Ledger Stax and Trezor Model T: two strong wallets compared
When choosing hardware wallets, many crypto users base their decisions on day-to-day asset management needs and perceived device security. However, savvy crypto users first consider a wallet's ability to handle long-term security scenarios. Long-term security includes expected essentials like backup and recovery tools, and also often-overlooked features related to secure and fault-proof third-party recovery. You can think of third-party recovery as your ability to allow crypto assets to be inherited by successors. Successful crypto users require a comprehensive security strategy for the full life cycle of crypto assets. This article will help you achieve that.
Let's jump into helping you understand the pros and cons of the Ledger Stax and Trezor Model T for day-to-day activities, as well as their potential to safeguard the long-term security and longevity of your assets.
Overview
The Ledger Stax and Trezor Model T both provide a wide variety of reliable security features and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios. However, several differences are clear:
Ledger Stax
- Mobile-Centric Usability: Designed with mobility in mind, the
- Ledger Stax features wireless connectivity options like Bluetooth and
- NFC, making it highly compatible with mobile platforms.
- Premium Design: Its unconventionally large display enhances readability, though it comes with slower responsiveness included.
- Price Point: Positioned as a premium product, its cost reflects its advanced features and sleek design
- Mobile-Centric Usability: No Bluetooth connectivity. iOS app is view-only.
- General Usability: Smaller set of wallets, coins, and apps.
- Design: The touchscreen and input are very well-thought-out experiences.
- Price Point: More affordable.
In terms of crypto asset longevity features, such as backup, recovery, and crypto inheritance, both devices provide industry-standard and proprietary options with certain trade-offs, as well as compatibility with third-party solutions like Vault12 Guard for succession planning scenarios.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Approach to comparison
When choosing the best hardware wallet for cryptocurrency security, you may wonder:
- Which is better, the Ledger Stax or the Trezor Model T?
- How easy to use are these wallets?
- How do their security features compare?
- Do these wallets have vulnerabilities, and have they been hacked?
- What happens if your wallet is lost or stolen?
- How do these wallets accomodate user errors, and complex scenarios like inheritance of crypto assets?
This article compares important characteristics for these two popular wallets. We’ll break down the strengths and weaknesses of each, focusing on security, ease of use, and backup and recovery methods.
By the end of this comparison, you’ll clearly understand which wallet is right for you, as well as how to recover your crypto assets in case of accidents.
What happens if your wallet is lost or stolen?
Wise wallet owners recognize the critical importance of crypto recovery before they find themselves in an unexpected bind! That's why it's important to understand the fundamental topic of crypto asset longevity, including features such as backup, recovery, and inheritance for crypto assets. These considerations are central to long-term planning.
Technical security is paramount, but in the world of crypto, the degree to which backup and recovery solutions are foolproof for users is at least equally important. Here are the backup and recovery options for these two wallets:
How do these wallets handle Crypto Inheritance?
Crypto Inheritance Features
Currently, most hardware wallets, including the Ledger Stax and Trezor Model T, lack any features for establishing and managing crypto inheritance. This gap presents a challenge for users who want to be sure that their crypto assets can be transferred to their heirs.
Backup and recovery differentiators
Ledger Stax Recovery service Disadvantages:
- The optional Ledger Recover backup service is a paid service provided by three corporations that each hold parts of the user’s seed phrase in a Cloud. This introduces risks, as the seed phrase could potentially be accessed via subpoena; business partners could terminate agreements or become involved in lawsuits that result in locked data or resources (like, for example, Gemini and Genesis); and there are multiple potential points of failure.
- Very important detail: The terms of the optional Ledger Recover service do not mention support for inheritance, meaning any unfortunate accident related to the user will make crypto assets unrecoverable for his or her successors. Ledger itself suggests using 3rd-party crypto inheritance services for those purposes.
Ledger Stax Recovery service Advantages:
- People have different preferences. If a user is comfortable trusting a bank with their assets, they may also feel confident using Ledger Recover for securing their seed phrase backup (even though Ledger is not providing the complete cloud backup solution).
Trezor Model T backup Disadvantages:
- Trezor has a Multishare backup service, but it is fully manual, and challenging to maintain. The user is responsible for generating, distributing, and keeping track of the encrypted shards.
Trezor Model T backup Advantages:
- Trezor does offer a Multishare backup option for those who are able and willing to set it up.
How easy are these crypto wallets to use?
Let's compare the key aspects of both wallets side by side, and then summarize what really stands out for user convenience:
Crypto wallet user experience differences
User holding a mobile phone and using Ledger Stax as FIDO U2F security key
Ledger Stax Disadvantages:
- The display has a noticeable response delay due to the "E Ink" touchscreen technology, and could be irritating.
- Not all apps are ported to Stax yet. Even the native Passwords app still has no release date identified as of this article's publish date, so check in advance whether your favorite network/coin is supported.
- Extremely expensive. The value in Stax is more about design, rather than practical aspects.
Ledger Stax Advantages:
- Huge informative display and "Clear Signing" allows you to review and confirm all transaction details directly on Ledger Stax and in a human-readable language before they are signed and sent. This enhances security and ensures that you see exactly what you are approving in a secure and tamper-proof manner.
- Offers Bluetooth connectivity as well as NFC — works with or without a cable, at least with smartphones.
- Wide support for third-party wallets and dapps, allowing the Ledger Stax to sign transactions directly in MetaMask, Uniswap, and other platforms without relying on Ledger Live software. This is a huge advantage for DeFi users.
Trezor Model T Disadvantages:
- No wireless connectivity: you always have to use a cable.
- iOS is a balance view-only app, so you can't send transactions from iOS.
Trezor Model T Advantages:
- The display is much more convenient to work with on a regular basis, and easy to read.
- The touchscreen and input are very well-thought-out experiences on Trezor Model T — you can use it without any discomfort.
How do these wallets' security features compare?
Now, we dive deeper into the core specification of every hardware wallet: security features.
| Ledger Stax | Trezor Model T | |
| PIN-code | 4 - 8 digits | up to 50 digits |
| BIP39 Passphrase | Yes | Yes |
| Open-source | Partial | Full |
| Secure Element | Yes | No |
| Multisignature | Yes | Yes |
Crypto wallet security feature differentiators
Ledger Stax security Disadvantages:
- Critical components like the Secure Element and its operating system are closed-source. This has raised concerns, especially after the controversial introduction of the Ledger Recover backup service, which challenged the assumption that the Secure Element could never transmit the recovery seed phrase outside the hardware wallet.
Ledger Stax security Advantages:
- Includes a Secure Element, giving Ledger devices a strong reputation for withstanding physical attacks. This is important for users who prefer not to complicate their security with BIP39 passphrases, prioritizing ease of use.
- Clear Signing is also a security feature.
Trezor Model T security Disadvantages:
- Lacks a Secure Element, making it resistant to physical attacks only if a BIP39 passphrase is used. This is a significant drawback in both convenience and its ability to be fault-proof.
Trezor Model T security Advantages:
- Fully open-source software and hardware. This minimizes third-party risks, and avoids any need to rely on trust.
- Allows for longer PIN codes, which might appeal to particularly cautious users.
Have there been vulnerabilities or hacks of these wallets?
There have been vulnerabilities and hacks associated with both the Ledger and Trezor products, however given Stax is very new we will cover it's manufacturer's hacks history.
Far from delivering uncompromised security, these wallets are routinely subject to malware, supply chain, and firmware vulnerabilities. Here are some recent notable incidents:
Ledger Vulnerabilities:
- The Connect Kit Attack (2023): The Connect Kit breach was discovered by the security teams of Ledger.
- Ledger User Data Breach (2020): A major data breach exposed the personal information of thousands of customers, leading to phishing attacks.
- Another User Data Breach (2021): Ledger announced on Twitter that it has been targeted by rogue Shopify team members who exported over 200 merchants’ customer databases.
- Ledger Live (2020): Users were exposed to basic double spending attacks, amplified double spending attacks, and DoS attacks without user consent.
- Potential Supply Chain Attack Vulnerability (2020): Kraken Security Labs Identifies Supply Chain Attacks Against Ledger Wallets.
Trezor Model T Vulnerabilities:
- Ability to Physically Hack Trezor T Wallet (2023): Crypto Security Firm Unciphered Claims Ability to Physically Hack Trezor T Wallet
- Five Reported Vulnerabilities in Two Models of Trezor Hardware Wallets (2019): Ledger’s Attack Lab has found five vulnerabilities in hardware wallets of its direct competitor Trezor.
- Kraken Identifies Critical Flaw in Trezor Hardware Wallets (2020): Kraken Security Labs has devised a way to extract seeds from both cryptocurrency hardware wallets offered from industry leader Trezor, the Trezor One and Trezor Model T.
Summary of Ledger Stax and Trezor Model T Comparison
The Ledger Stax and Trezor Model T both provide a respectable set of security measures, and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios.
The Ledger Stax is very mobile-friendly, and offers a balance of security and convenience features at a very premium price. It offers a big, but unconventional display and with delayed input, but with the advantages of a Secure Element and wireless connectivity options like Bluetooth.
On the other hand, the Trezor Model T, at a much lower price, boasts a fully open-source framework, larger display with colors, and touchscreen interface for enhanced user interaction, but with reduced security and convenience from not having a Secure Element and working only with USB connections the offer sounds non-attractive.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Whichever you choose, remember to add crypto inheritance to your choice of wallet to ensure the long-term safety of your digital assets.
Vault12 Guard: a decentralized solution for Crypto Inheritance
Vault12 is the pioneer in Crypto Inheritance Management, and delivers an easy-to-use and securemethod for assigning a legacy contact to your crypto wallets. This enables you to pass on your wallet seed phrases and private keys for all types of digital assets to future generations. Vault12 Guard is designed for everyday people, yet strong enough for Crypto OGs.
Vault12 Guard has a uniquely-secure design. Utilizing advanced encryption and decentralized storage, it ensures that crypto assets are not only safe but also transferable under predefined conditions, filling a critical need unmet by most traditional hardware wallets. Vault12 Guard applies a hybrid approach of software fused with the hardware-based Secure Element of phone devices (The Secure Enclave for iOS devices, and Strongbox for Google devices). Vault12 Guard's decentralized design reduces possible points of failure. Nothing is stored on cloud servers or Vault12 servers, and no assets are stored on local devices, making them less of a target.
From a user perspective, the Vault12 Guard app asks users to appoint one or more people (or mobile devices) as Guardians. The designated Guardians are entrusted to protect the user's comprehensive collection of wallet seed phrases and private keys, which are safely stored within a decentralized digital Vault. Its simple, user-friendly workflow removes the necessity for regularly revising wallet inventories or modifying instructions for your lawyers — a process that otherwise could lead to privacy breaches.
Both the Ledger Stax and Trezor Model T are compatible with Vault12 Guard Inheritance. This addresses the seed phrase backup dilemma for any hardware wallet. It also makes less-secure backup methods, such as paper or steel plates, unnecessary.
What is Multisig?
Some crypto wallets offer Multisignature transactions (aka "Multisig"), which require multiple private key signatures in order to spend cryptocurrency.
Because Multisig decentralizes spending authorization among multiple signers, it provides protection against having a single point of failure in the event of loss of control of a crypto wallet.
Multisig wallets also allow organizations to construct complex spending rules involving multiple parties.
Multisig has some potential pitfalls due to its inherently more-complicated design.
As Mutisig is not a common or widely used approach, it remains incompatible between different cryptocurrencies e.g. ETH and BTC
Each participant in a Multisig setup must maintain careful key and wallet management habits.
Backups are a challenge. Use a product like Vault12 to ensure you always have a secure, distributed backup.
What is Multisig?
Multisig is an approach implemented by cryptocurrency wallets such as Electrum and BlueWallet wherein two or more separate private keys are needed in order to sign and send spending transactions. This requirement for multiple signatures reduces the chances of fraudulent spending and lowers the risk of a single point of failure (SPOF).
Some practical use cases for Multisig include:
- Increased security for cold storage of personal funds.
- Business accounts where the CEO, CFO, and a Board member all can provide signatures for a transfer.
- Complexity and convenience - you have to control multiple devices. Even Bitcoin-specific hardware and software multisig wallets can be way too complicated for users.
- A backup strategy for all wallet keys is a must, along with regular co-signer keys health checks. Unfortunately, there is no reasonable UX or process automation provided to accomplish this.
- An individual and separate setup/protocol are needed for each cryptocurrency: e.g., you need independent multisig setups for Bitcoin & Ethereum.
Imagining Multisig as multiple keys to a vault
Imagine that you have a vault that you keep under lock and key, and that only you have the key. Things are good as long as you don't lose the key, it's not stolen from you, and you remain competent and available. But if you lose the key, or you can't get to the vault yourself, suddenly your money is no longer accessible to you, your family, or trusted agents. To prevent potential loss of access, you might look for a way to give more people access to your vault.
You might be tempted to distribute several vault keys among your closest friends and family. But you should be rightfully wary of giving them copies of the same key that would allow one of them to open the vault themselves.
These risks of key loss, theft and your own availability are the same whether your vault is physical or cryptocurrency - but the keys to a crypto vault are digital, which allows much more flexibility in key distribution. With a digital vault, you can choose to have the lock open only with multiple collaborating keyholders. For example, access could be granted if any 3 out of a pool of 5 keys are used to unlock it.
This is how crypto Multisignature transactions work. With Multisig transactions, the virtual "lock" on an address containing crypto will open only after it is authorized by a pre-set number of private keys. From a technical perspective, this digital lock works by way of a programmable spending policy that is attached to the blockchain address holding the crypto assets.
Multisig: Multiple locks, multiple keys
Multisig for business
Organizations generally do not want to place one person in charge of a large amount of cryptocurrency. (Companies sometimes require multiple approvals for anything more than petty cash!) Organizations often have policies requiring separation of duties or consensus between multiple stakeholders. Some Multisig implementations offer sophisticated spending rules, like allowing crypto to be spent if 3 of 5 regular keyholders provide a private key signature, plus 1 of 2 hierarchically superior keyholders. Institutions also want ways to retract keys when staff leave, and ways to temporarily delegate signing authority. Multisig configurations can conform to such organizational expectations, and organizations can accommodate the additional time and complexity needed for setting it up.
MultiSig for individuals
Some individuals are also attracted to the idea of setting up multisig crypto addresses. They might envision collaborating with a friend or relative to approve spend transactions, or manually controlling each of the approving wallets themselves, distributing them in different locations or just on different devices in order to guard against loss of funds in the event that they lose control of one wallet. This can protect individuals from one form of single point of failure risk (the loss of control of one of the co-signer wallets), just like businesses can achieve. To achieve this, some advanced crypto users set themselves up with a collection of wallets and a means of backup and regularly following the manual procedure of checking the status of wallets and backups.
How does MultiSig work in real life?
Let's explore a typical example of configuring a Multisig wallet to protect your cryptocurrency:
- Initiate the process of setting up a Multisig crypto wallet address using a multisig-capable wallet on a desktop computer. Choose a multisig vault that requires 2 out of 3 signatures.
- Obtain and set up a Hardware wallet with key #1 (if using a subscription service, this would not normally be included with the subscription price).
- Obtain another hardware wallet with key #2 (if using a subscription service, this would not normally be included with the subscription price). (Alternatively, install key #2 in a mobile app wallet.)
- To use a Laptop / desktop computer to sign transactions with hardware wallets, you might need multiple desktop computers, if you are also using desktop crypto wallets, and are following recommendations to store all keys geographically separated in different locations.
- Set up Recovery key #3, which might be stored with a wallet vendor's service.
- Back up all of the public and private keys for all of the devices. (If different people are in control of different signing wallets, this would require coordination such that all of the public keys are stored together, but the private keys stored independently.)
- If using a multisig vendor service, there may be a set of key recovery steps that rely on identifying factors such as answering secret questions. These security mechanisms could have their own flaws, for example, some secret questions may be fixed by the service, and based on users' biography details that may not be perfectly secret - not good security practice.
Actual steps in using Multisig once you have set it up are often something like this, where each step is necessary:
- Initiate a transaction from a mobile app wallet on a smartphone. App requests signature using key #1 (hardware wallet #1) and sends an e-mail to the user address with the link to the transaction signature page.
- User switches from smartphone to their desktop computer. Next, they open the email client and click on the link. Next, they open the desktop wallet software for hardware wallet #1.
- User switches to hardware wallet #1, unlocking it with its PIN and potentially connecting it to a desktop computer. Next, they sign the transaction with key #1.
- User switches back to the mobile app wallet on their smartphone. Then they check if the wallet app sees the first signature and if yes, initiates the second signature. Next, the App requests signature by key #2 (hardware wallet #2) and sends an e-mail to the user address with the link to that transaction signature page.
- User switches to the computer (or moves to another location if keys are stored separately). Next, they open the email client and open the link. Then they open the desktop wallet software for hardware wallet #2.
- User switches to hardware wallet #2, unlocking it with its PIN and potentially connecting it to a desktop computer. Next, the User signs the transaction with key #2.
- User switches back to the mobile app wallet on their smartphone. They check to see if the if app sees the 2nd signature, and whether the transaction confirmation is posted to the network.
This is still a standard of convenience of Multisignature today.
Multisig was created to solve the huge problem of derisking "single point of failure" and making Bitcoin available for enterprises when it first started to become popular (in 2013 by BitGo), and is basically a transition technology.
With the advent of new crypto users and especially the next 100 million to join the crypto movement, Multisig has become a complex and inconvenient method to practically reduce the risk for personal use.
Fortunately, technology evolves, and there are now solutions that can make Multisig usable even for less mature users who educate themselves before jumping in.
This privacy issue has changed somewhat after November 2021 with the Bitcoin Taproot network upgrade activation, but full support with wallet software rollout for general users will take more time.
Read on to understand why additional approaches are needed.
Pitfalls of Multisig
- Complexity and convenience - for one person to retain control over their own crypto funds in a Multisig setup, they have to solely control multiple devices. Even Bitcoin-only Multisig wallets can be way too complicated for individual users.
- A backup strategy is a must! A failure in key backup strategy can lead to complete loss of funds.
- Multisig implementation is different for every cryptocurrency.
Pitfalls of Multisig: Privacy
A Bitcoin multisignature address appears differently to those who examine Bitcoin transactions using a blockchain explorer tool. For this reason, the use of Bitcoin Multisig does not now offer complete privacy of transaction. (This does not imply that any observer can know who conducted which Multisig transaction ... but such transactions can be identified as being different from "regular" spend transactions.)
Pitfalls of Multisig: Backups
"The main caveat in a multisig wallet is that, losing access to even a single device could potentially prevent you from being able to spend the funds - if you don't back up properly!"
Although the risk of single-point-of-failure loss is reduced in the event that one wallet is lost or hacked, Multisig's potential for higher security can easily lead to a false sense of confidence and a loss of funds if backups are not correctly performed and maintained. To release the lock on crypto funds that are protected by Multisig, not just the requisite number of private key signatures is needed, but also public keys from all potential signers. The public keys are needed in order to provide the "terms for spending," as explained by a wallet developer in this discussion.
In a nutshell, all private keys need to be backed up and should be individually restorable by the person who controls those wallets. Additionally, the full set of public keys associated with all signers in the entire Multisig pool need to be backed up. (Because public keys are more sharable than private keys, the public keys could all be backed up together in a single limited-access place such as Vault12.)
For an individual user with a multi-device multisig setup, Vault12 can be used to easily back up ALL private and public keys. The Vault12 solution splits and safely stores keys in a geographically distributed, privacy-minded manner. This approach offers redundancy without sacrificing security.
Pitfalls of Multisig: Private key management
Just like key management requirements for a single crypto wallet with one seed phrase, if you use Multisig, now each of the potential signing wallets in the Multisig pool has to have its private key (or seed phrase) backed up with the same level of care. If you set up a fairly simple "2 of 3" Multisig crypto address to share the responsibility of authorizing crypto spending with two family members, now all three of you would need to learn how to generate, secure, and back up their wallet's seed phrase - and you would need to trust them to be responsible to protect that backup over time.
In other words, even if you set up Multisig among a collection of approving people or wallets, and you take perfect care of your own private key and all of the devices' public keys, but somehow more private keys are lost than the required number of co-signers, you would lose access to your crypto. (The blockchain network doesn't care if it wasn't your fault!)
Pitfalls of Multisig: Incompatible setup/protocols for each cryptocurrency
Independent multisig setups are necessary for Bitcoin and Ethereum because the technical mechanisms of locking and unlocking the blockchain addresses are different.
The Bitcoin community has implemented Multisignature on the native protocol level as a specific type of transaction and has dedicated the Bitcoin Script opcode OP_CHECKMULTISIG, which offers network-wide security design consensus. But supporting wallet software still should be a reputable and peer-reviewed implementation.
Ethereum on the other hand does not implement a Multisig on the native protocol level because it can be implemented on the higher smart contract level. So Ethereum MultiSig solutions take the form of various Smart Contracts provided by independent 3rd-party developers based on their own beliefs and security consensus. It could be a challenge for developers to get enough peer review to establish a security reputation for each - that normally takes years.
It is common for Multisig wallet vendors to concentrate on only one cryptocurrency due to the facts above.
How to make Multisig usable?
In Security, if something is not simple, it becomes less secure, since outcomes rely on human factors, and are subject to user failure.
Here is a better and easier solution to individual user crypto security. It is just easier to:
- Keep your seed phrase secured by Vault12.
- Monitor your crypto balance and receive transactions with a watch-only wallet or by using Address Explorer and XPUB.
- Have a dedicated, cheap iPhone with a secure enclave for spend transactions.
Whenever you need to sign a transaction:
- Stay in a secure environment (obviously).
- Unlock your seed with Vault12.
- Copy it into a freshly installed trusted wallet of your choice on a dedicated iPhone.
- Sign the transaction.
- Delete the wallet.
No hassle, no multitudes of protocols and devices to control or mess up with - and an even lower risk of failure as a result. Vault 12 also offers the added advantage of a similar experience for any cryptocurrency.
How to backup Multisig?
As described above, you can use Vault12 to perform key backups for Multisig the same way that you rely on it to back up resources for regular crypto wallets.
But you need to keep in mind:
- If there are other people in control of some of the devices that are potential signers for your Multisig transactions, their private keys need to be backed up (by them!) as well as the private keys for your own wallet(s).
- You need to ensure that the public keys for all potential signers' wallets are backed up as well as everyone's private keys.
As soon as you give Multisig a try, you can upgrade your experience by using Vault12 to perform key backups and gain a higher level of convenience without sacrificing security for your Multisig cold storage.
Compared to the manual multisig backup approach where you would have to rely on every co-signers careful key management and backup, along with checking key health status or control multiple devices yourself, with Vault12 you can significantly benefit from creating a backup of all your keys at once. Vault12 is a distributed backup, so it wouldn't create a single point of failure and it has implemented automation of backup health status. This way you are both getting a higher level of redundancy and convenience without sacrificing any security. Effectively it is more convenient and secure.
Do not forget that you need to backup all public and all private keys to recover your multisig wallet, whether you are going to distribute and control that manually or go on with automated Vault12 security procedures. Check for the exact instructions of what to backup with your multisig wallet support site.
Recovery from Vault12
If you do choose to use Multisig wallets, and you want to recover your backup to restore a wallet, some Multisig public keys, or any digital asset that you have stored in your Digital Vault, it is a simple process. Just initiate a request from the Vault12 app and rely on your choice of trusted Guardians!
