Why are hardware wallets more secure?
If you are not familiar with the notion of hardware wallets, you may wonder what would be the advantages versus a paper wallet or an encrypted private key on a computer.
The main principle behind hardware wallets is to provide a full isolation between the cryptographic secrets (private keys) and your easy to hack computer or smartphone. Vulnerabilies of modern PCs and smartphones are well known, and if you keep your private keys there (private key = your bitcoins) it’s just a matter of time before you’ll get hacked and lose everything.
A paper wallet may be secure, but only until you want to use your funds, requiring importing your private keys on your computer. And if you think a password encrypting your keys is enough, malwares are smart enough to wait for the inevitable decryption before sweeping your funds.
Hardware wallets are convenient, affordabe, portable and backuped by a paper wallet allowing an easy recovery in case of loss. If you have any significant amount of bitcoins, using a hardware wallet should be a no brainer.
Why Ledger hardware wallets are even more secure?
Ledger's hardware wallets are architectured around "secure elements" or secure chips. This is the same technology that find in chip and PIN payment cards or SIM cards. These chips bring guarantees against physical attacks and raise the level of security of your private keys.
We come from the security industry (Gemalto, Oberthur...) and we have extensive experience in the field of smartcards and secure embedded OS.
What are the differences with other hardware wallet vendors?
Other hardware wallets do not rely on smartcards and are based on regular microcontrollers. This leads to possible security holes such as side channel attacks, private keys leaks through code exploits and physical key extraction as soon as it is stolen.
What are the differences with cold storage?
Cold storage (such as a paper wallet in a physical safe) can be a very effective solution to secure your bitcoins. The benefit of Ledger Wallet is that it keeps the same level of security but adds convenience. Indeed, cold storage prevents by definition all usage of your bitcoins. As soon as you need to spend them, you'll have to import your private keys on your computer, and you'll have the same security problem if it has been compromised.
What are the differences with software wallets?
The difference, apart from interfaces and functionalities, is that even if your private keys may be stored encrypted on your computer (or cloud service), they must be available in plain text in your computer memory whenever you sign transactions. When your computer is compromised by specialized Bitcoin-targetting malware (and it is just a matter of time), it will be extremely easy for the malware to steal your bitcoins.
What are the differences with vaults or centralized solutions?
Centralized services host your bitcoins. They solve the above-mentioned security issue by assuming total responsibility for security. You give up direct control of your bitcoins in exchange of third-party supplied security, just like you trust a bank for keeping your dollars or euros. It is a very convenient approach, but which needs an alternative possibility for users who wish to retain full control of their assets.
Do I need to open an account with you or pay any subscription?
No. There is no subscription plan or account to be created.
Is my hardware wallet nominative? Can I resell it or give it to someone else?