「How can cryptocurrencies be stored safely?」These questions and concerns have existed for a long time, but with Japanese exchanges being hacked one after another in2018, interest in cryptocurrency storage security has been rising even more. In this article, we review past cryptocurrency leaks and thefts and propose storage using a hardware wallet. Among hardware wallets, we focus on the one widely used by Japanese users—LedgerNanoS”—and explain its basic specifications, evaluations, usage, and precautions.

1. The biggest risk in cryptocurrency is “outflow/theft”

The biggest risk is not that it could become worthless tomorrow, butthe risk of it flowing out or being stolen due to hacking or malware. Unlike fiat currency, cryptocurrency exists only on the Internet itself. Therefore, those who trade cryptocurrencies, invest in their future potential, or diversify funds with cryptocurrency must exercise utmost care in managing their holdings.

1.1 Do exchange wallets have safety myths? Lessons from past major incidents

There is no “safety myth” to begin with when it comes to cryptocurrency exchanges (and they never really existed). Of course, exchanges like BitFlyer have their own security technologies, but large exchanges storing substantial funds have always been targeted by hackers. The damage to cryptocurrency exchanges and related services happens every year.The following are among the most well-known cases.

Incident	Date	Location	Currencies affected	Total damages
MT.GOXCase 1	2011year6month	Japan	BTC	7billion yen
MT.GOXIncident2	2014year2month	Japan	BTC	390billion yen
The DAOIncident	2016year6month	※	ETH、ETC	65billion yen
BitfinexIncident	2016year8month	Hong Kong	BTC	73billion yen
NicehashIncident	2017year12month	Slovenia	BTC	76billion yen
Coincheck incident	January 2018	Japan	XEM	58 billion yen (worst in history)
ZaifIncident	2018year9month	Japan	BTC、BCH、MONA	70billion yen

※Total damages are calculated based on the value at that time (exchange rate). ※ “THE DAOincident” occurred on the Ethereum platform. In particularMT.GOXincident 2 popularized the slang of “GOX” meaning cryptocurrency hacking (in a negative sense). Also, apart from Ethereum (ETH), Ethereum Classic (ETC) coexists due to the impact of The Dao incident, and the huge drop in NEM (XEM) in January 2018 was triggered by the Coincheck incident. In the past, Japan’s three major exchanges were known as「BitFlyer」「Zaif」「Coincheck」, but which of these two, excluding BitFlyer, was hacked?

1.1.1 Why it’s important to think “It could happen to me tomorrow”

However, as soon as you deal with cryptocurrencies, you cannot treat these incidents as“other people’s problem.”The currencies that were affected are all major, and the exchanges (and others) were very large. Keeping cryptocurrency directly in a cryptocurrency exchange is convenient because it allows rapid response to market fluctuations, butit is extremely risky to keep your cryptocurrency on an exchange that is constantly targeted by hackers.

1.2 To store cryptocurrency safely, hardware wallets are recommended

A wallet stores cryptocurrency either on an online wallet (hot wallet) connected to the Internet, or on an offline wallet (cold wallet) that is disconnected from the Internet. In short, online wallets are convenient but less secure, while offline wallets sacrifice some convenience to improve security. Actually, offline wallets include forms other than hardware wallets, such aspaper wallets, but considering usability, security, and ease of storage,“Offline wallets are best when they are hardware wallets.”LedgerNanoS is the top choice. and

1.2.1 Even hardware wallets can be dangerous if misused

However, hardware wallets are not absolutely safe. If handled improperly, cryptocurrency can be lost or stolen, for example by: ・ Storing the wallet’sPIN or recovery phrase carelessly。・ Forgetting thePIN and not knowing the recovery phrase.・ Keeping the hardware wallet connected to a computer (like a USB key) all the time・ Storing notes of the wallet and recovery phrase in high temperature and humidity These actions can lead to self-induced GOX (self GOX) where you lose cryptocurrency due to your own mistakes.Examples of self GOX occur all over the world.Rather than thinking “hardware wallets are safe because I’m using one,” you must actively maintain a safe state with the hardware wallet. For example, renting a bank safety deposit box to store the hardware wallet and passphrases is recommended.

2.LedgerNanoS safety and evaluation

LedgerNanoS is, along withTREZOR, a hardware wallet that has established a solid reputation. ※GogoJungle homepage shows (as of2018 year11 month20 day view)However, for those unfamiliar with wallet management, questions like “What exactly is good about LedgerNanoS?” or “What are the criteria for selecting a hardware wallet?” naturally arise. Below, with those questions in mind, we objectively explain what LedgerNanoS excels at.

