Bitcoin and Ethereum make a common collocation in the crypto jargon. However, the role they play in the industry couldn’t be more different. While Bitcoin (BTC) serves as digital gold, Ethereum gives developers a chance to build a brand new decentralized ecosystem consisting of DeFi tokens and decentralized apps (dApps). The utility of these Ethereum-based products isn’t limited to the blockchain only — DeFi tokens and dApps can be used in various fields: financing, real estate, the entertainment industry, etc.
So far, ERC20 tokens have turned out to be the most notable DeFi products. You’ve probably heard of SHIBA INU (SHIB), for example, but you don’t know that it’s built on top of the Ethereum blockchain as an ERC-20 token.
That’s why, in today’s article, I’ll discuss ERC20 tokens focusing on their secure storage. Since hardware wallets are the safest solution, I’ll show you how to keep your ERC20 tokens on one of the most popular hardware wallets, Trezor (trezor.io).
What Are ERC20 Tokens?
The term ERC-20 stands for a technical standard for smart contracts built on the Ethereum blockchain. In other words, smart contracts must follow a set of standards to qualify for ERC20 tokens.
If you aren’t familiar with the notion of smart contracts, they are self-executing programs that are automatically triggered after given conditions have been met. The ETH blockchain is an amicable environment for running smart contracts, which enable the creation of DeFi tokens and dApps. Because of blockchain diversity, developers need standards for smart-contract unification. This includes token transfers, transaction approvals, data access, total token supply, etc. One of these standards is also that ERC20 tokens need gas for movement. On the Ethereum network, the gas is paid in Ethereum (ETH).
As such, ERC-20 tokens are blockchain-based assets with their value and owner — you can buy, sell, and trade them just like any other crypto assets, but unlike other cryptocurrencies, they don’t have their own blockchain but use the Ethereum blockchain as a host.
ERC-20 isn’t the only one of the kind token residing on Ethereum. There are a few other standard sets for smart contracts, such as ERC-777 and ERC-223. The majority of the increasingly popular NFTs are also an Ethereum smart-token standard called ERC-721.
However, unlike NFTs, ERC-20 tokens are fungible, meaning there can be plenty of other interchangeable tokens of that series out there. For example, the total number of SHIB tokens can go up to 1 quadrillion.
How Many ERC-20 Tokens Are There?
Thanks to the mainstream development of the DeFi sphere, you can easily meet the standards for creating a new type of ERC20 tokens today. So, I think that nobody can count up the exact number of circulating ERC-20 tokens, but there couldn’t be less than 500,000.
As tradable assets, some ERC20 tokens have reached the status of market-dominant cryptos on all relevant market-cap charts. However, a great number of ERC-20 projects never get to see the light of the day as they fade out immediately after their inception. In the Ethereum world, utility is the key factor for success. Apart from being trading instruments, ERC-20 tokens can be also used as governance and utility tokens in decentralized establishments. As I said, you are probably familiar with many popular ERC-20 tokens without knowing that they belong to this group.
For example, Uniswap (UNI) is a next-gen decentralized exchange that works as an automated market maker (AMM) and allows direct peer-to-peer swaps without the interference of a centralized entity. Uniswap enables users to aggregate the exchange liquidity using its native UNI token. You will come across many “swaps” on the market operating on the same principle — PancakeSwap, SushiSwap, Bancor Network, QuickSwap, etc.
Next, Aave (AAVE) is the native token of the lending platform Aave, which is a typical example of decentralized finance (DeFi). ApeCoin (APE) is a governance and utility token for the popular world of Bored Ape Yacht Club, based on the well-known NFT collection. The popular Wrapped Bitcoin (WBTC) is also an ERC-20 token that represents BTC on the Ethereum blockchain with a 1:1 price ratio.
How to Store ERC-20 Tokens?
I can readily say that ERC-20 comprises a considerable part of the crypto trading industry, so it won’t be difficult to find an ERC-20-friendly storage solution. Some digital wallets support direct token swaps and other sets of functionalities as part of the storage package.
However, bear in mind that here we’re talking about hot wallets that run as web wallets and app wallets for both desktop (Windows, Mac, Linux) and mobile devices (Android and iOS). The list of best-in-class wallets tailored for the ERC-20 community includes MetaMask, MyEtherWallet, MistWallet, and Atomic Wallet. They all feature an exceptional comfort of use but for ultimate security of your valuable tokens, you need a proper hardware wallet.
