Quiz answers: win a Ledger Nano S Plus at Thailand Crypto Expo 2022

Written for a competition at Thailand Crypto Expo 2022. The competition has long since ended, but the explanation of wallets, seed phrases and passphrases is kept here for reference. The article is kept as written.

First of all, thank you to everyone who came to visit SIAMBC at Thailand Crypto Expo 2022. For this activity we have ten questions. Whoever answers correctly and fastest scores highest and takes home a Ledger Nano S Plus. The activity starts at 15:00 at booth CS09, SIAMBC. The answers can be found in this article.

What is a digital wallet?

Imagine we want to keep gold in a safe. What we have to keep from being stolen is the key — because if a thief can take our key and make a copy, the thief can open the safe.

It is the same with storing digital money: we have to keep the key to our digital money safe. And because it is digital money, our key is not made of metal or anything we can hold. The key, or private key, of digital money looks something like this:

8612acb38931ab51cea51c036370930d18782dace7b59cf1a26be1fc993b8d5d83a9c66e8f15e2c234d997a1f0ecf63d9dd9f6abc3ae76c8023003886b8f0708

It is almost impossible for a person to write that down correctly, character for character. So it was agreed in BIP39 — Bitcoin Improvement Proposal 39 — to use 2,048 English words in place of this long code, called a seed phrase, which looks something like this:

orange, grace, sail, sunny, wrong, depart, together, quiz, area, ketchup, rapid, true

The main job of a digital wallet is to keep these private keys or seed phrases safe from attackers — because if a thief can copy those 12, 18 or 24 English words, our money is stolen immediately.

How does a seed phrase differ from a private key?

• A private key is like a key written in computer language (hard to write down)
• A seed phrase is like a key written in human language (far, far easier to write down)

Types of digital wallet

There are several kinds of digital wallet, which divide into two main groups: software wallets and hardware wallets.

Software wallet (or hot wallet): MetaMask, Electrum, Exodus, Trust Wallet, Atomic Wallet.

Hardware wallet (or cold wallet): Ledger, Trezor, SafePal, SecuX, D'CENT, CoolWallet.

A lot of people will have used MetaMask, and if you remember, there is a step where the user writes down 12 English words — which is our key.

But because a software wallet such as MetaMask keeps that key on a computer or phone connected to the internet, stealing the key from these programs is a great deal easier than stealing it from a hardware wallet. Using a hardware wallet therefore protects against hacking very well.

What is a hardware wallet?

A hardware wallet (or cold wallet) is a device for storing digital money or cryptocurrency that is highly secure, because the device is not directly connected to the internet.

The seed phrase is stored on the device itself rather than on a phone or computer, which means an attacker far away from us can hardly hack our money at all. When writing down the seed phrase, users should write it on paper or a steel plate only. Never photograph it and keep it on a phone, never type it into an email to yourself, and the seed phrase should not be kept in the same place as the hardware wallet.

Frequently asked questions

If the hardware wallet is lost or breaks, does that mean the money is gone?
No — the money is not lost if you have kept the seed phrase (also called seed words, recovery seed or mnemonic phrase). And if a passphrase has been enabled, you must keep the passphrase too, in order to recover onto a new device.

If both the hardware wallet and the seed phrase are lost, can the money still be recovered?
No. Both the device and the backup, the seed phrase, are gone.

What is a passphrase?
It is like a further password on top of the seed phrase, which the user can create themselves. Normally this function is not enabled, but on some models such as Trezor a prompt to use a passphrase may appear. SIAMBC recommends leaving this step blank, because if you use a passphrase and then forget it, the money cannot be recovered even though you kept the seed phrase.

Can a hardware wallet store NFTs?
Yes, if the NFT is on a main chain such as Ethereum, Binance Smart Chain, Matic, NEAR, TRON or Cardano. But you have to check whether the hardware wallet model you are buying supports that chain.

How does the Ledger Nano S Plus, the new model from Ledger, differ from the older Ledger Nano S?
It has more memory, and a screen that is larger and brighter.

Things to be careful of when using a hardware wallet

Although using a hardware wallet is very safe, there are still cases where users are tricked into typing out or sending the hardware wallet's seed phrase to an attacker. In cases like this the money can be taken immediately, without the attacker needing to reach the user's hardware wallet at all.

So always remember: the seed phrase matters more than the device.

Know that much and you are ready to play the game and go for the Ledger Nano S Plus from SIAMBC.