2.1 How to choose a hardware wallet—Security, Supported Currencies, Price

The most important factor in a hardware wallet is“security”. When using a hardware wallet, it connects to a PC only during use, so it becomes online briefly. Therefore, if the PC is compromised by hacking or malware, there is a risk of leakage/theft similar to online wallets.Thus, it is preferable that operations such as entering thePIN happen independently of the PC. Also,“Supported currencies” matters; you want to ensure the currencies (or tokens) you hold now or in the future are included. And“Price”: price alone isn’t everything, but for hardware wallets, you should not settle for poor quality even if cheap; paying a bit more (around 10,000–100,000 yen) for a solid product is advisable.15,800

2.2 LedgerNanoS basicsLedgerNanoS is regarded as strong in

and“Supported currencies”, and“Price” is around1 yen (tax included, as of the time of writing in “GogoJungle”). ※ LedgerNanoS official distributor “ (as of2018 year11 month20 day view)To enhance security, LedgerNanoS features include「Private key can be stored completely offline」「PIN entry required each time you connect to a PC」「PIN can be configured independently of the PC」「Private keys are encrypted and stored」. Also, at the time of writing (as of2018 year11 month20 day), the firmware supports“712 kinds” a total of of currencies/tokens, including,,, andRipple; this is a strong point. Around 15,000 yen, LedgerNanoS is roughly on par with the olderTREZOR One, and about 8,000 yen cheaper than the newerTREZOR Model T. Overall, the price is standard to reasonable for hardware wallets.※ As of the time of writing (2018 year11 month20 day), here is the list of currencies supported.Hardware Wallet Japanhttps://hardwarewallet-japan.com/) lists the above; for the latest status, refer to Ledger’s official site (in English):Ledger official page: https://www.ledger.com/pages/supported-crypto-assets

2.2.1MyEtherWallet and others compatibility

LedgerNanoS is compatible with several online wallets (web wallets). Supported wallets are as follows:

Wallet name	Japanese support	Official siteURL
MyEtherWallet	〇	https://www.myetherwallet.com/
Electrum	〇	https://electrum.org/
Copay	〇	https://copay.io/ja/
Mycelium	〇	https://mycelium.com/
BitGo	〇	https://bitcoin.org/ja/wallets/web/bitgo/
GreenBits	×	https://bitcoin.org/ja/wallets/mobile/android/greenbits/

In particularMyEtherWallet supports not only Ethereum but also many tokens built on Ethereum’s blockchain; it is actively used in free token distribution events called“Airdrop”. ※MyEtherWallet official site (https://www.myetherwallet.com/) shows Japanese support as well, and by linking withLedgerNanoS

2.2.3LedgerNanoS on Amazon reviews and notes

LedgerNanoS has many reviews on Japan’sAmazon as well. As shown in the screenshot, as of the time of writing (2018 year11 month20), day there were 63 reviews and the rating was 4 out of 5 stars. Next, we look at some high-rated and some low-rated reviews. ※Amazon official page for “Ledger Nano S” (as of2018 year11 month20 day ※Below, same.

2.3.1 High-rated reviews

High-rated reviews mention that the product is genuine and supports Japanese. As these reviews note, even if the price is a bit lower, you should avoid buying from non-authorized distributors, third-party sellers, or auction sites. Non-authentic items may contain malware on the device itself or have recovery phrases known to others.GogoJungle allows genuine products to be purchased, but among Amazon’s listings there are non-authorized distributors and used items, sobeginners are advised to purchase from GogoJungle’s site. Ledger Nano S (Ledger Nano S) Japanese manual & support included  

2.3.2 Low-rated reviews

Conversely, low-rated reviews largely concern concerns about non-official products rather than the device’s performance.Amazon shows a case where risks materialized when purchased there. Since hardware wallets are the most important tool for protecting cryptocurrency,“cheap is not good” does not apply.

3.LedgerNanoS usage

LedgerNanoS purchased from GogoJungle includesJapanese manual & support(chat, email), so if you have specific questions about operations, you should also use that resource. Below, we introduce points to be especially careful about for those starting to use LedgerNanoS.

3.1 Points to consider from initial setup to deposits and storage

For initial setup, the crucial items are the settings of thePIN and the recovery phrase (“Recovery Phrase”, recovery seed, restoration phrase). Both are important, but the recovery phrase must be written down here, or it may never be shown again. Also, if the LedgerNanoS is damaged or lost, the recovery phrase can be used to restore on anotherLedgerNanoS. If someone else finds or steals the LedgerNanoS and has the recovery phrase, they can withdraw your cryptocurrency, so keep the hardware and recovery phrase notes separate and secure. Also, when transferring cryptocurrency to a wallet, you must send the correct cryptocurrency to the matching address—sending Bitcoin to an Ethereum address, or any misdirected transfer, results in irreversible loss. After transfers are completed and you store the funds, you must disconnect the device from your computer. This ensures the wallet is completely offline and secured.

3.2 Withdrawal methods and precautions

To withdraw, do the following: 1) connect LedgerNanoS to a computer, 2) enter the PIN, 3) submit a transfer request to the desired address and amount. If you forget the PIN, retrieve the recovery phrase to restore. If you lose the recovery phrase, the cryptocurrency becomes permanently inaccessible and you must set up a new wallet from scratch.

4. Summary

How was it? To use cryptocurrency correctly, it is crucial to establish solid security first.This article explains thathardware wallets are among the safest storage methods, butthe user’s mindset can render them completely unsafe, too. LedgerNanoS is highly recommended for protecting private cryptocurrencies, and please follow the precautions discussed in this article when using it.

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