5 Common Mistakes to Avoid When Setting Up a Hardware Wallet

Skipping the Authenticity Verification Process

One of the most critical steps that users often skip is verifying that their hardware wallet is genuine and hasn't been tampered with during shipping. This verification process varies by manufacturer but typically involves checking holographic seals, verifying device signatures, or running authenticity checks through the official software.

Why this matters: Counterfeit or modified devices can steal your private keys, send funds to attacker-controlled addresses, or display fake transaction information while confirming malicious transfers.

How to avoid this mistake:

• Check all tamper-evident seals before opening the package
• Verify the device's authenticity using the manufacturer's official verification process
• Compare your device's appearance with official photos on the manufacturer's website
• Ensure the device boots into a fresh, unconfigured state

Improper Seed Phrase Generation or Storage

The seed phrase (also called a recovery phrase) is the master key to your cryptocurrency. Mistakes in generating or storing this phrase are perhaps the most dangerous errors you can make during setup.

Common seed phrase mistakes include:

• Not generating the seed phrase on the device itself
• Taking digital photos of the seed phrase
• Storing the phrase in cloud storage or password managers
• Writing the phrase on regular paper that can easily fade or be damaged
• Not creating multiple backup copies
• Storing all backups in the same location

The correct approach:

• Always generate the seed phrase using your hardware wallet's built-in random number generator
• Write the phrase by hand using acid-free paper or metal backup solutions
• Create multiple physical copies and store them in separate secure locations
• Never take photos, screenshots, or store the phrase digitally
• Consider using passphrases (25th word) for additional security
• Test your backups by recovering a small test wallet before storing large amounts

Using Untrusted Computers or Networks During Setup

While hardware wallets are designed to remain secure even when connected to compromised computers, the setup process still involves sensitive information that could be intercepted by malware or network attackers.

Risky setup environments include:

• Public computers (libraries, internet cafes, shared workstations)
• Computers with known malware infections
• Public WiFi networks
• Workplace computers that may be monitored
• Computers belonging to friends or family members

Best practices for setup environment:

• Use your own personal computer that's regularly updated with security patches
• Perform setup on a secure, private network
• Consider temporarily disconnecting from the internet after downloading necessary software
• Run a malware scan before connecting your hardware wallet
• Avoid setup in public spaces where others might observe your actions

Installing Fake or Compromised Software

Hardware wallets require companion software to interact with your computer or mobile device. Installing counterfeit wallet software is an increasingly common attack vector that can compromise your security even with a legitimate hardware device.

Warning signs of fake software:

• Apps found on unofficial app stores or websites
• Software that requests your seed phrase during normal operation
• Unexpected requests for additional personal information
• Poor user interface or spelling mistakes
• Software that doesn't properly verify device authenticity

How to download legitimate software:

• Only download software directly from the manufacturer's official website
• Verify download links by typing the URL manually rather than clicking links
• Check software signatures and hashes when provided
• Use official app stores for mobile apps, but verify the developer information
• Keep your wallet software updated with official releases

Inadequate Testing Before Large Transfers

Many users make the mistake of immediately transferring their entire cryptocurrency portfolio to a newly set up hardware wallet without properly testing the device and recovery process. This can lead to devastating losses if something goes wrong.

Common testing oversights:

• Not verifying that address generation works correctly
• Failing to test the recovery process with the seed phrase
• Not confirming that you can successfully send transactions
• Skipping PIN and passphrase functionality tests
• Not testing firmware update procedures

Proper testing protocol:

• Start by transferring only a small test amount (e.g., $10-50)
• Practice recovering your wallet using your seed phrase backup
• Test sending funds back to an exchange or another wallet
• Verify that your chosen passphrase works correctly if you use one
• Confirm that address verification works on the device screen
• Only transfer larger amounts after successful testing