When talking about the blockchain ecosystem, hardware wallets are considered a key component to provide security and utility. While software wallets can be vulnerable to security holes and hacker attacks, the hardware wallet will hold your private keys on an offline physical device, preventing them from being accessed while maintaining your privacy.
This offline storage method is considered a cold wallet. They can’t be beaten when it comes to security, as the crypto wallets stored in a computer or an online database are constantly connected to the internet and can be more vulnerable and labelled as hot wallets.
What Is a Hardware Wallet?
The hardware wallet works like a USB or Bluetooth device, offering an extra layer of protection, keeping your private keys away from your phone or desktop, so even during a hacker attack or an infected malware, your funds and transactions will be safe.
It’s one of the most efficient ways to safely store your private keys, as they will not be connected to the internet while being easy to use, since your computer can safely communicate with the hardware wallet to send the transactions directly to the device to be signed, and then they get returned to the computer assigned transactions.
Benefits of a Hardware Wallet
Security: The security level provided by a hardware wallet can’t be matched. Since they are kept offline all the time, and you’ll be able to sign transactions without your private keys ever leaving the physical device, they become immune to attacks and more secure than software wallets.
Backup: If you lose your wallet, it’s possible to recover your funds by using a recovery phrase, also known as seed phrase, to re-generate your private keys and access them from a different wallet – but the ideal is to keep your hardware wallet in a safe place.
Pin Encryption: It’s unlikely to happen, but if someone gets access to your hardware wallet they’ll be locked from using it after three attempts to guess your code, as most of them come with encrypted pin protection.
Control: You can manage your funds and grant total ownership of them with hardware wallets and conveniently hold multiple blockchains simultaneously, like Ethereum, Bitcoin, and Lumens in the same device since cryptocurrency doesn’t take much space.
How to Use a Hardware Wallet
1. The steps to use a hardware wallet are simple and work for the majority of models and brands:
2. Start by connecting the hardware wallet to your computer or phone;
3. Set a pin code to add another layer of security to the device. After setting it, you’ll be able to use the pin to unlock the device.
4. The app of the hardware wallet will provide you with an address for sending and receiving crypto;
5. When sending tokens from the hardware devices to another address, you have to input the pin to confirm the transaction;
6. The transaction will be confirmed.
Choosing the Best Hardware Wallet
Researching is the best way to choose the right hardware wallet for you. The device must be compatible with the other devices you use, easy to set up and use, fit into your budget and have the needed security features – like a built-in display, the possibility of offline transaction and two-factor authentication. Create a list of your priorities and which features are a must on your hardware wallet. By conducting deep research, you’ll easily choose the best hardware wallet for you.