Then follow the recovery instructions of your multisig wallet. (If you are struggling to find it, try searching for the wallet name and a direct link to recovery instructions here: https://github.com/nvk/wallets-recovery - this is a public database updated by wallet developers and supported by the ColdCard founder).
Is Multisig right for you?
Whether you should learn how to perform Multisig transactions depends on your individual needs, and your appetite for more complicated steps. There is no right blend of security and complexity that works for everyone, and there is a learning curve for using Multisig. Don't push past the comfort zone of your knowledge to a point where you might make mistakes.
Using Multisig for crypto transactions extends the power of approving transactions - and it extends the responsibilities. Maybe that is not a problem for you; maybe you, and your set of trusted family and friends has several crypto experts already. But you can see why the choice of whether to pursue Multisig is an individualized one.
Basics
Learn about how the risks of holding cryptocurrency are different than those of traditional investments, and how to move ahead with confidence and safety.
View all articlesWhy does privacy matter?
TL;DR
Keeping your crypto transactions private is important for your safety and confidentiality.
Be very careful who you share personal or financial information with.
Your personally-identifying information (PII) is a target for thieves.
"Know Your Customer" (KYC) information is collected by banks and many crypto-related service companies.
Public blockchain ledgers can be analyzed for clues about who controls which addresses.
HD wallets are recommended to generate a unique wallet address for each spend and receive transaction.
Privacy-enhancing wallets, strategies, and coins exist, but require at least an intermediate level of knowledge.
Bitcoin mixers offer an increasingly-popular way to gain privacy by combining together many users' unrelated transactions, then recording them on the blockchain as blended, more-anonymous transactions.
It is much easier to establish privacy of your crypto assets when you first buy them, rather than to make assets that are associated with you later look like they do not belong to you.
Privacy is important to crypto owners
It is easy for new crypto investors to overlook the importance of protecting their privacy when purchasing digital assets. At first, privacy may seem like a minor detail, since the initial purchase motivation may be just to "dip a toe into the crypto waters" with a nominal sum of money.
However, when you create an account on a crypto exchange, or start to use some other convenient "on-ramp" to crypto ownership, you are creating a digital footprint that can be attributed - by some party - to you. Once that footprint is established, you will likely be tempted to increase the size of your holdings by topping up your investment, or the value of your small investment might just skyrocket. Either way, an investment that you did not expect to be worth much suddenly could be worth a significant amount.
Although an increase in the value of your crypto holdings is great news, it reveals an important reason to be concerned about privacy from the very inception of your crypto journey: if anyone learns that you hold large sums of crypto, you are at risk of becoming a target of crime and theft. Privacy is important to cryptocurrency owners primarily because of the potentially high value that crypto holdings can have.
Privacy is also important because even for small crypto holdings, if your transactions are revealed to an audience that you did not intend, you could face potentially negative social impacts: you might use crypto to pay for sensitive products, financial accounts, or information subscriptions that you would rather not tell others about - in some cases, its discovery could make you a potential target for blackmail or harassment.
It is very difficult to restore privacy of crypto ownership after it has been attributed to you, and depending on how you choose to move existing digital assets, there may be profit-taking tax implications when you appear to be moving your crypto.
Smart crypto investors consider privacy before performing their very first transaction, no matter how you purchase your first digital assets.
Blockchain addresses can identify you
Anyone can track blockchain address transactions on public blockchain ledgers by analyzing transactions with a blockchain explorer such as Blockchain.info, etherscan.io, or solscan.io.
There are several ways that your crypto transactions could be identified as related: For example, if someone re-uses a blockchain address (like a single-address paper wallet), then all transactions that have been associated with that address can be identified as being linked to the same owner. Other types of transactions (like spending multiple tiny sums of crypto "dust" from different addresses at the same time) can also reveal connections between multiple addresses, showing that they are controlled by the same person or entity. Curious individuals, as well as professional companies specializing in blockchain analysis, puzzle together clues like these to gain more understanding and data about transactions.
Reused or associated addresses may reveal about the address owner:
- what companies the person bought from
- what causes they sent assets to
- what income was received
Observers may not immediately know who controls a given address, but some day, they may see a clue that allows them to identify who the owner is. For example, if you reuse an address that you have shared with someone like a service provider, they could know who you are, and could watch other transactions that you perform at that address.
If someone can identify you personally as connected with a blockchain address that has received large sums of money, you could be targeted for blackmail, kidnapping, theft, or any number of threats.
People or organizations with a known Bitcoin receive address could also be blacklisted: for example, a payment-related organization like Paypal could decide that they do not want to support transactions sent to a given address.
HD wallets offer "fresh" addresses every time
A popular type of crypto wallet that helps you to preserve your crypto privacy is a Hierarchical Deterministic (HD) wallet. HD wallets are designed to give you as many spending and receiving wallet addresses as you want - a fresh one every time, completely avoiding blockchain address reuse.
To retain your privacy when spending or receiving crypto, you should allow your HD wallet to provide you with a new Send or Receive address every time you perform a transaction.
To create many unique addresses, an HD wallet uses the wallet seed phrase to generate a master key pair: an extended private key (XPRIV) and an extended public key (XPUB). Then it can create many individual private and public keys that are hierarchically below the master ones. If you want to know more about XPUB addresses, swanbitcoin offers a nice explanation.
Your XPRIV should obviously always be protected, since it can be used to sign transactions and spend your crypto! Your XPUB also should be kept secret, since it allows read-only access to all of the "receive" addresses in your wallet - an XPUB can be used to configure a "watch-only" wallet. In fact, the Vault12 Digital Vault has an "Address Explorer" feature that can use an XPUB to build a watch-only wallet for you.
What you can and should share with others is a unique, freshly-created send or receive address that your HD wallet will generate for you every time you want to spend or accept crypto. By using a new address for each transaction, the "outside world" does not know which transactions are associated with a given wallet - each of the transactions appears on the public ledger to be independent.
An abstracted crypto transaction through a secure exchange
Limit who has your Personally-Identifying Information
Personally-Identifying Information (PII) is generally defined as any information or combination of information that could be used to identify you as an individual.
Common forms of PII include your name, government identification numbers (passport, drivers license, Social Security number, etc.), payment card numbers, birthday, physical address, email address, and telephone number. Even an IP address can be considered PII, although different countries have different privacy laws that vary on that point.
You should be very careful to only share your PII with reputable organizations, and only through secure, encrypted communication channels (like the main corporate https web site of the firms that you have chosen to work with). PII is a prime target of digital thieves. If your personal information were acquired by bad actors, it would be abused for fraudulent purposes, and then likely resold on the black market.
To protect your PII, be particularly wary of links in emails, since they are a common source of cleverly-crafted phishing attacks that target your PII. It is much safer to open your web browser and directly navigate to a reputable company's web site than to click on a link in an email, even if the email looks legitimate to you. Educate yourself and learn how to recognize and avoid being tricked by phishing attacks.
It is not directly related to crypto, but Facebook's ongoing challenges with leaked PII data demonstrate the high appetite for PII abuse - and keep in mind that PII attained from any source could be used to try to target crypto investors.
Exchanges, hardware wallet vendors, and all sorts of crypto-related firms are under constant attack as hackers try to steal PII. The hardware wallet vendor Ledger succumbed to one such high-profile attack in 2020, for which they had to issue a public apology.
Crypto exchanges know your Personally-Identifying Information
Cryptocurrency has a veneer of anonymity, but due to connections with financial accounts that are used to exchange currency for cryptocurrency in "on-ramp" crypto purchases and "off-ramp" crypto sales, your identity is often able to be associated with your crypto transactions. By default, your personally-identifying information is known to exchanges and to other crypto-related service providers with which you establish accounts. Pay attention to what information is solicited from you when you register for any services.
We are accustomed to trusting reputable organizations with our PII, and usually they do a good job of protecting it. But we should be conservative with our judgement of which organizations we give our information to, and should be aware that when we sign up to use a crypto exchange or other crypto-related service provider, they, as well as government regulatory entities, have the ability to associate our identity with crypto wallet addresses that we use.
Exchanges use "KYC" information for Anti-Money Laundering
You may wonder why you have to give your personal information to crypto exchanges.
Financial institutions and many crypto exchanges support governments in their enforcement of anti-money laundering (AML) regulations. When large sums of money or other assets are moved, governments have the right to scrutinize transactions to ensure that no money laundering or other criminal activity is underway. The acronym KYC stands for "Know Your Customer," and it is standard for banks and other financial institutions to require KYC information.
If you buy your crypto through a KYC-compliant exchange, you give up some privacy. However, if you do not buy your crypto through a KYC-compliant "on-ramp," governments tend to perceive transactions as less legitimate, since they do not know as much about the participants - as a result, there may be even more scrutiny of non-KYC transactions.
As crypto regulations evolve, there are personal choices to be made about tradeoffs with respect to privacy and perceived legitimacy. There is no "right" level of anonymity for your transactions, but you should be conscious of the level of privacy that you choose, and you should be conservative about which institutions and individuals you expose your information to.
Your currency-to-cryptocurrency transactions (crypto "on-ramps"), and your cryptocurrency-to-currency transactions (crypto "off-ramps") are some of the most important financial events that you will conduct. Be informed and cautious in which organizations you trust with an awareness of these transactions.
Privacy regulations offer limited protection
Different countries and municipal regions have varying privacy protection laws that offer you legal rights to control who can access or use your personally-identifying information, for what purposes, and for how long. Some of these laws include the European General Data Protection Regulation (GDPR), the U.S. Gramm-Leach-Bliley Act, the California Right to Financial Privacy Act, and the California Consumer Privacy Act.
However, you still have to provide your KYC information to major crypto exchanges if you want to do business with them, and it is still up to you to be conscious not to leave clues about your spending patterns on public-facing blockchain ledgers.
Additionally, there are significant privacy risks that regulations can not protect you from: unplanned problems such as cyber attacks, institutional misconfigurations, or insider leaks from exchanges.
You can acquire crypto anonymously
If you would like to maximize your crypto privacy, there are ways that you can acquire crypto that do not rely on KYC-compliant exchanges:
- Peer-to-peer trading platforms, which may use an escrow service to guarantee trouble-free payments.
- Crypto ATMs (although some require identification, and if you use a credit or debit card at them, you have lost any anonymity).
- Earning transaction fees as a crypto miner.
- Earning freelance income from customers who pay you in crypto. (Usually they would know who you are, but perhaps you provide services pseudonymously.)
You can spend crypto anonymously
The crypto world offers technology known as "mixers," or tumblers, which increase privacy by combining crypto coins from many sources and redistributing them in such a way that it is impossible to say which coins came from which origin. Similarly, a Bitcoin privacy improvement called CoinJoin increases privacy by producing multi-party transactions, rather than having all involved transactions identify which party performed transactions with which other party - in this way, it blurs the visible line of who actually transacted with whom for how much.
For Ethereum, there is a smart contract called Tornado that makes it harder to identify which tokens are being sent from which addresses. However, technologies such as Tornado are complex to use, and work best in the hands of "power users" who understand the nuances of timing and other techniques of obfuscation for their transactions. Additionally, the United States Treasury's Office for Foreign Assets Control has prohibited U.S. entities from using Tornado Cash.
Crypto wallets like Wasabi and Samourai are easier to use, and offer tumbling features that can help users leverage mixing technologies.
Regulators do not particularly like these forms of privacy protection, but they are becoming more widely used nonetheless by users seeking to keep their privacy as robust as possible.
Crypto wallets that prioritize privacy
A few crypto wallets specialize in providing features that support you in protecting your privacy. These wallets tend to have fast-changing feature sets as they implement new technologies like mixers.
Some high-privacy wallets are best for intermediate to advanced users. Privacy features are a little more complex to use than "default" transactions. Your wallet's documentation is the best place to learn more about the specific privacy features that are available to you.
To help you understand all of the choices among crypto wallets, Bitcoin.org offers you a handy interactive tool to compare features among many privacy-conscious wallets. (Keep the criterion checkbox "Privacy" checked.)
Running your own Bitcoin node offers extra privacy
If you run your own Bitcoin full node, you send your pending Bitcoin transactions to your own server to perform required checks against consensus rules, instead of sending them to a random node for those checks (which would reveal information about which transactions were requested from your IP address). Similarly, if your crypto wallet makes a request for your past transactions, your own full node could fulfill that request, rather than transmitting it to a random node for the information.
There are many guides about how to set up your own node to increase your privacy. Some wallet vendors provide instructions for how to run full nodes that integrate well with their products. Bitcoin.org offers a wealth of additional general information about how to get started with full nodes.
If you don't run your own full node, it is a good idea to use a VPN to obfuscate your IP address when you run crypto-related applications like your crypto wallet software.
"Privacy coins" may offer extra privacy
Privacy Coins are cryptocurrencies that are designed to keep transactional details private through various identity-cloaking mechanisms such as one-time addresses, ring signatures, and confidential transactions. There is much more to be considered than privacy when choosing which cryptocurrencies to invest in, but privacy features are a valid consideration.
Bitcoin used with CoinJoin can be considered to be a form of privacy coin. Altcoins that are making a name for themselves as privacy coins are Monero, Grin, Zcash, and Dash (which uses PrivateSend, an implementation of CoinJoin).
Privacy Best Practices
Privacy best practices include:
- Be conservative about which institutions you share your PII with.
- Keep quiet about your personal crypto holdings and use.
- Avoid blockchain address re-use.
Privacy advanced practices include:
- Run your own node.
- Purchase and sell crypto through anonymous platforms (brokered or peer-to-peer).
- Use coin-mixing wallet features.
Diving deep into crypto privacy
Crypto investors who want an extremely high level of privacy need to stay on top of multiple fast-changing technologies and services. No set of references will remain current or comprehensive for long, but these sites offer a wealth of further detail about options to secure the highest levels of privacy for your coins:
How do Crypto Wallet Passphrases work?
A crypto wallet passphrase is an optional feature that can be used in addition to your seed phrase to restrict access to your crypto wallet. The BIP-39 standard defines both the passphrase and the seed phrase. This comprehensive guide summarizes the usefulness as well as potential risks of passphrases, how Vault12 securely stores your passphrases, and goes into all of the specifics you need to consider to make an informed decision on how you want to approach wallet passphrases.
Key Highlights on Wallet Passphrases
- While it is an optional feature, passphrases offer extra security in the event that your seed phrase is exposed, or if someone else gains access to your hardware wallet.
- Passphrases also allow you to create multiple crypto wallets from a single seed phrase - in this way, you could even create a dummy wallet that would provide "plausible deniability" of your true holdings.
- If you lose your passphrase, you will likely lose access to your crypto!
- Because of the added risk of passphrase loss, passphrases are recommended only for experienced users.
Any and all passphrases must be carefully included in your crypto backup plan!
Vault12's distributed, encrypted backup technology makes it safe for you to store both seed phrases and passphrases in your Digital Vault.
The Vault12 Digital Vault securely stores your passphrases
Fortunately, you can keep all of your backup codes in one place if you store them in your Vault12 Digital Vault. Vault12 offers a uniquely safe way to store these sensitive pieces of data together because of how it distributes encrypted shards of your digital vault in multiple places. You have the flexibility to organize and describe your backup strategy in your choice of formats, whether in a simple way (with a single seed phrase), or in a complex way where you describe multiple wallets with unique seed phrases, passphrases, and other codes. Once your backup is safely stored away, you have the peace of mind of knowing that you or your choice of beneficiary will be able to access your vault and your crypto when needed.
Please keep in mind all of the following considerations as you make a decision on whether and why you might consider crypto wallet passphrases.
A wallet passphrase is one more layer of security for your crypto wallet
Crypto wallet passphrases can be added during your wallet configuration as an extra layer of security. Passphrases are different from seed phrases, and different from wallet app PINs. Its mechanism is defined by the Bitcoin Improvement Proposal (BIP) BIP39 standard.
To recap where passphrases fit in: you already know that when you have a self-custody crypto wallet, your wallet seed phrase (also sometimes called a mnemonic code, recovery phrase, or mnemonic sentence) is a secret that can be used to reconstruct your crypto wallet, and to perform transactions. A well-chosen seed phrase offers excellent wallet protection, since it is not able to be guessed ... but If someone is able to use some other clever method to steal your seed phrase, then they could reconstruct your wallet, and take all of the crypto out. Unless, that is, your wallet is protected with a passphrase.
Unlike a seed phrase, if you set a passphrase, you need to enter that passphrase every time you run your wallet app in order to see your crypto. In this way, having a passphrase is very much like having 2-factor authentication for your wallet (although it leverages "two things that you know," rather than "something that you have/are" plus "something you know").
Note that your crypto wallet should not store passphrases - so even if there were a known or unknown vulnerability in your wallet, your passphrase could not possibly be extracted. Trezor highlights this fact on their security page.
If you'd like to refresh your memory about the basics of how crypto wallet seed phrases and passphrases work, consider reviewing the Vault12 article about the BIP39 standard.
Be aware that some wallets use words other than the term "passphrase" that comes from the original BIP39 standard. You may see passphrases called a "seed extension," "extension word," "extension phrase," "13th word," or "25th word." For the sake of clarity, we will stick with the term "passphrase" here.
Passphrases increase both your protection and your risk too
Passphrases increase the complexity of your crypto wallet and your backups, because if you lose your passphrase, you will probably lose your crypto. Setting a passphrase burdens you with the risk that you could fail to properly back it up, or that your backup could fail. Your passphrase must be backed up just as carefully as your seed phrase.
Also, depending on how you have chosen to back up your seed phrase, it may be advisable to back up your passphrase in a different place or way than your seed phrase. Consider that if both the seed phrase and the passphrase are sitting together in your physical safe, and your safe is broken into, the thief will have both secrets, and the passphrase wouldn't offer any added protection.
If you were to back your seed phrase up in one place and your passphrase in another place, it would be critical for both of those storage locations to be reliable (so not just a magnetic disk in your closet, or your memory). Additionally, each of your separate chosen storage mechanisms would likely have a unique set of passwords, PINs, or other identifiers to access them ... making the complexity of storing your seed phrase and your passphrase separately very high.
The core reason that it is safe to store both your seed phrase and your passphrase together in the Vault12 Digital Vault is because Digital Vault contents are stored in a distributed way as encrypted shards of data - no individual besides you can access a copy. This gives you both redundancy and personal control at the same time as the convenience of a single easy-to-use interface.
Because the concept of passphrases is tricky, and because some people would not carefully back it up, many crypto wallet vendors do not expose the passphrase feature by default ... it may need to be enabled in wallet Settings. Some wallets don't support passphrases at all. Like a sharp knife, a wallet passphrase is an excellent tool in careful hands - but experts recommend that users do not set a passphrase unless they have spent the time to fully understand the risks and responsibilities that go along with setting one and backing it up. No matter how careful you are with your crypto, your passphrase is a single point of failure (SPOF) if lost. There is a lot at stake!
Passphrases should be hard to guess
As you would expect, any passphrase that you set should be strong. A passphrase acts like an extra-long password, and contains multiple words. Because they can contain multiple words, and even space characters, passphrases can be both long and more rememberable than a regular password.
A simple passphrase could be brute-force guessed within a few hours, days, or weeks. Many experts point out that the practical defensive benefit of a passphrase is to buy you extra time to move your crypto funds if you discover the theft of your seed phrase or hardware wallet. The longer and more-complex your passphrase, the more time you have to move your funds before the bad actor does.
For more guidance, you could review this article about password management that includes a specific section about how to choose a good multi-word passphrase. You should also keep in mind that different wallet vendors allow different length limitations (e.g., Trezor: 50 characters; Coldcard: 100 characters; Ledger: 100 characters). These differences in allowed passphrase length become important if you think that you may want to change hardware wallets in the future to one with a shorter maximum passphrase length. A 50-character passphrase, assuming that it contains sufficient unpredictability, offers very strong protection.
By default, wallets use a blank passphrase
If you do not set any passphrase when you configure your wallet, a blank passphrase is used by the wallet to determine where your crypto is stored on the blockchain network. If you do set a passphrase, your wallet stores your crypto at a different place on the blockchain.
What this suggests is that if you set a passphrase when you configure your wallet, and then you put some crypto into your wallet - all is well; you see your crypto! But then if you decide to install a second wallet, using just your seed phrase and no passphrase, the wallet with no passphrase would show you a zero balance! This behavior can lead some beginners to think that they have lost all of their crypto, when actually, they just did not configure their second wallet with the same passphrase that they used when they set up their first wallet. All they would need to do to correct this situation is to re-open the second wallet and provide the correct passphrase.
Wallet passphrases can be used for multiple purposes
Now that we've reviewed the basics, now let's consider the main ways that wallet passphrases can protect your crypto.
- A passphrase adds an extra authentication step: If you set up a crypto wallet with a seed phrase and a passphrase, you have extra protection if your seed phrase is exposed, or if your hardware wallet is exposed or lost, since both the seed phrase and the passphrase are needed to access the wallet.
- A passphrase-protected wallet can act as a "hidden" wallet: If you set up a crypto wallet with a seed phrase and a passphrase, you really have two wallets: one uses a passphrase, and one does not. You could switch between them by exiting and re-opening the same wallet application, based on whether you entered the passphrase or not. Or you might choose to use only the passphrase-protected wallet and not use the passphrase-free wallet at all.
- Multiple passphrases could be used to create multiple wallets: If you configure a more complex setup with one seed phrase and multiple passphrases, you create multiple wallets. As described above, you have the ability to choose which of the wallets is shown when you enter the passphrase to open your wallet application. In this way, you could choose to have several wallets, each with a different mix of crypto funds.
It is easy for beginners to become confused when creating multiple wallets from a single seed phrase. Do not attempt this advanced functionality unless you thoroughly understand the concepts!
BIP-39 Passphrases help if your seed phrase or hardware wallet are stolen
Whether you plan to use multiple crypto wallets or not, setting a passphrase is sensible protection if you are not able to keep your seed phrase or hardware wallet perfectly secure (for example, maybe you can not fully control who may come or go from your home, hotel, office, or room due to shared accommodations or staff access). Because of the chance that your seed phrase or hardware wallet could be stolen or examined by an unauthorized person, it can be very helpful to add a passphrase in order to reduce this risk of illegitimate access.
Would you know whether your wallet or seed phrase were compromised? Maybe ... your physical safe might show signs of forced opening, or you may realize that you absentmindedly left your seed phrase lying around unprotected. Maybe your hardware wallet is missing from where you normally keep it. If you are not sure whether your seed phrase was leaked or taken, but you think that it could have been, it is best to assume that it was compromised, and quickly take action!
If your wallet may be compromised ... sweep it!
If you have a passphrase-protected wallet and you suspect that your hardware wallet or your seed phrase backup was compromised, your passphrase will hopefully protect your crypto until you move your crypto to a different wallet. As long as you move your crypto before the potential thief cracks your passphrase, you get to keep your crypto. To move your crypto into a new wallet, create a new wallet with a different seed phrase, and then send all of the crypto stored in your old wallet to the Receive address of your new wallet.
Moving crypto funds to a different blockchain address that you generated with a new seed phrase is called "sweeping," or key rotation.
Beware of the $5 Wrench Attack!
The following image humorously demonstrates what has come to be called a "$5 wrench attack." It shows that a bad actor could just threaten you with a cheap wrench to physically force you to open your wallet for them.
This kind of attack serves as a reminder of why you should be very careful who you allow to know that you own any crypto - it can make you an appealing target for all kinds of thieves. This is one of the major reasons that privacy is so important for crypto owners.
