Published on August 25, 2022
Using a Hardware Wallet for NFTs, Crypto, and Digital Assets
Using a hardware crypto wallet — a cold wallet — is the safest way to store your NFTs, crypto, and other digital assets.
7 min read
When it comes to crypto, NFTs, and other digital assets, security and storage are no joke – and a lively topic of debate. The beauty of decentralization is that no central authority controls digital assets, NFTs, and cryptocurrency. The downside — if you consider it a downside — is that each individual is responsible for their own security in Web3. In addition, you don't have a safety net like traditional insured banking. If you mess up a wallet address, you could lose your valuables forever!
Solid security starts with the right crypto wallet. There are many ideas and thoughts on what makes a good crypto wallet, so take some time to read through the options and decide which fits your needs best. Ultimately, though, all serious crypto and NFT investors will want to set up a hardware wallet that exists offline. Here's why.
Why Hardware Wallets?
You thought Web3 was all about going digital? There are still bridges between digital assets and physical reality, and the hardware wallet might be the most important link in the chain. While an NFT marketplace or cryptocurrency exchange provides the arena to buy and sell digital assets, they are not the final destination for digital assets. That key is in your hands, and your assets are only as secure as your wallet.
There are both software and hardware wallets, sometimes called hot and cold wallets. Most software wallets are hot wallets, meaning they are connected to the internet, either as an app or website portal. Cold wallets are not reliant on internet connection and exist as physical hardware like those made by Ledger or Trezor.
Cold hardware wallets are often hailed as the most secure due to their disconnected nature. They are near hacker proof if used with care, including the handling of the private key and seed phrases that every user will generate when they open their wallet. Get familiar with NFT security and protect your assets.
It should be noted that no crypto or Web3 wallet actually holds the digital asset itself. Digital assets always remain tied to the blockchain. However, the private keys provided by wallets lockdown and verify that area of the chain as belonging to you.
While more cumbersome and difficult to access if engaged in high-paced trading efforts, hardware wallets are the smart choice for any investor who knows the worth of what they want to hold for the medium to long-term.
However, hardware wallets have not been known for usage with NFTs. Their popularity reigns with cryptocurrency, but when it comes to non-fungible tokens, it's another story. This is mainly due to the more recent popularity of NFTs. Crypto has been around for a while, but the NFT boom is just taking off. So now hardware wallet usage needs to adapt.
Hardware Wallets & NFTs
Unlike popular crypto tokens like ETH, which exist as ERC-20, most NFTs are ERC-721 tokens (find more information on token standardization here). Like other digital assets, NFTs live on the blockchain, be it Ethereum, Solana, Binance, or other digital, decentralized ledgers such as those. The authentication of an investor's ownership is confirmed through the blockchain, and that proof of ownership along with the asset's image or content can be utilized by the owner – yet the NFT still exists on the blockchain itself.
As mentioned earlier, wallets provide keys that lock around assets you own on the blockchain, to provide extra security and protection for that ownership. In this sense, a hardware wallet can indeed provide that level of protection for an NFT just as it can for cryptocurrencies. However, even major hardware wallets like Ledger can sometimes plague users with error messages that can make it seem like their NFT is not truly there.
Again, one thing to understand is that NFTs will not be displayed on a hardware wallet. These are not designed to be galleries like some hot wallets, exchange accounts, and other dApps are. Yet securing an NFT through a hardware wallet is completely possible.
Simply place your hardware wallet into its receiving mode, and then utilize its public wallet address as the destination when you send your NFT from wherever it currently sits, be it Metamask or another wallet. As long as you still hold knowledge of your private key, the hardware wallet will accept responsibility as the new guardian between your NFT and the chaos of the hackers out there.
Best Hardware Wallets?
While there are plenty of recommended software wallets, from MetaMask to Rainbow, the trusted market for hardware wallets and cold storage is a lot less robust. There are two major companies in this space, and each has its own line of various cold storage wallets for an investor to examine. Those companies are Trezor and Ledger.
The differences between these hardware wallets can seem small, but it's important to choose the best wallet for your exact circumstances. Depending on how an investor hopes to handle their NFT investment portfolio, there could be important distinctions to note. We'll break down the major products in the space today.
Trezor Model T
Trezor is a long-trusted company in the hardware wallet space. Their flagship product is the Model T. Like the best of cold storage wallets, the Model T is designed and programmed so that an investor's sensitive wallet keys should never be exposed to outside access – if used properly. With a useful touchscreen, investors can use the Model T to directly interface with Trezor's open-source software, Trezor Suite, to help manage their digital assets.
Currently, Trezor Suite does not provide functionality for NFTs. However, NFTs can still be protected using the Model T, and the Trezor device itself can interface with outside applications such as MetaMask.
Far cheaper than the Trezor Model T, the One is a favorite of veteran Bitcoin investors. The small device can interface with a wide variety of operating systems, along with Trezor Suite. For newer investors, the compact and flexible Trezor One is a dependable choice for their first foray into NFT collecting.
Ledger Nano S & Ledger Nano Plus
The Ledger Nano S models are some of the most attractive and well-designed on the market. Ledger itself is quickly pulling ahead as the favored hardware wallet manufacturer, with top-of-the-line security chips and wide-ranging support for nearly 2,000 types of tokens, including NFTs. The Nano S, and the larger Nano Plus, both connect with the Ledger Live service that allows for transactions to be completed right from the screen of the device. While the Nano S can only include information from 3 different apps or blockchains, the Nano Plus supports up to 100.
Ledger Nano X
With all the features of the Ledger Nano S and Nano Plus, the flagship Ledger X model also delivers the highest compatibility with different digital asset dApps and marketplaces. For NFT collectors, Ledger Live can be utilized to purchase NFTs using the Ledger X itself. In this way, one can plug the Ledger Nano X into a secure computer, finalize a transaction, and unplug – with the NFT or digital asset securely locked in by the X. Coupled with a beautiful aesthetic that would make Steve Jobs blush, and a sterling reputation with users, the Ledger Nano X might very well be worth the higher price tag than its smaller companions on the Ledger line.
How Secure Is Secure?
Hardware wallets are no guarantee of absolute security, but they are the closest an NFT investor will be able to come. If utilized properly and by users following all recommendations to keep their private keys and seed phrases safe, the nervous and paranoid may finally be able to rest easy.
While none of these hardware wallet options are cheap, the extra USD is worth it to protect your NFTs. Storage and security are concerns just as essential as figuring out the next big blue chip NFT on the market. Without a secure hardware wallet, there may not be a future to your investment at all. So do your research, pick your favorite gadget, and add a dash of the physical and earthbound to your Web3 brew. You'll be glad you did.