First and foremost, there are several different ways to classify wallets:

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• Custodial wallets Most exchanges and web wallets . You do not own any Bitcoin but "IOUs". (legally you own the bitcoin but practically you don't as the law will not help you in most cases and can and often will be used against you) You have little privacy and your bitcoin is in control of someone else that has their own private keys/seeds which you do not have that reserve your Bitcoin. The bitcoin you own might not exist or may be fractional as well diluting the supply of Bitcoin and decreasing the ability of your investment to appreciate in value. Keeping bitcoin in exchanges also makes Bitcoin more insecure as a whole from attacks and theft.

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• Non - Custodial wallets You have the Bitcoin in your private wallet and no one knows your privatekey/seed backup but you. You actually own your own Bitcoin.

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• Hot wallet - wallet connected to the internet.

Examples - mobile wallets , web wallets , wallets in exchanges, desktop wallets

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• Warm wallet - wallet indirectly connected to the internet but a piece of hardware tries to isolate the private keys and transaction signing

Examples - hardware wallets. wallets like cold card with PSBTs offer slightly better security than other HW wallets when used correctly

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• Cold wallet - wallet not connected to the internet

Examples - paper wallets(all new paper wallets should use 12-24 seed words instead of private keys), offline laptop that never connects to the internet with a wallet, , hardware wallets (ledger, trezor) not connected to the internet

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Cold wallets can be physical devices like Ledger or Trezor, but why are Hardware Wallets superior?

There is a single reason for this:

Your seed phrase will never be on a device connected to the internet.

This means:

• No spyware vulnerability
• No keylogger exposure
• No exposure to clipboard malware
• No risks of scam websites/apps asking you to enter it
• No trace of that sequence of words ever existing
• No exposure to the hot wallets apps that generate them
• No risk of your seed phrase being sent somewhere over the internet
• No risk of whoever has access to your device misusing all your crypto
• No exposure to theft (if your phone/laptop get stolen)
• No risk of viruses targeting browser extensions reading your info

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Now that we know what is a cold wallet and why they are superior when it comes to security, how do we decide between them? Is there any diference?

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Trezor is a hardware wallet providing advanced security for handling Bitcoin and other cryptocurrencies private keys.

Unlike traditional cold storage methods (offline storage or paper wallets), Trezor makes secure payments without exposing your private keys to a potentially compromised computer.

It is designed to protect your private keys from possible online and offline risks. To do this, Trezor keeps the private keys away from the Internet and confirms the transactions in-device. That way, you can always check the screen for the right address, amount and transaction fee before sending your bitcoins. In layman's terms...you can connect Trezor to an infected computer and still be able to have 100% control over the funds in your device.

Ledger wallets are USB storage devices that hold multiple currencies offline. It stores your private keys on the device, making it difficult for online hackers to access your accounts. If the physical device is stolen, users rely on a 24-word backup recovery phrase to access stored cryptocurrencies.

Conducting transactions using cryptocurrencies requires the use of cryptographic private keys. But these keys, which are generally stored online, are susceptible to thefts and hacks. Ledger holds private keys offline. These wallets are device-based, which means they use storage mechanisms (like USB drives) to store private keys, thereby making it difficult for hackers to access them from an online location.

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In my opinion they’re both good. I use a Trezor because it’s open source, which means that I do not need to ‘trust’ Trezor, instead I can trust the fact that the community has attacked the device in every conceivable way, and has not obviated it.

In general open source > closed / proprietary. That said, Ledger is also a solid company with a great rep, so I’d say you’re fine to use them too. For most, it’s more a matter of which GUI or form factor they prefer.

One common misconception is that if the company behind the hardware wallet disappeared it would mean the crypto in the wallet would be lost, this is not true. If either company goes out of business, you will be able to ‘restore’ your wallet on a different device using the seed phrase, at which point you should wipe your old device and destroy it. Very unlikely though.

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I personally knew someone that did not use hardware wallets instead he encrypted his seed phrase onto 3 different usb devices and hid them in different places in case of natural disasater, he made them in a cold fresh install linux machine, apparently he used something called AES-256 encryption which would take supercomputer millions of years to decrypt and is also quantum resistant...but he is quite a paranoid.

So, in your opinion, can both trezor and ledger be trusted with your cryptocurrency? Do you feel safe using their wallet or have any of you researched another way to keep your digital assets safe?

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