A hardware wallet is usually a physical device that stores private keys to access crypto tokens offline. These wallets are physical devices like Key fobs or USB sticks; you can think of them as portable vaults that digitally store vital information, such as private keys, to access crypto tokens.
Private keys
You can think of crypto private keys as a PIN to access your bank account. You can hold your crypto on a third-party crypto platform, but you do not hold the private keys to the wallet, the crypto platform does. The custodial crypto platform controls your crypto, and you must trust the platform to secure your crypto. Additionally, the platform has to prove that it has sufficient reserves to cover withdrawals.
How does a hardware wallet work?
Most crypto wallets are hot wallets, such as desktop wallets, mobile wallets, or other web-based wallets. These are connected to the internet and store private keys online. These wallets could be vulnerable to hacks.
Cold storage wallets are completely offline and only connect to the internet if the user wants to move funds off or to the physical device. They do not need the help of intermediaries for their service. You are in control of your crypto in hardware or cold wallet. It also means you have access to your crypto at all times. You plug it into a computer and connect it to a crypto exchange to add or trade crypto tokens.
How to use a hardware wallet?
Each hardware wallet is different, but the steps to use them are usually the same.
- First, connect your hardware wallet to a computer or laptop.
- Next, set a PIN code to add an extra security layer.
- You will receive a wallet address or public key from the wallet’s app for sending or receiving crypto tokens.
- Set up your wallet in a way in which you have to physically input the PIN to send crypto tokens from your wallet to another address.
- Finally, wait for the confirmation of the crypto transaction.
Are hardware crypto wallets safe?
Many users attest that hardware wallets strike the right balance between accessibility and security. They are ideal for users looking to store their crypto over a longer time and who do not transact frequently.
How to Choose a Hardware Wallet?
Look for some of the vital features when choosing a hardware wallet.
- Hardware wallet security: Choose a wallet that offers multi-signature and two-factor authentication. Additionally, choose a wallet that has a backup feature like a recovery seed phrase.
- Ease of use: Some wallets are ideal for advanced crypto users, and others find some other wallets’ interfaces easy to use.
- Supported crypto token: The crypto you want to store should be supported by the hardware wallet.
- Supported operating systems: Check if your computer or operating system is compatible with the hardware wallet.
- Crypto platform compatibility: Check if the crypto exchanges you use are compatible with the hardware wallet. The ideal hardware should connect to your dApps and exchanges.
- Portability: Check if it is easy to carry with you regularly.
- Research the history, customer reviews, and reputation of the hardware wallet provider.
Hardware wallet advantages
Security: One of the vital advantages of a hardware wallet over a software or hot wallet is the added security. Private keys are stored offline, less vulnerable to online attacks. Additionally, hardware wallets offer security measures like two-factor authentication, multi-signature, and password protection to keep your crypto secure from online hackers.
Ease of use: They are portable, enabling you to manage your crypto on the go.
Wide compatibility: Most hardware wallets are compatible with a wide range of crypto tokens.
Hardware wallet disadvantages
Cost: Compared to software or hot wallets, hardware wallets are relatively expensive.
Risk of Loss: You could lose access to your crypto if the wallet is lost or damaged. This risk can be avoided if you have a backup of the private keys.
How much does a hardware wallet cost?
The cost of a simple hardware wallet can start at $30. Advanced cold wallets can cost up to $150. It is vital to do your due diligence before you choose a wallet that is right for your needs.
Conclusion
Hardware wallets or cold wallets offer high security, but they might not be ideal for every user, especially a crypto novice. Also, for users who trade frequently, having an online wallet is better. In case one wants to buy and hold for a long period, a hardware wallet would suit best. The choice of your hardware wallet depends on your preferences and budget.
You can buy popular cryptos like BTC and ETH on Zebpay and join the millions already trading there.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.
