Which Technology is the better Security Technology for Cold Storage?
Recently I learned about a second cold storage technology, the seed phrase stored on a credit card-like card making use of NFC to 'talk' with a smartphone wallet. Companies such as Arculus and Tangem offer such wallets. Like most of us, I knew about the technology used by Trezor and Ledger, based on hardware with its own wallet on said hardware.
From UX point of view, I really like the credit card-like seed phrase storage with the smartphone app. Though am wondering if this technology is at least as secure as a Trezor/Ledger wallet. Thus far I wasn't able to find an independent review between such technologies and cold storage wallets. Obviously, Arculus and Tangem claim they have better technology than Trezor and Ledger. But is this true?
Useful links:
- Arculus: https://www.getarculus.com/
- Tangem: https://tangem.com/en/
- Trezor: https://trezor.io/
- Ledger: https://www.ledger.com/
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Good question ! I suspect that for practical day-to-day use, the security on all of these is good enough unless you are storing lots of crypto on them.
In all cases, the biggest security risk is the user. For Ledger, a user could write the seed phrase on paper and then lose it.
But having read the info on Tangem's website, it appears that (unlike Ledger) you don't enter a pin number or anything when you access the wallet. It's just a card scanned by your phone using an app you download from Google Play or the Apple Store. They say it can be read by any device using NFT technology, and that "Like traditional banknotes, therefore, these cards must be physically secure at all times". In other words, if you lose your physical wallet with one of their cards in, and someone knows what it is, all they'd have to do is download the app and take your crypto before you realise it's gone and can get home to use one of your backup cards to get move your crypto somewhere else. To me, that is a huge vulnerability !
Ahhhh the part about no additional security layer in the form of for instance a pin code you mentioned, doesnt seem like the correct approach to secure crypto in cold storage. Although with Ledger and Trezor approach, we’ll have to type in the seed phrase at least one time, perhaps more than once? This makes our seed phrases vulnerable as well when eg keyboard loggers are installed by peeps wanting to steal funds. Although I suspect with Trezor and Ledger it’ll not be as easy for hackers to install keyboard loggers as this is possible on laptops and desktops used for other means than just crypto.
Thanks for your insightful response.
I don't know about Trezor, but with Ledger you'd only need to type the seed phrase in if you had to initialise a new Ledger device (as a backup one, or as a replacement if you lose or damage the original one). I'm not sure if you'd need to do that if you had to re-install Ledger Live on a new PC, but I don't think so; as far as I know, everything is driven by a combination of plugging the Ledger device into the PC and entering the PIN into the device (thus not needing to use the PC keyboard).
I'm sure any device can be hacked with enough expertise and determination, but Ledger seems the best for security to me so far !
Edit to add: as long as you don't sign up to the awful recovery service they announced recently !
I heard about the centralised key storage option. Not that good, espacially since we’ve seen LastPass hack not too long ago; The one of last year or early this year I mean.
Looks like Ledger handles the seed phrase thing in a highly secure way. Great the seed phrases is rarily needed. Makes that part as safe as possible. What Ledger do you advise?
You think Ledger is more secure to Trezor?
To be honest, I went for Ledger rather than Trezor because it was when I was first getting into crypto and the devices were cheaper at the time. In terms of security and the way they work, they both seem very similar, so it really seems to come down to preference.
I use the Ledger Nano, because it's all I need. The Ledger X is better if you want to store a large variety of different coins & tokens, but is a little more expensive.
Thanks for the advise 🙇♂️