The cryptocurrency wallet market is saturated with different wallets of all kinds — some great, some less so. Discerning the differences between the various types and what separates wallets of the same class can be an arduous task.
From paper wallets to software wallets to hardware wallets, the market is highly convoluted to a mainstream user who just got hold of their first crypto assets.
However, as hardware ‘cold’ wallet solutions are the prevailing choice among long-term hodlers and security experts, analyzing how specific cold wallet solutions differ from Ledger — a leading hardware wallet provider — is an excellent method for highlighting important considerations in your wallet choice.
Cold Storage: The Preferred Choice
Cold storage is the preferred storage method for everyone from long-term hodlers and Bitcoin proponents to institutional custody services like Ledger Vault — who holds millions of dollars in funds.
Storage through a hardware wallet is the mechanism of choice because of the physical security layer afforded by decoupling the encrypted USB devices from the Internet. Malicious entities would need to have physical access to the device and subsequently bypass numerous protections like passphrases, PINs, and tampering authenticity signatures on the device.
Hardware wallets mitigate the need for third-party ownership of funds, providing a form of value sovereignty not readily available with fiat currencies. Additionally, cold wallets are improvements over similar non-custodial wallets like software wallets (i.e., full Bitcoin node wallets) and other concepts like Brain Wallets.
Despite a crowded field of competition, a few hardware wallet providers have stood out from the crowd — particularly Ledger. Ledger provides several of the most popular hardware devices including the Ledger Nano X and the Ledger Nano S. Depending on your storage, interface, and cost preferences, both are standards from which other cold wallet products can adequately be compared to give users context on the cold storage wallet market.
Ledger vs. Other Cold Storage Solutions
Regarding security, Ledger stands among the leaders in the cold storage ecosystem with some unique features and long-term considerations for adapting to an evolving market.
First and foremost, analyzing the hardware of a cold wallet is critical. Ledger devices use the tamper-resistant Secure Element (SE) chip for mitigating complex attack vectors and securely hosting applications. SE chips are an improvement over conventional MicroController Unit (MCU) chips that are common among appliances and used in Ledger competing devices
SE chips provide indispensable assurances against physical access to devices, and seeing how cold wallets are not connected to the Internet, is a major security boon for Ledger devices. SE chips are referred to as ‘hardened microcontrollers,’ that reduce attack surfaces by removing the number of interfaces they are compatible with the outside world. The cards protect against physical attacks such as side channel analysis and undergo the EAL5+ certification process to meet strict industry standards.
Another primary advantage Ledger has over other providers is that the company is the only one in the market to provide a proprietary operating system (OS) for their devices — BOLOS. Ledger can manage the processing environment of the SE chip with a custom OS that is designed specifically for securing crypto assets and flexible support of applications.
Ledger even provides Rainbow — a side channel analysis simulation tool for developers to evaluate their applications against side channel attacks.
According to Ledger, more than half of the coins compatible with their devices were developed by third-parties. These applications are rigorously tested and independently separated using the BOLOS system. As a result, Ledger devices support a suite of coins from standalone blockchains to ERC-20 tokens amid utility applications for password management as well.
Many other cold wallet products do not support as many crypto assets as Ledger devices.
Price and other serviceable features of cold wallet providers also help distinguish them from the rest. Ledger is highly popular because of its practical price point for mainstream consumers and offering of multiple devices to suit user needs.
Similarly, Ledger offers custodial vault services via multi-signature authentication with its Ledger Vault. Primarily catering to institutional custodians and asset managers, the Ledger Vault B2B solution is unique to Ledger among other hardware wallet producers. Integrating multi-sig services for asset management merges the key management products into a single platform for administering access control and permissions to business operations.
Among the rapidly evolving market for cryptocurrency cold wallet solutions, Nano remains one of the most popular due to its comprehensive security approach with both software and hardware considerations. Drawing from their custom OS, Ledger can support numerous assets and applications, providing advanced features with a unique UI that cryptocurrency users seek. As the market for wallet solutions progresses, Ledger is poised to remain among the best options available.