- What Are Hardware Wallets?
- Why Are Hardware Wallets Safe?
- Why use a hardware wallet?
- Top 3 hardware wallets and where to buy them
- Do I need multiple hardware wallets?
- Hardware Wallets FAQ
What a crypto hardware wallet is or what makes them so safe to use is something every new crypto user wants to know so let me explain.
The importance of using hardware wallets for securing your cryptocurrencies cannot be overemphasized. Every crypto investor needs something to keep his investments secure and safe from hackers.
Though there are different types of wallets such as a web wallet, mobile wallet, a desktop wallet, a hardware wallet, and a paper wallet, researches have shown that the hardware wallet is one of the safest and most preferred amongst crypto holders.
With the frequent incidences of hacking and crypto thefts, it becomes imperative to get the best wallet which will not only enable you to store multiple assets in a single place but also ensure that you do not lose all your investments should anything go wrong for whatever reasons.
There are many types of hardware wallets available for you as a crypto holder but not all of them will perfectly serve your ideal purpose. Only a few of them are outstanding when it comes to safety and reliability.
The best hardware wallets are those wallets that are able to store the user’s private keys in a highly-secure manner, well encrypted, they are not easily affected by computer viruses, they are secured by a password, not dependent on a server, and they are not easily hacked.
If you are a big-time crypto investor, you would definitely need to secure your portfolio so that you don’t easily lose all the money you have plowed into the business. You certainly need a kind of safe that you are completely in control of – you have the private keys and you also have the secure password.
Moreover, wallets that are highly versatile in terms of having the capacity to store multiple crypto assets are equally considered when shopping for the best hardware wallets to use for safe-keeping your assets.
In a nutshell, you alone have the access to your vault and nobody can access your account except granted a pass by you.
What Are Hardware W
Hardware wallets are electronic devices or tokens that are designed to secure your crypto assets by protecting your private keys. They are mainly used offline and can generate codes that are not accessible to third parties thereby making it near impossible for those codes to be hijacked by hackers in order to gain access to your portfolio.
They are generally intended to be plugged into your computer via a USB in order to check your account balance or send some crypto funds to someone else. It is important to note that most hardware wallets require you to plugging the device into a computer or Smartphone via USB before accessing your account. Hardware wallets ensure that your private keys are not stored on your computers, mobile phones or web servers to function, hence they are not easily compromised.
For anybody to gain access to your account and steal your crypto assets, he first has to steal your hardware device and access the private keys. However, the potential hacker or thief still has a herculean task to overcome – he needs to rightly guess your PIN as a lot of the hardware wallets have an extra layer of security requiring you to input your PIN before you are allowed access.
Are hardware wallets 100% secured? Well, it is difficult to say that anything is 100% safe. The manufacturers of these wallets have tried their best in making sure that they are highly secure and provide your account the best security possible. Nevertheless, there are a few challenges associated with the use of hardware wallets. For instance, there is the issue of Random Number Generator (RNG) to contend with. That shouldn’t be an issue if you have the right hardware and you are using it according to the manufacturer’s instructions.
Since you require a PIN or password to access your devices, it is advisable to write down your Pin on a paper and keep it in a safe place because you are going to need it should you for any reason forget your PIN. The inability to input the right PIN or password in the future means that you might forfeit your investment as nobody can help you with the PIN.
Hardware wallets may not be entirely convenient for you because you need to connect to your computer each time you need to use it and also have to pair it with third-party software to successfully carry out a transaction. However, the inconvenience is worth it since it guarantees the safety and security of your investment.
These wallets do not come free; they require that you pay from $50 to anything above $300 and this can be a bit of inconvenience for low-income earners who are enthusiastic about securing their cryptocurrencies. Now that we have an understanding of what hardware wallets are, it’s time to move on to our next topic of discussion, which is, why are hardware wallets safe?
Why Are Hardware Wallets S
There are several reasons why hardware wallets are safe. Let us quickly examine some of these features.
Hardware security: Hardware wallets make use of Secure Element, which is a hardened microcontroller consisting of a small number of interfaces to the external world thereby minimizing the attack surface. The secure element boasts of high-level integrity and is made of specific engineering to ensure it is tamper-resistant. One way to guard it against serious hardware attacks like fault injection or channel analysis is to insert strong physical protections in it.
