Ledger HW1 – Low Cost for High Security

One of the biggest challenges for bitcoin wallets is balancing security and accessibility. Many solutions in the past have sacrificed one for the other, and high security often came at a high price. Ledger addressed this problem very well with the Ledger Nano, a wallet that is affordable and very flexible when it comes to usability. They have now taken the Nano and created an even more cost-effective base model – the Ledger HW1.

“Hardware wallets, or digital identity security systems, must be eventually perceived as a commodity. Only horizontal integration, as well as extremely low cost per user, is compatible with global mass adoption.”
— – Eric Larchevêque, Ledger CEO and Co-Founder

Ledger wallets operate using Chromium or a Google Chrome extension which can be easily added to any computer, making it a convenient device to carry around. Eric Larchevêque, CEO and co-founder of Ledger, explains the requirement, “We need Chrome because only Chrome right now has the HID support to speak directly with the smartcard on the [Ledger wallet].”

HW1 is functionally the exact same product as the Nano. Costs have been reduced by removing the metal housing from the USB key, crafting the security card from plastic, and excluding other various non-essential packaging items. It still maintains the exceptional security and usability of its bigger brother. Other hardware wallets such as Trezor offer wonderful security too, but the price point is substantially higher than the HW1.

“Trezor relies on normal microcomputers so it means that the price point is quite higher, [and] they have a screen to see the transaction,”
— – Larchevêque

The brain of the USB wallet is a supplied smart card; it’s use to generate private keys and sign transactions, keeping sensitive information off the computer entirely. The accompanying plastic security card is a simple but effective idea, credit card sized and with just three rows of letters and numbers to get to grips with and no electronics whatsoever. The customer uses the unique set of letters and numbers to validate transactions when prompted, and for accessing the wallet from a smartphone. The phone can then act as a screen for the wallet and speed up validation times, removing the need for a screen on the wallet leads to further savings for the customer.

“If we want bitcoin to scale, it means that the security has to be paramount and it has to be very simple and easy for everyone. We really want everyone to have this in their pockets, so the price has to be the lowest possible.”
— – Larchevêque

Once the wallet is plugged into a computer an initialization process begins. Private keys are generated, and never leave the wallet, which keeps any unwanted access out of the picture. A pin code is then selected, which will later be required every time the device is plugged into a USB port. If an incorrect pin code is entered three times the wallet returns itself to factory settings, ensuring funds are never accessed. Recovering a locked HW1 can be done with any new Ledger wallet, or BIP39 compatible software wallets such as Multibit HD or Mycelium.

“We are running our own operating system on [the wallet] so there is a lot of tech. We have open specifications, APIs, and also we are working on the new version […] which works on Near Field Communication.”
— – Larchevêque

The use of NFC will increase the functionality of the wallet, making it compatible with many newer point of sale terminals. Few details have been released about the new prototype but it is known that a switch will be added to turn NFC on and off to prevent unauthorized access.

Ledger Nano was a big step in secure starter-level wallet technology, and the HW1 is a giant leap. Packing all the power of the Nano with a price that makes it ideal for gifting, multiple purchases, or a first wallet for those new to bitcoin. This is incredibly important for getting people involved in cryptocurrency, as strong security is now possible in a convenient and cost-effective package.