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Bitcoin Hardware wallet : Ledger Nano review

Bitcoin Hardware wallet : Ledger Nano review

Name: Ledger Wallet Nano

What it is: A USB bitcoin wallet with smartcard security in a very compact package.

Who’s behind it: Three French startups: BTChip, Chronocoin and La Maison du Bitcoin.

Cost: €29.90.

Date launched: December 2014.

Summary: The Ledger Wallet Nano is a relatively affordable bitcoin hardware wallet with a few clever tricks up its sleeve. It also looks good and the company promises to make it even better with a companion mobile app set to launch in 2015.

The Basics

The Ledger Wallet Nano is a new hierarchical deterministic multisig hardware wallet for bitcoin users that aims to eliminate a number of attack vectors through the use of a second security layer. This tech-heavy description does not mean much to the average consumer, though, which is why I am going to explain it in plain language, describing what makes the Ledger Wallet Nano tick. The wallet launched in early December and for more background on the project you can catch up on our launch coverage.

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In terms of hardware, the Ledger Wallet Nano is a compact USB device based on a smartcard. It is roughly the size of a small flash drive, measuring 39 x 13 x 4mm (1.53 x 0.51 x 0.16in) and weighing in at just 5.9g.

Security

The Ledger Nano is an HD Bitcoin wallet, meaning the 24 word seed generated on setup is all that’s needed to backup the entire wallet. The original 24-word seed is generated using RNG from the device and the computer. This spreads out the source of entropy.

The HD seed is then generated offline on the Nano’s smartcard and displayed on your computer’s screen. This is the main problem with the Ledger Nano: it doesn’t have a screen. Since the seed is displayed on your computer’s screen, setup your Nano on an offline computer or bootable operating system. Ledger offers aUSB drive called Ledger Starter which you can use to setup your Nano securely.

A 4-digit pin code is added on setup. The pin code is required to view balances when plugged into any computer and for each transaction. Three incorrect guesses of the pin code will wipe the device.

The Ledger Nano comes with a security card that provides extra two factor authentication and prevents man in the middle attacks. The Nano uses the security card as 2-factor authentication because it lacks a screen.

Each time you need to send a payment you will be asked to input some of the letters or numbers from the recipient address using the security card.

Privacy

As with any hardware wallet, using your device is only as private as the software wallet it’s used with. Many software wallets have support for the Nano: Electrum, Mycelium, Copay, GreenBits, GreenAddress, Coinkite, and the Ledger Chrome wallet. Electrum, Mycelium and Coinkite support Tor and can offer additional privacy. Copay can be used with a Bitcore full node which is also a very private way to use your Nano.

Conclusion

There is no such thing as absolute security, but the goal of hardware wallets is to make any potential attack more difficult and resource-intensive. Ledger is no exception – it is designed to render attacks impractical by raising the bar.

At €29.90, the Ledger Wallet Nano is good value for money, which means it will appeal to enthusiasts who want to hold bitcoin but don’t want to spend too much money on security, and this is what makes it special in my book. It’s not an expensive, specialised piece of hardware for the select few, it’s geared toward the everyday bitcoin user.