Use of 2 Types of Hardware Wallet (Trezor, Ledger Nano S) for Ethereum Transaction

Published in

RayonProtocol

4 min readJul 4, 2018

This article explains about the role of Hardware wallet, things to consider when to choose it, and the process of how to use it.

A hardware wallet encrypts and stores its key and does not allow it to be exposed through an external interface. Using a software wallet that runs in an Internet-connected computer has more external risks than a hardware wallet. Yet, a hardware wallet only deals with offline transaction signatures — so it is safer than a software wallet.

Role of Hardware Wallet

Role of wallet in executing transactions

Create (fill in transaction contents)
Sign (make a signature on transaction detail)
Broadcast (broadcast the transaction)

A software wallet can perform all of the above behaviors (Create, Sign, and Broadcast)

Using a hardware wallet along with a software wallet

A hardware wallet only performs Sign. It can obtain the transaction that a software wallet delivered, and make a signature on it. Then, it delivers it back to the software wallet for further broadcasting it to the network.

Things to Consider When to Choose it

We specifically chose Trazor and Ledger Nano S hardware wallets. We, on purpose, did not choose only one device for avoiding a single point of failure when there are malfunctions(SW/HW) in it. For reducing its risk, we selected devices from different manufacturers.

Below is the things to consider when choosing the two hardware wallets.

Should support Ethereum wallet

For Ethereum asset management, we should support Ethereum wallet. Trazor and Ledger Nano S, both support Ethereum, Bitcoin, and Litecoin.

Need to have a screen for confirming the transaction in the wallet

A hardware wallet executes a transaction in a closed environment. We need to verify which transaction has been done in a hardware wallet. Unlike a software wallet, having a screen allows us to confirm the details of a transaction, even if it has been deteriorated for a bad purpose. Also, with a screen, we can confirm mnemonic words (recovery phrase and seed are synonyms, so-called mnemonic).

Should be able perform for not only transfer but also Smart Contract transactions

We should be able to perform Smart Contract transactions such as MultiSig wallet as well as execute a transfer. It is actually required on a software wallet, as a hardware wallet only does Sign. MyEtherWallet and MyCrypto both support for them. Trezor and Ledger Nano S are connected to those two software wallets, so that a hardware wallet can ultimately execute Smart Contract transactions.

How to Use

Completely separated environment

For using a hardware wallet, we need to set mnemonic(creation/recovery) in it.

Mnemonic Creation: We can create mnemonic on both Trezor and Ledger Nano S devices. Mnemonic appears only on the screen of the devices.

Mnemonic word appears on Ledger Nano S’s Screen

Mnemonic Recovery: If you have had mnemonic created, you can recover it onto the hardware wallets.

Trezor’s Mnemonic (left), Input Interface(right)

In the process of Trezor’s recovery (advanced recovery), an external interface is used — it is merely a means of assistance to find its mnemonic, but it does not actually input mnemonic value. So, It’s not possible to guess mnemonic through an external interface.

Ledger Nano completely input mnemonic through the device’s button. It takes a bit of time, but it ensures a complete offline execution.

Transaction

Interworking to MyEtherWallet

Let’s try to make a transfer transaction, using a software wallet. Please connect to https://www.myetherwallet.com/#send-transaction for transmitting Ethereum.

(1) Choose Trazor as a wallet. Enter PIN number before interworking the public key through export.

(2) Choose an address that would be used on transfer transaction. When you select an HD derivation path, you can see several address that are created under the path.

(3) For remittance, you need to enter the target address and amount and hit “Generate Transaction”. At this time, the hardware wallet is requested a signature and the user can check it on the device’s screen and confirm it.

(4) The singed transaction is delivered to MyEtherWallet and it is broadcasted to the network through “Send Transactions”.

So far, we’ve explored the role of a hardware wallet, things to consider when to choose it, and also how a transaction is created and signed separately. Thanks.

Photograph : Joontae Kim