Beginner’s Mistake With A Hardware Wallet is a cautionary tale. A must-read for anyone buying a hardware wallet.
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If there is something that needs to be further highlighted we will do so.
This article is one such piece. It demonstrates my own schoolboy error with hardware wallets.
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My Beginner’s Mistake With A Hardware Wallet
This is a simple one but important. A story you might want to read if you own any cryptocurrency.
I knew that a hardware wallet was one way to safeguard my crypto using cold storage.
I decided to buy a Ledger Nano S.
The Ledger website had sold out of the Nano S.
I was impatient because I wanted to secure my coins. I looked elsewhere for one.
Where does everyone go online to buy things these days?
Amazon of course.
I didn’t buy straight away. But there was still no news on the Ledger site when the Nano S would be available again.
A supplier on Amazon had the Nano in stock. It was a lot more expensive than the Ledger website but the Amazon supplier was the only person who had them. Ebay is too full of scammers to trust buying a security-related product from. At the time, crypto had taken off and so the price of wallets shot up overnight. I wanted to boost my security, so I bought it anyway.
The wallet arrived the next day. Free shipping using my Prime membership.
The instructions on the Ledger website were not bad. I started to put my crypto in the wallet. It was scary at first. I did a small transaction to make sure the address and everything was correct. It worked, so I transferred the rest. I put it into storage. My crypto was safe from hackers, fire or theft. I could rest easy at night.
Not so fast.
I did more research about hardware wallets later that week. The research I was too impatient to do before I blew my money on a useless wallet.
Never Buy A Hardware Wallet from A Third Party
I started to find warnings on the forums and crypto websites. Do not buy a Nano wallet from a third party. A ‘man in the middle’ attack can compromise it before you get it. They can steal your crypto.
Sound a bit out there?
It’s been well documented that it happened to someone who bought on eBay.
Ledger Nano S Available And For Less Money Than On Amazon
In the meantime, the Nano S became available on the Ledger website. At a cheaper price than the one I bought on Amazon. I ordered a second Nano S direct from the manufacturer.
I emptied my Amazon Nano S wallet onto an exchange in case someone had hacked it. (Remember, all these transactions cost money).
I received my second Nano S direct from Ledger in five days. I transferred my crypto to the new wallet. By this time I was an expert, I had done so many transfers.
The moral of the story is, of course, buy your wallet direct from the manufacturer.
Even that is not 100% safe. Something could happen at the Ledger factory. Before the wallet even reached a third-party seller. Buying direct does cut down the odds on someone compromising your wallet. Every storage medium has issues, no matter which one you choose.
That is not the end.
Having a single wallet is not enough. You need your private key and seed backed up in different locations. Your hardware wallet could get stolen or destroyed. Even if you use a safe deposit box or secure storage facility.
If you take the necessary precautions in advance, you can recover your crypto. Even if your Nano S gets destroyed.
I wrote an article here on how to secure your crypto. Even if you die, your family can still get your coins.
Man Has His Life Savings Stolen From A Nano S Wallet
I read that headline a lot. It’s actually not true.
There are several accounts of what happened so here is my take.
A person known as Moodyrocket on Reddit bought a Nano on eBay.
The person who sold it to him did not break into the wallet or re-programme it. Nothing so technical. He put his own twenty-four seed words on the Nano and included doctored instructions with it. The instructions had the scammer’s seed already printed under a scratch-off square. Like a lottery scratch card.
This image came from Moodyrocket’s original post on Reddit if you want to read it.
A lot of people online are calling Moodyrocket an idiot. He does have to take some of the blame for not following the instructions and videos on the Ledger website.
This could have been me before I knew better.
I didn’t do enough research on buying a hardware wallet myself. There’s now an empty Ledger Nano S sitting on my shelf that I can’t use until I can get it checked by Ledger.
Whatever your feelings on what Moddyrocket did, he told his story. That made the crypto community aware of this scam. I hope that has prevented it happening to anyone else.
Some people suggested he do a Gofundme. It seems that brought the scammers and trolls out en-masse.
As I write this, Moodyrocket has not had any success retrieving his crypto. He has been proactive and contacted the police and eBay. It seems as though Ledger has not helped him so far.
I can’t repeat it enough. Put your crypto into cold storage and get it off the exchanges. Play it safe and get a hardware wallet direct from the manufacturer.
I should also add. No one has accused the Amazon seller I purchased my Nano S from of stealing. Or of selling hacked devices.
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