The iPod of Crypto Storage

Numerous major crypto exchanges, lenders, and institutions filed for bankruptcy in 2022 – Terra Luna, Voyager, Three Arrows Capital, FTX, and BlockFi. Billions of dollars of user crypto funds that were parked on FTX and BlockFi are irrecoverable. Gone forever because they trusted them as their crypto custodian.

I’m reminded of the memes circulating after the FTX collapse:

I’ll be honest, seeing an exchange the size of FTX fail spooked us. Both Ryan and I exited and withdrew 90% of our crypto positions on central exchanges (Coinbase and Gemini) right in the thick of the FTX collapse. We didn’t want to hold too much crypto, and especially none of our cash, there.

“Not your keys, not your crypto.” Mismanagement by crypto custodians is just too common. Turns out, we weren’t alone.

This year’s crypto catastrophes were great marketing for hardware wallet providers. Ledger, especially.

Ledger said Nov. 14 – three days after FTX filed for bankruptcy – was the best sales day ever for its devices, while the previous day was its second-best sales day ever. And November was its best sales month ever. – CoinDesk

Personally, I’ve yet to be impressed by the hardware wallet offerings.

1. I’ve never liked the idea of storing my crypto on a flash drive and having to keep track of another small device.
2. The process for storing coins other than ETH and BTC was cumbersome and easy to mess up.
3. And I’ve always feared that sellers could open my package and copy the keys before shipping me the device – rendering it a ticking time bomb for theft.

Yes, self-custody of your crypto on a cold storage device is the most secure way to store your crypto. But the industry often doesn’t mention some of these shortfalls, risks, and liabilities. It’s not exactly an easy piece of hardware to use.

That’s changing, though.

iPod of Crypto Storage

Crypto wallet maker Ledger has partnered with Tony Fadell, the well-known creator of Apple’s iPod and the co-founder and former CEO of thermostat company Nest, to create its Ledger Stax hardware wallet.

The wallet is a credit card-sized device with embedded magnets so that multiple devices can easily be stacked. The outside is a wraparound e-ink display that can show transaction details and even NFTs. – CoinDesk

Tony Fadell is a legendary innovator. The iPod was an iconic piece of hardware for so many reasons. The user experience was smooth, intuitive, and efficient. If we could get even 25% of that experience in a hardware wallet, I’d be happy.

Frankly, knowing that this brilliant designer has been working on a hardware wallet will be enough to get me to spend the $279 in 2023 on the device. To me, it signals that Ledger (and hopefully the entire hardware wallet industry) is maturing and focused on creating a better user experience.

The FTX collapse of 2022 was a terrible reminder of the risks of trusting a third party with your crypto funds. The industry should strive to make controlling one’s own crypto assets as easy and user-friendly as possible. I think the entrance of Fadell is a great step toward this new era of self-custody and mass adoption of hardware wallets.