Review: How Well Does the Ledger Wallet Nano Balance Bitcoin Security and Convenience?

By Kyle Torpey Jan 7, 2015 5:23 PM EDT

Ledger Wallet Bitcoin

NEW YORK (InsideBitcoins) — Hardware wallets have been touted as the perfect solution when it comes to creating a useful combination of security and convenience for bitcoin users. Although the general public likes to believe that their files and passwords are secure on their home computers, the reality of online security is nowhere near that false hope. As we’ve seen in the past, users who are not using strong passwords, 2-factor authentication, and other security measures tend to only figure out the error of their ways when it’s already too late.

[Read More: Bitcoin Security: Sony, iCloud and Credit Card Hacks – and You Want Me to Put My Money on the Internet?]

Hardware wallets allow users to store sensitive information on separate devices, which offers greater security in a situation where their computer has become infected with malware. Most of the bitcoin community knows about the TREZOR, but the Ledger Wallet Nano is a relatively new offering that enables enhanced bitcoin security for a lower price. I was recently able to test out one of these new devices. Here are my thoughts.

Setting up the Ledger Wallet Nano

Setting up a Ledger Wallet seems like it should be simple enough in most instances, but I ran into one issue due to the fact that I was using Linux. GreenAddress (one of the wallets that supports the Ledger Wallet) did not seem to be recognizing the hardware wallet at all, so I decided to load up the official Ledger Chrome App instead.

The app was also not seeing the hardware device, so I visited the FAQ page on the Ledger Wallet website. It was there that I realized I needed to download a script to get the hardware device to work. After following the instructions, I was good to go.

GreenAddress and Electrum integration?

LedgerWalletNow that I knew the hardware device would work properly, I decided to test it out on Electrum. Contrary to what I had heard in the past, Electrum did not seem to support the Ledger Wallet. It appears that the device is supported in Electrum 2.0, but that is not the build currently available on the Electrum website. After clicking around for 15 minutes, I decided to give up on Electrum and move to GreenAddress.

I was excited at the prospect of using the Ledger Wallet as one of two or three signatories for bitcoin transactions, but it does not seem that sort of functionality is available at this time. In reality, the Ledger Wallet is currently not much more than a storage device when connected to the GreenAddress Chrome App. All I was actually able to do was download the seed for my GreenAddress wallet onto the Nano.

Is security a priority?

At this point, I decided to use the Chrome app to setup my device and simply see how the whole thing worked. I was told to write down the mnemonic phrase for my HD seed and PIN number during the setup process. It was at this point that I began to question the actual security offered by the Nano.

While it is true that the hardware device can protect private keys, that doesn’t really matter if the device can be tricked into sending bitcoins to the wrong address. The PIN number attached to the hardware device does not help when it is typed into a computer with a keylogger, and the device can then be used to send bitcoin transactions to any address that the malware’s heart desires.

The team behind the Ledger Wallet would counter this argument by stating a card that is paired with each device must also be used to confirm that the Ledger Wallet is sending bitcoins to the correct address, but the issue there is that it would only take a few dozen transactions for a sophisticated piece of malware to figure out the decoder-ring-esque security of the card.

Final thoughts

While I commend the team behind the Nano for all of their hard work in creating this device, the fact of the matter is that it seems to fall short of the security offered by the TREZOR. Due to the screen and physical buttons featured on the TREZOR, a piece of malware attempting to trick the user into sending bitcoins to the wrong address could be easily discovered.

The user experience when using the official Ledger Wallet Chrome App was rather seamless, but the real issue was that I didn’t feel like the device was offering a substantial improvement in a situation where malware is sitting on my computer.

[Read More: Making Bitcoin Security Easy Enough for Anyone to Figure Out]

To their credit, the Ledger Wallet team is currently working on roughly 100 prototypes of their hardware device at various stages of development in an attempt to find the right balance between security and convenience. For now, it seems that they need to turn the dial towards the direction of creating a more secure device. Purchasing one of these devices still makes sense if you’d like to help support further development of alternative hardware wallet options by the Ledger Wallet team.

Update: GreenAddress released an update today. Using a Ledger Wallet Nano as a signator for a 2-of-3 multisig account is now possible by customizing a 2-of-3 account with the Ledger Wallet’s master public key. It should be noted that this sort of implementation also works for paper wallets, and the custom master public key is only needed in situations where GreenAddress disappears or goes offline.

Correction: In the final paragraph “roughly 100 different variations of their hardware device” was changed to “100 prototypes of their hardware device at various stages of development.”

Disclosure: Kyle was provided a Ledger Wallet Nano at no cost for the purposes of this review. The Nano retails for $34.00.

You can follow @kyletorpey on Twitter.

  • Eric Voskuil

    Finally, an honest review of this fatally flawed security model. Good work Kyle.

  • Thanks for retrying!

    just to make sure you don’t have false expectations: If you do reuse the same seed across GreenAddress and other app like Ledger Wallet you won’t see the same wallets/transactions as each uses a different wallet structure (multisig and BIP32 derivations) so they effectively ignore or not see/look for the transactions.

