What are hardware wallets and why should I use one?

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Hardware Wallets

A hardware wallet is a physical wallet which stores users private keys ‘offline,’ rather than hot, or software wallets, which generally store private keys ‘online.’ Hardware wallets, such as the Ledger Nano S or Trezor, are small devices, which plug into any PC USB port. Usually, after plugging the device in, you require a passcode/passphrase to unlock the wallet.

 

Enhanced Security

The primary principle behind hardware wallet is to provide maximum protection of private keys, which are the key to unlocking and accessing a wallets balance. Modern PC’s and smartphones are very vulnerable to cyber attacks. Storing private keys or even encrypted private keys on such devices is very insecure and makes you and your wallet an easy target for cyber attacks. Generally, a hardware wallet private key is stored in the protected area of a microcontroller, meaning the private key cannot be exported from the device. Further, hardware wallets are not susceptible to software wallet viruses.

Another reason hardware wallets are considered secure is that they cannot be accessed without the physical device. For example, I keep my Ledger Nano S on my keyring. No matter where I go, I generally have my keys. This means I have my Ledger, and in turn, my funds are safe. If I were to lose my Ledger, or it was stolen, the person with it in their possession would need my passphrase in order to access it. Further, after three failed login attempts the Ledger resets. The only way to restore the wallet from here is to enter the 24-word recovery phrase.

We strongly recommend buying a hardware wallet before investing in Cryptocurrency, especially if you plan to invest a substantial amount. The two hardware wallets we offer support for are the Ledger Nano S and Trezor.

If you have any questions regarding hardware wallets please contact us.

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