In crypto investing, keeping assets safe is crucial, given the risk of theft and attacks. New users often store their assets on exchanges for convenience, which means they do not have full control over the storage of their crypto assets.
In that regard, the safest solution is to use a hardware wallet, which allows users to store and manage their crypto assets more securely independently.
Now, to understand more about hardware wallets, from their advantages and disadvantages to how to use them, check out the full review below.
What is Hardware Wallet?
Hardware wallets, or hard wallets, are a type of crypto wallet that stores private keys and crypto assets on a physical device and offline. This contrasts software wallets, which store private keys and crypto assets on a computer or mobile device.
The main advantage of hardware wallets is their high level of security. Because they are not connected to the Internet, hackers cannot access users’ private keys.
Private keys are stored on a hardware wallet, which is generally a small, portable device connected to a computer or mobile device via USB or Bluetooth.
Hardware wallets are also called cold wallets because they are not directly connected to the Internet. Therefore, they are considered more secure or “cold” for storing crypto assets. Some examples of popular cold wallets include the Trezor Model T, Ledger Nano X, NGRAVE ZERO, KeepKey, and ELLIPAL Titan.
Advantages of Hardware Wallet
Hardware wallets have several advantages that are important to know, including the following:
High Security
Hardware wallets are currently recognized as the most secure private key storage method. By storing them on a device not connected to the internet, the risk of being hacked or infected with malware is significantly reduced.
Furthermore, hardware wallets are designed to protect private keys from theft, even if the device is physically stolen. This high level of security makes it a top choice for storing crypto assets over a long period.
Malware Protection
The advantage of hardware wallets is their immunity to malware or viruses that could threaten the security of software wallets. Because they are not connected online and are difficult to hack, hardware wallets provide additional protection for your crypto asset holdings.
Full Control over Private Key
By controlling your private keys, you don’t rely on third-party services, such as exchanges or online wallets, to store your crypto. That gives you greater control over your assets and the ability to access them whenever you need.
It also eliminates the need to trust third-party services to protect your crypto assets, which are often a major concern in the crypto industry.
Portability
Hardware wallets are small in size and easy to carry. Easily fitting into a pocket or bag, hardware wallets allow you to carry your crypto assets wherever you go, whether for everyday transactions or when traveling.
Disadvantages of Hardware Wallet
On the other hand, hardware wallets also have some drawbacks that are important to know, including the following:
Required Learning
Understanding how hardware wallets work is important for managing and accessing your crypto assets. It may require a little more time and effort than using a software wallet that can be accessed directly through a computer or mobile device.
Price
Purchasing a hardware wallet is costly. For those active in trading crypto assets and making frequent transactions, having a hardware wallet may not be considered a priority.
However, a hardware wallet is the right choice for those who intend to store their crypto assets in the long run. That’s because hardware wallets offer higher security and protection for your crypto assets.
Limited Asset Support
Remember that not all hardware wallets support all types of crypto assets. Some hardware wallets may have limited support for some types of crypto assets. That’s something to consider, especially for users with diverse crypto portfolios.
Physical Vulnerability
Since hardware wallets are physical devices, there is a risk of physical damage or loss. You risk losing access to your crypto assets if your hardware wallet is lost or damaged without having a backup of your private keys.
How to Use Hardware Wallet
The following are steps related to how to use a hardware wallet that is important to know, including:
Setup Process
When you start using your hardware wallet, follow the instructions. The first step usually involves creating a unique PIN code and saving seed phrases, a series of words used to recover your hardware wallet if lost or damaged.
Managing Crypto Assets
Once your hardware wallet is connected, you can manage your crypto assets through the software wallet. You can send and receive transactions, check your account balance, and securely manage your private keys.
Transaction Confirmation
When you want to send crypto assets from the hardware wallet, you must confirm the transaction on the hardware wallet screen connected to the software wallet.
The hardware wallet will then sign the transaction using the PIN stored on the device and send it to the blockchain network for processing through the software wallet.
List of Hardware Wallet
Below is a list of some hardware wallets that are important to know about, including:
Ledger Nano X
Ledger Nano X is the latest wallet from Ledger. One of its advantages is the Bluetooth feature, making it the first hardware wallet to connect with iOS devices.
It is considered more secure because all transactions are signed with the Nano X. its price is $119. The main difference between Nano X and Nano S is that Nano X can store multiple crypto assets simultaneously.