  • As mentioned in our other thread of comments, I did try to 1) Create a new GreenAddress account/seed directly onto the hardware wallet 2) Import an already existed seed on the hardware wallet for a new GreenAddress account. The GreenAddress Chrome App was non-responsive and didn’t seem to be interacting with the Ledger Wallet very well. This was disappointing since GreenAddress is one of my favorite wallets. I’ll try it out again later today to see if I can get it to work.

  • All in all, I have to agree with Eric.

    The process is actually quite similar for GreenAddress with the only exception that if you are ALREADY a GreenAddress user the software allows you to use your current mnemonic passphrase/seed on your hardware wallet.

    It’s easy during the creation of a new wallet to create the seed directly on the hardware wallet but since you reused your old test account I assume you never tried the functionality let alone encountered it.

    The user experience can be improved and so can be the documentation. On the other hand, I can’t think of any other service that supports multiple hardware wallets.

    Last but not least: with GreenAddress when you use your Nano or HW.1 you can review the details of the transaction via out of band 2 factor authentication before you sign it with your hardware wallet.

  • 1. From what I could tell, that was not the case on GreenAddress at the time of the review. The process works as you described for the Ledger Wallet. This isn’t a slight at the Ledger Wallet at all. It’s just pointing out the lack of full implementation of Ledger at GreenAddress.

    2. The bulk of the people in the bitcoin community I’ve spoken to do not agree with you. I think I’ll send out the question to various bitcoin security researchers. Should make for an interesting piece.

    3. a. You may have a point with the Ledger Wallet being more convenient for certain aspects of 2of2 multisig. I’ll have to chat with Chris Pacia from Bitcoin Authenticator to get his thoughts as well as he is currently building a “user-friendly” 2of2 multisig wallet (Bitcoin Authenticator).
    b. I’m not sure why I would want to use the card at all if I always have my smartphone with me. Also, a lot of people just bring their own laptop when they travel.

    4. I’m not sure people would have taken that comment that way, but I’m sorry if they did. I think readers would probably be more concerned with the actual security of your device rather than the number of different prototypes you have in the works. It was actually meant to point out that you are working on various improvements to your product. I’ll have the editor add an extra note to the article as a correction like that should have one.

    5. Sorry, misunderstood your original point. Yes, a user can be tricked into thinking a friend or merchant’s address is different from what they were sent. However, you can still go extra paranoid and confirm the address is correct on large transactions via text message. Even less of a problem if the proper recipient uses the same address every time (or better yet a stealth address). The point is that you at least know which address the payment is being sent to when you look down at your TREZOR and click the button. The Ledger is simply a black box of mystery.

  • Eric Larchevêque

    1. It’s still different. The key is actually never transferred to the computer and all derivation and signature operations are performed on board, so it’s more secure than just storage.
    2. It can be debated (our opinion is that you are wrong)
    3. 2of2 multisig with a smartphone is more complicated to backup properly (you have to backup both seeds). It’s also more complicated to validate that the P2SH address creation was properly done (i.e. that a malware didn’t decide to replace the second public key by a public key controlled by the malware). Also the smarphone + security card options let the user decide what’s the best solution for the given scenario (at home : use the smartphone / when traveling and performing only a few transactions on each computer, use the security card)
    4. Considering this mistake is currently used to summarize the whole article, and paint our company as amateurs running around with no goal in mind, it clearly deserves an immediate editorial correction, as well as an apology. I’m not even speaking of your patronizing conclusion.
    5. No, not if it’s changed *before* the user takes knowledge of it and that the wallet displays it.

  • When I said test accounts, I was referring to accounts on mainnet that I was using to test the Ledger with GreenAddress. Sorry for the confusion.

    I actually found those videos while testing everything out, but the problems noted in my previous posted persisted.

    I actually thought that running both the Ledger and GreenAddress apps at the same time could be an issue, so I made sure to close one before running the other from the start.

    Looking forward to both GreenAddress and Ledger continuing to close the security/convenience gap in the future.

  • 1. I understand the point of hardware wallets. The point I
    was making is the device acted as not much more than a storage device
    when using it with GreenAddress from my original experience (cloning to
    the hardware wallet).

    2. The point is that the device as a whole doesn’t provide the same protection against malware as other options.

    3. What are the advantages of this new setup over 2of2 multisig with a smartphone?

    4. Will send a note to the editor to clarify with “100 prototypes at various stages”.

    5. Yes, but the point is the changed address can be seen by the user on the TREZOR screen before they confirm the transaction.

    I didn’t claim the Ledger doesnt offer an improvement over
    software. I said, “I didn’t feel like the device was offering a
    substantial improvement in a situation where malware is sitting on my

    I know you’re working on improvements, which is why I still
    said people should buy your product if they want to support those
    efforts. I wish you all the best with your future releases.

  • The main point is that the Ledger Wallet is built on a secure element, while other hardware wallet are done on micro-controller.

    It’s not the first review I saw about hardware wallets, is there anybody able to do an article about a secure element ???

