallet is a type of cryptocurrency wallet that stores your private keys in a physical device that you can keep within arm’s reach. Crypto and other assets like NFTs are protected by the hardware wallet which stores the keys to access your wallet, keeping them offline so they are not vulnerable to hacking. Whenever the owner needs to access their coins and digital assets they can safely unlock their hardware wallet and interact with them through the wallet’s interface.
What is a Hardware Wallet?
A hardware wallet is a physical device used to store cryptocurrencies, NFTs, and other digital assets safely. It stores your wallet’s recovery phrase, password, and PIN code offline, making it the most secure storage solution. Also, devices like Ledger utilize a secure chip to protect against physical hacks.
In the last year, NFTs have catapulted themselves into society as the next big craze for gaming, art, and collectibles. And with all the popularity of NFTs, a lot of fake accounts, scammers, and malware have emerged which when given the opportunity will take advantage of your information to gain access to your wallet.
Hardware wallets allow you to be the sole person in control of accessing your NFTs and provide the necessary layer of security while interacting with Web 3.0 applications.
When determining which hardware wallet to use there are a ton of good selections like Trezor or Ledger. For this setup guide, we will be focusing on the Ledger and how to send your NFTs to it from A to Z.
What Are The Benefits of a Hardware Wallet?
The main benefit of using a hardware wallet over a software wallet like Metamask is that all of your wallet’s private information remains offline. Most scams and hacks occur because a majority of wallets are either connected to the internet or are set up on a device that’s connected to the internet, such as your phone or computer.
Since a hardware wallet is a separate device that is not connected to the internet as often, the likelihood of it being hacked is significantly reduced.
There are numerous other benefits of using a hardware wallet such as:
Wallet’s private information remains unexposed
Increased security due to multiple layers of authentication (recovery phrase, password, and PIN code)
Secure chips protect against physical attacks (these are the same chips utilized in passports and bank cards)
Virtually zero vulnerabilities to computer viruses
You can hold multiple cryptocurrencies and NFTs in one wallet
Transaction verification is displayed on-screen
Ultimately, a hardware wallet is the best way to securely store your NFTs and other digital assets to ensure their longevity. If you own any valuable digital assets, a hardware wallet is a must.
How to Setup a Hardware Wallet
Setting up a hardware wallet is easy. Just follow these 6 simple steps below.
Step 1: Buy a Hardware Wallet from a Verified Vendor
Be sure to buy your hardware wallet from the manufacturer. There’s a common scam where wallets are preloaded with viruses posed as cheap or second-hand hardware wallets.
Here are the official links to these trusted vendors:
Supply chain hacks are common because suppliers know that the user will be using the hardware wallet to store their most valuable assets on the device. This creates a vulnerability in second-hand sales of hardware wallets.
Ledger’s own website warns of phishing websites posing as them or their team. Ledger and other official vendors will never ask you for your seed phrase or any other private information about your hardware wallets.
It’s also extremely risky to purchase a hardware wallet from a trusted site like Amazon. Although there are verified sellers, you should only trust the manufacturer's website.
Image credit: Ledger
Step 2: Set Up Ledger Live on the Device
Ledger has created custom software that helps with setting up your device and will help you with your crypto assets. Once you have your ledger go ahead and plug the USB cable into your device and into your PC.
It should light up and carry you through the prompt that takes you to the ledger live site which you can find here.
Step 3: Write Down Your Recovery Phrase Multiple Places Offline (never digitally, including photos)
Start the setup of the new ledger and be sure to follow the prompts until you get to the pin code. Make sure you write your pincode down somewhere you will not forget. Also, be sure to write down your 24-word recovery phrase offline. Most ledgers will come with little sheets that you can write your phrase on. Write your recovery phrase down in several places so that if you were to lose one there will be another stored somewhere else. Store your recovery phrase offline and somewhere secure.
If you lose the recovery phase you lose access to your wallet and will not be able to recover it.
Step 4: Confirm Your Recovery Phrase
The automatic prompt should have you confirm your recovery phrase to make sure you wrote it down correctly. For extra security, after recording your recovery phrase you should reset your wallet and restore it completely using your recovery phrase. This step adds an extra precaution to make sure that you will always be able to safely recover your hardware wallet.
Step 5: Create an ETH Wallet on Your Ledger Device
Go to the manager section of the menu, then search for Ethereum. Follow the prompts and after adding successfully you can jump to adding your first NFTs to your hardware wallet.
Image credit: Ledger
Step 6: Connect Metamask
You will need to login into your Metamask on the computer. From there you need to click on the top right-hand corner and connect your hardware wallet. If you need a tutorial on how to set up a Metamask on your browser you can refer to this article here.
Image credit: Ledger
After you click continue, MetaMask will look for a Ledger device connected to the computer. Unlock your Ledger wallet to ensure that it is discovered. It will prompt you to select a Ledger account to link to MetaMask once it has discovered your wallet. Choose the ledger account you want to use or create one with ledger live.
On your hardware wallet display, click the Ethereum application. Then go to your settings and turn on contract data.
If you skip this step the contract information will not function properly. Click on the account logo in the top right corner of the MetaMask window and scroll down to the settings menu. Once you are there click advanced settings, and select "Use with Ledger Live" from the drop-down menu. This will allow you to see the balance of your Ledger wallet on your MetaMask extension.
You will also be able to create transactions across all MetaMask-enabled blockchain applications. All you have to do is connect your Ledger wallet to your device, launch Ledger Live, and check and sign the transactions.
BOOM. Now you can use all of your favorite NFT marketplaces like OpenSea from the security of your hardware wallet.
How Do You Transfer an NFT to a Hardware Wallet?
Transferring an NFT to a hardware wallet is no different than transferring it to any other kind of wallet. In fact, you can transfer an NFT to a hardware wallet in three steps.
Step 1: Copy Your Hardware Wallet’s Public Address
To transfer an NFT to a hardware wallet, you need its public address. The public address is what you use to receive various digital assets into your wallet. An address is generally 42 randomized numbers and letters.
Note: This is not your wallet’s recovery phrase.
Also, ensure that you are copying the correct wallet address. Each blockchain will provide you with a different address. So, depending on which blockchain the NFT you are trying to send is minted on, you need to make sure that is the address you copy from the hardware wallet.
For example, if you are sending an Ethereum-based NFT from your software wallet to your hardware wallet, make sure to use the hardware wallet’s Ethereum address.
Step 2: Select the NFT You Want to Transfer
There are multiple ways you can initiate an NFT transfer. The most common way is to transfer it directly from within your wallet. To do this, go to your wallet’s ‘NFT’ or ‘Assets’ tab, and select the NFT you want to transfer.
Next, click the ‘Send’ button to begin the transfer process.
Step 3: Input the Hardware Wallet’s Address into the Recipient and Hit Send
Once you have verified that you have copied the correct public address from your hardware wallet, paste it into the ‘Recipient’ section. Then, hit send and confirm the transaction using the sender’s wallet.
Please be aware that you will have to pay gas fees if you are sending NFTs on the Ethereum blockchain.
Depending on the transaction speed you choose and the current congestion on the blockchain, you can expect the transfer to take anywhere from 15 seconds to over 5 minutes.
