In this post we discuss how to securely store your tokens using Ledger Blue hardware wallet and Parity software for Ethereum.
Benefits of a hardware wallet
A hardware wallet is a specialized device where the private key is kept inside the device. The device itself is very hard to crack open. The hardware wallet has a physical interface to confirm all withdrawal transactions. This ensures that even if your main connected device (laptop, mobile) becomes infected by malware or your wallet password leaks, the malicious party cannot make any transactions as they cannot be present to confirm the transaction physically. Using a hardware wallet basically protects you against almost all online attacks.
It is recommended to use a hardware wallet for high value long term crypto asset storage.
Usually hardware wallets connect to your laptop via a USB bort (USB 3.0, not USB-C). For recent Macbooks you need an adapter.
Ledger Blue (order), Ledger Nano or similar Ledger hardware wallet
Chrome web browser
Mac, Linux or Window desktop computer with a USB port
50 GB of free disk space
Some Ether balance for transaction fees
Tokens – if you do not have any go to https://tokenmarket.net and find a token that is a good fit for your ideology
Getting started with Ledger
Connect your Ledger Blue to computer via USB. Turn it on.
Note: If this the first time you are using Ledger Blue you are asked to write down the seed words. Make sure that you do this and store the paper safely in a different location than the Ledger device itself. Even if your tokens do not have much value now, wour piece of paper might very high worthy in the future of cryptoeconomy. Do not store the paper backup and the device itself in the same loction e.g. for the case of a fire.
Note: Ledger Blue will wipe itself if you mistype your PIN code three times.
Install Ledger Manager in Chrome
Use Apps in Chrome top left corner to access your Chrome Apps.
In Ledger Manager make sure your Ethereum app is up-to-date.
Getting started with Parity
Parity is a so called Ethereum full node software that runs on your local computer. Because Parity is a full Ethereum node, you need to have full Ethereum blockchain downloaded on your computer. As the writing of this, it is recommended that you have 50 GB of free disk space minimum for storing the blockchain files.
Start Parity once, make sure your blockchain is fully downloaded and synchronized. This usually takes few hours for a fresh install.
Visit http://localhost:8090 to display Parity web user interface from Parity running on your local computer.
Connecting Ledger to Parity
Parity should now autodetect your Ledger account. Its name is Blue and when you hover your mouse over the account it says Hardware.
Note: As the writing of this Parity and Ledger supports only one account per device.
Depositing tokens to your Parity wallet
Now we are ready to transfer tokens from another wallet to Ledger wallet. Note: You should be also able to participate any ICO or token sale using your Parity hardware account. However in this example we have used MyEtherWallet to participate the token sale and we are moving tokens safety to the hardware wallet.
Copy-paste your address to another wallet. Choose token transfer (no ETH transfer).
Send transaction from your existing wallet.
Make sure that your transaction confirms on EtherScan by checking the transaction id on this service. MyEtherWallet also gives you a direct link to the transaction after it has been sent. Token transactions usually take 2-10 minutes to be mined into a blockchain.
Showing your token balance in Parity
After your token transaction is in a blockchain, and your Parity is fully synced, you can see your balance.
Parity should be able to display the balances of all popular token by default. If your token balance does not show up make sure the token is correctly registered with Parity.
Note: As the writing of this, Parity token registry mechanism had had recent makeover. Please contact your token team to make sure that they have registed their tokens on Parity. The new mechanism is smart contract based. Read more in instructions for registering a new token on Parity.
Withdrawing tokens from your Parity wallet
It has come time to cash out your cryptoinvestment. You want to send tokens to a cryptocurrency exchange.
In the settings of Ethereum application of Ledger Blue user interface, you need to
Allow contract data
Disable browser support
To access the settings click the top left corner hamburger menu inside the Ethereum application of Ledger Blue.
Note: NEVER send tokens to an exchange wallet if you do not check that the exchange wallet is able to receive this particular token. Bittrex, Coinbase, Poloniex, etc. customer support is likely not to be able to receive tokens. This is because as the writing of this most exchange infrastructure is not yet upgraded to deal with tokens as tokens being a very recent phenonenom.
Make sure the accout from where you are going to withdraw tokens needs to have ETH balance for transaction fees.
Make sure Ledger Blue is connected and Ethereum application is running, so that Parity can autodetect your hardware wallet account.
Enter receving address and token amount.
Parity transaction confirmation window asks you to confirm the transaction on the hardware device. Please press Confirm on Ledger Blue.
Note: As the writing of this, Ledger Blue cannot display a token transaction decoded to human readaable format, so one cannot be sure if this is the transaction you really initiated. The receiving address of the transaction is the token contract address, not the receiver of tokens.
After you refesh the account on Parity web interfacae you see the confirmed transaction
Multisig is a safer solution for teams
If you are running operations for company, team or other organization it is safer to use a multisig wallet for storing your tokens instead of a single device hardware wallet. All transctions can be confirmed by 2/3 cosigners, or 3/5 cosigners. With a multisig your organization and wallet stays operational even if some team members go missing in action or get compromised.
Please contact to Ethereum support forums on StackExchange