Inspired by original https://xkcd.com/538/
Protecting against the Wrench Attack with passphrases
To protect against the $5 wrench attack, you could establish a "dummy wallet" by using an "extra" passphrase with your hardware wallet. The ability to show someone a "fake wallet" instead of your real crypto holdings if you are under duress is a form of "plausible deniability."
To understand how this works, remember that when you open your crypto wallet application, you only see the assets associated with the wallet that corresponds with the passphrase that you entered.
For example, you could configure three wallets with the same seed phrase and different passphrases. If you access the wallet using no passphrase, it could show you a small amount of crypto that you might use for day-to-day spending. If you access the wallet using passphrase "My$trongW0rd," it could show you a moderate balance that you might choose to sacrifice to a physical attacker. But if you access the wallet using passphrase "My$trongW0rd_real," it could show you the majority of your crypto holdings. In this example, as shown in the image below, if you were subject to physical attack, you could allow the attacker to have one or two small wallets, but not let them know that you have the larger wallet hidden with a different passphrase.
This example shows how one could use pass phrases to generate a dummy wallet that one could show an attacker instead of the actual wallet. Everyone should devise their own personal strategy.
Multiple passphrases can be helpful in more than one way
Generating multiple wallets from the same seed phrase might come in handy in a few scenarios:
- Defense against a physical attack (as described above): You can have a "dummy wallet" that you plan to offer if you are forced against your will to open your wallet.
- Categorization: You might want to set up several crypto wallets as multiple "buckets" that you use for different purposes (maybe based on whether you intend to save it or spend it, whether you have held it for long enough to qualify for capital gains taxation, whether it is shared with your family, etc.)
- Privacy: You might not want to keep a significant amount of crypto value in any one wallet address for privacy purposes.
Passphrases and your crypto backup strategy
Your backup strategy needs to include all passphrases that you use, and, if you have multiple seed phrases, it needs to indicate which passphrase goes with which seed phrase.
It is becoming more common for people to maintain multiple separate crypto wallets for various reasons. Some of these reasons are described above. You might have decided to keep multiple hardware wallets in order to perform multisig transactions. Or you might be trying out a new wallet or service ... there are many reasons that you could find yourself juggling multiple wallets. However you may have ended up with multiple wallets, it is critical that your backup strategy keeps track of which passphrases should be combined with which seed phrases!
When deciding how to organize your crypto backup strategy, think about each wallet backup "bundle" as if you were starting with zero knowledge and zero trusted devices (like your smartphone). What would you need to know to access each wallet? Accessing any individual wallet might require someone to know how to access your seed phrase backup (which might include a safe vault or decryption code), passphrase(s), and possibly 2FA backup codes. The exact information to be stored depends on what forms and methods you chose to protect your secrets.
Think your unique situation through carefully.
Inheritance Management
Managing digital assets like cryptocurrencies can be complex, especially when it comes to inheritance.
View all articles$6 Trillion of Crypto Assets to Be Inherited by 2045
Over the next two decades, up to $6 trillion in crypto could be inherited, as younger investors favor digital assets over traditional stocks and bonds. Learn how this shift is reshaping wealth transfer and the future of investing
Unprecedented Asset Transfer via Inheritance by 2045
A recent report, the 2024 Bank of America Private Bank Study on Wealthy Americans, reveals key trends related to inheritance, and particularly how younger generations view the future of wealth, including crypto and estate planning.
An astounding $84 trillion of wealth transfer is projected over the next 20 years from current generations to Gen X, Millenials and Gen Z. Renowned expert Matthew Sigil, head of digital assets research at Van Eck (a prominent issuer of Bitcoin ETFs) has estimated that of this amount, $6T in crypto assets will be passed on via inheritance.
This transfer will be successful only if care and attention are paid to crypto inheritance planning and management, and if the right approaches are in place to support the technical transfer of these funds. Crypto assets are technically different in a number of ways to traditional assets, so inheritance needs to be carefully choreographed between asset owners, Trust and Estate Lawyers, and intended crypto beneficiaries.
Despite the fact that important steps must be taken for the safe, secure, and private transfer of crypto assets, none of the participants in the crypto ecosystem have offered inheritance plans or services. The pioneer of crypto inheritance management since 2015 has been Vault12.
Vault12 has built and continues to innovate a comprehensive solution that is easy to use for non-technical participants, yet incorporates a highly secure architecture and technology that is designed to preserve your crypto wealth and ensure successful transfer to your heirs. Learn more at vault12.com.
The Bank of America Private Bank Study
This report by Bank of America Private Bank analyzes financial outlooks, investing habits, and estate planning practices of wealthy Americans. The study reveals a generational divide, with younger wealthy individuals exhibiting different investment preferences than older generations. Younger individuals tend to be more skeptical of traditional investment strategies, and favor alternatives like cryptocurrencies and private equity. The study highlights the challenges facing wealthy families as they navigate wealth transfer, including the emotional strain of inheritance and the increasing burden of serving as trustee or executor.
Takeaways
- Great Wealth Transfer: Approximately $84 trillion is projected to transfer from seniors and baby boomers to Gen X, millennials, and their heirs by 2045.
- Crypto Inheritance Surge:Matthew Sigel of VanEck Investments estimates that up to $6 trillion could enter the crypto market through inheritance in the next 20 years.
- Investment Shifts: Millennials and Gen Xers will inherit $84 trillion, with a growing proportion of cryptocurrencies.
- Young Investor Participation: To reach the $6 trillion estimate, young investors (ages 21-43) need to allocate 14% of their inherited wealth to crypto: about $300 billion annually.
- Broader Investment Preferences: Many young investors view traditional stocks and bonds as insufficient for superior returns, preferring high-growth assets like cryptocurrencies.
- Risk Appetite by Generation: Younger investors show a higher risk tolerance, with significant crypto allocations (14%-17%) compared to older investors, who remain conservative.
- Crypto Exposure: Younger investors hold the highest average exposure to crypto, highlighting a shift in how the next generation approaches digital assets.
Sources:
2024 Bank of America Private Bank Study of Wealthy Americans
VanEck: $6 Trillion Could Pour Into Bitcoin, XRP and Crypto via Inheritances Over 20 Years
Crypto and Digital Asset Allocations
Bank of America 2024 Private Bank Study on Wealthy Americans
Crypto, Inheritance, and Wealth Management in Younger Generations
The 2024 Bank of America Private Bank Study on Wealthy Americans focuses on several key trends related to inheritance, particularly how younger generations view the future of wealth, including crypto and estate planning.
1. Crypto and Digital Assets
Younger generations (ages 21-42) are more inclined to see digital assets like cryptocurrency as a key growth opportunity. Around 28% of younger respondents ranked crypto as a promising investment vehicle, significantly higher than older generations, where only 4% expressed the same confidence. This highlights the generational shift towards embracing newer financial instruments like blockchain and decentralized finance.
2. Inheritance and Estate Planning
Interpersonal family dynamics can create tension during wealth transfers. For both younger and older wealthy individuals, unequal distribution of assets and a lack of clear instructions or communication were common sources of strain. Younger generations are more focused on including hard assets like jewelry and heirlooms — which are frequently overlooked in formal planning — in their estate plans.
3. Generational Differences in Wealth Management
Younger heirs are more likely to pursue alternative investment strategies, such as private equity and digital tools, reflecting their broader interest in controlling their wealth. These individuals also prioritize sustainability and impact investing as part of their inheritance planning, distinguishing their approach from older generations.
These insights demonstrate the ongoing generational divide in attitudes toward wealth management and the evolving role of digital assets in estate planning.
Inheritance and Estate Planning "Strain Points"
Factors driving strain on inheritance-related issues
Bank of America 2024 Private Bank Study
What you need to know about Crypto Inheritance Planning
Unlike traditional assets, crypto assets need to be managed differently from an inheritance standpoint. In fact, the only similarity between traditional and digital assets is that you must maintain an update inventory of them. The main challenges associated with crypto inheritance are:
- Inventory of crypto assets: You must carefully maintain an inventory of crypto assets. This means backing up seed phrases and/or private keys of all crypto wallets, across all blockchains, and all types of devices or places where those wallets exist, e.g., mobile phones, hardware wallets, cloud, and paper backups. Any assets that are not documented in your backup are liable to be lost.
- Privacy of all information:You must ensure absolute privacy of the backup information. Anyone with access to private keys or seed phrases will be able to compromise the funds. This includes ensuring that any documentation left with your lawyers is strongly protected.
- Critical Points of Failure: You must eliminate personal devices and cloud services as critical points of failure. The most significant risk in inheritance is reliance on individual devices, which can be stolen, lost, or damaged. The second risk is the dependency on one or more cloud servers. We have seen what happens when business relationships between cloud partners face legal challenges, or cloud services are disrupted by malware or bad software updates.
- Technical Beneficiary awareness: As the varieties of crypto assets expand over time, staying aware of them becomes important. You will need to designate someone technically fluent in this area. They may not be the ultimate beneficiary; however, you will need to trust them to distribute the assets per your wishes.
- Trust & Estate Attorney: You must consult with experienced lawyers who are well versed in inheritance of crypto assets. A great resource is "A Practical Guide to Estate Administration and Crypto Assets" by Richard Marshall from Hill Dickinson LLP.
Why Choose Vault12 Guard for Crypto Inheritance Management?
Vault12 is the pioneer of crypto inheritance management, and Vault12 Guard is the first solution to offer a simple, direct, and secure way for all types of investors to ensure that all of their crypto assets can be accessed by future generations.
Consider that:
- Traditional approaches to the inheritance of assets, when applied to digital assets, create complexity and risk.
- Your portfolio of digital assets is continually changing — you cannot rely on doing an inventory once, or for that matter continuously, without assistance.
- A simple and direct approach like Vault12 Guard reduces the uncertainty around assets not being available to the designated recipient. It also avoids having to approach and petition each service individually during probate to gain access.
- Inventory of crypto assets: The first step in inheritance is backing up all your crypto wallets. Vault12 makes this as easy as possible - despite the appalling lack of usability in current hardware and software wallets. There will always be new crypto assets on new blockchains, and Vault12 can manage any crypto asset on any device, on any blockchain, now and in the future.
- Privacy of all information:Your crypto assets are protected via a Secure Element (Secure Enclave in iOS, and Strongbox on Google Android phones), and the encryption used is Quantum-safe. With this security, no one knows what assets are part of your Vault.
- No Critical Points of Failure: No assets are stored locally, no assets are stored in any cloud, and no assets are stored at Vault12. There are no devices to lose, no paper backups, and no need to manually give encrypted assets to a subset of people. The Vault12 system is decentralized, making it a difficult target for hackers — and in fact for any type of failure.
- Confidence in a Technical Beneficiary: With Vault12 you get to designate a trusted technical beneficiary. Should you change your mind, you can swap them out at any time.
- Flexibility in Trust & Estate Attorney: While regulations and guidelines for inheritance planning can vary from state to state and country to country, Vault12 Guard is designed to be independent of whatever legal framework you choose to govern the inheritance of your assets. Vault12 Guard is simply a transfer mechanism that ensures all your crypto assets are passed from your control to a designated technical beneficiary.
Key Product Features of Vault12 Guard
The Vault12 platform provides your crypto assets with the highest security and strong backup resilience. Vault12 Guard Inheritance enables you to designate a beneficiary (an executor, trustee, or other chosen beneficiary) who can inherit the entire portfolio of digital assets that you choose to store in your Vault. There is no need to update an inventory continually or to issue updated instructions.
- Unified Digital Vault: Use Vault12 Guard Digital Vault to store digital assets, including cryptocurrency, financial login information, legal documents, medical records, and more.
- Guardian Network: The Vault is protected by your network of Guardians: friends, family, and/or business associates — people that you know and trust.
- Beneficiary Designation: Designate a beneficiary from your chosen Guardians. A declaration is then digitally signed, and can be emailed to other parties, such as lawyers.
- Trigger-Based Access: As a Vault Owner, you can configure a legally-defined trigger such as incapacitation or death. When the trigger occurs, the beneficiary indicates they are ready to access the digital assets. Assets are unlocked and transferred to the beneficiary only when a designated number of Guardians approve the request.
- Preemptive Veto Option: Should the beneficiary attempt to access the assets before they are intended to, the owner can veto the request before any of the Guardians receive an approval request.
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Backup and Inheritance for Bitcoin Runes
What are Inscriptions, Ordinals, and Runes?
We recently shared the story about how in 2023, the Ordinals protocol was added to the Bitcoin network. Users began to use Ordinals to inscribe unique data (NFT "inscriptions") directly onto Bitcoin satoshis, and soon thereafter, Ordinals inscriptions enabled the creation of fungible BRC-20 tokens on the Bitcoin blockchain. Inscription-based Bitcoin NFTs and BRC-20 tokens expanded the Bitcoin landscape to encompass both fungible and non-fungible tokens. BRC-20 tokens became fairly popular, achieving a market cap exceeding $2 billion.
Then in September 2023, just as Ordinals was reaching peak popularity, the same developer behind Ordinals, Casey Rodarmor, proposed another new protocol for tokens on Bitcoin: Runes. Runes introduces a fresh token standard for Bitcoin, streamlining the process of creating fungible tokens and enhancing efficiency for users. The motivation behind Runes was to improve upon BRC-20.
Runes launched at the same time as the April 20, 2024 Bitcoin halving event, at network block 840,000.
What makes Runes better than BRC-20?
Runes aligns more closely than BRC-20 with the Bitcoin community’s values and unwritten rules, like protocol simplicity, independence of off-chain data, and using unspent transaction outputs (UTXOs) as a state model. Runes also uses a smaller blockchain footprint, thus avoiding the perception that it is filling up the Bitcoin blockchain with “garbage” data.
In contrast to the complexity of BRC-20, the simple rules of Runes tokens allow the tokens to be included in many wallets, requiring only relatively minor modifications by wallet developers.
If you are interested in learning more about how the Runes protocol works, you can read more about it in the Ordinals documentation.
Why do Runes have such long names?
Runes have a unique, forward-looking characteristic of ticker naming: shorter names for individual Runes will be unlocked (allowed) over time. This rule is intended to prevent a rush of front-running and "squatting" more attractive, shorter names. At first, only Rune names of thirteen or more characters are unlocked, which is why (depending on when you read this article) you might only see Runes with long names avaliable for mint and sale. An example of an early Rune name is "UNCOMMONGOODS." How quickly are shorter names unlocked? Runes was unlocked at block 840,000, and after that, the completion of every 17,500 blocks (which takes about four months) unlocks the next-smaller length of Rune name availability.
What will Runes be used for?
Initially, we will inevitably see a lot of meme Runes traded, since they are so simple to create. There are more "serious" Runes projects in the works, but it’s hard to predict which will be successful, and when more value-added Runes-based projects will be available.
What are some popular Bitcoin Rune projects?
You can follow along with which Runes projects are new and most popular at several online Runes explorers, including Ordiscan.
How can you mint, buy, and sell Runes?
Platforms like Ordinalbots can make the process of "etching" and minting Runes simple. "Etching" sets the properties of Runes, and “minting” creates new ones that may then be transferred.
Trading platforms like Magic Eden already support Runes purchases and sales. OKX is another.
Always do your own research and/or consult with a professional if you're unsure about anything.
How do you use a wallet to back up and protect your Runes?
Runes-capable wallets operate like other crypto wallets. To buy some Runes and back them up:
- Create an account, secure your seed phrase backup, and deposit funds into your choice of Runes-capable wallet.
- Create or purchase Bitcoin Runes on your platform of choice.
- Use a Runes-compatible Receive address in your wallet to receive the Bitcoin Runes from the marketplace or trading platform you've chosen.
How do you ensure inheritance of Bitcoin Runes?
You must protect your long-term storage and the inheritance of Bitcoin Runes in the same way as you would any other Web3 digital asset.
Web3 asset inheritance is different from the relatively straightforward steps for a traditional inheritance, where you go to the bank or the broker, you tell them that someone has passed on or is incapacitated, and you are given access to those assets. In contrast, with Web3 assets, you, the owner, are responsible for the security and safekeeping of those assets. If you haven't recorded all of the details about your assets and communicated them to the people who will be the beneficiaries, your assets will likely be lost. Even if you did record the details correctly, there are still a lot of ways for heirs to go wrong with complex technical things during the succession process.
Take the risk out of your web3 and Bitcoin asset wallet backups by storing your wallet seed phrases in a specialized digital vault.
How can Vault12 Guard protect your Bitcoin Runes?
Our latest technology release Vault12 Guard is a mobile app designed for ordinary people who are collectors, Web3 creators, and crypto enthusiasts buying cryptocurrency. Vault12 Guard is designed to make it as simple as possible to back up all of your digital assets and then assign a beneficiary who can receive those assets in the event of incapacitation or death.
With Vault12 Guard, it's very simple to back things up for your own wallet recovery. It's very simple to activate Inheritance. And it's very simple for your heirs to retrieve those assets when needed. Download the app from any of the app stores (iOS or Android), install it, and create a digital vault. You can immediately start adding assets, which will be stored locally on your phone device for full, distributed, decentralized backup and inheritance.
With Vault12 Guard, you can add and assign your own vault Heirs and Guardians. These are people that you know: they could be business partners, family members, or friends who will guard your vault. Your Guardians will grant access to your Web3 assets on the event of your passing.
You can learn more about Crypto Inheritance here, or jump right into learning how to quickly set up your vault to bring longevity and resilience to your digital assets journey.
How to Self-Custody, Back Up, and Inherit NFTs with Vault12
TL;DR
An NFT ("Niftie") is a blockchain token that is associated with a specific physical or digital asset that has a unique form and value. In contrast, cryptocurrencies such as BTC, ETH, or other altcoins are interchangeable with others of the same type (for example, 1 bitcoin (BTC) = any other BTC).
NFTs can be linked to unique physical assets, e.g., a diamond, a piece of physical art, a digital asset like an online concert ticket, or digital art.
NFTs can be tracked on a blockchain as they are transferred or sold to other people. As an added twist, NFTs can even be programmed so that when they are sold on the secondary market, a portion of the proceeds are automatically sent to the creator, thus creating a whole new motivational value chain for the creator economy.
NFT functionality is still in its infancy, but has the potential to fundamentally change how all types of assets are traded.
You should protect the NFTs you own by using Vault12 to securely back up the wallet that holds the keys to your NFTs. It is especially important for creators, who may have authored a myriad of NFTs, to protect the keys to their NFT wallets, since all proof of ownership revolves around protecting those keys.
What is an NFT?
NFTs, or Non-Fungible Tokens (also known as "Nifties"), are digital assets tracked on a blockchain like any other digital token. The term "non-fungible" means that each token is unique. An NFT and its trading history can be tracked on the blockchain. Unlike Bitcoin, where each BTC is valued the same as any other BTC, NFTs can have different values depending on their attributes, and depending on their unique market demand.
NFTs come in all shapes and sizes, but all of them have two key properties:
- They are linked to actual assets - either physical or digital. Effectively, NFTs express the immutable right of possession. This right is cryptographically fixed in a blockchain as an advanced digital version of a "certificate of ownership."
- They are tracked on the blockchain so that their ownership history can always be verified. This means that not only digital items can be tracked, but physical items that have been tokenized and represented as an NFT can be tracked as well.
This opens a wide range of use cases for NFTs:
Art: Both digital and physical art can be tokenized, traded, and tracked via a blockchain. In a famous example from March 2021, a JPG image produced by digital artist "Beeple" fetched $69 million (lol) in an auction run by famous auction house Christie's. Other high-profile artists, musicians, and creators are creating new art, as well as tokenizing their historical catalogs.
Plane Tickets: Yes, plane tickets (in fact, tickets of all kinds) can be issued, tracked, transferred, and even bought and sold, optionally with a percentage of the ticket price going back to the original issuers.
Baseball Cards: Cards and other collectibles, including limited edition items, can be registered, traded and collected.
Real-world physical assets: Real-world valuable assets like diamonds or real estate can also be tokenized, and then traded! As long as there is clear provenance (a known source, or history of ownership) for the physical items, they can easily be traded on a global market, once they are registered as NFTs.
As for the future of NFTs, there are some incredible possibilities for how Smart Contracts will increase the utility of NFTs even more by supplementing them with real-world, dynamic data. Just consider the possibilities for NFTs beyond their usual function (serving as a record of the chain of custody and ownership): GPS location data can show the physical location of an NFT-tokenized object; real or virtual sports outcomes can offer additional token "rewards" to NFT owners; economic data can be used to automatically modify interest rates used for NFT-tokenized mortgage agreements. A dynamic NFT becomes a trackable asset that can be used for various contractual relationships besides just collectible trading.
How are NFTs different from Cryptocurrency?
Most NFTs live on the Ethereum blockchain, although some other blockchains also offer NFT support. Unlike cryptocurrency coins like Ether, which are interchangeable with other coins of the same type (fungible), NFTs are unique (just like snowflakes)! So what gets tracked on the blockchain for any given NFT captures its unique properties, as well as its trading history.
How do I create an NFT?
To create an NFT, first choose a blockchain network. Ethereum has the widest range of NFTs today, but some other blockchains that support NFTs include Binance Smart Chain, Flow by Dapper Labs, Tron, Polkadot, Tezos, Cosmos, and WAX, to name a few. Your choice of NFT blockchain network will determine which exchanges and crypto wallets will interoperate with your NFT.
If you choose to use Ethereum for your NFT, you will need a crypto wallet that supports the associated ERC-721 standard. Examples of these wallets are MetaMask, Trust Wallet, Coinbase Wallet, or Rainbow. In addition, you will need some funds in Ether (ETH). All Ethereum transactions will cost a transaction processing fee (also called a "gas" fee).
The NFT trading platforms that enable you to create NFTs include OpenSea, Rarible, and Mintable. To use these NFT platforms, connect your crypto wallet to the platform, click the "Create" button, upload your digital art or other NFT format, and accept the contract terms and details. Once your NFT is signed with your wallet, your NFT is ready to go and can be listed on the blockchain.
How do I buy an NFT?
There are lots of sources to buy NFTs, and there are more coming online every day. The most popular platforms include:
Here's a livestream of the first-ever authenticated Banksy art burning:
How do I secure, protect, and back up my NFTs?
NFTs are registered on the blockchain and linked to your wallet address, so backing up your NFTs follows the same process as backing up a wallet's seed phrase.
If you own the digital art source file itself (regardless of its format), you can also back this up in a Digital Vault. This ensures that your copy of the art is also protected from being accidentally deleted or lost. This is especially important for NFT art that may happen to pass through many hands (e.g., auction houses), and is also important for insurance purposes.
Read on for step-by-step instructions for how to protect your NFTs and original artwork using Vault12.
How to back up from an NFT Platform
Once a creator or developer has created an asset, it needs to be "minted" on an NFT platform. Minting is the process of registering the asset on the blockchain and activating the smart contract that governs the NFT (e.g., these terms can include what percentage of future sales are credited back to the creator). Once minted, the NFT can be made available for purchase. Buyers will purchase from the NFT platform directly, using their crypto wallet.
NFT Platforms support wallets in different ways. Some wallets can display NFT records, others cannot (we're still in early days of this technology).
In the following example, we will use Opensea.io (a leading NFT platform), and the Metamask mobile wallet:
Opensea.io
Metamask mobile wallet
With NFTs (as with standard cryptocurrency), the wallet seed phrase becomes the most important piece of information to back up and secure.
Here's how to reveal the seed phrase in our Metamask Wallet so that it can be backed up:
1. Settings
2. Security & Privacy
3. Reveal seed phrase
4. Seed phrase displayed
Backing up your Crypto Wallet
Once you have access to your seed phrase, you can back it up with a Digital Vault from Vault12.
