Don’t Store Your Bitcoin on a Ledger Nano S Until You’ve Read This!

I recently purchased a Ledger Nano S hardware wallet so that I could store my Bitcoin and altcoins securely and to make backing up my private keys easier. However, I’ve noticed an issue where you could potentially lose your funds and this post will explain why and how to prevent this from happening.

Why Use a Hardware Wallet?

The main benefits of using a hardware wallet are:

• Private keys are stored on the hardware wallet and transactions are signed in a way that funds can’t be stolen by viruses or malware running on the device connected to the wallet.
• Backing up your private keys is much easier because they are derived from a securely random generated list of seed words that must be configured on first use. All you need to do is write down the seed words on a piece of paper or engrave them on steel and store them in a safe location.

What’s Wrong with the Ledger Nano S?

The configuration of the Ledger Nano S is surprisingly easy. When you first power on the device it walks you through a series of step-by-step instructions which is all done via the built-in display and the buttons on the device itself. You don’t need to connect it to a computer so you can be sure the PIN and seed words are not compromised during the initial configuration.

However, I noticed a slight issue.

After being notified to write down each seed word the confirmation to make sure they are correct only asks you to confirm two words.

To be certain I wrote them down properly I did a full restore of the seed words and it turns out I had written them down wrong even though the confirmation for two of the words was successful. I started the process again from scratch and I wrote them down wrong again. It was my third attempt before I managed to write down the correct seed words.

Conclusion

I thought I was being careful when writing down the seed words but it turns out it’s quite easy to get one wrong. I don’t know if it was my bad hand writing making a word look similar to an invalid word, or if I was just being stupid.

Either way, if you are going to store a lot of funds on the Ledger, I would recommend doing a full restore of the seed words before sending any funds to the wallet. Don’t rely on the verification method of selecting 2 seed words in the initial configuration wizard.

Now that I'm sure I can recover my seed words, I'm happy with the device. It's so much easier than having to install a full wallet for each cryptocurrency and it makes me sleep at night knowing my funds are safer :-)