Isolation of private keys: Hardware wallets deploy both public and private keys to ensure the safety of your crypto assets. While the crypto assets are stored in the public address, the private keys are the only way to access them in order to make use of them.
The security of your assets is paramount and as a result, the wallets are built to make use of ‘the principle of Isolation’ which makes it impracticable to have access to the keys they protect, since they do not leave the device. This is why they are also referred to as ‘cold storage’. Precisely, they are not online or hot and do not get exposed to the computer which they are connected to or the internet. They are relatively safe.
PIN: Most hardware wallets require that you create a PIN while setting them up. This is to ensure there is a second layer of security for your assets in case you lose your wallet to someone. Your funds are safe even if the wallet is in the hands of someone else since one must input the PIN on any computer before being granted access to your funds. Most wallets are equally designed to wipe out all the data on the hardware if the PIN is inputted incorrectly several times.
Seed Words: It is possible to recover your assets in the event of damage, loss, or accidental wipe off of data. This is why one is required to generate “seed words” which would be needed in such eventuality in order to get your funds back. These seed words must be securely stored away from your wallet.
Now that we have seen why hardware wallets are safe, it is time to examine the next issue which is, why use a hardware wallet?
Why use a hardware wallet?
Crypto investors are constantly searching for wallets that would guarantee the safety of their assets and give them peace of mind. This is why it is imperative that we examine why they should use a hardware wallet. Having seen what makes these wallets safe, we shall also look at why they should be used for storing crypto assets. So why use a hardware wallet? Here are the reasons to use hardware wallets.
- They generate and store private keys in a protected area of a microcontroller, and one cannot transfer the keys out of the device in plain text. Since you are in possession of the device, you are absolutely in control of your portfolio. Nobody can access your funds except the one to whom you give the private keys or divulge your PIN.
- They are mostly used in a secure and interactive manner without exposing the private keys to software that are potentially vulnerable.
- It is not possible for computer viruses to steal funds from the device even if the computer is malware or virus-infected.
- The user can easily validate the device’s operation since the software is mostly open source.
- All operations and transactions are carried out within the device. It only shows the result of the operation, which is a hash of every operation. So, the operations are beyond human manipulation.
- They demand that you manually confirm an operation via the use of a hardware button. This is why a hacker cannot gain access to your fund by proxy; he needs to physically be in possession of the device.
- Your funds are recoverable in case of loss of hardware, damage, or wipe. You only need to remember your “seed words” which you generated while setting up the device.
- A lot of them work on all modern versions of Windows, macOS, and Linux. So, one has several options in terms of the operating systems to use the device on.
- One can create a backup of private keys in case the device is stolen, lost, or broken.
- They do not allow the installation of software on the device thereby ensuring that the operation is not disrupted and no strange code can make your funds vulnerable.
- Some of the hardware wallets such as Ledger Nano S support more than 1100 different cryptocurrencies. This versatility ensures you don’t spend money buying several wallets even if you hold multiple coins.
We have seen the major reasons to use a hardware wallet. Now, what are the top hardware wallets?
Top 3 hardware wallets and where to buy them
There are several hardware wallets out there but three of them are top notch and outstanding for various reasons. We shall briefly look at them and explain why they are better as well as where to buy them.
Ledger Nano X
This is Ledger’s flagship as far as hardware wallets are concerned. It is built with the capacity to handle up to 100 crypto assets at the same time. It is controlled through the Ledger Live mobile app. It provides state-of-the-art security because it safely isolates your private keys inside the device’s certified secure element (CC EAL5+), the same chip that provides adequate security for passports and credit cards.
Besides, there is a backup of your cryptocurrency, enabling you to recover them at anytime by using the 24-word recovery phrase provided when your device was being initialized. With this phrase you can easily restore your account on any Ledger device.
- It is mobile compatible and controlled through Bluetooth
- It supports different coins simultaneously
- It is a highly reputable company
- Its Bluetooth user interface is not easily understood by newbie users
- It’s a bit pricey for low-income earners
- It requires a paired app to carry out its functionality effectively
The cost of Ledger Nano X is $119.00 as of the time of writing this post. You can get one to buy on the Ledger website.
