Welcome to the next part of my series 'How to store your crypto'. This series is all about sharing my insights storing cryptocurrencies in a secure way and hopefully, you won't join the people who have lost crypto due to bad management.
During the previous part, I covered an important lesson that I highly recommend to follow: If you want to keep your software crypto wallet as secure as possible – don’t browse dodgy stuff on the web with the machine you have installed your crypto wallet on. On top, I wrote about the main differentiator between a software and hardware wallet. Additionally, I covered why people have lost crypto in the past and why we want to access our own private keys.
Why is that important in many ways for me?
Compared to a few different software wallets it took a few days for the devs of Ledger to make the adjustments that the Ledger wallet was able to grant access to Bitcoin Cash. Why am I mentioning this here? Although the price skyrocketed later in 2017 the first few people who got their BCH instantly sold them, so the first few days the price of BCH went down. People who had their BTC on a Ledger couldn’t really participate simply as they didn’t have access to the new cryptocurrency. Another good example is the hard fork to Bitcoin Gold. History repeated itself. People who had their Bitcoin stored on Ledger had to wait again for the devs to release an update that owners were able to claim their bitcoin gold. This time the value never really recovered.
But why didn’t people owning a Ledger simply access their private keys manually? You might say that is the whole purpose of having a separate wallet. Guess what? It was NOT possible – you were not able to access your private keys on a Ledger. That is something that didn't make sense to me as you will always have to rely on Ledger and their software to access your cryptos. I am glad that they have fixed this in the meantime.
When I bought my Ledger in 2017, I was quite keen to get my hands on this little piece of hardware. I received the package a few days later, made sure everything was sealed before opening it and started to look at the stuff I got. The installation process was fairly smooth. No difference in comparison to set up a software wallet. I wrote down my recovery seed and sent an initial amount of 0.25 BTC to my Ledger. The main purpose of this initial transaction was to play around with the handling. So far so good.
Suddenly the bitcoin price surpassed $10,000 USD and I thought ok, time to make a decision where I want to hold my BTC. One of my tests to make a decision was to go through a full recovery of my existing wallets. Testing a full backup and recovery on my software wallet was completed as expected without any issues. I could easily spin up a new operating system and install a software wallet from scratch. Importing the recovery seeds worked without any issues. Then I tried to test this for my Ledger. Funny thing there is no way to test a recovery - at least not a confident approach with funds on your wallet.
So why couldn't I test the recovery with a Ledger wallet?
To test a restore of your Ledger wallet you will need a second device. Period! At the time I was keen on trying the restore, I had already different cryptos sent to my Ledger. To test a restore with the same device would have required to send all those to other wallets first. But as I said in November 2017 we were talking about insanely high transaction fees. I calculated all fees and would have been easily able to buy a second device for the fees I need to spend just to empty my wallet for testing purposes. Therefore, if you ever buy a hardware wallet I highly recommend testing a recovery on a hardware wallet after the initial setup before sending any funds to your device.
Nonetheless, that is another big flaw I see in hardware wallets. Imagine, you really lose your wallet. Sure your crypto is protected but you will need to buy another device asap. Do you really want to wait 3-4 weeks to get access to your cryptos which might be worth a 5digit amount in USD or Euro? I don't, that is for sure. And even Ledger itself already noticed that and they simply sell these days a backup pack. Luckily, they have fixed this issue as well in 2020. So there is a tool available that allows you to enter your recovery phrase. Last time I checked it, it wasn't officially supported.
When I got my Ledger in 2017 I had to install Chrome extensions for each cryptocurrency I wanted to store at my Ledger. Luckily, the devs moved away from Chrome extensions and developed their own management software called Ledger Live. I remember that I had to update my firmware on my Ledger at least twice from 2017 to 2019. Updating Bios chipsets or boot loaders is usually something you don't need much technical knowledge. It comes down to developers publishing a reliable patch routine.
Both Ledger firmware updates were quite painful.
The first one crashed in the middle of the process. Then I had to uninstall all apps on my Ledger manually before starting the update again. The second one forced me to recover my Ledger wallet by using my recovery seed. Not a pleasant experience. With the second firmware update, I had to completely uninstall and reinstall Ledger Live as well to get access to my Ledger again. I was not the only one who complained about this experience. Support forum and reddit are pretty much an endless collection of people trying to figure out what is going on during this update. The longer you haven't used your Ledger the worse it seems to be.
Overall, updating software and firmware is quite a clunky experience. In addition with no access to private keys and being less flexible when it comes to backup and recovery, I decided to stick with a software wallet.
Conclusion
So far so good for today. I hope you enjoyed reading my experience with my Ledger back in 2017/18. Do your own research before you rely on a hardware wallet just because you think it comes handier than a software wallet.
Stay safe, leave me a comment if you like.
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