In the following sections, we will demonstrate how owners of NFTs, as well as creators, can utilize a Digital Vault as the mechanism to store seed phrases, as well as secure the original asset.
How can NFT Owners Use a Digital Vault to back up NFTs?
A Digital Vault has the advantage of being focused on a singular purpose: securely storing digital assets for long term use. While there are many types of "digital vaults" available for cryptocurrency storage, for NFTs it is better to use something that is independent of any one blockchain and can store any type of digital asset.
Here we will use Vault12 to demonstrate how an NFT can be backed up, and how digital assets can also be stored in a Vault:
Step 2: Add a new asset to your Vault: in this case an NFT. First, switch to the Vault screen by tapping on the vault icon on the bottom navigation pane. Tap Add an Asset, and choose NFTs.
How can you back up your NFT seed phrase in Vault12?
Start by choosing "Add a Seed Phrase" to add your NFT wallet's seed phrase. For convenience, the name of the software wallet type that you use to control the NFT will be suggested, but you can use any name.
Entering the seed phrase could be done by choosing either "Enter each word," or "Free format text." If you want to refresh your memory about the details of seed phrases, you can do that here.
As soon as you finish entering the seed phrase words, choose the name for the asset (or use the one proposed by the application), and choose between storing whether you want to hold the local copy, or only store a backup with your Vault Guardians.
Finally, you will be returned to the Digital Vault screen that will display your added asset and indicate the status of its distribution to your Guardians.
Creators: Use a Digital Vault to back up NFTs and original artwork
For creators, in addition to backing up wallets that contain NFT collections, there's also the option to back up the original artwork itself - this could be the form of an image, video or some other file format.
To add the artwork to your Vault, simply tap the "Add an Asset" option on your Vault screen, then choose "Add Media."
In this simple way, you can add files, images, or other media from files on your device or from your Photo Library to back up the source files of your highly valuable media.
The final step is to give a name to your selected asset (you can associate it with the seed phrase name, to ease tracking of inventory), and choose whether you want to keep a local copy.
How to unlock and access assets in the Vault?
To gain access to your asset or artwork, select the asset in your Vault, and tap the "Unlock Asset" option.
To learn more about accessing the assets that are locked in your Vault, please read How to access your Seed Phrase or asset stored in Vault12.
The NFT market is new and constantly evolving, and there have already been hacking attempts on several platforms where owners and creators ended up having their accounts drained. Please make sure that you are using well-known and highly trusted wallets to associate with your collection of NFTs. Follow the guidelines laid out in this article to make sure you are able to robustly secure and back up your NFTs - whether you bought them or created them yourself.
Backup
Vault12 Guard provides inheritance, and secure decentralized backup of seed phrases and/or private keys, giving Bitcoin (BTC), Ethereum (ETH).
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How to securely destroy your paper seed phrase backup.
TL;DR (concentrated takeaways)
You should not keep any temporary paper copies of your crypto wallet seed phrase.
The Vault12 Digital Vault is perfect for permanently and safely storing your seed phrase backup.
Disposing of your temporary paper seed phrase is easy, but the details are very important.
You could dispose of it by burning it in your kitchen, and then flushing the ashes.
You could dispose of it by erasing, shredding, and then flushing the pieces.
Remember that your wallet seed phrase allows access to your crypto
By now, you know that your crypto wallet seed phrase is the most important thing to protect in order to guard your crypto assets. You have read about the need to use randomness to generate your seed phrase, and then how important it is to back it up to ensure that it is not lost or stolen. In this article, we will assume that you have already decided on which wallet to use, how to generate your seed phrase, and how to back it up. With your wallet set up and your seed phrase safely and permanently backed up, now you find yourself with a piece of paper that holds a "spare copy" of your seed phrase scrawled on it. How should you dispose of that precious piece of paper?
Why would you have a paper copy of your seed phrase?
You probably ended up with that piece of paper containing your seed phrase as a result of your seed phrase generation and/or wallet setup steps. Until you are sure that your wallet configuration is complete, and your permanent seed phrase backup is complete, you likely wrote down your seed phrase on paper along the way.
If you generated your seed words incrementally with dice, you likely calculated them one by one, capturing each one on paper after it was chosen.
Similarly, if you let a crypto wallet choose your seed phrase for you, you likely wrote it down in order to confirm the words back to the wallet during the configuration process. In any case, you probably did not transcribe each word directly into permanent storage the instant that it was generated - you wrote it down offline, on paper, in order to have a copy to use to help you complete the steps of saving it to its permanent storage medium. Then you saved your seed phrase to a permanent medium such as your Vault12 Digital Vault, a steel card, or a limited-access, backed-up encrypted file. You might even have chosen to use two of those forms of secure, permanent backup.
Congratulations! But now you also have this extra piece of paper that you don't need - and it would be silly to leave it lying around waiting to be stolen, or to just throw it into your trash can.
Planning to destroy your temporary seed phrase copy
You need a foolproof way to destroy the now-unnecessary, temporary paper copy of your wallet seed phase, such that it can never be reconstructed. Here are some things to keep in mind as you plan to destroy it:
- Don't put the task off. If you do not keep the temporary copy in a high-security safe until it is destroyed, every moment that it remains readable holds some risk that you could misplace it, or that it could be otherwise accessed. Properly disposing of it is not hard to do, and it does not take long - finish the task.
- Meanwhile, be aware of cameras that could record the seed phase from the paper. Your smartphone, laptop, tablet, or security camera could all capture an image of your seed phrase without your realizing it. We have all become so accustomed to cameras around us all of the time, especially when they are part of our home security system, that we lose our awareness of what is being recorded. Don't take the chance of accidental image capture.
- If you wrote down the seed phrase on a pad of paper, ensure that the page below the one that you wrote on does not have impressions that could be used to detect and reconstruct the words. Tap into your spy novel knowledge to imagine that possibility! If necessary, destroy the page underneath as well to remove all traces.
- Be absolutely sure that you did not make any errors in backing up your seed phrase to permanent storage.
Now you are ready.
Option #1: Destroy your seed phrase copy with fire and water
For all activities related to fire, you should of course carefully take appropriate safety precautions.
It is possible to burn your seed phrase outdoors, but we recommend doing it indoors, since indoor space is more controllable. (Outdoors, you may be more conspicuous, the paper could blow away partially-burned, or worst of all, you could accidentally start a larger fire.)
Indoors, you have a ready-made seed phrase burning area: your kitchen stove. When you are ready:
- Just in case, know where your fire extinguisher is located!
- Survey the area around the stove to ensure that there is nothing flammable.
- Turn on the ventilation fan near your stove to prevent setting off the smoke detector.
- Have a lighter handy.
- Put a metal pan that you will use to contain the burning paper onto the stove.
- Fold your seed phrase paper in half so that it makes a V-shaped "tent."
- Place the folded paper into the pan, pointy side up (as an upside-down "V") - this will allow oxygen to circulate underneath it for a complete burn.
- Carefully light the paper on fire, and wait for the flame to completely consume it.
- Wait for the paper to cool. Crumble the ashes.
- Flush the ashes down the toilet to avoid any chance of reassembly.
Option #2: Destroy your seed phrase copy by shredding and flushing
To destroy your paper seed phrase without fire:
- First, if the words are written with pencil, completely erase them.
- Shred the paper into extremely small pieces, such that even if any letters could still be read, no more than one letter would be shown on any piece. (This could be done using your hands, scissors, or a shredding machine.)
- Flush the shredded pieces down the toilet to avoid any chance of their reassembly.
Your Vault12 Digital Vault is secure and convenient for your seed phrase backup
It is a good feeling to know that your seed phrase is safe and secure without having to keep paper copies lying around. Your Vault12 Digital Vault is the perfect place to store your sensitive digital assets including your seed phrase. Congratulations on being an informed, responsible holder of your own crypto assets.
How to back up your seed phrase on Cryptosteel.
TL;DR (concentrated takeaways)
Backing up your seed phrase to steel plates offers a robust solution that is subject to only a few threats.
Don't give a steel plate vendor your seed phrase to stamp or engrave for you! This is a "DIY" task.
Once created, protect it well from discovery and theft.
Some options are Cryptosteel, Ledger CryptoSteel Capsule, Crypto Key Stack and Hodlinox (engraveable options), ColdTi (titanium), and Billfodl.
When it comes to a decision about how to back up your seed phrase, you have to consider your personal circumstances, and weigh the pros and cons of the many options that exist.
For offline, long-term, cold storage backups, utilizing steel is one of the most secure options. Steel requires no software, is nearly indestructible, and the backup process is completely manual and offline. Furthermore, the steel devices that are on the market today don't look like a seed phrase backup to those not already familiar with crypto seed phrases - this offers a degree of "security through obscurity" that could deter a common thief. (However, you should not rely on that protection! Always keep your backup in a safe or lockbox.)
Steel backups exist in a variety of formats. If you are handy with metalworking, you could even create a steel backup yourself. This review showcases Cryptosteel, which is produced from the original blueprints of the open-source Cryptosteel steel backup solution that was the first metal backup solution on the market. Cryptosteel sells its original model as the Cassette and has since added a Capsule version. Since the blueprint is open-source, the "cassette-type" steel wallet backup solution may be available from a variety of providers. If you consider several different steel backup solutions, consider the quality of each before making a purchase, since the place of manufacture, the grade of steel, and other characteristics may vary.
How is the seed phrase recorded onto the card?
A few companies offer ready-made steel plates, and all you have to do is input your seed phrase onto the steel. Different companies offer different ways of doing this, from sliding metal tiles into locking slots, to engraving, or using a metal punch. If you are handy and have the tools, you can even make a steel plate backup yourself.
There are 2 rules that you must follow if you are considering using metal plates as a backup:
1. Simplicity is the win-win! Some solutions are way too complicated. Fewer pieces = less chance for failure.
2. You should never ever provide the card manufacturer with your private key or seed phrase for "engraving" or whatever process they use. Unfortunately, some reckless manufacturers expose their customers to this severe risk ... pease keep your seed phrase safe by avoiding them.
What risks are steel cards still subject to?
Backing up to a steel plate is great - but don't forget about the importance of keeping that plate in a safe location. There is no "data security" layer present on a steel plate, so it becomes critical to implement steps to prevent unauthorized people from accessing the seed phrase or steel plate.
- Consider encrypting your seed phrase before committing it to steel - that way if the plate is exposed, you still have a layer of protection.
- Keep it in a safe place! If the plate is exposed, then your seed phrase is exposed, and you become at risk of your funds being drained.
Why protect Your Seed Phrase?
In the world of cryptocurrency, you are your own bank, and with great power comes great responsibility. Public blockchain cryptocurrencies are run on open, permissionless systems, where transactions are irreversible. There is no credit card company or bank to call and dispute the charges.
Your seed phrase provides full access to your wallet, and because of this, protecting your seed phrase is critically important. You can think of your seed phrase as equivalent in legacy finance to someone having all of your online banking information. Anyone with your seed phrase can access your wallet, just as anyone with your online banking information can log in to your banking account.
Protecting/backing up your seed phrase serves two purposes: First, it backs up your Wallet, allowing you to reconstruct your wallets in cases of device failure, new devices, etc. Second, it secures your Wallet by preventing bad actors from gaining access to your seed phrase, which would allow them to steal funds.
What is the Cryptosteel
Cryptosteel was the first steel seed phrase backup solution on the market. The concept was developed in 2013, and the blueprints were later released as open-source software. The rectangle block resembles a cassette deck, as suggested by its model name "The Cassette." The frame is a little bigger than a credit card and will fit easily into your pocket (although the pocket is a poor choice of locations for safekeeping).
The purpose of steel backup solutions like Cryptosteel is to safeguard your seed phrase from extreme scenarios. The Cryptosteel Capsule will survive fire up to 1400C/2500F degrees, and the Cryptosteel Cassette up to 1200C/2100F. (For reference, a house fire is around 600C/1100F degrees.) It will survive physical damage from flooding, electric shock, corrosion, magnetic shockwaves, and extreme pressure.
The form of the device does not appear to the untrained eye as a seed phrase backup solution - it appears simply as a block of metal. However, someone who is familiar with the devices will recognize what it is. After you have backed up your seed phrase, choose a proper location for storage, such as a safe or a lockbox.
The device is made from 100% AISI 304 grade stainless steel - the Capsule form also incorporates AISI 303 grade steel - and the company says that it can go undetected by many scanners and metal detectors. Since tech is always advancing, this is not a safe long-term reliance if your objective is stealth and your threat profile involves entities searching your house with metal detectors. If this is the case, embed the device onto a stainless steel object, preferably inside a wall, and your Cryptosteel will become masked and invisible to metal detectors.
How to use the Cryptosteel
When you first open the Cryptosteel, you will notice that the instructions are printed on the inside top of the cardboard box, along with pictures for each step. The device and the engraved steel tiles are neatly embedded into cushions.
0. Cryptosteel Unboxing
Cryptosteel unboxing
Remove the Cryptosteel device from the box, and the plastic container holding the engraved steel tiles. Printed on the box, underneath the plastic container, is an outline that maps out where each letter can be found in the plastic container. Each box shows 2 letters because the engraved steel tiles have one letter on each side.
Do you notice the elongated box in the middle, with numbers and symbols? BIP39 seed phrases do not contain numbers and symbols, but BIP39 does support adding a passphrase to the end of your seed phrase: this is sometimes referred to as the 13th or 25th word. However, the steel wallet only has 24-word options to fill, so if you have a 25th word, it won't fit. If you have a 12-word seed phrase, it will fit.
Cryptosteel outline and steel tiles
Cryptosteel device
1. Setup Cryptosteel
Now that you are familiar with the device and have had a chance to look everything over, let's back up your seed phrase.
Step #1 - "Open the case by sliding upper and lower containers like a fan."
When you first hold your Cryptosteel, the device frame is closed and locked, and it appears as a rectangular block of steel. To back up your seed phrase, first, you need to open the device.
To open the device easily, place your fingers near the top of the device, and slide each side in opposite directions.
Identify the top of the Cryptosteel by looking for the side that has a thin rectangular opening, which separates the two blocks of metal. In contrast, the bottom of the device will be completely closed and solid.
You shouldn't have to push too hard to open the Cryptosteel. If you are pushing hard, you are likely pushing near the bottom of the device.
Opening Cryptosteel
2. Unlock the frame by turning the screw counter-clockwise
Now that the Cryptosteel is opened, notice that the device frame is actually 2 plates of steel, with each steel plate holding 12 words, so that you can store your seed phrase.
The way that you store your seed phrase is by sliding engraved steel tiles into the Cryptosteel and then locking it. By default, the device comes locked. To unlock it, you will need to use a flathead screwdriver, or something similar, to turn a screw counter-clockwise. In our testing, we were also able to use a credit card and a fingernail to turn the screw.
It is easy to identify the screw, because it is the only screw on the device that has an opening to be turned. If you lay the Cryptosteel horizontal, the screw is on the top right.
Unlocking the Cryptosteel
3. Release the safety lever by pressing inside the long slot with a small tool.
Before you can open the frame, you need to release the safety lever. The safety lever prevents you from accidentally opening the frame and having your steel tiles fall out.
To identify the safety lever, look for the thin rectangular opening with a small half-oval inside of it. On the 1-12 word side, it is underneath word 12. On the 13-24 word side, it is underneath word 24.
To release the safety lever, you need to push out the metal piece inside the long slot. It's possible to push it out using your finger, but it's much easier to use something like a screwdriver or similar object.
Releasin safety lever
4. Open the frame while safety lever is released
Once the safety lever is released, you can easily open the frame by sliding it open. When the frame is shut, it protects the steel tiles from falling out by keeping them locked in place. After you have opened the frame, you are ready to start placing your seed phrase in the Cryptosteel.
Opening the frame on the Cryptosteel
5. Insert the slots with the first 4 letters of each word
With the frame open, you will be able to slide the engraved steel tiles into the Cryptosteel. Notice the numbers engraved on the device. It is extremely important to follow the correct order! The Cryptosteel has 3 rows, each with 4 words.
Due to the way BIP39 works, you will only need the first 4 letters of each word. This is because each word of the 2,048 word list has unique first 4 letters. If you have a word that only has 3 letters, feel free to use a steel tile from the numbers and symbols box to represent the "extra" space.
Now, it is time to open the plastic case containing your letters, and put them into the Cryptosteel:
- Identify word 1 of your seed phrase, and identify the position of word 1 on the Cryptosteel.
- Gather the engraved steel tiles of the first 4 letters of your word.
- Insert the 1st letter first, position it in the slot, and slide it to the bottom.
- Insert the remaining engraved steel tiles to complete your 4 letters.
- Repeat the process for the rest of your 12 words.
*If you have a seed phrase that has more than 12 words, keep following this guide till the end, and then repeat the same steps for the second steel block that contains words 13-24.*
Sliding the engraved steel tile into the Cryptosteel
First 4 letters of the first word in the Cryptosteel
When you are finished sliding in the steel tiles, this is what it will look like
6. Close the frame and bend the safety lever back inside the slot
Now that all the slots are filled, the next step is to close the frame and close the safety lever. When doing this step, be very careful to keep the Cryptosteel flat and horizontal. If you tilt it too much, it is possible for the steel tiles to slide out!
Before you can close the safety lever, you have to close the frame. Closing the frame is super-simple: just push it back down into place, and it should naturally fall into place without much resistance.
To close the safety lever, you need to push it back inside the slot. This requires a little more resistance than closing the frame. If the safety lever doesn't want to bend back into the slot, just give it a good push.
7. Lock back the frame by turning the screw clockwise
Recall Step 2, when you had to unlock the frame by turning the screw counter-clockwise? This step is the opposite of that: you are going to lock the frame by turning the screw clockwise.
This is what your Cryptosteel will look like once you have locked the frame
8. If you have a seed phrase more than 12 words, repeat these steps for the other side
The Cryptosteel is made up of 2 steel plates, with each steel plate containing 12 words. You have just completed setting up the Cryptosteel for a 12-word backup ... congratulations!
But what if you have an 18, or 24-word seed phrase? If so, repeat these same steps for the 2nd steel plate to back up the remaining words of your seed phrase.
When you are done, slide the 2 steel plates together so they form 1 steel plate. When finished, it will look like this:
The Cryptosteel, closed and locked
The advantages of using Cryptosteel
Using this method to backup your seed phrase provides protection from destruction via disaster. In today's world, you do not need to look far to see natural disasters happening around the world. From Texas freezing over, to fires in California, Cryptosteel ensures that your seed phrase is protected, and comes out completely intact on the other side.
The ideal solution
Cryptosteel is near-perfect as a long-term backup and storage solution. Since the steel wallet is a physical device, storing it in a safe place that is under your control is crucial. The best place to store the Cryptosteel would be in a safe, lockbox, or cleverly hidden - for example, embedded in a steel object.
The Cryptosteel is not without downsides. For starters, recovering your seed phrase requires physically retrieving the device, which could be tricky, depending on your chosen hiding place.
Today, next-generation digital backup solutions are available that utilize military-grade encryption, providing the same level of security as the Cryptosteel, and incorporating high levels of fault-tolerance and ease of access to your backups. You could choose to have the best of all worlds by using the Cryptosteel to provide protection against disaster and destruction, combined with next-generation tools like Vault 12 for your day-to-day use - with the same level of security.
Back up your Recovery Phrase or add an asset using Vault12.
There are many ways to back up a seed phrase, and here we will show you how you can use the Vault12 Guard app to back up a seed phrase from your preferred wallet.
To back up a seed phrase using the Vault12 Guard app, you will need to complete the following steps:
- Using the Guard app, create and set up a Digital Vault.
- Add an Asset to your Vault, e.g., "Add Web3 Wallet."
- Using the Web3 Wallet, generate your Seed Phrase.
- Using the Guard app, save the Seed Phrase or backup code into your Vault.
Confirm your Digital Vault setup
In order to back up a seed phrase, you must have a working Digital Vault. If you have not created a Digital Vault and assigned Guardians to protect it, you can easily do that by following these instructions first.
After you have created a Vault, from the Guard app's Home screen, add an asset to your vault by tapping on "Add a Web3 Wallet."
Add an Asset to your Digital Vault
Alternatively, you could start from the app's "My Vault" screen, by tapping the Add an Asset button, or the [ + ] button in the upper right corner, and then choosing Web3 Wallet.
Choose your Wallet type
On the next screen, you will be able to choose the wallet vendor you are backing up from (or which you plan to use). By identifying the wallet vendor, it is easy for you to distinguish multiple seed phrases and private keys that you may accumulate in your Vault in the future.
When you select a wallet type, you can choose from all major vendors of software and hardware wallets.
Choose a display format for your Seed Phrase backup
Now, you need to select the format in which you want to store your seed phrase - word-by-word or free-text format. The 'Enter each word" option presents the words in your seed phrase as a formatted list. The "Free-form text" option allows you to enter your seed words in whatever way you choose.
There are also Advanced options in case you want to securely generate a new seed with the Vault12 Guard app, or import your seed backup as a file or as a photo of your paper backup.
Prepare to add a Seed Phrase to your Vault
Create or open your Web3 wallet, and display your seed phrase. Often, right after you set up your wallet, it will ask you to back up your Seed Phrase - this is the best time to add it to your Vault. Confirm how many words your seed phrase contains (for example, 12), and select that option in the Vault12 app.
Carefully enter your Seed Phrase into your Vault
Carefully enter your Seed Phrase into your Vault, word by word, in order, until all words have been entered. You can copy/paste the whole seed phrase if your wallet provides such an option. Be sure to double-check your entry against what you see in your wallet. (You may even want to triple-check! )"Enter each word" option
"Enter each word" option"Free-form text" option
"Free-form text" optionName your Asset, and store it in your Vault
Once you have entered all of the words and clicked the "Done" and "Continue" buttons, you have the option to give your Wallet's Asset a unique name (otherwise it will be stored with the name of the Wallet vendor chosen before).
Also, if you already set up the Guardians for your Vault, there will be a choice between creating an Asset Backup using your Guardians only, or "Guardian Backup + local copy" of the Asset too. Having a local copy might be convenient in case you need regular and prompt access to this seed phrase, however choosing "Guardian Backup only" is more appropriate for cold storage and higher security needs.
Finally, press the "Add to Vault" button, to store the Asset.
Your Vault distributes a Backup of your Asset to your Guardians
After you tap "Add to Vault," the app will bring you to the main "My Vault" screen, showing you the newly added Asset. You can check the status of the backup by tapping on the Asset.
After the seed phrase is stored in your Vault, it will be encrypted, split, and distributed to your Guardians (if you already set up the Guardians for your Vault). In case you choose not to store a local copy, the asset will be locked after distribution to Guardians is complete.
"My Vault" with added Asset
"My Vault" with added AssetAsset Details: Backup status
"Asset Details" and backup distribution statusAccess and unlock Seed Phrase Asset
By default, your Asset will remain locked. To unlock and access your Seed Phrase, check out this article.
Once unlocked, your Asset's Seed Phrase will be temporarily displayed so that you can enter it into a new wallet.
Note: The asset will automatically lock after 2 hours.
Get Started Now.
How-Tos
Articles on crypto security how to's e.g how to secure, back up, and inherit all your cryptoassets such as Bitcoin, Ethereum, crypto, private keys, seed phrases, NFTs, digital art, DAOs, and DeFi tokens.
View all articles
How to access your Recovery Phrase or asset stored in Vault12.
There are many ways to generate and back up seed phrases, and a superb choice is to use Vault12 Guard.