Ledger Nano S
The second hardware wallet on this list is the Ledger Nano S. This is another product designed by Ledger and it comes with sleek design, and user-friendly interface. It supports over 1100 cryptocurrencies including Ethereum, Zcash, Litecoin, Ripple, Dash, and several ERC-20 tokens.
It is accessible via Ledger Live, a free desktop application that gives you control over your Ledger devices, enabling you to check your account as well as send and receive crypto assets into your account at any time.
- It has user-friendly interface
- It has support for over 1100 different cryptocurrencies and altcoins.
- Offers high security for your assets
- It has OLED display
- It is fairly affordable
- Your crypto assets can be recovered in case of any eventuality once you have your 24-word recovery phrase.
- A growing brand reputation
- Firmware update creates difficulties for some users
- It has some vulnerability which is constantly fixed by its highly professional engineering and security teams.
Ledger Nano S goes for just $59.00 as of the time of writing this post. You can easily get one on the Ledger website.
TREZOR One is the last hardware wallet we are considering under this section. Formerly referred to as “TREZOR”, this device is the oldest hardware wallet in the market and also one of the most popular and reputable devices. Its design is simple and it comes with a user-friendly interface. It supports several cryptocurrencies and altcoins including Bitcoin, Ethereum, Bitcoin Cash, Bitcoin Gold, Litecoin, Zcash, NEM, Dash, and a few others.
- It supports major cryptocurrencies
- It is highly secure and makes use of a PIN to ensure nobody gains entry to your account without your permission.
- Your assets are easily recoverable with your 24-letter recovery seed, in case of any damage, loss or wipe.
- It has Two-Factor authentication (2FA)
- Each crypto transaction is uniquely signed
- It allows multiple passwords for multiple accounts
- It is liable to security attacks through its firmware
- A lot of coins are not supported
- The price is on the high side for some users
The price of TRZOR One ranges from 83.49 EUR to 605 EUR. You can make your purchase at the Trezor shop.
Do I need multiple hardware wallets?
The answer to this question is both ‘Yes’ and ‘No’. As a small scale crypto investor who is able to guard his private keys jealousy, you may not need to have multiple hardware wallets because it is not cost effective.
However, as a medium to large scale investors, there are reasons to have multiple wallets. Some of these reasons include:
- To have extra backups: In case your hardware device is accidentally damaged or lost and you are in haste to check your account balance or make transactions, you will certainly need a spare device to access your account if you still have your seed key. In this case you don’t have to delay your transactions until you purchase/receive a new device.
- To have two clone wallets: If you are holding a huge number of crypto coins and decide to be cautious, it is wise to have two hardware wallets – while you keep one at home or office for safety purposes, you can equally have one to be on the go with you at all times, in case you need to make transactions in an emergency situation.
- To minimize risk: If you have several coins, then there is a need to have multiple hardware wallets and spread your assets in them. If for any reason you lose the PIN or seed key to any of the wallets, you are sure not going to lose all your assets as you can still have access to what you have in the other wallets.
In conclusion, hardware wallets are relatively safe and secure for storing crypto assets. Your digital currencies can only be safe if you provide a secure environment for their storage. Therefore, while shopping for a hardware wallet, make sure you settle for nothing less than the best.
Hardware Wallets FAQ
Do hardware wallets have fees? Yes. Hardware wallets do have some fees, depending on the particular hardware. These fees are charged when you make transactions from your account. While the fees are higher with some wallets, others are relatively cheaper. For instance, Ledger Nano S wallet is the first in the crypto ecosystem to implement segwit addresses which makes it easy for users to be charged lower transaction fees when compared to others.
Additionally, they have a feature that enables them to customize their Bitcoin transaction fee if they are to send Bitcoin to other users. With this wallet, one can save big on transaction fees.
Does ledger wallet support ripple? Certainly, ledger wallet supports Ripple. They added Ripple in mid-2017 and the wallet can now serve your purpose if you intend holding your Ripple for a long time.