When dealing with cryptocurrencies, asset security is one of the factors you need to pay special attention to if you don’t want to become a cyber attack victim and lose money due to poor storage safety. Many crypto exchange platforms offer storage services to their users, as it’s quite convenient to keep your assets stored in your exchange account for day-to-day trading. However, the cryptos stored online are a prime target for hackers, especially if the exchange you’re using doesn’t employ the latest security measures.
This is why it’s highly recommended to keep all of your crypto coins and tokens in specialized apps called crypto wallets that are designed to keep your digital currencies safe. There are many reliable crypto wallets on the market, such as MyEtherWallet, MetaMask, Exodus, Trust Wallet, and Atomic Wallet. Although these are all software wallets, they all have robust security infrastructure. However, if you’re looking to store a large amount of cryptos, it’s always best to combine a good software wallet with a strong hardware wallet that would store your private keys offline.
In this guide, we’ll take a detailed look at one of the best hardware wallets for storing large amounts of ERC20 tokens – Ledger Nano S, show you how to integrate it with a software wallet, and provide a step-by-step guide on how to transfer tokens.
Ethereum and ERC20 Tokens
Before we dive into Ledger Nano S, we need to explain why we are talking about ERC20 tokens. The Ethereum (ETH) blockchain is one of the largest crypto blockchains on the market and apart from being home to the second most popular cryptocurrency on the market, the network also allows developers to build their own tokens on top of Ethereum. The Solidity programming language and other open-source Ethereum-based developer tools make it possible to easily launch a cryptocurrency that utilizes the infrastructure of the ETH blockchain.
Such cryptocurrencies are referred to as Ethereum tokens. They aren’t crypto coins since coins have their own blockchain, while tokens are cryptocurrencies that are built on top of an existing blockchain. There are various programming standards for Ethereum tokens, but ERC20 is definitely the most popular one on the Ethereum blockchain.
This token standard is composed of a set of rules for creating cryptocurrency on the ETH blockchain and so far, developers have launched hundreds of these tokens. Actually, some of the most popular cryptocurrencies on the market are ERC20 tokens, so if you’re a crypto trader, it’s highly probable that you’ll be buying and storing them in your crypto wallet.
Popular ERC20 tokens include: Chainlink (LINK), Basic Attention Token (BAT), OmiseGO (OMG), Shiba Inu (SHIB), TenX (PAY), USD Coin (USDC), Hex (HEX), Dai (DAI), Uniswap (UNI), BitTorrent (BTT) and numerous other altcoins.
The Ledger Nano S
Ledger Nano S is one of the most popular hardware wallets on the crypto market. It comes in the form of a small, elegant USB device specialised for keeping your digital currencies safe. Ledger, the company behind the wallet, is a veteran blockchain security company with over 1.5 million hardware wallets sold worldwide. The company is known for its frequent firmware updates and the dedicated support team available to answer all your questions 24/7.
The wallet has a few buttons on the device and a small screen for managing and approving transactions. To manage your Ledger device, you need to install the Ledger Live app on your desktop or mobile device. The app is compatible with Windows, Linux, macOS, Android and iOS operating systems. You can manage your cryptos, facilitate transactions, and connect your hardware wallet to a third-party software wallet through the app. The reason why you might want to do this is that when you connect your Ledger device to a trusted software wallet, you’ll have faster access to your cryptos, which is important if you’re an active trader.
Ledger devices store all of your private keys offline at all times. When you connect your Ledger wallet to a third-party software wallet or manage your cryptos through Ledger Live, the wallet’s firmware creates a barrier between the internet connection and your private keys. This way, your private keys remain safely offline, even when your device is connected to the web.
For each cryptocurrency you wish to store on Ledger, you need to find and download the appropriate app within the Ledger Live interface. In total, the Ledger Nano S supports more than 1,000 crypto coins and tokens, while the Ledger Nano X model supports even more assets. You can store Bitcoin (BTC), Ethereum Classic (ETC), Litecoin (LTC), Cardano (ADA), Ripple (XRP), Ethereum (ETH) and many other altcoins, including all ERC20 tokens on your Ledger wallet.
Ledger Nano S Features
Ledger devices are CC EAL5+ Secure Element rated devices, certified by ANSSI, the French cybersecurity agency. This means that Ledger wallets offer some of the safest crypto storage in the industry, thanks to their embedded security chip. This chip includes efficient countermeasures against numerous types of cyber-attacks.
Also, several security layers protect the private keys from unauthorised access. The first time you turn on your Ledger device, you’ll need to set up a PIN code that can have anywhere between 4 and 8 digits. Without the PIN code, you can’t confirm transactions.
