The Ledger Nano S is Ledger’s newest Bitcoin hardware wallet.
The Ledger Nano S is different than Ledger’s other two hardware wallets—the Ledger Nano and Ledger HW.1—because it has a screen.
The Ledger Nano S is priced in euros at €58, which is about $65 USD.
The real question is: does the S’s lower price tag come with any security tradeoffs?
Before jumping into the S’s security, it’s important to understand why a screen is so vital to hardware wallet security.
The first reason a screen is important is because when you setup a hardware wallet, you will need to write down a 24 word seed. This seed is a backup of your wallet.
Once your wallet has been setup and bitcoins are sent to your hardware wallet, anyone who has access to this seed can gain control of your bitcoins. So what does this have to do with a screen? Well, if a hardware wallet has no screen then it must use your computer’s display to show the 12/24 word seed. In the slight chance that some hacker could view or see your screen, the hacker would also have access to your seed and bitcoins.
Since the Ledger Nano S and other hardware wallets have screens, they just display the seed on the hardware wallet’s screen. This makes it almost impossible for a hacker to get access of your seed upon setup.
The second reason a screen on the Nano S or any hardware wallet is important is because it acts as additional verification before sending payments. The screen makes it easy to confirm that the payment you’d like to send is for the correct amount and to the right address.
Like the TREZOR, the S also has two physical buttons which add to its security. In order to confirm payment you need to physical press both buttons at the same time. This makes it so no hacker could hack into your device and confirm a payment.
The Ledger Nano S also requires the user to create a PIN code on setup. The PIN code helps prevent the loss of bitcoins in the case that your Nano S is lost. A stranger would not be able to send bitcoins from your Nano S because he/she would not know your 4 digit pin code. After three incorrect guesses of the pin code the device wipes itself.
Let’s get back to the main purpose of a hardware wallet. It stores your keys in its offline, secure environment. Bitcoins and private keys stored on an online computer are easy target for hackers. When you use a hardware wallet, which stores your bitcoins offline, then your coins are stored offline and out of reach from hackers.
One feature that the Nano S lacks is passphrase support. Put simply, passphrase support lets you add custom text onto your 24 word seed. As we mentioned early, if anyone gets access to your backup seed they also have access to your bitcoins. A passphrase prevents this because in addition to the 24 word backup seed, a thief would need the seed plus the passphrase used to create the wallet, which is memorized by the wallet’s creator. The good news is, Ledger plans to add this feature to the Nano S soon.
The Nano S also does not run on a battery, meaning when it is not plugged in it is completely offline and turned off.
What’s in the Box
The Ledger Nano comes nicely packaged and includes the following items:
- Ledger Nano S
- 1 micro-USB cable
- Lanyard for wearing device around neck
- One keychain and key ring
- Recovery sheet for writing down seed
Setting up the Ledger Nano S is actually quite easy. First, plug it into your computer to turn it on. You’ll need a micro-USB cable.
You’ll be asked to create a four-digit pin code using the device’s screen. You can slide the numbers higher or lower using the buttons. Once you reach the desired number, press both buttons at the same time to select the next number. You’ll then have to repeat this process to confirm your pin code.
After you’ve set a PIN code, you’ll be asked to write down the Ledger’s 24-word recovery phrase. Words will show up one at a time, just click the right button to see the next word.
The Nano S will then ask you to confirm your seed by asking for two random words of your seed. If, for example, it asks for the 10th word of your seed, scroll through the words and press both buttons when you see the 10th word of your seed.
If you have the Ledger Chrome application installed you can now access your wallet. On your Ledger Nano S’s screen scroll through the options and press both buttons on the “B” icon that says “Bitcoin”.
Once you do this you should now see a wallet interface in the Ledger Chrome app. And that’s it! You can now receive payments to your Ledger Nano S.
The Ledger Nano S can actually be setup without even being plugged into a computer. You can completely setup the device from its screen, which means no wallet will be able to see your IP address upon setup (if you setup plugged into regular wallet outlet).
Once setup, the best wallet option for privacy to use with Ledger is Electrum on desktop, or Mycelium on Android.
The Open Bitcoin Privacy Project ranked Ledger’s wallets as the most private Bitcoin wallet in their 2016 report.Buy a Ledger Nano S