If you used Vault12 Guard to back up your seed phrase, this guide describes how you can access that seed phrase by unlocking your asset.
To access a seed phrase that you have stored in your Vault, you will follow these steps:
- Confirm that your seed phrase is backed up in your Vault, and that your Guardians are active.
- In the Vault12 Guard app, request that the asset be Unlocked.
- Wait for Guardians to confirm your request.
- View the asset.
1. How to confirm your Digital Vault setup?
In order to access your seed phrase or backup code that has been stored in your Vault, first check that you have a working Vault in your Vault12 Guard app, and that your Guardians are available. In general, it is a recommended practice to do a Vault "health check" regularly.
If you don't have a Vault because you changed phones, then you can recover your entire Vault - see instructions for Vault recovery. After recovery, your Vault and its stored assets will again exist on your phone, and you can proceed with these instructions to unlock the stored seed phrase or other asset.
If you have not created a Digital Vault and assigned Guardians to protect it, please follow these instructions (since you did not have a Digital Vault, the new Vault created will be empty).
Are your Guardians active?
Once you have confirmed that your assets are stored in the Vault installed on your phone, ensure that your Vault Guardians are available. You can do this by switching to the "My Guardian" tab from the bottom navigation pane. If all of your Guardians are shown as active, you can proceed to request an Unlock.
If not enough of your Guardians are shown as active, you may want to call your inactive Guardians in advance and ask them to open the Vault12 Guard app on their phone, to refresh the encrypted connection between your apps.
2. How to use Guard to request that your asset be Unlocked?
First, jump to the Vault section of your Guard app by using the bottom navigation pane.
On the "My Vault" screen, you will see your asset inventory, with the current state of each asset shown below its name. As you can see, there may be a variety of different states for the same asset:
- Blue icon - asset has a local copy on the device
- Grey icon - asset only saved with Guardians
- Recovering badge - the asset is requested for Unlock, and Guardians' responses are pending.
- Recovered badge - the asset was unlocked by Guardians, and a local copy is temporarily available.
- Sent to Guardians badge - the newly-created asset is in the process of backup and distribution to Guardians.
To Unlock an asset, choose the asset that you wish to unlock from the inventory list, and tap to open the Asset Details screen.
Then click on the "Recover from Guardians" button.
In the image above, there are two assets in a locked state (with grey icons). Let's unlock one of them (Metamask-wallet.txt) for illustrative purposes.
How do Guardians confirm recovery requests?
When the "Recover from Guardians" button is pressed, all of your Guardians will be notified with your Vault unlock request.
You have significant privacy even from your Guardians, since none of your Guardians can see which assets you are accessing. Your Guardians only see that you requested them to identify you, and they are asked to confirm that you made such a request.
Guardian's in-app notification of your request
As the Vault owner, to see the progress of Guardians' responses, and of your overall recovery request, tap "View Status" in your Vault app.
How do Guardians approve your recovery of the asset?
Here you can see all the details of the Guardians' confirmations progress and the recovery:
- The total number of Guardians requested (by default 3)
- Number of confirmations you need to receive from Guardians to recover (by default 2)
- Guardians' names, and status of their responses.
How to view the recovered seed phrase?
As soon as you have been positively identified by the required number of Guardians, and they confirmed your restore request, your asset will be recovered and available for you to view. You can then tap on "View Recovered Asset" to interact with it. Be careful not to expose your asset unintentionally to observers or cameras!
Do not hesitate to learn more about how to maintain your crypto safely and easily at SecureMyCrypto.org.
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How to Protect Yourself From Impersonators on Telegram
If you do not want to be taken advantage of by scammers, please remember:
- None of the Vault12 team members will ever ask you for money or cryptocurrencies. You should NEVER transfer any to them. We will never ask for you to send your contributions to a wallet address that we provide on Telegram. All crypto transfers related to Vault12 are found in your Vault12 app.
- If it seems too good to be true, it probably is.
- Never give out your personal details, even email addresses on the Telegram chat. If an admin gets in touch with you via a private message, make sure their username (listed below) is correct before engaging in any discussion.
- See this in-depth investigation by the New York Times into Telegram security.
1. Check Your Telegram Privacy Settings
Telegram gives users a number of privacy settings to control information being accessed, e.g. your telephone number. Make sure you've reviewed the settings to hide information that doesn't belong in public.
Telegram Privacy and Security Settings
2. Identify admins
Check if they have "admin" titles beside their names on the Telegram channel member list.
To see the member list, just click on "members" or "info".
Look for the admin or owner tag
3. Check member @usernames to determine if you are talking to the right person
You may get messages from scammers pretending to be team members with their exact same photo/avatar and a very similar username. Please report those accounts to TG so that they get banned.
Just click on the photo/avatar of the person you are talking to, to check their username and compare this with our list of admin usernames:
Official Vault12 team members:
@wasima
@max_vault12
@commagere
@pavlo1
@anastasiapopova
4. SIM Swapping - Another potential attack risk
The other common attack is via a SIM swap, this is where your phone number is ported to another device, followed by account password resets — the recovery codes now being under the control of the criminal. To guard against this you need to implement 2FA with an app such as Authy, and to have your carrier explicitly forbidden to do number ports to new devices without verifying identity. Please see this article for more details: https://www.wired.com/story/sim-swap-attack-defend-phone/
5. Remember these two things
* Do not transfer your funds to addresses received in private messages
* Block and report any suspicious behavior and spam messages — this will help Telegram remove these impersonators.
Join Us on official channels for current updates
Team: https://vault12.com/team
Blog: https://vault12.com/blog
Twitter: https://twitter.com/_Vault12_
Website: https://vault12.com
White Paper: https://bit.ly/vault12-whitepaper
Announcement Channel: https://t.me/Vault12official
Support Channel: https://t.me/Vault12
Wallet Guides
Articles on crypto security how to's e.g how to secure, back up, and inherit all your cryptoassets such as Bitcoin, Ethereum, crypto, private keys, seed phrases, NFTs, digital art, DAOs, and DeFi tokens. Start here to learn the basics about security risks in Web3, and where to learn more about keeping your cryptoassets secure.
View all articlesLedger Stax and Ledger Nano X Wallets: Which is right for you?
When choosing hardware wallets, many crypto users base their decisions on day-to-day asset management needs and perceived device security. However, savvy crypto users first consider a wallet's ability to handle long-term security scenarios. Long-term security includes expected essentials like backup and recovery tools, and also often-overlooked features related to secure and fault-proof third-party recovery. You can think of third-party recovery as your ability to allow crypto assets to be inherited by successors. Successful crypto users require a comprehensive security strategy for the full life cycle of crypto assets. This article will help you achieve that.
Let's jump into helping you understand the pros and cons of the Ledger Stax and Ledger Nano X hardware wallets for day-to-day activities, as well as their potential to safeguard the long-term security and longevity of your assets.
Overview
The Ledger Stax and Ledger Nano X both provide a wide variety of reliable security features and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios. However, several differences are clear:
Ledger Stax
- Mobile-Centric Usability: Designed with mobility in mind, the Ledger Stax features wireless connectivity options like Bluetooth and NFC, making it highly compatible with mobile platforms. Stax also has a longer battery life (up to 10 hours versus Nano X's 5).
- Premium Design: Its unconventionally large display enhances readability, though it comes with slightly slower responsiveness.
- Price Point: Positioned as a premium product, its cost reflects its advanced features and sleek design.
Ledger Nano X
- Mobile-Centric Usability: Offers Bluetooth connectivity — works with or without a cable, at least with smartphones.
- Design: A bit more compact than Stax. User input is via buttons, not touchscreen.
- Price Point: Not so overpriced.
In terms of crypto asset longevity features, such as backup, recovery, and crypto inheritance, both devices provide industry-standard and proprietary options with certain trade-offs, as well as compatibility with third-party solutions like Vault12 Guard for succession planning scenarios.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Approach to comparison
When choosing the best hardware wallet for cryptocurrency security, you may wonder:
- Which is better, the Ledger Stax or the Ledger Nano X?
- How easy to use are these wallets?
- How do their security features compare?
- Do these wallets have vulnerabilities, and have they been hacked?
- What happens if your wallet is lost or stolen?
- How do these wallets accomodate user errors, and complex scenarios like inheritance of crypto assets?
This article compares important characteristics for these two popular wallets. We’ll break down the strengths and weaknesses of each, focusing on security, ease of use, and backup and recovery methods.
By the end of this comparison, you’ll clearly understand which wallet is right for you, as well as how to recover your crypto assets in case of accidents.
What happens if your wallet is lost or stolen?
Wise wallet owners recognize the critical importance of crypto recovery before they find themselves in an unexpected bind! That's why it's important to understand the fundamental topic of crypto asset longevity, including features such as backup, recovery, and inheritance for crypto assets. These considerations are central to long-term planning.
Technical security is paramount, but in the world of crypto, the degree to which backup and recovery solutions are foolproof for users is at least equally important. Here are the backup and recovery options for these two wallets:
How do these wallets handle Crypto Inheritance?
Crypto Inheritance Features
Currently, most hardware wallets, including the Ledger Stax and Ledger Nano X, lack any features for establishing and managing crypto inheritance. This gap presents a challenge for users who want to be sure that their crypto assets can be transferred to their heirs.
Backup and recovery differentiators
Ledger Stax and Ledger Nano X both have similar recovery service Disadvantages:
- The optional Ledger Recover backup service is a paid service provided by three corporations that each hold parts of the user’s seed phrase in a Cloud. This introduces risks, as the seed phrase could potentially be accessed via subpoena; or business partners could terminate agreements or become involved in lawsuits that result in locked data or resources (like, for example, Gemini and Genesis). These scenarios contain multiple potential points of failure, and should be taken into account.
- Very important detail: The terms of the optional Ledger Recover service do not mention support for inheritance, meaning any unfortunate accident related to the user will make crypto assets unrecoverable for his or her successors. Ledger itself suggests using 3rd-party crypto inheritance services for those purposes.
Ledger Stax and Ledger Nano X both have similar recovery service Advantages:
- People have different preferences. If a user is comfortable trusting a bank with their assets, they may also feel confident using Ledger Recover for securing their seed phrase backup (even though Ledger is not providing the entire cloud backup solution).
User holding a mobile phone and using Ledger Stax as FIDO U2F security keyHow easy are these crypto wallets to use?
Let's compare the key aspects of both wallets side by side, and then summarize what really stands out for user convenience:
Crypto wallet user experience differences
Ledger Nano X with Smartphone UXLedger Stax UX Disadvantages:
- The display has a noticeable response delay due to the "E Ink" touchscreen technology, and could be irritating.
- Not all apps are ported to Stax yet. Even the native Passwords app still has no release date identified as of this article's publish date, so check in advance whether your favorite network/coin is supported.
- Extremely expensive. The value in Stax is more about design, rather than practical aspects.
Ledger Stax UX Advantages:
- Huge informative display and "Clear Signing" allows you to review and confirm all transaction details directly on Ledger Stax and in a human-readable language before they are signed and sent. This enhances security and ensures that you see exactly what you are approving in a secure and tamper-proof manner.
- Offers Bluetooth connectivity as well as NFC — works with or without a cable, at least with smartphones.
- Wide support for third-party wallets and dapps, allowing the Ledger Stax to sign transactions directly in MetaMask, Uniswap, and other platforms without relying on Ledger Live software. This is a huge advantage for DeFi users.
Ledger Nano X Disadvantages:
- The display is literally the size of a coin: very uncomfortable to use.
- Requires two-handed operation, making it difficult to use with a phone simultaneously — contrary to some misleading ads.
- The buttons are stiff, making operations cumbersome.
- No NFC.
Ledger Nano X Advantages:
- A bit more compact than Stax while also offering Bluetooth connectivity — works with or without a cable, at least with smartphones.
- Wide support for third-party wallets and dapps, allowing the Ledger Nano X to sign transactions directly in MetaMask, Uniswap, and other platforms without relying on Ledger Live software. This is a huge advantage for DeFi users.
- Not so overpriced.
How do these wallets' security features compare?
Now, we dive deeper into the core specification of every hardware wallet: security features.
| Ledger Stax | Ledger Nano X | |
| PIN-code | 4 - 8 digits | 4 - 8 digits |
| BIP39 Passphrase | Yes | Yes |
| Open-source | Partial | Partial |
| Secure Element | Yes | Yes |
| Multisignature | Yes | Yes |
Crypto wallet security feature differentiators
Ledger Stax and Ledger Nano X both have similar security feature Disadvantages:
- Critical components like the Secure Element and its operating system are closed-source. This raises concerns, especially after the controversial introduction of the Ledger Recover backup service, which challenged the previous assumption that the Secure Element could never transmit the recovery seed phrase outside the hardware wallet.
Ledger Stax and Ledger Nano X both have similar security feature Advantages:
- Includes a Secure Element, giving Ledger devices a strong reputation for withstanding physical attacks. This is important for users who prefer not to complicate their security with BIP39 passphrases, prioritizing ease of use.
- Clear Signing is also a security feature.
Have there been vulnerabilities or hacks of these wallets?
There have been some vulnerabilities and hacks associated with Ledger products in the past — let's consider their "hack history." While relatively secure, most crypto wallets — even hardware wallets — can not provide perfect security, and are routinely subject to malware, supply chain, and firmware vulnerabilities. Here are some recent notable incidents:Ledger Vulnerabilities:
- The Connect Kit Attack (2023): The Connect Kit breach was discovered by the security teams of Ledger.
- Ledger User Data Breach (2020): A major data breach exposed the personal information of thousands of customers, leading to phishing attacks.
- Another User Data Breach (2021): Ledger announced on Twitter that it has been targeted by rogue Shopify team members who exported over 200 merchants’ customer databases.
- Ledger Live (2020): Users were exposed to basic double spending attacks, amplified double spending attacks, and DoS attacks without user consent.
- Potential Supply Chain Attack Vulnerability (2020): Kraken Security Labs Identifies Supply Chain Attacks Against Ledger Wallets.
No software is perfect, and no wallet is ideal. However, some designs have been compromised more than others.
Summary of Ledger Stax and Ledger Nano X Comparison
The Ledger Stax and Ledger Nano X both provide a respectable set of security measures, and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios.
The Ledger Stax is more mobile-friendly, and offers a balance of security and convenience features at a very premium price. It offers an unconventionally large display with delayed response, with the advantage of wireless connectivity options like Bluetooth.
On the other hand, the Ledger Nano X, at a lower price point, is still mobile-friendly and offers a balance of security and convenience features. It offers a small display and uncomfortable input, but still has the advantages of a Secure Element and wireless connectivity options like Bluetooth.
The decision between the two will likely hinge on individual preferences for the target user interface with screen, and should take into account the planned frequency of use.
Whichever you choose, remember to add crypto inheritance to your choice of wallet to ensure the long-term safety of your digital assets. Both the Ledger Stax and Ledger Nano X are compatible with Vault12 Guard Inheritance planning.Vault12 Guard: a decentralized solution for Crypto Inheritance
Vault12 is the pioneer in Crypto Inheritance Management, and delivers an easy-to-use and securemethod for assigning a legacy contact to your crypto wallets. This enables you to pass on your wallet seed phrases and private keys for all types of digital assets to future generations. Vault12 Guard is designed for everyday people, yet strong enough for Crypto OGs.
Vault12 Guard has a uniquely-secure design. Utilizing advanced encryption and decentralized storage, it ensures that crypto assets are not only safe but also transferable under predefined conditions, filling a critical need unmet by most traditional hardware wallets. Vault12 Guard applies a hybrid approach of software fused with the hardware-based Secure Element of phone devices (The Secure Enclave for iOS devices, and Strongbox for Google devices). Vault12 Guard's decentralized design reduces possible points of failure. Nothing is stored on cloud servers or Vault12 servers, and no assets are stored on local devices, making them less of a target.
From a user perspective, the Vault12 Guard app asks users to appoint one or more people (or mobile devices) as Guardians. The designated Guardians are entrusted to protect the user's comprehensive collection of wallet seed phrases and private keys, which are safely stored within a decentralized digital Vault. Its simple, user-friendly workflow removes the necessity for regularly revising wallet inventories or modifying instructions for your lawyers — a process that otherwise could lead to privacy breaches.
Both the Ledger Stax and Ledger Nano X are compatible with Vault12 Guard Inheritance. This addresses the seed phrase backup dilemma for any hardware wallet. It also makes less-secure backup methods, such as paper or steel plates, unnecessary.
MetaMask browser extension
Step 1. What is MetaMask?
MetaMask consists of two main parts: a wallet and a web browser. The wallet supports any token compatible with Ethereum, and the web browser is preconfigured for interacting with dapps and smart-contracts.
MetaMask was first released in 2016, as a browser-extension, by ConsenSys - the first company focused on building decentralized tools and infrastructure. Both MetaMask and ConsenSys have played monumental roles in bringing Ethereum to the mainstream.
It is hard to overstate the effect MetaMask has had on the Ethereum ecosystem. By making dapps and smart-contracts simple and intuitive to use, activity on the Ethereum blockchain has enjoyed consistent growth.
Metamask is an open-source wallet, active development happens on github. The wallet has tons of features, and is constantly being updated and improved.
MetaMask is available as a browser-extension for Chrome, Firefox, Brave, and Edge. In September of 2020, MetaMask released a mobile app for iOS and Android.
Step 2. How can you download MetaMask?
MetaMask is installed as a browser-extension. The process of installing MetaMask involves going to the extension/add-on store for your browser and downloading MetaMask.
- The first step is crucial. Navigate to the official MetaMask website. The only valid URL for metamask is https://metamask.io
- Verify the closed lock to the left of the URL. This signifies you are connected through SSL - an encrypted connection. SSL encrypts data in transit and prevents attacks like phishing, and man-in-the-middle attacks.
- If you do not see the closed lock, exit the page immediately.
How can you prevent phishing attacks when you download MetaMask?
- MetaMask is a target for phishing attacks. Phishing is a way of stealing your credentials, by tricking you into downloading a malicious version of the app you want to download. A common tactic for phishers is to purchase domain names of common misspellings - hoping you make a mistake typing the URL.
- Advanced phishers will install an SSL certificate on their phishing site. For extra verification, click on the closed lock, then click on `Certificate` to bring up the certificate details. Verify that the certificate was issued to https://metamask.io - the only valid URL for MetaMask.
How do you go from the MetaMask download page to your browser's extension store?
After you have verified you are on the correct URL - https://metamask.io - click on `Download` in the upper right corner, or `Download Now` in the main section.
- The MetaMask download page contains the official links to download MetaMask from your web browser's extension store. By following or verifying the links from the official MetaMask site, we can prevent phishing.
- On the MetaMask download page, click on your Web Browser's icon to go to the browsers extension store
Which browser extension or Add-On stores can you use to install MetaMask?
- Chrome Web Store - https://chrome.google.com/webstore/detail/metamask/nkbihfbeogaeaoehlefnkodbefgpgknn?hl=en
- Firefox Browser Add-Ons - https://addons.mozilla.org/en-US/firefox/addon/ether-metamask/
- Microsoft Edge Add-Ons - https://microsoftedge.microsoft.com/addons/detail/metamask/ejbalbakoplchlghecdalmeeeajnimhm?hl=en-US
- Brave Browser (Brave Browser is a Chromium-based browser, it sources add-ons from the Chrome Web Store.) - https://chrome.google.com/webstore/detail/metamask/nkbihfbeogaeaoehlefnkodbefgpgknn?hl=en
Follow the official link from MetaMask to your browser's web store, then click `Add to browser`.
Before installing, you will get a pop-up letting you know MetaMask can access and alter data on any website you visit. Let's go over the details
Why does MetaMask need access to your browser's data?
- Since MetaMask works by connecting your web-browser to an application running on the blockchain, MetaMask needs these permissions to form the connection and establish the flow of data between the blockchain and your web browser.
- To maximize security, consider running MetaMask in a browser profile that only consists of MetaMask. This creates a separation between regular browsing activities and MetaMask activities.
- Click on `Add Extension` and MetaMask will finish installing and open a new tab with a welcome screen. Congrats! You just installed MetaMask browser-extension
Good job on safely installing MetaMask. By verifying the authenticity of the MetaMask download, like this guide shows, a whole range of attacks can be prevented. When doing anything in the world of crypto, having a security mindset is so important. Having a security mindset is the best way to prevent loss of funds or a breach of personal information.
Trust, but verify - This means even if a source is trusted, such as an official website or a trusted community member, you should always take the additional steps to verify the information - no matter what.
You are now ready to move on to the next section. Click on `Get Started` on the welcome screen.
Step 3. How can you create and setup a MetaMask wallet?
MetaMask is a very easy wallet to get started with. No email address or personal identification is required. The process consists of two main steps - creating a password and backing up your seed phrase. You will be ready to explore the world of Ethereum in just a few minutes.
MetaMask supports any token built on the Ethereum blockchain. You might come across terms such as ERC-20 and ERC-721; these are just types of tokens.
ERC-20 tokens are fungible; meaning they are like money - each token represents the same value.
ERC-721 are NFT's, non-fungible tokens - where each token represents a unique digital asset - like a collectible.
On the Ethereum Blockchain, there are a couple hundred thousand tokens in existence. MetaMask includes most of the popular tokens by default.
To add a token, simply tap `Add Token` and search for the token. If your token is not listed, select `Add Custom Token` and input the contract address - MetaMask will then pull the info automatically.
Safely backing up your MetaMask wallet is essential. This guide covers in detail how to securely back up your seed phrase in Section 5. Securely back up your seed phrase.
MetaMask uses BIP39 to generate a seed phrase for your wallet. Your seed phrase will cover every token, address, and transaction generated by your wallet. Think of it as your backup master key. Backing up your seed phrase ensures you will always have access to your funds.
When creating a new MetaMask Wallet, the default method is to create your wallet within the app. The more advanced method is to generate your own seed phrase. We created detailed guides on generating your own seed phrase. By following the right directions, you can generate a seed phrase that is more secure than the default method used by wallets.
If you already have a recovery phrase, proceed to Section 6. Initialize or import seed phrase.
Create a New Wallet in MetaMask
In this section, you are going to create a new wallet in the MetaMask browser extension using the wallet's default method. Let's get started.
To create a new wallet with a new recovery phrase in MetaMask:
- Open the MetaMask extension and tap on `Get Started`. This will bring you to the `Wallet Setup` screen
- On the `Wallet Setup` screen you will be presented with 3 options:
- `Import using seed phrase`
- `Create a new wallet` ← This is the one you want to select
Help us improve MetaMask? Before setting up your wallet, MetaMask wants to know if you want to help contribute to MetaMask development by contributing anonymous data. This is a personal decision for you to make based on your own value system. The data MetaMask wants to collect is anonymous clicks and pageviews.
- The first step is to create your password
- Create a secure password! MetaMask does not have 2FA, so creating a secure password is very important
- Make your password unique, do not reuse an old password
- Consider using a passphrase instead, a sequence of 4 or more random words
- Consider using a password generator and manager, like Bitwarden
- Setup a time frame to rotate to a new password
- Learn how to make secure passwords
- Prepare your Seed Phrase for Backup - Backing up your seed phrase is the most important step in creating a wallet. In this step, you will find your seed phrase and prepare it to be backed up. Section 5. Securely back up seed phrase of this guide focuses on how to safely backup your seed phrase.
- MetaMask will first show you your secret backup phrase, called your `Seed Phrase`, grayed out. Click in the box to reveal your seed phrase.
- There are a few options for backing up your seed phrase mentioned here, only one suggested option is secure enough - backing the seed phrase up on an encrypted medium.
