As cryptocurrencies gain in popularity and the number of participants in the crypto market grows at the speed of light, there are rising concerns about where to store the acquired digital assets. Alongside this issue, there’s an increasing need for technical know-how for handling the new technologies.
Since the safe storage of the coins is the primary concern of any cryptocurrency investor, there are many different types of wallets developed for storing the multitude of crypto coins and tokens. Broadly divided into four main groups, these include hardware wallets/firmware wallets (e.g. the Ledger wallets such as Ledger Nano S and Ledger Live, the Trezor wallets such as Trezor One and Trezor Model T), mobile wallets (e.g. Exodus, MyEtherWallet), online wallets/software wallets (e.g. Kraken, MetaMask), as well as desktop wallets (e.g. Atomic, Guarda).
However, not all of these technologies support all crypto coins. In this regard, one should be well informed on both the underlying technology of the coin of interest and the most suitable wallet for storing the targeted cryptocurrency prior to making any investment move on the digital currencies market.
In this post, we’ll take a closer look at the Trezor hardware wallet, with an emphasis on how to use it to store ERC20 tokens. But first, let us follow our own advice and become acquainted with the underlying technology of both ERC20 tokens and the Trezor hardware wallet.
The Mechanism Behind the Ethereum Platform
In 2013, the young Russian-Canadian programmer Vitalik Buterin and the Ethereum Foundation launched Ethereum as an autonomous platform based on various innovative technological solutions. Ethereum represents the first decentralized open-source cryptocurrency platform that allows for the development of blockchain-based apps. These decentralized programs, known as dApps, can be deployed over a distributed network through the use of smart contracts.
Smart contracts are computer programs, i.e. pre-coded business protocols that are recorded on a blockchain and are automatically executed when a pre-programmed set of conditions have been met. Ethereum successfully eliminates the necessity for third-party participation in the transaction process by utilizing smart contracts as the most distinctive digital solution offered by this blockchain, thus reaffirming its decentralized nature.
The mechanism of the Ethereum platform is created with the help of a special programming language, labeled Solidity. Initially featuring the Proof of Work consensus mechanism known for consuming massive amounts of electric power, the latest upgrades of the Ethereum blockchain introduce the Proof of Stake protocol as a way to preserve energy sources.
What Is Ether (ETH)?
This platform also features a native token, Ether (ETH), which is the second most popular cryptocurrency in terms of market size and demand after Bitcoin (BTC). The initial objective of the ETH cryptocurrency developers was to utilize the token as a means of exchange for the dApps or to perform transactions on the Ethereum blockchain platform.
Nowadays, Ether (ETH) can be used for various other transactions, like purchasing or selling commodities or services. Ethereum’s native coin also has a store of value like Bitcoin (BTC) and can be used for investment purposes.
What Is an ERC20 Token?
Tokens developed on the Ethereum platform are known as ERC20 tokens in the cryptocurrency industry. The ERC20 token is a decentralized digital currency based on the Ethereum blockchain that has many of the same characteristics and uses as Bitcoin or other altcoins.
However, in contrast to other cryptocurrencies, ERC20 tokens do not have a distinct blockchain infrastructure on which they are built but use the blockchain infrastructure of another altcoin instead. Additionally, these digital assets have an intrinsic worth, which qualifies them for trading on the crypto exchanges.
Furthermore, the ERC20 tokens are used for trading purposes and are stored and traded using an Ethereum address. There are several wallets that support these coins, most of them are labeled as Ethereum compatible digital wallets. MetaMask and MyEtherWallet are two examples of technological solutions for storing your ERC20 tokens safely.
In the event of sending ERC20 tokens to some other user, you are effectively notifying the token’s smart contract that it needs to carry out a transfer because of your action. Any time you send Ether or move your ERC20 tokens, this action will incur a transaction fee to compensate for the transaction costs. The fee of the Ethereum blockchain network is a tiny percentage of your Ether (ETH) amount denoted as gas.
On the ERC20 Token Standard
The ERC20 (Ethereum Request for Comments 20) token standard was originally suggested by Fabian Vogelsteller, one of the Ethereum Foundation’s engineers. The ERC20 standard was authorized in December 2015.
This framework allows for token API (Application Programming Interface) implementation in smart contracts. More specifically, the ERC20 token standard outlines the rules that all ERC20 tokens must follow in order to function properly. This token standard is also used by the crypto wallets and exchange platforms to implement different ERC20 tokens, in order to allow the exchange of ERC20 tokens with other digital assets.
Characteristics of the Trezor Hardware Wallet
Hardware wallets are one of the safest technological solutions when it comes to safeguarding your digital assets. Being on the market since the early days of crypto, Trezor is the first project of its kind for SatoshiLabs.
Designed to fit on your keychain, Trezor’s advanced security measures include an in-built firewall that shields it from malicious malware. So, even if your computer system becomes infected with malware, this cold storage device will protect your digital assets from being compromised.
In addition, the TREZOR hardware cryptocurrency wallet links to the user’s portable device or PC via a USB connector. In this way, the wallet allows the user to download, upload, or keep their digital money in an easy and convenient manner.
How to Store Your ERC20 Tokens on Trezor
For the time being, it’s only possible to store, receive, and transfer Ether (ETH) or ERC20 tokens via your Trezor device if you use a third-party wallet such as MyEtherWallet or MyCrypto.
How to Use MyEtherWallet (MEW) With Tresor
To begin using your MEW with Trezor hardware wallet, first, you need to connect your Trezor device to your computer, provided you’ve installed the Google Chrome extension, and open the www.trezor.io/start site.
After clicking the dedicated “Create New Wallet” button, you’ll be provided with a 24-word recovery seed phrase that will serve you as your private key to the wallet. In case you store it on a computer or public place, it might get stolen – along with your digital assets. For this reason, it’s very important that you store this passphrase in a safe and private place because losing it would also mean losing access to your stored assets.
In the final step of setting up your Trezor wallet, you’ll be asked to name your Trezor wallet and select a pin to (un)lock it.
Now, connect your MEW to the Internet and go to www.myetherwallet.com. When you open the site, you’ll be offered two options – to create a new wallet (on the left) or access your existing wallet (on the right). Here you need to choose the second option and select “Hardware Wallet” followed by the “Trezor” option.
This will connect MEW to your Trezor device. At the same time, a pop-up window will ask you to enable MEW to access your public key for this session, which is what you need to do.
In the next stage, you must select the derivation path and the network to which you want to join, the ETH address in this case. By choosing an address path related to a dedicated coin, you may use your wallet to access any other network (eg. Ethereum Classic (ETC)) and start making transactions with your ERC20 tokens. Just select the address where you want to transfer or store the tokens, and – feel free to venture into your new crypto adventure!
A Few Words Before You Go…
Ethereum is a global platform based on blockchain technology that’s utilized for the transmission of unalterable information between parties throughout the world. Unlike its native coin Ether (ETH), the ERC20 tokens are programmed on top of this blockchain and remain stored on it. Due to the constant connection of these tokens with their blockchain, not many cryptocurrency wallets have the technology to support their safe storage.
However, Trezor, the first hardware wallet on the crypto market, was able to discover the ideal method for keeping your ERC20 tokens safe. The resolution to this issue comes in the form of a third-party wallet, which adds a layer of complexity to an otherwise user-friendly device. Hence, to begin using your digital assets, you must first download and install the TREZOR Wallet, My CryptoWallet, or MyEtherWallet dApp before you can use your digital assets.
Finally, before you give in to the thrill of any new technology solution, remember the advice from the first paragraph of this article: do your research first!