  • Eric Larchevêque

    Hi Kyle,

    Thank you for the review.

    However, I think there is some confusion about how the Nano is architectured and operating.

    1. It is not a storage device at all. It does have a USB form factor, but inside there is a secure microcontroller (smartcard) running code, and not a flash memory. The transaction is signed by the chip inside the chip. The private master seed is never going out of the secure element. This is all the point of hardware wallets.

    2. The PIN is an anti theft feature, not anti malware. After three wrong PINs, the device will wipe the seed and restore to factory defaults.

    3. We use a security card acting as a second factor (like a screen/button). This indeed has some theorical shortcomings, this is why we’ll introduce soon a mobile companion app showing the payment address and amount for confirmation. Pairing will be done using the security card only once.

    4. We are not working on “100 different prototypes”, this doesn’t make sense. This is a reference to the 100 units of Proton prototypes (USB/NFC) we are currently showcasing at the CES Las Vegas (and soon at the BTC Miami conference). These units are for developers wanting to port early their wallet to our next generation products.

    5. Generally speaking, no hardware wallet (even the TREZOR) can presently protect against address switching on the remote side (malware would change the address before it’s displayed so you can’t ever know your are being tricked). This issue will be tackled with our next firmware release (a BIP70 extension, that only secure elements can implement).

    Your conclusion is that our product doesn’t offer an improvement of security compared to software based wallets. This is an incorrect fact, which we cannot let published as is. Please take into consideration our comments to update your article.

    Thank you.

    Eric Larchevêque
    Ledger, CEO

  • I think there is still some confusion here.

    We only support Btchip HW1 or Ledger Nano in our Chrome app or our Android app (cordova), and both of these are mainnet only (no testnet), so this would explain why you wouldn’t be able to use the Nano with GreenAddress if you were playing in testnet – it is not supported.

    We do not support Nano or Btchip on

    There are various video instructions for Btchip that equally apply to Nano which should help.

    Please also note that in my own experience HW1 (and presumably the Nano) doesn’t really like to have multiple apps open that talk to it so if you do test it you want to close the Ledger wallet while you do it.

    As to your side note, give it time, it will happen: the majority of wallet still don’t support multisig nor hardware wallets and it takes time for advanced solutions to be developed.

  • Thank you for the comments. I’ll further explain my experience with the Ledger Wallet Nano and GreenAddress here:

    When I was first reviewing the Ledger Wallet Nano integration, I logged into my old test account and searched for a way to add the Nano as a new required signator for transactions. All I saw was an option to clone my GreenAddress seed to the hardware wallet. This is why I referred to it as a storage device. It didn’t seem as if this was actually adding any security. It was more of a backup of my GreenAddress seed.

    I tried creating a new GreenAddress seed and writing it to the Nano last night. I ran into a few different problems, and I couldn’t get the integration to work. When I clicked the small “Click to use hardware wallet seed instead” button, I was told to delete the seed that was already on there. The Nano reset process wasn’t working in the GreenAddress app, so I reset it in the Ledger Wallet app. I then returned to the GreenAddress app to generate a new seed for a new account that would be written to the freshly restored Ledger Wallet. The process didn’t work. I was clicking the “Write to hardware wallet” button, but nothing was happening. The button just faded out after I clicked it. I also noticed that I wouldn’t be able to click anything on the screen at all if I clicked the “Write to hardware wallet” button before checking the “I confirm I saved my passphrase” box. Seemed to be a small bug.

    As a side note, I think a lot of people would like to see an option for 2of2 or 2of3 multisig where GreenAddress is not involved as one of the signators. Requiring a signature from a TREZOR for larger transactions would be cool. 2of3 multisig with a computer and smartphone would also be nice for moderately large transactions. I know users having all of the keys to a multisig address isn’t the focus of your product right now, but this seems like something a lot of people desire in a personal multisig wallet.

  • Hi Kyle,

    I think there’s some confusion as to how the Nano or other hardware wallets work with GreenAddress.

    > the Ledger Wallet is currently not much more than a storage device when connected to the GreenAddress

    As far as I know the only notable differences between using the Nano with GreenAddress and the Ledger app is that the Ledger app is not multisignature and that GreenAddress offers 2FA via multisig and they offer 2FA via a special card with a matrix of codes (I didn’t try it yet) and soon an Android app that can validate data from the nano.

    GreenAddress does not use the Nano as a storage device by any means, it can’t, the seed can’t be extracted from the Nano and it can be generated outside of the app directly inside the Nano, but yes, if you already have a GreenAddress wallet you can write your current mnemonics/seed to the Nano (this is not storage though, the signatures are done inside the Nano).

    From the GreenAddress new wallet page, where the mnemonics are shown to the user, you can click on the right bottom corner of the mnemonics frame to generate the seed directly on the device such that the app never sees it.

    To be fair with you, the button is not super visible, but there are good reasons for it: the nano only supports a hex seed and not mnemonic passphrases and if you generate the seed directly on the hardware wallet you can only have access to a hex seed, which is harder to write down than mnemonic passphrases and as such it is considered more of an advanced option.

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