- Remind me later ← Never Select this option.
- MetaMask encrypts data on the client-side, this means your seed phrase is the only method of recovering funds.
- Temporarily write your seed phrase on paper ← Only acceptable with additional safety measures
- Please read Section 5. Securely back up seed phrase, multiple additional steps need to be taken to ensure the safety of funds.
- Store seed phrase in password manager ← Never select this option.
- Your seed phrase should be nowhere near the internet.
- Store seed phrase on encrypted medium← The only good option listed
- There are a few different ways you can safely back up your seed phrase. We have done the research and compiled all the ways to do so in Section B of this guide
- To move on to the next step, you will have to write down your 12-word seed phrase. Click in the gray box to reveal your 12-word seed phrase.
Step 4. How can you verify your recovery phrase?
At this point, you will have a fully functioning cryptocurrency wallet that is able to store, send, and receive cryptocurrency. Before you put funds in your wallet, you need to verify and create a backup of your recovery phrase. Your recovery phrase is the only way to restore access to your funds if you lose access to your wallet - backing up your recovery phrase is a very important step. Before moving on to Section B, you need to find out what your recovery phrase is, so you can back it up.
WARNING: When you follow the steps to find your recovery phrase, you will be writing the recovery phrase on a piece of paper. It is very important that you back up the recovery phrase on a more reliable medium, and then destroy that piece of paper. Paper is vulnerable to accidental loss, theft, and damage. It is not the safest method of backing up your recovery phrase.
- Now you need to confirm you accurately prepared your Seed Phrase for backup. MetaMask will display your 12 words in a random order. Starting with the first word, click on each word in the correct order.
- MetaMask encrypts data on the client-side. This means all data is encrypted locally in your web-browser before being transmitted over the internet. If you lose access to your account, MetaMask cannot help you recover your account
- Pay attention to the piece of paper you have written your seed phrase on. Do not leave this paper anywhere where someone else can find it. It is advisable to destroy the paper after you have backed up your seed phrase.
- Congratulations! Your wallet has been created and is ready to be used. You have also prepared your seed phrase for backup. Read over the advice given on the Congratulations screen and click `All Done` when you are ready.
- Get ready to explore the world of Ethereum. Your MetaMask wallet can store, send, and receive any token on the Ethereum blockchain. MetaMask is more than just a wallet - it's your portal to interact with apps and smart-contracts built on Ethereum.
- Before you put funds in your wallet, you need to create a safe backup of your seed phrase. Your seed phrase is the only way to restore access to your funds if you lose access to your wallet.
You are now ready to proceed to Section 5. Securely back up your seed phrase and securely back up your funds.
Recommended Action: After you securely back up your recovery phrase, it is important to destroy the paper you temporarily wrote your recovery phase on.
Step 5. How can you securely back up your seed phrase?
If you used Vault12 to generate your recovery phrase, your recovery phrase is already securely backed up in your digital vault.
Your recovery phrase is the master key to all of your cryptocurrency funds. BRD Wallet uses BIP39, which is the current industry best practice for generating recovery phrases. The majority of modern wallets today use BIP39. This means your MetaMask seed phrase can be used to access your funds across many different wallets.
Securely backing up your recovery phrase is the most important step in creating a new wallet. To emphasize how important this is, consider how someone with your recovery phrase could access your funds without you knowing.
Imagine a bad actor has your recovery phrase, and you have your BRD Wallet locked down with 2FA, IP address whitelisting, blocked tor access, and all the other security features. The attacker could simply open any wallet application, and import your recovery phrase. The attacker now has access to all of your funds.
We want you to have a secure backup, so this never happens to you.
Nine out of ten wallet providers only mention one way to back up your recovery phrase - by writing the recovery phrase on paper. Wallet providers only mention this paper backup method because it is easy for beginners to do. Paper backups are simply not that secure.
We did extensive research and compiled the best ways to back up your recovery phrase. We cover all the most well-known options, including next-generation options like how to back up your recovery phrase in Vault12.
Once you have safely backed up your seed phrase, you can initialize your wallet using any BIP39 compatible wallet. In the next section, you will learn how you can initialize a MetaMask wallet using your seed phrase.
Step 6. How can you Initialize or import your seed phrase?
If you are following this guide from the beginning, and you created your wallet using the default approach, using the app to `Create a Wallet`, then congratulations! You are ready to start using your wallet.
However, be careful about storing large amounts of funds secured only by a wallet-generated recovery phrase.
If you followed one of our guides for pre-generating a more secure seed phrase, for instance using Vault12, and you want to use that seed phrase with your wallet - this section is for you!
In this section, you will learn how to initialize your wallet using only your recovery phrase. There are 3 main reasons to generate your wallet using this method:
- You lost access to your wallet, and you need to regain access to your wallet and your funds.
- You want to access your wallet and funds using a different wallet app.
- You want the best security, and you generated a recovery phrase using an advanced method.
The Metamask Wallet makes the process super easy and user friendly. Let's get started.
In this section you are going to create a new wallet in the MetaMask browser extension by importing your seed phrase. Let's get started.
To create a new wallet with a new recovery phrase in MetaMask:
- Click on the MetaMask extension and tap on `Get Started`. This will launch the wallet setup process.
- On the `Wallet Setup` screen you will be presented with 2 options:
- `Import Wallet`← This is the one you want to select
- `Create a new wallet`
- Help us improve MetaMask? Before setting up your wallet, MetaMask wants to know if you want to help contribute to MetaMask development by contributing anonymous data. This is a personal decision for you to make based on your own value system. The data MetaMask wants to collect is anonymous clicks and pageviews.
- Enter your seed phrase and create a new password.
- Proceed to type in your 12 word recovery phrase. Any typos, misspellings, or typing the words in the incorrect order will invalidate the process and you will have to start over
- Create a secure password! MetaMask does not have 2FA, so creating a secure password is very important
- Make your password unique, do not reuse an old password
- Consider using a passphrase instead, a sequence of 4 or more random words
- Consider using a password generator and manager, like Bitwarden
- Setup a time frame to rotate to a new password
- Congratulations! Your wallet has been created and is ready to be used. Get ready to explore the world of Ethereum. MetaMask is more than just a wallet - it's your portal to interact with apps and smart-contracts built on Ethereum. Your MetaMask wallet can store, send, and receive any token on the Ethereum blockchain.
- Read over the advice given on the Congratulations screen and click `All Done` when you are ready to start using MetaMask.
Recommended Action: do you have a safe backup of your seed phrase? Your seed phrase is the only way to restore access to your funds if you lose access to your wallet. Review Section 5. Securely Backup Seed Phraseof this guide for compiled information on best practices for secure seed phrase backups.
Where can you read more about MetaMask?
In the world of cryptocurrency, knowledge is your best friend.
Crypto Wallet providers will almost always have their own user documentation, and sometimes they may even have a user community where you can ask questions.
Check out these resources about MetaMask Wallets:
Information about best practices on the topic of security can be scattered all over the internet. We work hard to distill the best practices into one place for you.
Check out these resources about securing digital wallets:
- Benefits of using an encrypted digital vault, like Vault12
- How to back up a seed phrase on paper
- All about RNG's - Random Number Generators and why they are important
Ethereum is home to a rapidly growing ecosystem of dApps, smart contracts, communities, and more.
Check out these resources about Ethereum:
Ledger Stax and Trezor Model T: two strong wallets compared
When choosing hardware wallets, many crypto users base their decisions on day-to-day asset management needs and perceived device security. However, savvy crypto users first consider a wallet's ability to handle long-term security scenarios. Long-term security includes expected essentials like backup and recovery tools, and also often-overlooked features related to secure and fault-proof third-party recovery. You can think of third-party recovery as your ability to allow crypto assets to be inherited by successors. Successful crypto users require a comprehensive security strategy for the full life cycle of crypto assets. This article will help you achieve that.
Let's jump into helping you understand the pros and cons of the Ledger Stax and Trezor Model T for day-to-day activities, as well as their potential to safeguard the long-term security and longevity of your assets.
Overview
The Ledger Stax and Trezor Model T both provide a wide variety of reliable security features and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios. However, several differences are clear:
Ledger Stax
- Mobile-Centric Usability: Designed with mobility in mind, the
- Ledger Stax features wireless connectivity options like Bluetooth and
- NFC, making it highly compatible with mobile platforms.
- Premium Design: Its unconventionally large display enhances readability, though it comes with slower responsiveness included.
- Price Point: Positioned as a premium product, its cost reflects its advanced features and sleek design
- Mobile-Centric Usability: No Bluetooth connectivity. iOS app is view-only.
- General Usability: Smaller set of wallets, coins, and apps.
- Design: The touchscreen and input are very well-thought-out experiences.
- Price Point: More affordable.
In terms of crypto asset longevity features, such as backup, recovery, and crypto inheritance, both devices provide industry-standard and proprietary options with certain trade-offs, as well as compatibility with third-party solutions like Vault12 Guard for succession planning scenarios.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Approach to comparison
When choosing the best hardware wallet for cryptocurrency security, you may wonder:
- Which is better, the Ledger Stax or the Trezor Model T?
- How easy to use are these wallets?
- How do their security features compare?
- Do these wallets have vulnerabilities, and have they been hacked?
- What happens if your wallet is lost or stolen?
- How do these wallets accomodate user errors, and complex scenarios like inheritance of crypto assets?
This article compares important characteristics for these two popular wallets. We’ll break down the strengths and weaknesses of each, focusing on security, ease of use, and backup and recovery methods.
By the end of this comparison, you’ll clearly understand which wallet is right for you, as well as how to recover your crypto assets in case of accidents.
What happens if your wallet is lost or stolen?
Wise wallet owners recognize the critical importance of crypto recovery before they find themselves in an unexpected bind! That's why it's important to understand the fundamental topic of crypto asset longevity, including features such as backup, recovery, and inheritance for crypto assets. These considerations are central to long-term planning.
Technical security is paramount, but in the world of crypto, the degree to which backup and recovery solutions are foolproof for users is at least equally important. Here are the backup and recovery options for these two wallets:
How do these wallets handle Crypto Inheritance?
Crypto Inheritance Features
Currently, most hardware wallets, including the Ledger Stax and Trezor Model T, lack any features for establishing and managing crypto inheritance. This gap presents a challenge for users who want to be sure that their crypto assets can be transferred to their heirs.
Backup and recovery differentiators
Ledger Stax Recovery service Disadvantages:
- The optional Ledger Recover backup service is a paid service provided by three corporations that each hold parts of the user’s seed phrase in a Cloud. This introduces risks, as the seed phrase could potentially be accessed via subpoena; business partners could terminate agreements or become involved in lawsuits that result in locked data or resources (like, for example, Gemini and Genesis); and there are multiple potential points of failure.
- Very important detail: The terms of the optional Ledger Recover service do not mention support for inheritance, meaning any unfortunate accident related to the user will make crypto assets unrecoverable for his or her successors. Ledger itself suggests using 3rd-party crypto inheritance services for those purposes.
Ledger Stax Recovery service Advantages:
- People have different preferences. If a user is comfortable trusting a bank with their assets, they may also feel confident using Ledger Recover for securing their seed phrase backup (even though Ledger is not providing the complete cloud backup solution).
Trezor Model T backup Disadvantages:
- Trezor has a Multishare backup service, but it is fully manual, and challenging to maintain. The user is responsible for generating, distributing, and keeping track of the encrypted shards.
Trezor Model T backup Advantages:
- Trezor does offer a Multishare backup option for those who are able and willing to set it up.
How easy are these crypto wallets to use?
Let's compare the key aspects of both wallets side by side, and then summarize what really stands out for user convenience:
Crypto wallet user experience differences
User holding a mobile phone and using Ledger Stax as FIDO U2F security key
Ledger Stax Disadvantages:
- The display has a noticeable response delay due to the "E Ink" touchscreen technology, and could be irritating.
- Not all apps are ported to Stax yet. Even the native Passwords app still has no release date identified as of this article's publish date, so check in advance whether your favorite network/coin is supported.
- Extremely expensive. The value in Stax is more about design, rather than practical aspects.
Ledger Stax Advantages:
- Huge informative display and "Clear Signing" allows you to review and confirm all transaction details directly on Ledger Stax and in a human-readable language before they are signed and sent. This enhances security and ensures that you see exactly what you are approving in a secure and tamper-proof manner.
- Offers Bluetooth connectivity as well as NFC — works with or without a cable, at least with smartphones.
- Wide support for third-party wallets and dapps, allowing the Ledger Stax to sign transactions directly in MetaMask, Uniswap, and other platforms without relying on Ledger Live software. This is a huge advantage for DeFi users.
Trezor Model T Disadvantages:
- No wireless connectivity: you always have to use a cable.
- iOS is a balance view-only app, so you can't send transactions from iOS.
Trezor Model T Advantages:
- The display is much more convenient to work with on a regular basis, and easy to read.
- The touchscreen and input are very well-thought-out experiences on Trezor Model T — you can use it without any discomfort.
How do these wallets' security features compare?
Now, we dive deeper into the core specification of every hardware wallet: security features.
| Ledger Stax | Trezor Model T | |
| PIN-code | 4 - 8 digits | up to 50 digits |
| BIP39 Passphrase | Yes | Yes |
| Open-source | Partial | Full |
| Secure Element | Yes | No |
| Multisignature | Yes | Yes |
Crypto wallet security feature differentiators
Ledger Stax security Disadvantages:
- Critical components like the Secure Element and its operating system are closed-source. This has raised concerns, especially after the controversial introduction of the Ledger Recover backup service, which challenged the assumption that the Secure Element could never transmit the recovery seed phrase outside the hardware wallet.
Ledger Stax security Advantages:
- Includes a Secure Element, giving Ledger devices a strong reputation for withstanding physical attacks. This is important for users who prefer not to complicate their security with BIP39 passphrases, prioritizing ease of use.
- Clear Signing is also a security feature.
Trezor Model T security Disadvantages:
- Lacks a Secure Element, making it resistant to physical attacks only if a BIP39 passphrase is used. This is a significant drawback in both convenience and its ability to be fault-proof.
Trezor Model T security Advantages:
- Fully open-source software and hardware. This minimizes third-party risks, and avoids any need to rely on trust.
- Allows for longer PIN codes, which might appeal to particularly cautious users.
Have there been vulnerabilities or hacks of these wallets?
There have been vulnerabilities and hacks associated with both the Ledger and Trezor products, however given Stax is very new we will cover it's manufacturer's hacks history.
Far from delivering uncompromised security, these wallets are routinely subject to malware, supply chain, and firmware vulnerabilities. Here are some recent notable incidents:
Ledger Vulnerabilities:
- The Connect Kit Attack (2023): The Connect Kit breach was discovered by the security teams of Ledger.
- Ledger User Data Breach (2020): A major data breach exposed the personal information of thousands of customers, leading to phishing attacks.
- Another User Data Breach (2021): Ledger announced on Twitter that it has been targeted by rogue Shopify team members who exported over 200 merchants’ customer databases.
- Ledger Live (2020): Users were exposed to basic double spending attacks, amplified double spending attacks, and DoS attacks without user consent.
- Potential Supply Chain Attack Vulnerability (2020): Kraken Security Labs Identifies Supply Chain Attacks Against Ledger Wallets.
Trezor Model T Vulnerabilities:
- Ability to Physically Hack Trezor T Wallet (2023): Crypto Security Firm Unciphered Claims Ability to Physically Hack Trezor T Wallet
- Five Reported Vulnerabilities in Two Models of Trezor Hardware Wallets (2019): Ledger’s Attack Lab has found five vulnerabilities in hardware wallets of its direct competitor Trezor.
- Kraken Identifies Critical Flaw in Trezor Hardware Wallets (2020): Kraken Security Labs has devised a way to extract seeds from both cryptocurrency hardware wallets offered from industry leader Trezor, the Trezor One and Trezor Model T.
Summary of Ledger Stax and Trezor Model T Comparison
The Ledger Stax and Trezor Model T both provide a respectable set of security measures, and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios.
The Ledger Stax is very mobile-friendly, and offers a balance of security and convenience features at a very premium price. It offers a big, but unconventional display and with delayed input, but with the advantages of a Secure Element and wireless connectivity options like Bluetooth.
On the other hand, the Trezor Model T, at a much lower price, boasts a fully open-source framework, larger display with colors, and touchscreen interface for enhanced user interaction, but with reduced security and convenience from not having a Secure Element and working only with USB connections the offer sounds non-attractive.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Whichever you choose, remember to add crypto inheritance to your choice of wallet to ensure the long-term safety of your digital assets.
Vault12 Guard: a decentralized solution for Crypto Inheritance
Vault12 is the pioneer in Crypto Inheritance Management, and delivers an easy-to-use and securemethod for assigning a legacy contact to your crypto wallets. This enables you to pass on your wallet seed phrases and private keys for all types of digital assets to future generations. Vault12 Guard is designed for everyday people, yet strong enough for Crypto OGs.
Vault12 Guard has a uniquely-secure design. Utilizing advanced encryption and decentralized storage, it ensures that crypto assets are not only safe but also transferable under predefined conditions, filling a critical need unmet by most traditional hardware wallets. Vault12 Guard applies a hybrid approach of software fused with the hardware-based Secure Element of phone devices (The Secure Enclave for iOS devices, and Strongbox for Google devices). Vault12 Guard's decentralized design reduces possible points of failure. Nothing is stored on cloud servers or Vault12 servers, and no assets are stored on local devices, making them less of a target.
From a user perspective, the Vault12 Guard app asks users to appoint one or more people (or mobile devices) as Guardians. The designated Guardians are entrusted to protect the user's comprehensive collection of wallet seed phrases and private keys, which are safely stored within a decentralized digital Vault. Its simple, user-friendly workflow removes the necessity for regularly revising wallet inventories or modifying instructions for your lawyers — a process that otherwise could lead to privacy breaches.
Both the Ledger Stax and Trezor Model T are compatible with Vault12 Guard Inheritance. This addresses the seed phrase backup dilemma for any hardware wallet. It also makes less-secure backup methods, such as paper or steel plates, unnecessary.
How to choose between the Ledger Stax and Trezor Safe 5 Wallets
When choosing hardware wallets, many crypto users base their decisions on day-to-day asset management needs and perceived device security. However, savvy crypto users first consider a wallet's ability to handle long-term security scenarios. Long-term security includes expected essentials like backup and recovery tools, and also often-overlooked features related to secure and fault-proof third-party recovery. You can think of third-party recovery as your ability to allow crypto assets to be inherited by successors. Successful crypto users require a comprehensive security strategy for the full life cycle of crypto assets. This article will help you achieve that.
Let's jump into helping you understand the pros and cons of the Ledger Stax and Trezor Safe 5 hardware wallets for day-to-day activities, as well as their potential to safeguard the long-term security and longevity of your assets.
Overview
The Ledger Stax and Trezor Safe 5 both provide a wide variety of reliable security features and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios. However, several differences are clear:
Ledger Stax
- Mobile-Centric Usability: Designed with mobility in mind, the Ledger Stax features wireless connectivity options like Bluetooth, making it highly compatible with mobile platforms.
- Premium Design: Its unconventionally large display enhances readability, though it comes with slightly slower responsiveness.
- Price Point: Positioned as a premium product, its cost reflects its advanced features and sleek design.
Trezor Safe 5
- Open-Source Transparency: Built on an NDA-free framework (full disclosure), Trezor Safe 5 emphasizes trust through transparency, appealing to users who value open-source security.
- Simplified Connectivity: Limited to USB connections, it offers reliable functionality for desktop and Android users only.
- Affordable Access: At a much lower price point, it delivers solid security and usability without the premium cost.
In terms of crypto asset longevity features, such as backup, recovery, and crypto inheritance, both devices provide industry-standard and proprietary options with certain trade-offs, as well as compatibility with third-party solutions like Vault12 Guard for succession planning scenarios.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Approach to comparison
When choosing the best hardware wallet for cryptocurrency security, you may wonder:
- Which is better, the Ledger Stax or the Trezor Safe 5?
- How easy to use are these wallets?
- How do their security features compare?
- Do these wallets have vulnerabilities, and have they been hacked?
- What happens if your wallet is lost or stolen?
- How do these wallets accomodate user errors, and complex scenarios like inheritance of crypto assets?
This article compares important characteristics for these two popular wallets. We’ll break down the strengths and weaknesses of each, focusing on security, ease of use, and backup and recovery methods.
By the end of this comparison, you’ll clearly understand which wallet is right for you, as well as how to recover your crypto assets in case of accidents.
What happens if your wallet is lost or stolen?
Wise wallet owners recognize the critical importance of crypto recovery before they find themselves in an unexpected bind! That's why it's important to understand the fundamental topic of crypto asset longevity, including features such as backup, recovery, and inheritance for crypto assets. These considerations are central to long-term planning.
Technical security is paramount, but in the world of crypto, the degree to which backup and recovery solutions are foolproof for users is at least equally important. Here are the backup and recovery options for these two wallets:
How do these wallets handle Crypto Inheritance?
Crypto Inheritance Features
Currently, most hardware wallets, including the Ledger Stax and Trezor Safe 5, lack any features for establishing and managing crypto inheritance. This gap presents a challenge for users who want to be sure that their crypto assets can be transferred to their heirs.
Backup and recovery differentiators
Ledger Stax Recovery Disadvantages:
- The optional Ledger Recover backup service is a paid service provided by three corporations that each hold parts of the user’s seed phrase in a Cloud. This introduces risks, as the seed phrase could potentially be accessed via subpoena; or business partners could terminate agreements or become involved in lawsuits that result in locked data or resources (like, for example, Gemini and Genesis). These scenarios contain multiple potential points of failure, and should be taken into account.
- Very important detail: The terms of the optional Ledger Recover service do not mention support for inheritance, meaning any unfortunate accident related to the user will make crypto assets unrecoverable for his or her successors. Ledger itself suggests using 3rd-party crypto inheritance services for those purposes.
Ledger Stax Recovery Advantages:
- People have different preferences. If a user is comfortable trusting a bank with their assets, they may also feel confident using Ledger Recover for securing their seed phrase backup (even though Ledger is not providing the entire Cloud backup solution).
Trezor Safe 5 Recovery Disadvantages:
- Trezor has a Multishare backup service, but it is fully manual, and challenging to maintain. The user is responsible for generating, distributing, and keeping track of the encrypted shards.
Trezor Safe 5 Recovery Advantages:
- Trezor offers the Multishare backup option for those who are able and willing to set it up.
How easy are these crypto wallets to use?
User holding a mobile phone and using Ledger Stax as FIDO U2F security key
Let's compare the key aspects of both wallets side by side, and then summarize what really stands out for user convenience:
Trezor Safe 5 wallet and desktop software
Crypto wallet user experience differences
Ledger Stax UX Disadvantages:
- The display has a noticeable response delay due to the "E Ink" touchscreen technology, and could be irritating.
- Not all apps are ported to Stax yet. Even the native Passwords app still has no release date identified as of this article's publish date, so check in advance whether your favorite network/coin is supported.
- Extremely expensive. The value in Stax is more about design, rather than practical aspects.
Ledger Stax UX Advantages:
- Huge informative display and "Clear Signing" allows you to review and confirm all transaction details directly on Ledger Stax and in a human-readable language before they are signed and sent. This enhances security and ensures that you see exactly what you are approving in a secure and tamper-proof manner.
- Offers Bluetooth connectivity — works with or without a cable, at least with smartphones.
- Wide support for third-party wallets and dapps, allowing the Ledger Stax to sign transactions directly in MetaMask, Uniswap, and other platforms without relying on Ledger Live software. This is a huge advantage for DeFi users.