Hardware wallets are a type of cold storage. They are physical devices that keep your data (your private keys) offline. You’ll still need an app or platform for executing a transaction when keeping your ERC-20 tokens on a hardware wallet. The most popular hardware wallets like Ledger wallets (Ledger Nano X and Ledger Nano S), Trezor, and Keepkey allow sleek integration with selected software wallets and crypto exchanges. However, the private keys will stay safe on your hardware wallet. They have built-in software to accommodate your private keys and achieve full autonomy.
In this article, I’ll provide you with a compact step-by-step guide on how to store your token on Trezor. Before I begin, let’s take a closer look at the Trezor main features.
What Is Trezor?
The original Trezor hardware wallet was released in 2014 by SatoshiLabs — an energetic start-up company that heralded a new approach to crypto storage. Yes, Trezor was the first hardware wallet available for public use, which kept its competitive edge in the mainstream crypto years to come.
The brand is present on the market with two models: Trezor One and a more sophisticated version, Trezor Model T. In general terms, Trezor wallets are small-sized devices with a USB cable gate to connect the wallet device to your computer. They’re compatible with Windows, Mac, and Linux.
The Trezor wallet allows you to store and manage thousands of different cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), XRP, Ethereum Classic (ETC), Binance Coin (BNB), and the full range of ERC-20 tokens. In partnership with the crypto exchanges Changelly, CoinSwitch, and ChangeNOW, the wallet also allows you to trade directly from its interface.
You can either use the native wallet interface Trezor Bridge (Trezor Suite) or connect through one of the supported software wallets: Electrum, MetaMask, Exodus, MyCrypto, MyEtherWallet, Etherwall, Mycelium, and Walleth.
The basic Trezor version comes with the full-featured set for robust protection of your private keys against spam and malware actors. In its outline, Trezor One features a small screen and two simple push buttons. The navigation is smooth and intuitive. Because of the competitive price, the One model is the company’s bestseller.
Trezor Model T
On the other hand, the Trezor Model T is an upgraded and hence, more expensive wallet version. It’s perhaps the most expensive hardware-wallet model available on the market. Apart from the fancy appearance (touch screen and hardware design), Trezor Model T has enhanced security features and supports a larger number of cryptocurrencies.
How to Store ERC20 Tokens on Trezor
Trezor can be a good shelter for your ERC-20 tokens. Just to be clear, the Trezor firmware does support these tokens but they’re not integrated into the wallet itself. This means that you need a
Trezor Beta Wallet and an external software wallet, with private keys and seeds stored by the Trezor hardware device. I recommend MyEtherWallet (MEW) and MetaMask as the best third-party wallets in this case. For this guide, I’ll use MEW as an example.
The entire process consists of two main stages. First, you need to set up both Trezor and MEW on your computer and then send tokens to the hardware device.
How to Set Up the Trezor and MEW Wallet
- Connect the Trezor device to your computer and enter a PIN code and a passphrase.
- Now, go to the official MEW website (MyEtherWallet.com) and navigate to the Send Ether and Tokens button on the main menu. When you see the option How do you like to access your wallet, select Trezor.
- The wallet will show you a separate pop-up panel for exporting the public key. You need to tap Export.
- At this point, you’ll need to define the derivation route to where your public key will be obtained from your seed phrase. Enter or copy the ETH address you want to manage and choose the Unlock your Wallet option.
- As you’ve already approached your MEW wallet, you’re now able to transfer tokens to your hardware device.
How to Make the Transfer
- Log in to your account on MyEtherWallet.
- Head to Send Ether & Tokens from your dashboard.
- Select Trezor under destination wallet and confirm the Connect Trezor option.
- Unlock the hardware wallet with the PIN code you’ve set in the first phase.
- Here, you can notice all the ERC20 token addresses and Ethereum addresses that Trezor is handling for you.
A Few Words Before You Go…
Safe storage of your cryptocurrency is a must for all upcoming crypto endeavours. ERC-20 tokens aren’t an exception — the storage part should be settled before you start dealing with marketplaces and trading strategies. Fortunately, the market offers quite some trustworthy options for robust security.
Hardware wallets are always my first choice, especially when dealing with large amounts of ERC-20 tokens. As you can see, transferring your private keys to a hardware wallet is rather fast and straightforward. Finally, accommodating your ERC-20 tokens to a hardware device that doesn’t require an internet connection is worth the time and money you’d eventually spend. At least you and your tokens will stay far away from the risks lurking in the virtual realm.