All of your private keys can safely be backed up with a BIP39 standard recovery phrase which consists of 24 words. Store these 24 words somewhere safely, on a piece of paper or in a text document on another USB device, because if your Ledger wallet gets stolen or lost, the recovery phrase is the only way to get your private keys back.
Passphrase protection is another layer of Ledger security. The passphrase works by adding a secret, 25th word to your 24-word recovery phrase. This means that even if someone managed to find your recovery phrase, they wouldn’t be able to steal your coins without the 25th word. If you choose to implement this additional layer of protection, be sure not to keep the 25th word stored together with the recovery phrase.
When you receive your Ledger device, you should ensure it hasn’t been tampered with by any third party. This can easily be done through the Ledger Root of trust protocol, which can be activated through the Ledger Live app once you connect the wallet. The protocol will check with Ledger central servers to ensure your device is an original Ledger wallet.
MyEtherWallet.com (MEW) is one of the most popular Ethereum blockchain crypto wallets. MEW is developed to support the storage of all Ether based assets, which means you can keep all of your ERC20 tokens in your MEW wallet. You can use MEW from your Chrome browser, but it’s also available as a mobile app compatible with Android and iOS smartphones.
The MEW wallet is actually much more than just a wallet – it’s an app for interacting with the Ethereum blockchain, and users can utilise its functionalities to exchange various ERC20 tokens without the need for an exchange like Binance or any other crypto platform. Smart contract capabilities are also available through MEW. For example, you can set up a smart contract to buy a certain amount of specific tokens once they reach a certain price. These types of features aren’t usually available on regular crypto wallets.
The wallet relies on the Ethereum blockchain’s security, which means that transactions are immutable, and once you initiate a transfer, it can’t be reversed or altered. All of your private keys are stored on the device you’re using to run MEW. This is generally quite safe, but if your device gets hacked by a cyber attacker, they might be able to steal your private keys. For this reason, MEW developers have included hardware wallet support. You can easily integrate your MEW account with Ledger Nano S to store Ethereum based assets safely offline.
If you plan to store low or moderate amounts of ERC20 tokens, then it’s fine to just use MEW as your main wallet. Still, in case you want to store a lot of tokens or store them long-term, it’s better to integrate your MEW account with Ledger Nano S. Moreover, MEW doesn’t have multiple protection layers such as 2FA (two-factor authentication) or email confirmation for transactions, which is another reason to connect it to a hardware device.
Transferring ERC20 Tokens to Ledger Nano S
If you decide to use MEW as a third-party Ethereum wallet paired with a Ledger Nano S device, the process of transferring ERC20 tokens to Ledger is quite simple once you set up your MEW-Ledger connection and learn how to manage your tokens.
Here’s a step-by-step tutorial on how to do this:
- First, make sure your Ledger Live app is updated to the latest version. Then, connect your Ledger Nano S to your computer and install the Ledger Ethereum app. This app is essential for storing any ERC20 token on the device.
- Once you install the app, you need to add an Ethereum account to your Ledger Nano S device. Go to the Accounts section, select Add Account, then choose Ethereum (ETH) and proceed.
- Unlock your wallet and run the ETH app. The app will let you choose between existing Ethereum accounts, adding a new one, or selecting an Ethereum account that is already in your portfolio. Add an existing account or a new one and click Continue. This will enable you to store Ethereum and ERC20 tokens on your Ledger Nano S device.
- Now that you’ve enabled your Ledger Nano S device to receive ETH and ERC20 tokens, you need to connect your MEW account and the Ledger device. Make sure your Ledger wallet is connected to your computer and go to Settings. Navigate to the Contract Data feature and make sure you’ve selected the Yes option.
- Now switch to your MEW app, go to the Access My Wallet section, and select Hardware. Choose Ledger wallet and select the Connect With Your Device feature. A pop-up window will appear where you can choose a derivation path and network. For Ethereum and ERC20 tokens, you should select the ETH network and the ETH derivation path. Choose a wallet address from the list.
- That’s it. On the next screen, you’ll be provided with your MEW address for interacting with the Ledger Nano S wallet, and you’re now able to easily send Ether & tokens from MEW to this new Ledger Ethereum address.
A Few Ending Words…
Using MyEtherWallet in combination with the Ledger Nano S hardware wallet is a great way to ensure all your coins and tokens are safely stored offline while still being quickly accessible and ready for trading. Connecting these two wallets might seem a bit complicated at first glance, but it’s actually quite simple if you follow the steps described in this guide.