Trezor Safe 5 UX Disadvantages:
- No wireless connectivity: you always have to use a cable.
- iOS integration is view-only: you can watch your balance, but can't send transactions from iOS apps.
Trezor Safe 5 UX Advantages:
- The display is easy to read and convenient to use on a regular basis.
- The touchscreen and input are very well-thought-out experiences on Trezor Safe 5 — you can use them without any discomfort.
How do these wallets' security features compare?
Now, we dive deeper into the core specification of every hardware wallet: security features.
| Ledger Stax | Trezor Safe 5 | |
| PIN-code | 4 - 8 digits | up to 50 digits |
| BIP39 Passphrase | Yes | Yes |
| Open-source | Partial | Full |
| Secure Element | Yes | Yes, and it's NDA-free |
| Multisignature | Yes | Yes |
Crypto wallet security feature differentiators
Trezor Safe 5 with a void sticker on it - security seal of genuineness
Ledger Stax Security Disadvantages:
- Critical components like the Secure Element and its operating system are closed-source. This raises concerns, especially after the controversial introduction of the Ledger Recover backup service, which challenged the previous assumption that the Secure Element could never transmit the recovery seed phrase outside the hardware wallet.
Ledger Stax Security Advantages:
- Includes a Secure Element, giving Ledger devices a strong reputation for withstanding physical attacks. This is important for users who prefer not to complicate their security with BIP39 passphrases, instead prioritizing ease of use.
- Clear Signing is also a security feature.
Trezor Safe 5 Security Disadvantages:
- Trezor does not fully rely on open-source software and hardware, but mitigates this limitation architecturally, so that the seed phrase is not touched by any closed-source software on the device.
Trezor Safe 5 Security Advantages:
- Along with this new flagship product, Trezor introduces Secure Element chips, raising the security bar. More importantly, its Secure Elements are "NDA-free," which is good: the chips are not bound by Non-Disclosure Agreements (NDAs) that could restrict Trezor from publicly discussing any security flaws.
- The Secure Element is responsible for verifying device authenticity via secure boot protection, and for storing a part of the secret that is used to decrypt the recovery seed (but it never actually knows what your recovery seed is).
- Allows for longer PIN codes, which might appeal to particularly cautious users.
Have there been vulnerabilities or hacks of these wallets?
Given that both of these products under review are very new, we will examine their manufacturers' histories of hacks. There have been vulnerabilities and hacks associated with both the Ledger and Trezor products.
While relatively secure, most crypto wallets — even hardware wallets — can not provide perfect security, and are routinely subject to malware, supply chain, and firmware vulnerabilities. Here are some recent notable incidents:
Ledger Vulnerabilities:
- The Connect Kit Attack (2023): The Connect Kit breach was discovered by the security teams of Ledger.
- Ledger User Data Breach (2020): A major data breach exposed the personal information of thousands of customers, leading to phishing attacks.
- Another User Data Breach (2021): Ledger announced on Twitter that it has been targeted by rogue Shopify team members who exported over 200 merchants’ customer databases.
- Ledger Live (2020): Users were exposed to basic double spending attacks, amplified double spending attacks, and DoS attacks without user consent.
- Potential Supply Chain Attack Vulnerability (2020): Kraken Security Labs Identifies Supply Chain Attacks Against Ledger Wallets.
Trezor Vulnerabilities:
- Ability to Physically Hack Trezor T Wallet (2023): Crypto Security Firm Unciphered Claims Ability to Physically Hack Trezor T Wallet
- Five Reported Vulnerabilities in Two Models of Trezor Hardware Wallets (2019): Ledger’s Attack Lab has found five vulnerabilities in hardware wallets of its direct competitor Trezor.
- Kraken Identifies Critical Flaw in Trezor Hardware Wallets (2020): Kraken Security Labs has devised a way to extract seeds from both cryptocurrency hardware wallets offered from industry leader Trezor, the Trezor One and Trezor Model T.
Summary of Ledger Stax and Trezor Safe 5 Comparison
The Ledger Stax and Trezor Safe 5 both provide a respectable set of security measures, and support a broad spectrum of cryptocurrencies, making them suitable for diverse crypto portfolios.
The Ledger Stax is more mobile-friendly, and offers a balance of security and convenience features at a very premium price. It offers an unconventionally-large display with delayed response, with the advantage of wireless connectivity options like Bluetooth.
On the other hand, the Trezor Safe 5, at a much lower price, boasts a more open-source and NDA-free framework, a reasonably-sized display with colors, and a touchscreen interface for enhanced user interaction. However, it has fewer convenience features: it works only with USB connections, and is missing iOS integration.
The decision between the two will likely hinge on individual preferences for the target platform (mobile or desktop), and should take into account the planned frequency of use.
Whichever you choose, remember to add crypto inheritance to your choice of wallet to ensure the long-term safety of your digital assets. Both the Ledger Stax and Trezor Safe 5 are compatible with Vault12 Guard Inheritance planning.
Vault12 Guard: a decentralized solution for Crypto Inheritance
Vault12 is the pioneer in Crypto Inheritance Management, and delivers an easy-to-use and securemethod for assigning a legacy contact to your crypto wallets. This enables you to pass on your wallet seed phrases and private keys for all types of digital assets to future generations. Vault12 Guard is designed for everyday people, yet strong enough for Crypto OGs.
Vault12 Guard has a uniquely-secure design. Utilizing advanced encryption and decentralized storage, it ensures that crypto assets are not only safe but also transferable under predefined conditions, filling a critical need unmet by most traditional hardware wallets. Vault12 Guard applies a hybrid approach of software fused with the hardware-based Secure Element of phone devices (The Secure Enclave for iOS devices, and Strongbox for Google devices). Vault12 Guard's decentralized design minimizes possible points of failure. Nothing is stored on Cloud servers or Vault12 servers, and no assets are stored on local devices, making them less of a target.
From a user perspective, the Vault12 Guard app asks users to appoint one or more people (or mobile devices) as Guardians. The designated Guardians are entrusted to protect the user's comprehensive collection of wallet seed phrases and private keys, which are safely stored within a decentralized digital Vault. Its simple, user-friendly workflow removes the necessity for regularly revising wallet inventories or modifying instructions for your lawyers — a process that otherwise could lead to privacy breaches.
Both the Ledger Stax and Trezor Safe 5 are compatible with Vault12 Guard Inheritance. This addresses the seed phrase backup dilemma for any hardware wallet. It also makes less-secure backup methods, such as paper or steel plates, unnecessary.
How to securely set up Trezor Model T
Welcome to the Vault12 step-by-step guide to securely configuring the Trezor Model T, the high-security hardware wallet created by Trezor. This guide will walk you through either creating a new wallet, or initializing an existing wallet by importing a recovery seed.
This guide focuses on the security choices you can make when setting up your wallet; if you are looking for the official setup guide, please click here.
Let's get started.
TLDR;
Hardware wallets are widely considered to be the safest way to store cryptocurrency.
The Trezor Model T is considered to be among the best hardware wallets available on the market.
The Trezor Model T is compatible with multiple 3rd-party software wallets.
The Trezor Model T supports a wide variety of coins and tokens.
This guide complements the official documentation.
Intro to Hardware Wallets
Most cryptocurrency wallets on the market today are software wallets running on computer systems that are connected to the Internet, and this makes sense - the blockchain itself is software, and if you want to conveniently interact with it, a few mouse clicks in a software wallet can quickly execute a transaction. However, a potential threat emerges that is present in all applications: software is hard to keep secure. Not only is the wallet application itself susceptible to attack, but the operating system of the host computer, and even the security of the hardware that runs the operating system can be the target of attack.
This is why specialized secure hardware exists - the smaller the set of tasks that a device performs, the smaller the "attack surface," and the less likely that bad actors can find a way to compromise its security.
No matter which hardware security setup you use, hardware attacks are still possible. For this reason, Trezor recommends using a BIP39 passphrase if you think that you are at risk of physical attacks; however, you must still BACK UP both the passphrase and seed phrase. Similarly, another option provided by Trezor is to use Shamir's Secret Sharing - but the same responsibility exists - you must back up the shards. Vault12 addresses all of these scenarios by providing an easy-to-use back up and retrieval mechanism for passphrases, seedphrases, and shards.
For a software wallet to be secure, the application has to be built without security flaws, the operating system hosting the application has to be hardened (configured to reduce the likelihood of successful attacks), and both the application and the operating system must be kept patched to address any newly-emergent security flaws. Every day reveals new unexpected vulnerabilities discovered by creative hackers. A choreographed team of application developers, system administrators, and network engineers must constantly monitor and defend online applications against security threats.
Hardware wallets have emerged as a solution to these threats. Hardware wallet manufacturers design security features into purpose-built, customized hardware that protect your private keys by keeping them inside the device and permanently isolated from the Internet. No matter what new vulnerabilities are discovered in software, if your private keys are stored in an offline specialized hardware device, your keys are safe.
The Innovation of Trezor
The Trezor Model T is an open-source, fully auditable hardware wallet developed by Satoshi Labs. The team at Satoshi Labs are trailblazers in the cryptocurrency space, making open-source contributions that are in use by thousands of wallets every single day. Among Satoshi Labs' significant contributions are the BIP39 protocol that is the industry standard for wallet generation, and the protocols that determine the wallet derivation paths for native-SegWit and non-SegWit addresses: BIP44 and BIP84.
In fact, in 2012, Trezor released the very first hardware wallet for Bitcoin. The Trezor Model T is the culmination of almost a decade of work on open-source hardware wallets.
The Trezor Model T has a number of security features that are unique, and due to its open-source nature, many other hardware wallets on the market use the source code from Trezor in their products. Satoshi Labs welcomes and fosters this, in the spirit of driving innovation in the open-source model. The approach is working, with hundreds of developers having contributed code to the Trezor ecosystem.
Security features of Trezor Model T
The Trezor Model T builds in a number of security features.
The main threat model of the Trezor Model T is to protect against digital attacks from hackers and malware, which are the most common threats facing cryptocurrency users. Your Trezor Model T protects your private keys, never sharing them or exposing them to any 3rd party.
To achieve this, the Trezor Model T operates on a zero-trust principle. What this means is that by default your Trezor Model T does not trust Trezor Wallet or any 3rd-party wallet. The principle of "Don't Trust; verify" is at the forefront of the design of the Trezor Model T.
When you initiate a transaction from your wallet application, the raw transaction is sent to your Trezor Model T, with a request that the raw transaction be signed. In order for a crypto spending transaction to be broadcast to the blockchain network, it must be signed with the private key associated with the blockchain address that holds the crypto.
Before signing the transaction with your private key and returning it to your wallet application to be broadcast, your Trezor Model T will perform a series of "Don't Trust; verify" checks.
To protect against a compromised wallet, when your Trezor Model T receives a raw transaction, the details will appear on its display. This gives the user the ability to confirm the amount, address, and fee, before signing the transaction. This prevents malware from changing the destination address, or making unauthorized transactions.
In order to sign a transaction, your Trezor Model T will require you to input your PIN code. Your PIN is 1-9 numbers, and is used anytime action is taken involving private or public keys. To protect against brute force attacks, the device wipes its memory after 16 failed PIN attempts. A 9-number PIN has so many possibilities that this guessing attempt limit ensures that no attacker will be able to gain access to your device. This prevents someone with physical access to your wallet and your Trezor Model T from being able to send transactions.
Building on the zero-trust principle, the individual components in the Trezor Model T do not trust each other. The device ships with only the boardloader and bootloader installed, and requires firmware to be installed at the first setup. The main function of the boardloader is to verify the authenticity of the bootloader. The boardloader is write-protected, and has no ability to be altered or upgraded.
Once the bootloader has been verified to be authentic, the device starts up and proceeds to check the authenticity of the firmware. If the firmware is not signed by Satoshi Labs, a warning will be displayed on the screen.
The firmware is the operating system of the Trezor Model T, providing all the instructions and directions. By default, the firmware does not trust incoming transactions from wallets. As described in the above paragraphs, the firmware instructs the device to display the transaction details; amount, address, and fee, and requires the user to confirm accuracy with the PIN code.
To limit the possible attack vectors, the Trezor Model T was built with only the functionality that was needed to perform its task: protecting users' private keys, even if connected to a compromised computer. The Trezor Model T only connects over USB - there is no wifi, bluetooth, or cameras installed on the device.
The Trezor Model T also has a number of security features built in to protect against physical attacks on the device. Physical attacks on the device include when an attacker has physical hands on the device and is able to manipulate the hardware.
When your Trezor Model T arrives, a hologram sticker will be covering the USB port. This holographic strip is ultrasonically welded to the hardware, creating a very strong seal. In order to use the device, the hologram strip must be removed, which leaves a noticeable debris on the hardware. This simple protection prevents bad actors from being able to modify the hardware of a Trezor Model T, and then resell the device to an unsuspecting victim.
To protect against the infamous "5-dollar wrench attack," in which an attacker beats you with a $5 wrench and forces you to unlock your device, the Trezor Model T supports and recommends using BIP39 passphrases.
BIP39 passphrases are supported as an advanced feature that adds an extra phrase to the end of your recovery seed. Using a BIP39 passphrase generates a completely new and separate wallet. This offers a clever way to protect against a$5 "wrench attack." How this works in practice is that you would use wallets generated by BIP39 passphrases, and if an attacker forced you to give up your recovery seed, you would provide the recovery seed - without the BIP39 passphrase. This would open up a dummy wallet that might hold a small amount of cryptocurrency, while your wallets that may hold more cryptocurrency would remain hidden. You can set up BIP39 passphrases in both Trezor Wallet and in Trezor Suite.
Additionally, the Trezor Model T supports multiple advanced security configurations, including:
- Running your own instance of Trezor Wallet, and running your own backend,
- Using the Trezor Model T as a hardware 2FA, similar to Yubikey,
- Configuring a specialized PIN that when entered will completely wipe your device,
- Encrypting the PIN with a microSD card, and
- Using Trezor for passwordless SSH keys, and GPG signatures.
Instead, the team at Satoshi Labs has been building its own open source Secure Element chip, and has created a new company around it called Tropic Square. It is expected to deliver samples next year, and it will likely be included in newer Trezor models.
Compatible Wallets
Due to the open-source nature of the Trezor Ecosystem, many 3rd-party wallets and service providers integrate with the Trezor Model T. In fact, Satoshi Labs maintains an actively-developed API for wallet providers to integrate with Trezor wallets.
When integrating with a 3rd-party wallet, keep in mind that the level of integration will vary from wallet to wallet. Some wallets only provide watch-only wallets, while some wallets are closer to full-featured, such as Electrum and Exodus. It is best to consult 3rd-party wallets' documentation to make sure that the features you need are available.
Below is a non-exhaustive list of wallets that are integrated with the Trezor Model T:
Wallets supporting transactions
- Electrum
- Electrum-DASH
- Electrum-LTC
- Etherwall
- Exodus
- MetaMask
- Mycelium
- MyCrypto
- MyEtherWallet
- Nano Wallet
- Walleth
Watch-only wallets
- ArcBit
- BitWallet
- Blockonomics
- Sentinel
Exchanges and Services
- Bitex
- Bitstamp
- Coinmate
- Coinmap
- Coinpayments
- Cryptee
- Emoon
- Portfolio
- Faa.st
Unboxing your Trezor Model T
If you have not opened your Trezor Model T, do so now. Inside the box, your Trezor Model T includes:
- The Trezor Model T
- A magnetic docking pad
- 1 USB-A to USB-C cable for connecting your Trezor to your computer or mobile device
- 2 Recovery Seed cards
- 4 Trezor Stickers
- A Getting Started guide
The contents of the accessories box
Trezor Wallet and Trezor Suite
The setup process for your Trezor Model T originates on the web. Currently, the official setup procedure involves going to https://trezor.io/start, and connecting your Trezor Model T to your computer via USB.
At the time of publishing in June 2021, Satoshi Labs is in the process of a major upgrade to Trezor Wallet, rebuilding it from the ground up. The new wallet is called Trezor Suite.
Trezor Suite is a desktop application available with enhanced features, including running your own full node, and routing transactions over Tor. It is available for use today in beta mode.
For this tutorial, we will cover setting up your Trezor Model T with trezor.io/start, and how to migrate to Trezor Suite later. (As a bonus, at the end of this guide are the setup instructions for Trezor Suite.)
Let's begin!
Setup with Trezor.io/start
If you want to complete the setup using Trezor Suite, which is currently in beta, the steps outlined below are identical. The only difference is the host application. Vault 12 does not recommend using Trezor Suite until it graduates from beta and is officially recommended by Satoshi Labs.
Alternatively, if you want to use Trezor Suite, Vault 12 recommends setting your wallet up using the official method at trezor.io/start, and then migrating to Trezor Suite. This is the process we will be following in this tutorial.
- Open a web browser and navigate to https://trezor.io/start.
- Verify that the URL is correct: https://trezor.io/start.
- Look for the lock icon next to the URL, indicating a connection over HTTPS.
- Clicking on the lock icon, you should see "Connection secure."
Make sure you see the closed lock
Click on the lock, you should see connection is secure
Now that we have verified we are on a secure URL, we can safely proceed with setting up our Trezor Model T. The first step is to select our device from the available options.
- Select "Trezor Model T" to continue set up.
Select Trezor Model T
After selecting our device, a pop-up will appear on the screen. The pop-up will ask you to verify that the hologram sticker on your Model T is authentic. To help with this, a 3-second video plays on a loop.
The hologram sticker is a security feature of your Trezor Model T that is designed to detect if the device has been tampered with. The hologram sticker is using very sticky glue, and when you remove the hologram a residue will be left behind.
Using the video as reference, look at your hologram and compare it to the hologram in the video. We have also included a picture below that you can use.
After verifying your hologram, remove the hologram sticker.
Click on "Continue to Wallet."
Verify your Hologram
Connect your Trezor
Now that we have verified the hologram on our Trezor Model T, it is time to connect it to your desktop computer or mobile device via USB cable. The Trezor Model T does not support any wireless connections. The only officially supported operating systems are Windows, Mac OS, Linux, and Android. iOS is not supported by Trezor.
iOS is not supported by Trezor. For this reason, it is recommended to not use your Trezor with iOS devices. You are using the Trezor to secure monetary value, and using it with an unsupported operating system comes with inherent risks.
Trezor Model T connects to your web browser using a protocol called WebUSB. WebUSB allows web browsers to securely interface with USB devices. Your web browser should pick up the Trezor Model T automatically, and your browser may ask you for your permission to access your Trezor.
If you are not seeing the Trezor Model T, follow these troubleshooting steps:
- First, connect your Trezor Model T to your device using the supplied USB cable. You will need to use a little bit of force when connecting the USB cable to the Trezor Model T: you should hear a small click when the device is connected.
- You may need to install Trezor Bridge, a compatibility tool for your Trezor.
Connect your Trezor
Trezor Bridge (optional) - How to install Trezor Bridge if USB connection is not successful
If your browser does not automatically recognize your Trezor Model T, you may need to install Trezor Bridge. If you were able to connect your Trezor, you can safely skip this step.
To download Trezor Bridge, scroll to the bottom of the screen and look for the following text:
"Device not recognized? Try installing the Trezor Bridge"
Click on Trezor Bridge and it will bring you to the Trezor Bridge download page.
Trezor Bridge
- On the Trezor Bridge download page, select your operating system and click on Download.
- For Mac OS and Windows, download the PGP signatures.
- For Linux users, the .deb and .rpm files contain the PGP signatures.
Trezor Bridge download
Trezor Bridge (optional) - Verify PGP signatures
Trezor Bridge is signed by Pavlo Rusnak, the co-founder and CTO of Satoshi Labs. For some reason, on the download page for Trezor Bridge, the signature files are provided, however Pavlo's key is not provided, it has to be tracked down.
Tracking a key down across the internet is problematic, as you could download any key, and you have to make your best determination that the key is trustworthy. Whenever this has to be done, it is best to get multiple sources of confirmation that the key is correct.
- First, we will locate Pavlo's GitHub account and verify that he contributes to Trezor.
- Pavlo's github: https://github.com/prusnak.
- From his GitHub, we can see he contributes to Trezor, including to trezord-go, which is the repo for Trezor Bridge.
- From his GitHub, we can see his homepage is https://rusnak.io.
- His PGP key is listed on his homepage here: https://rusnak.io/public/pgp.txt.
- We can verify this further by locating his keybase account, here: https://keybase.io/stick.
- We can verify this even further by locating this twitter post, where he posts his GPG fingerprint: https://twitter.com/pavolrusnak/status/74842941222.
- Download the key, and make sure it is saved as an .asc file.
Next, we have to verify the signatures of Trezor Bridge and make sure they match.
Trezor Bridge (optional) - Verify PGP Signature on Windows
- Download Gpg4win (https://gpg4win.org) - this is a windows utility that installs GPG, a GPG key manager, and configures it all to work across many apps on your Windows.
- For this guide, you do not need to create your own GPG keypair. However, GPG is used a lot and it is good to be familiar with it.
- Verify your download by using the `check integrity` page provided by Gpg4win. The "check integrity" page is where Gpg4win lists its code signatures for each release.
- Open Gpg4win (https://gpg4win.org) and look for the Download button. Below the Download button you will find the check integrity link. You should now be on the URL https://www.gpg4win.org/package-integrity.html.
- In the File Explorer, navigate to the Downloads folder and right-click on gpg4win installer. Follow the path Properties -> Digital Signatures -> Details of Signatures. This will open the signature information.
- Compare the signature data on Gpg4win's check integrity link and the signature data on your Windows device. They should be identical.
- Run the Gpg4win installer. If you have Windows Universal Access Control enabled (it's enabled unless you disabled it) you will be asked to confirm that you want to run Gpg4win. Check the publisher data: the publisher should be "Gpg4win Initiative."
- During installation, you will be asked which packages you want to install. To complete this guide, you will only need GnuPG and a key manager.
- When installation is complete, your key manager, Kleopatra, should start automatically. If it hasn't, open Kleopatra from the start menu.
- In Kleopatra, click on "Import" in the top menu. Select Pavol Rusnak's PGP key that you just downloaded, and import it. After importing, you will be able to see the key listed in your keychain.
- In Kleopatra, right click on Decrypt/Verify in the top menu.
- Select the signature file and click "open."
- A popup will appear with the results. Look for "Good signature from "Pavol Rusnák." This indicates a good, valid signature!
- You might see the text "Undefined trust," or a warning that the key that signed the file is not trusted. If so, this is likely because you have not signed Pavol Rusnak's GPG key with your own GPG key, which lets GPG know that you trust this key.
Trezor Bridge (optional) - Verify PGP Signature on Mac OS
- Download and install GPG Suite (https://gpgtools.org) - this is a Mac utility that installs GPG, a GPG key manager, and configures it all to work across many apps on your Mac.
- For this guide, you do not need to create your own GPG keypair. However, GPG is used a lot and it is good to be familiar with it.
- Verify your download by using the checksum. Checksums are not as secure as GPG signatures, but we don't have GPG yet! So checksum it is.
- On the download page for GPG Suite (https://gpgtools.org) - hover your mouse over "SHA256." SHA256 is the hashing algorithm used to generate the checksum.
- Open the terminal app, found in Applications -> Utilities -> Terminal and run this command, but don't hit ENTER yet!
- shasum -a 256
- Open the folder containing GPG Suite, and drag and drop the application in the terminal - this will automatically fill in the rest. Now hit Enter!
- Your terminal will generate the sha256 checksum. Compare the result to the result on https://gpgtools.org when hovering over sha256.
