Is a hardware wallet any close to the conventional wallet you are familiar with?
If you have been in the cryptocurrency scene for a while, then it is highly likely that you have come across the brands TREZOR, Ledger Nano, and KeepKey. If you have not, then all is not lost since today is your lucky day. Read on and learn more about these as they are some of the available Bitcoin hardware wallets.
Before proceeding, it probably is prudent to define a wallet in the context of a cryptocurrency.
What is a Wallet?
A wallet, in the cryptocurrency concept, is essentially similar to a bank account. The infrastructure allows the user to send, receive, and store cryptocurrency. In a more formal outlook, a wallet is your interface to the Bitcoin blockchain, or whatever network you are using. It connects you to the network just as the usual bank account connects you to the fiat monetary system.
In Crypto-speak, they refer to the devices or programs that store a user’s public addresses and his or her private keys. In addition, the said programs or devices are used to receive or send out crypto.
The two major kinds of wallets available are hardware (cold) wallets, and online (web) wallets.
Hardware Wallets Defined
A hardware wallet refers to the special kind of bitcoin wallet, which is a secure hardware device where a user stores his or her private keys. This kind of wallet has a few outstanding advantages over the standard software wallets in that the private keys are stored in the former are in a protected area of the device’s microcontroller. Essentially, this means that the keys are not transferable out of the electronic device in plaintext.
These physical electronic devices are constructed solely to secure the user’s crypto coins. The underpinning invention guiding the use of hardware wallets is that they have to be connected to the user’s computer, tablet or phone to spend the coins.
Benefits of a Hardware Wallet
The two biggest reasons why you should insist on using a hardware wallet, especially when you have quite a sizeable stash of crypto are:
- The wallet always remains permanently disconnected either in your pocket or inside your bag. This architecture ensures that the wallet is always offline, and cold.
- Sending cryptocurrency is easy since all you have to do is connect the wallet to a device, key in your PIN code and authorise a transaction. You can then disconnect the hardware wallet immediately you are done transacting and keep safe.
In addition, these wallets come with ease of back up and heightened security, and they have a considerably lesser margin of error. Further, setting them up is an easy task even for users that have little or no technical knowledge.
What You Need to Consider When Using a Hardware Wallet?
The single most important factor that you should consider before you go cold is that hardware wallets cost money. And, not small money at that. However, considering the benefits they offer and the amounts of stash they can secure, you may want to consider the cost a fair trade-off.
These wallets are apt for people who keep huge tranches of cryptocurrencies. Since hot wallets are susceptible to fraud, hardware wallets are the safe alternative for people that hold huge amounts of digital coins.
The Most Trusted Hardware Wallets
It is important to note that hardware wallets are the safest choice for individuals looking for the most secure, reliable, and convenient method of storing Bitcoin and altcoins.
The two popular and probably the best Bitcoin hardware wallets are:
- Ledger Nano X
- Ledger Nano S
- TREZOR T
Ledger Nano X
With superior security features thanks to the two chips embedded on the wallet, Nano X also offers added convenience because of the Bluetooth feature. Users that buy this hardware wallet can connect to their devices (phone or laptop) without necessarily attaching the hardware to the mentioned devices.
It is made of plastic and stainless steel, has a battery with 100mAh power, and can hold multiple cryptocurrencies at the same time. Additionally, users can log in to exchanges such as Binance from the wallet.
Ledger Nano S
Nano S is a product of the French company Ledger. Unlike its counterpart highlighted above, you have to connect it to a device using a USB cable. It supports more than 1,100 coins, and can run third-party apps.
Made by SatoshiLabs, the TREZOR brand looks a lot like a tiny calculator that has an OLED screen. It is compatible with Android devices as well as with numerous apps like Mycelium, Multibit HD, and Trezor Wallet.
Each TREZOR T wallet contains a PIN which is permanently embedded in the device. This feature helps ensure that your PIN is not lost even if your computer is compromised.
Holding cryptocurrency is possible through either hot or cold wallets. Cold or offline wallets are the most secure, especially for users that contemplate holding huge amounts of cryptocurrencies. Of these hardware wallets, the most preferred have been highlighted above. Remember that you can enhance your safety by using the hardware wallets alongside cryptocurrency mixing platforms, especially if you keep a portion of your crypto coins in hot wallets.