Now that you’ve got your hardware wallet, what is next ?
Ok, you’ve bought your first bitcoins, then you’ve secured your crypto on a hardware wallet. But are your crypto that safe. What are the risk of loosing your crypto when they are stored on a hardware wallet ? At least it is better to have your crypto on a hardware wallet than having them on a custodial wallet or on an exchange.
First of all, remember that your crypto are not stored inside the hardware wallet. Only your private key is. Your crypto are still on the blockchain. And the only way to get your crypto back is using your private key.
Then what could go wrong from there ?
You could forget your private key, most of the time in the form of a path phrase of 12 to 24 words. Difficult to remember. So first thing to do is to write it down. Of course, do not store your path phrase on a file on your computer or on your smartphone. Write it down on a piece of paper.
But then you could loose this paper. Remember the story of this German programmer based in San Francisco, Stefan Thomas, who lost the document where he entered his private key years ago and has only two attempts to gain access left. He could have lost nearly 7000 bitcoins worth $ 200 millions.
Your paper could be lost, just like Stephan Thomas, but could also be burnt in a fire or drowned in a flood in your house. So make copies and keep copies in different places. Let say at home, in your car and at your office.
The ink could also fade away with time. So better engrave your path phrase on a card than print it on a paper. This one is not easy. I have my path phrase printed on a paper that I later laminated.
You could also have an accident and loose your memory or, worse, loose your life and die. For that case, I suggest you inform a trustworthy person of where you store your private key. Even so it is always said to never share your private key with anyone, I think it is important to share at least the place where you keep your key : your husband/wife, your kids, you brother/sister, your best friend could be this reliable person. Its your choice …
You could also loose your hardware wallet. But this is not the worse scenario … as long as you have access to your path phrase.
Your datas could also leak from your wallet provider (see Ledger july’20 leak). But, even if it is a real issue, it is not supposed to impact your private key. Your wallet provider does not have, does not know, your private key. Which means that, if you loose your key, your provider can not help.
So when you’ve got your crypto on your hardware wallet, your crypto are safer but you have to go further to make them safer than safe.