- Now that you have confirmed that GPGTools is secure, Open GPG Keychain, and import Pavol Rusnak's PGP key that you just downloaded.
- Open your downloads folder, and right click on the Trezor Bridge OSX executable file (.dmg).
- Look for services -> OpenPGP: Verify signature of File and click on it
- A pop up will appear with the results. Look for "Signed by Pavol Rusnak." This indicates a good, valid signature!
- You might see the text "Undefined trust," or a warning that the key that signed the file is not trusted. If so, this is likely because you have not signed Pavol Rusnak's GPG key with your own GPG key, which lets GPG know that you trust this key.
Trezor Bridge (optional) - Verify PGP Signatures on Linux
- Open a terminal and $ cd into your Downloads folder, or whatever folder contains the Trezor Bridge download and Pavlo's GPG signature.
- Import Pavlo's GPG key by running the following commands:
- gpg --import keyname.asc # the name of the saved file
- Verify the Trezor Bridge download by running the following command:
- $ gpg --verify trezor-bridge*.deb # for Debian-based systems
- $ gpg --verify trezor-bridge*.rpm # for RPM-based systems
- You should see good signature from Pavol Rusnak
- Now you can install Trezor Bridge:
- $ sudo apt install /path/to/treorbridge.deb # For Debian-based systems
- $ sudo rpm -i /path/to/trezorbridge.rpm # For RPM-based systems
Install Trezor Model T Firmware
After Trezor Wallet recognizes your Trezor Model T, the first action it will take is to install firmware on your device. Your Trezor Model T ships with no firmware installed. This is by design, and is a security feature. By installing the firmware at device setup, you prevent running outdated firmware.
Warning: If you receive a Trezor Model T and it already has firmware, it is not recommended to use it. Instead, Satoshi Labs wants you to contact them.
- Click on Install Firmware to begin installing the Firmware.
Click on install firmware
Trezor Wallet Creation
When the firmware is finished installing, you will be greeted with "Welcome to Trezor." This is the beginning of the wallet creation process.
- Two options appear on the screen:
- Create a new wallet
- Recover an existing wallet
- Select Create a new wallet by clicking on the green Create Wallet button.
Create wallet
Next, Trezor wants to know how we would like to create our wallet. We are presented with two options:
- Create with Single backup
- Create with Shamir backup
- Click the green button "Create with Single Backup."
Create with Single Backup or Shamir Secret Sharing
Create with Single Backup
The following instructions are for creating a wallet with a Single BIP39 backup.
If you want to create a wallet using Shamir's Secret Sharing, skip this section.
Accept Terms of Service
Before proceeding, you will need to accept the Terms of Service. A pop-up will appear in Trezor Wallet asking you to confirm the Terms of Service by clicking on Confirm on your Trezor Model T.
- Turn your attention to your Trezor Model T, and tap on the green checkmark on the touchscreen to accept the Terms of Service.
Terms of Service
Create a backup
After accepting the terms of service, your Trezor will initialize your wallet. When this process is done, you will notice a yellow bar on the top of the touchscreen that says "Needs Backup."
- Return your attention to Trezor wallet, and click on the orange "Create a backup in 3 minutes" button.
Create a backup in 3 minutes
Before beginning the backup process, Trezor Wallet displays some important information about your seed phrase (they call it the "recovery seed." Read all of the information listed; it will only take a minute. The information mirrors what the Guides listed here on the Vault12 Learn site advise about best security practices.
Also, take notice of the steps listed on the top of the popup. These are the security configuration steps Trezor Wallet is going to walk you through in setting up your device. They are as follows:
- Create backup
- Set up PIN lock
- Name your device
- Bookmark
- Stay in touch
- Read the security best practices overview about backing up seed phrases.
- Check the "I understand and I agree" checkbox.
- Click on the green button that says "Continue."
Good security information
Finish backup on your Model T
Trezor Wallet will be displaying a popup telling you to complete the backup on your Trezor Model T. This is because the rest of the backup process happens on your device.
Here is a high-level overview of the backup process on your device:
- Trezor Model T is going to display your 12-word recovery seed on the touchscreen.
- You will write down your 12-word recovery seed.
- Trezor Model T will quiz you on 3 random words, asking you to select the correct word.
Don't make digital copies of your recovery seed
Write down your recovery seed
- Your 12-word recovery seed will now be displayed on the touch screen.
- In order to see all the words, you will have to swipe in a fashion similar to smart phones. You will notice the arrow says Swipe down, but you really have to swipe up to go down.
- Write your recovery seed down on a piece of paper and when you get to the last word you will see "Hold to confirm."
- Press and hold on "Hold to confirm" to confirm that you have written down your recovery seed.
Writing your recovery seed on paper is not sufficient for long-term backups. Paper is vulnerable to loss, theft, and damage. Your Trezor Model T ships with a "recovery seed booklet" for writing down your recovery seed. However, it is not advised to use this as a long-term method.
Recovery seed words 1-2
Verify your recovery seed
- Select the correct word from the available choices.
- You will do this for 3 random words.
- When you are finished, a Success message will appear on screen. Tap on the green "Continue" button.
Confirm recovery seed
Success! Tap Green button to continue
Success
Good job! You have created and backed up your recovery seed. Now it is time to set up your PIN.
Set your PIN
Good work on backing up your recovery seed - it is important!
Now, you will notice that your Trezor Model T still has the yellow bar across the top, but this time it says "PIN NOT SET!"
Your device PIN works as a passcode to protect your device from unauthorized access. Everytime you want to send funds, change a setting, or any significant action, your Trezor Model T will ask you to input your PIN code to the touch screen.
The device PIN can be anywhere from 1 number to 9 numbers. Let's set up our PIN now.
- Focusing your attention back to the Trezor Wallet, you should see a "Success" message confirming that you have backed up your seed phrase.
- To setup your PIN, click on the green Continue button.
- After clicking Continue, you will be directed to focus your attention back to your Trezor Model T to set up your PIN.
PIN not set
- On your Trezor Model T, the display will be asking you if you want to enable PIN protection. Tap on the green checkmark to confirm.
- Displayed on the screen is a keypad with numbers 0-9. The numbers are displayed in a random order on the screen.
- Using the touchpad, create your PIN. The maximum length of your PIN is 9, and the minimum length is 1.
- When you have created your PIN, tap on the green checkbox.
- Re-enter your PIN to verify it. Notice that the layout of the numbers has changed; make sure you select the correct numbers.
- When successful, your Model T will confirm success on the screen. Tap on "Continue" to proceed.
Enable PIN
Congratulations! You have set up all of the security features of your Trezor Model T, and you can safely begin using it. Notice that when you look at your Trezor Model T, there is no yellow bar across the top of the screen with a call to action.
There are, however, a few setup steps remaining in Trezor Wallet. The remaining steps are very simple and will not take long to complete.
- Focus your attention back to Trezor Wallet, and you will see a "Success" message from creating your PIN.
- Click on the green "Continue" button to proceed.
My Trezor is current name of device
Name your device
The next step is to name your device. The name of your device will appear on your Trezor Model T display underneath the Trezor Logo. Right now, your device is named "My Trezor."
Although this step is technically optional, if you do not name your device, you will see a prompt in your wallet homepage asking you to name your device.
When choosing a name for your Trezor, it is best to choose something uninteresting and nondescript. For example, do NOT select a name such as "My Life Savings," or "Million Dollar Club." For example, we are going to name our Trezor Model T something inconspicuous like "unu1." (This is the initials of Trezor Model T, TMT, but shifted one letter ahead, and for good measure we added the number 1, for wallet 1.)
Why do we do this? It is part of being in a security mindset and taking care of the little things in order to prevent unnecessary risk. Devices can go missing due to loss or theft and end up in the wrong hands.
Consider a situation in which the device was lost, and found by an unethical human. This unethical human plugs in the Trezor Model T and notices a name such as "My Name's Life Savings" or "Million Dollar Club." In this case, the unethical human may decide to track you down and force you to unlock the Trezor and send all your crypto to them.
This situation can likely be avoided by simply naming your wallet something nondescript and not identifiable to you.
- To name your device, click on the green "Continue" button in Trezor Wallet.
- A text area will appear on the screen. Type your device name into the text area.
- Click on the green "Confirm to continue" button.
- Enter your device PIN.
- Your Trezor Model T will ask if you really want to change the name. Tap on the green checkmark to confirm.
- The name you entered in the text area will now appear under the Trezor logo.
Name device
Bookmark Trezor Wallet
Next, Trezor wants you to create a bookmark in your browser to prevent phishing, since the Trezor wallet is a web-based wallet. This is a great idea. By using a bookmark, you can prevent accidental phishing by making a spelling mistake or going to the wrong URL.
- Press Control+D on your keyboard, or use your browser menu to create a bookmark. Every time you visit your wallet, make sure you use the bookmark.
- When you are finished, click on the green "Continue" button.
Bookmark Trezor
The last step in the setup flow is a page that lists Trezor's social media pages. To stay updated with Trezor developments, it is a good idea to bookmark these pages.
- Click on the green "Continue" button.
The final page asks you to keep in touch, and reminds you to keep your recovery seed safe. You can view our detailed instructions on backing up your recovery phrase if you want to learn about your available options.
- Click on the green "Finish" button to complete the setup flow.
After you click on the green "Finish" button, Trezor Wallet will prompt you to enter your email information to receive updates from the Trezor team.
This step is up to you if you feel comfortable sharing this information. For privacy protection, it is worth considering the potential impact to you if Trezor's customer contact database ever had a breach and the email list were to get out. If your email address includes your name, then you would have just let the world know that you own a Trezor. This could put you at risk of receiving phishing attacks via email, or advanced social engineering attacks.
If you want to sign up for email, consider creating a secondary email specific for your Trezor with a non-descript name.
Otherwise, skip this step.
Trezor is set up
Finished Setting Up Trezor Wallet
You are now on the wallet homepage, your device is fully configured, and you are ready to use your new Trezor!
Before you start trading crypto, you might notice "Trezor Suite" in the side menu. Trezor Suite is the future wallet of Ledger (as of this writing, it is still in beta mode), and the setup process that you just completed has positioned you to use the Trezor Suite product soon.
You could choose to download the Trezor Suite beta version now to be prepared, as the current Trezor wallet will be merged with Trezor Suite.
Learn how to download Trezor Suite below (after the section describing how to import an existing recovery seed), or just bookmark the Trezor page for future reference.
Import an existing Recovery Seed
This section is for those who already have a Recovery Seed phrase, whether manually generated or recovered from backup, and are initializing a wallet with it.
The Trezor Model T follows all common industry-standard protocols for blockchain networks, including BIP32, BIP39, and BIP44. If you have an existing BIP39 recovery phrase, you can use it to initialize your wallet with the Trezor Model T.
In addition, the Trezor Model T also supports recovering a wallet using SLIP-0039, which is Satoshi Lab's implementation of Shamir's Shared Secrets.
- To begin, navigate to https://wallet.trezor.io.
- Verify that you are connected over TLS/SSL (using https), and that there are no typos in the URL.
- Select "Recover Wallet" from the Start screen.
Recover wallet
Trezor Wallet is now going to display some information about initializing a wallet from a recovery seed. To protect against insecure computers, your recovery seed will be entered directly into your Trezor Model T, and will not be accessible to the computer.
- Click on the green "Continue" button.
Click on continue
Next, Trezor Wallet wants to know if you are going to be using a passphrase with your wallet. The passphrase refers to a BIP39 passphrase, an advanced feature which not only adds another layer of security, but also creates additional hidden wallets for each passphrase used. This is a feature that can be activated at any time from the wallet settings, so you can safely leave the box unchecked during setup, even if you are using a passphrase.
- Leave the checkbox unchecked, and click on the green "Continue" button.
If you used a BIP39 passphrase check box
The rest of the process happens on your Trezor Model T.
The Trezor Wallet displays a prompt asking you to accept its Terms of Service.
Tap on the green checkmark to accept the Terms of Service.
Terms of Service
We have officially entered what is called "Recovery Mode" on the Trezor Model T. At the top of the display, a yellow bar appears with the text "RECOVERY MODE," and the message that it is safe to eject the Trezor from your computer. This is because in recovery mode, the Trezor Model T remembers your progress, so you can stop and start as you please without having to start over.
Recovery mode is designed for importing existing wallets. Since the entire process happens on your Trezor Model T, it does not have to be connected to a computer to be functional. The Trezor Model T does need a power source over USB. If you have a USB power bank, you can use that instead of a computer and gain a little more security by being completely disconnected from any other computer.
The first step in Recovery Mode is to let your Trezor Model T know how many words are in your recovery seed.
- Tap on the green "Select" button to let your Trezor know how many words are in your recovery seed.
Tap on green button
- Select the number of words that are in your recovery seed.
- The available options are: 12, 18, 20, 24, 33.
- For standard BIP39 recovery seeds: choose 12, 18, or 24.
- For Shamir's Secret Sharing select: choose 20 or 33.
- If you select 20 or 33, the Trezor Model T will automatically recognize you are importing via Shamir's Secret Sharing.
Select number of words
Recover BIP39 Wallet
The following instructions are for recreating BIP39 wallets. If your recovery seed is 12, 18, or 24 words, this is the section for you.
Now it is time to enter your BIP39 recovery seed into your Trezor Model T. To begin, tap on the green "Enter seed" button on the display.
- On the display of your Trezor Model T, letters are in groups of 3. For example, you will see "ABC" and "DEF".
- To select letter "A", tap the "ABC" group 1 time.
- To select letter "B," tap the "ABC" group 2 times.
- To select letter "C," tap the "ABC" group 3 times.
- As you input the letters, the most likely word will appear at the top of the display.
- If the word at the top of the display is correct, you can select it by tapping on it twice. After the first tap, the word will turn green. A second tap confirms your selection.
- Because of how BIP39 works, you will only have to enter the first 3 letters of each word. After entering the first 3 letters, the correct word should appear at the top of the display.
- If you want to backspace, press the yellow Backspace button on the top left of the display.
- When you have finished typing your word, the color of the word will turn green. Tap on it to confirm your word.
- Repeat this process for all of your words.
Type recovery seed
- When you finish entering your last word, you will see a Success message.
- Tap the green button to continue.
Congratulations! You have just initialized a wallet using your BIP39 recovery seed. If your Trezor is not connected to your computer, connect it now and navigate to https://wallet.trezor.io to load your wallet.
Satoshi Labs is in the process of a big upgrade to the wallet experience in Trezor, called Trezor Suite. You can continue to use Trezor Wallet, if you want to learn more about Trezor Suite, go to the next section.
Set up Trezor Suite
Trezor Suite is available as a desktop app available for Mac OS, Windows, and Linux, as well as a Progressive Web App. The easiest way to get familiar with Trezor Suite is to visit the web wallet. However, it is recommended to only use the desktop app for enhanced security.
- To access Trezor Suite, click on the link in the menu in Trezor Wallet, or visit https://suite.trezor.io
This will bring you to Trezor Suite's homepage. From here, you can download Trezor Suite or visit the web wallet. Notice how the green download button for the desktop is front and center, while the button to access the web wallet is up in the top-right corner.
Trezor Suite link is on left-side menu
Download Trezor Suite Desktop
For this guide, we are going to download the desktop app. However, if you want to use the web wallet, the user interface and the steps involved are exactly the same - simply open the web wallet and skip to the next section.
- To download Trezor Suite, use the green "Get Desktop App" button and select your operating system. Trezor Suite supports Mac OS, Windows, and Linux.
- Notice underneath the green "Get Desktop App" button, there are two additional links: "Signature" and "Signing key."
- Download both the "Signature" and the "Signing key." These are used to verify that the download is authentic.
Download Trezor Suite
Verify your Trezor Suite download
Now that you have downloaded your Trezor Suite desktop app and the matching signature and signing key, it is time to verify that the signature matches the expected value. Trezor Suite is signed with the GPG key of the developers. This operation will perform a check to make sure the signature included with Trezor Suite matches the signing key from Satoshi Labs.
Satoshi Labs signs all of their downloads with their company PGP key. The key rotates every year, and can be found at the following link:
https://trezor.io/security/satoshilabs-2021-signing-key.asc
- Download the key, and make sure it is saved as a .asc file.
Next, we have to verify the signatures of Trezor Suite and make sure they match.
Verify Trezor Suite Signature Windows
- Download Gpg4win (https://gpg4win.org) - this is a Windows utility that installs GPG, a GPG key manager, and configures it all to work across many apps on your Windows.
- For this guide, you do not need to create your own GPG keypair. However, GPG is used a lot, and it is good to be familiar with it.
- Verify your download by using the "check integrity" page provided by Gpg4win. The "check integrity" page is where Gpg4win lists its code signatures for each release.
- Open Gpg4win (https://gpg4win.org) and look for the Download button. Below the Download button you will find the check integrity link. You should now be on the URL https://www.gpg4win.org/package-integrity.html.
- In the File Explorer, navigate to the Downloads folder, and right-click on the gpg4win installer. Follow the path Properties -> Digital Signatures -> Details of Signatures - this will open the signature information.
- Compare the signature data on Gpg4win's check integrity link and the signature data on your Windows device. They should be identical.
- Run the Gpg4win installer. If you have Windows Universal Access Control enabled (it's enabled unless you disabled it) you will be asked to confirm that you want to run Gpg4win. Check the publisher data: the publisher should be "Gpg4win Initiative."
- During installation, you will be asked which packages you want to install. To complete this guide, you will only need GnuPG and a key manager.
- When installation is complete, your key manager, Kleopatra, should start automatically. If it hasn't, open Kleopatra from the start menu.
- In Kleopatra, click on "Import" in the top menu. Select the Satoshi Labs 2021 signing key that you just downloaded (satoshilabs-2021-signing-key.asc) and import it. After importing, you will be able to see the key listed in your keychain.
- In Kleopatra, right click on Decrypt/Verify in the top menu.
- Select the signature file and click "Open."
- A pop up will appear with the results. Look for "Good signature from "SatoshiLabs 2021 Signing Key."". This indicates a good, valid signature!
- You might see the text "Undefined trust," or a warning that the key that signed the file is not trusted. This is likely because you have not signed Pavol Rusnak's GPG key with your own GPG key, which lets GPG know that you trust this key.
Good job! You have verified your Trezor Suite download. Install Trezor Suite by running .exe file
Verify Trezor Suite Mac OS
- Download and install GPG Suite (https://gpgtools.org) - this is a mac utility that installs GPG, a GPG key manager, and configures it all to work across many apps on your Mac.
- For this guide, you do not need to create your own GPG keypair. However, GPG is used a lot, and it is good to be familiar with it.
- Verify your download by using the checksum. Checksums are not as secure as GPG signatures, but we don't have GPG yet! So checksum it is.
- On the download page for GPG Suite (https://gpgtools.org) - hover your mouse over "SHA256." SHA256 is the hashing algorithm used to generate the checksum.
- Open the terminal app, found in Applications -> Utilities -> Terminal and run this command, don't hit ENTER yet!
- $ shasum -a 256
- Open the folder containing GPG Suite, and drag and drop the application in the terminal, this will automatically fill in the rest. Now hit Enter!
- Your terminal will generate the SHA256 checksum. Compare the result to the result on https://gpgtools.org when hovering over SHA256
- Now that you confirmed GPGTools is secure, Open GPG Keychain and import Satoshi Lab's 2021 signing key.
- Open your downloads folder, and right click on the Trezor Suite OSX executable file (.dmg).
- Look for services -> OpenPGP: Verify signature of File and click on it.
- A pop up will appear with the results. Look for "Good signature from SatoshiLabs 2021 Signing Key" This indicates a good, valid signature!
- You might see the text "Undefined trust," or a warning that the key that signed the file is not trusted. This is likely because you have not signed Satoshi Lab's GPG key with your own GPG key, which lets GPG know that you trust this key.
Verify Trezor Suite Linux
- Open a terminal and $ cd into your Downloads folder, or whatever folder contains the Trezor Suite download and GPG signature file.
- Import the SatoshiLabs 2021 Signing key (satoshilabs-2021-signing-key.asc) by running the following commands:
- gpg --import keyname.asc # the name of the saved file
- Verify the Trezor Suite download by running the following command:
- $ gpg --verify Trezor-Suite*.AppImage.asc
- You should see a verification of good signature from the SatoshiLabs 2021 Signing Key.
- Now you can install Trezor Suite. The Linux App is an AppImage, so we have to mark it as executable before it can run. (AppImages are programs contained within a single file.)
- Using the graphical interface:
- Right-click the AppImage file and click on Properties.
- Check the "Allow executing file as a program" box.
- Using the terminal:
- Navigate to the folder containing the AppImage (usually the Downloads folder).
- $ cd Downloads
- Change the permissions on the AppImage file to make it executable.
- $ chmod u+x Trezor-Suite*.AppImage
- Navigate to the folder containing the AppImage (usually the Downloads folder).
- Using the graphical interface:
Open Trezor Suite
Now that we have verified our Trezor Suite download, it is time to open Trezor Suite. When you open Trezor Suite for the first time, you will be greeted with a welcome message.
- Click on the green "Let's begin!" button to start the process of setting up Trezor Suite.
Welcome to Trezor Suite
Next, Trezor Suite will ask you if want to opt in to anonymous data collection, which will help to improve the app. This is a personal decision that only you can make. Ask yourself if you are comfortable with your data being sent to Satoshi Labs, the company that develops Trezor, and if you are okay with not being certain with how your data will be used.
- To opt-in to data collection, make sure the toggle is turned on. When the toggle is on, the color is green.
- To opt-out of data collection, make sure the toggle is turned off. When the toggle is turned off, the color is gray.
- To continue, click on the green "Continue" button.
Usage data opt-in
Now Trezor Suite is going to ask if you are setting up a new device, or if you already have your Trezor Model T setup. You will see two options appear on the screen:
- Begin Setup - use this option to set up your Trezor Model T as a new device.
- Access Suite - use this option if you already set up your Trezor Model T.
Trezor Suite setup
One last step before we can access Trezor Suite.
Trezor Suite is going to display a warning. In the warning, Trezor Suite states to only proceed if you set up your Trezor Model T yourself. If anyone else set up your Trezor Model T, do not proceed.
- Click on the green "Access Suite" button.
- Focus your attention on your Trezor Model T and enter your PIN.
- Anytime a wallet wants to access your Trezor Model T, you have to enter your PIN. This is a security feature, and why it is important to set a strong PIN.
click on Access Suite
How to update Trezor Suite
If you decide to use Trezor Suite instead of Trezor Wallet, you will want to regularly check for updates. You can check for updates by following Trezor across social media, or by checking in the app.
In the most recent update to Trezor Suite, the Trezor team has enabled in-place updates. Since Trezor Suite is still in beta, until recently when new versions were released, early adopters had to download the new version and upgrade manually. Since the most recent update, users simply have to click on "Check for update" in app Settings, and the app will update itself.
- To check for an update, access the Settings by clicking on the Settings wheel in the top-right corner.
- In the Settings, scroll to the bottom of the page and look for "Check for updates."
- "Check for updates" is located under "General > Application" in your settings.
How to check for updates
Congratulations!
Congratulations! You have just set up one of the most secure methods of storing your crypto funds. There is a lot of good content around here to learn from, so check out these articles:
- How to back up a recovery phrase
- How to set up a Digital Vault
- How to buy cryptocurrency
- 11 things you need for a safer crypto environment
In crypto, knowledge is essential. The Trezor ecosystem is in very active development and constantly innovating and pushing out updates. Check out these links:
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