Hardware wallet 101: Safeguarding your crypto

Jonathan G.

As the adoption of crypto continues to accelerate, so does the importance of individual security measures.

Unlike traditional banking systems with centralized protections, crypto users must take responsibility for safeguarding their assets against cyber threats, hacking attempts, and theft.

The best way to do so is by using a dual setup, consisting of a Phantom wallet and a hardware wallet—offering a balance between convenience and robust protection.

In this guide, we'll take a closer look at the importance of hardware wallets and how you can leverage them with the help of Phantom to avoid potential loss of funds.

The importance of hardware wallets

Hardware wallets have become indispensable tools in crypto.

These specialized devices, resembling USB drives, offer a robust solution for safeguarding both private keys and digital assets by keeping them offline—significantly minimizing exposure to online threats such as malware and phishing attacks.

And when users want to sign transactions with their hardware wallet, they only need to connect it to a computer or smartphone for a short period of time to complete the process, ensuring peace of mind in an increasingly complex crypto landscape.

Popular hardware wallets

Several reputable brands dominate the hardware wallet market, each with their own unique features:

Ledger: Known for its sleek design and support for a wide range of cryptocurrencies. Ledger offers three main models: the Nano S, the more advanced Nano X, and Ledger Stax — the most advanced and customizable solution.
Trezor: One of the first hardware wallet brands, Trezor is praised for its open-source firmware and user-friendly interface. They offer the basic Trezor Model One and Trezor Safe 3, as well as the premium Trezor Safe 5 with a color touchscreen.
Keystone: The products feature a large display for easy verification of transaction details, as well as a self-destruct mechanism against side-channel attacks.

Dual setup: Software wallets and hardware wallets

While hardware wallets offer significant security advantages, they may not always be convenient for frequent trading or small transactions.

As such, a best practice for on-chain activities is to combine the use of software wallets with hardware wallets.

This approach allows you to keep the majority of your crypto assets offline and secure in your hardware wallet, while maintaining a smaller amount in software wallets for day-to-day transactions or trading.

A couple things to consider:

Wallet setup: We suggest starting a dual setup with both a new software wallet and hardware wallet. When you create a software wallet, connect and link it to your hardware wallet (e.g. Ledger) before you do anything else. By doing so, you can be sure that the connection between your software and hardware wallets is safe and has not been tampered with.
Asset management: When you buy digital assets that you'd like to hold long term, you should regularly transfer them from your software to your hardware wallet. By doing so, you disconnect your digital assets from the Internet. Now, if your software wallet is hacked and the perpetrators want to “drain” it, i.e. steal your digital assets, they can’t.‍
Wallet operations: **Always create multiple software wallets for multiple use cases: trading, minting NFTs, and when using/testing new platforms and apps, especially when they’re still in alpha/on devnet.

By carefully considering these factors and implementing a combined software and hardware wallet strategy, you can enhance your overall operational security (OpSec) setup while maintaining flexibility for various on-chain activities.

How to set up a Ledger Nano with Phantom

As a software wallet, Phantom offers a seamless integration with hardware wallets such as Ledger, providing you with an additional layer of security for your on-chain activities.

By connecting a Ledger device to Phantom, you can enjoy our user-friendly interface and features while benefiting from the enhanced protection of cold storage—offering a best-of-both-worlds solution.

If you'd like to connect your Ledger Nano with Phantom, read our setup guide.

Get involved in the Solana ecosystem

Solana has rapidly gained popularity as one of the leading blockchain platforms, known for its high-speed, low transaction costs, and silly memecoins.

If you'd like to dive into the Solana ecosystem, here are some guides to get you started:

How to bridge tokens to Solana with Phantom?

If this is your first time using Solana, you might have most of your assets on other blockchains, such as Ethereum and Polygon. With our Cross-Chain Swapper, you can bridge tokens across Ethereum, Solana, and Polygon right in your Phantom wallet. Here’s how:

Disclaimer: This guide is strictly for educational purposes only and doesn’t constitute financial or legal advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.