Users have to install and uninstall apps on the Nano S to use certain wallets manually. However, users can install multiple crypto wallets on Nano X simultaneously.
The Ledger Nano X is 72mm x 18.6mm x 11.75mm and weighs 34g. It is made of stainless steel and plastic, powered by a 100mAh battery, and can store multiple crypto assets simultaneously.
The Ledger Nano X supports the same coins as the Nano S, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Monero, Ripple, Neo, Binance Coin, ERC20 Tokens, and more.
Nano S is capable of running third-party apps, and according to its website, there are 18 installable apps currently. The device integrates with a large number of software wallets. The recovery process can only be done from the device without connecting to a computer, featuring Ledger’s secure chip technology.
TREZOR One
TREZOR was introduced in August as the first Bitcoin hardware wallet. It offers secure Bitcoin storage and, thanks to its small and portable design, easy transaction access.
According to the TREZOR website, it supports 1064 coins, including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and others.
The advantages of TREZOR One are its ease of use, sleek design, compatibility with various platforms (Windows, Mac OS X, or Linux), and randomly generated PIN code to keep the device secure.
TREZOR T
TREZOR Model-T is SatoshiLabs’s second generation of Bitcoin/crypto hardware wallet. It is an enhanced version of the TREZOR One with a better screen.
This hardware wallet does not have buttons but also has a touch screen. TREZOR Model-T supports all the coins supported by TREZOR One, plus Ripple, Cardano, Monero, and Tezos.
This hardware wallet’s benefits are similar to those of the TREZOR One, but it has more coin storage capabilities and a touchscreen feature that makes it easier to use.
KeepKey
KeepKey was founded in 2015 by Darin Stanchfield and is based in the United States. In 2016, it acquired the Bitcoin wallet Multibit. Then, in August 2017, it was acquired by ShapeShift, an exchange based in Switzerland.
KeepKey is priced at around $99 and has received a positive response from users. Coins that can be stored or sent from KeepKey include Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin, and it also provides support for ERC-20 tokens.
This wallet’s advantages include a sizable LCD screen for easy user interaction, integration with ShapeShift, a user-friendly design, and a password recovery system that enhances wallet security.
Best Practice for Hardware Wallet
Quoting kaspersky.com, here are some best practices for hardware wallets that are important to know, including:
Safe Storage
Since hardware wallets are physical objects, keeping them safe and storing them in a suitable and secure place at room temperature is important. This location should also be protected from fire, rain, and other elements.
However, if the worst happens and the hardware wallet is stolen, users can always use their recovery code or PIN to retrieve their data. With that in mind, it is equally important to store these codes in a secure location (and not physically written down in your home).
Password Manager Usage
It is highly recommended that you use a password manager (sometimes referred to as a password repository) to store all your digital PIN codes to keep them safe from possible hackers.
Although password managers can be hacked, your passwords will remain safe because they are encrypted (decrypting industry-standard encryption, such as 256-bit AES, Advanced Encryption Standard, is nearly impossible).
They also include a “password generator”, which can be used to create a strong recovery PIN/password (10-12 characters containing a mix of special characters, numbers, uppercase and lowercase letters).
Some hardware wallets automatically generate recovery codes or seed phrases (usually 12-24 randomly generated words).
Purchase from Leading Manufacturers
Always buy hardware wallets from trusted manufacturers, and never buy “used” ones. Since hardware wallets are essentially simple computers, used hardware wallets are perfect vectors for many forms of malware, which can be used to create a backdoor into your system or network.
Hardware wallets usually include a visible holographic sticker (or other security feature) that can alert potential buyers. If the sticker is damaged or looks like it has been removed or tampered with, do not purchase the wallet and notify the manufacturer or seller.
Conclusion
In conclusion, hardware wallets offer high security in storing private keys and crypto assets, reducing the risk of hacking and malware infection. However, users need to consider several factors before choosing a hardware wallet.
Hardware wallets have advantages, including high security, the ability to store different types of crypto coins, and the use of reliable recovery codes in case of device loss or theft.
However, some drawbacks are also to consider, including the possibly high purchase cost, limitations in support for certain crypto coins, and the risk of physical damage or loss.
Furthermore, users must consider their needs and priorities before choosing a hardware wallet, including how often they make transactions, the types of coins they want to store, and design preferences or additional features.
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Well, now you understand hardware wallets, from the advantages and disadvantages to how to use them.
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Therefore, it is very important to do in-depth research before investing in crypto assets.
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