A Look at Hardware Wallets
Hardware wallet – also, known as cold storage – is an electronic device that allows easy transactions and works as a safe box for your cryptocurrency. The hardware wallets don’t have security risks of online wallets and software wallets, provide secure storage, and have security advantages over other cold storage methods like paper wallets. These securely programmed devices store your private keys but never reveal them.
Let us ponder over the significance of hardware wallets and discuss why it is important to have them.
The purpose of designing hardware wallets is to isolate the private keys from online storage methods, like PCs or smartphones – prone to being access by hackers. As private keys are never exposed to the computer, hackers would have to physically steal the computer to access the private keys of a user. That’s why hardware wallets are called as cold storage. The cryptocurrencies are always found on the blockchain that has an address containing the assets. The private key unlocks the address, and you can access the tokens using your hardware wallet.
You can use a hardware wallet by inserting the device into your PC using a USB port and accessing it using the PIN code. While keeping your keys secured, you create a blockchain transaction during which you sign. Your signature gives you access to a private key which prevents others from intruding on your privacy and making transactions. Your hardware confirms the transaction made on your device before any coins can be spent.
Hardware wallets come with several benefits. Let us explore some of them.
- Most hardware wallets are encrypted with a PIN code, like your debit card; thereby, giving an added layer of security to assets; keeping the computer immune to cyberattacks and malicious software.
- In case your wallet is misplaced, there’s a back-up for the assets with a single seed phrase/recovery phase. Your private key can be restored with the help of recovery phrase – a record of words. The private key can also be transferred to another hardware wallet using seed/recovery phrase.
- As cryptocurrencies are not physical things occupying space, therefore there is no limit to how many cryptocurrencies can be held by the wallet. These wallets allow hosting multiple cryptocurrencies; like Bitcoin, Ethereum, Ripple, on the same wallet.
- The hardware wallets are the safest option when it comes to cryptocurrency wallets because they are immune to computer viruses, unlike software wallets, which are always under threat of malware.
- It is convenient to use a hardware wallet. The small, plug-in device has your private key which can be used to access the assets from anywhere. These wallets can be used to log in your apps like Facebook and Google.
- These wallets can be used for wallet-to-wallet trading – the safest medium to trade digital assets from your wallet; saving you from the hassle of deposit delays.
The two recommended hardware wallets are Ledger Wallet and Trezor Wallet. You now know how hardware wallets work. Get one for you now!