What Is Hardware Wallet? It’s Benefits and Drawbacks.
In a growing crypto space where hacks and theft are common, it is hard to store cryptocurrencies.
There are 3 different methods you can choose to store crypto holdings.
The first method is to store cryptos in an online wallet. This method is very helpful when you’re doing a lot of crypto transactions, but at the same time, online wallets are prone to hacking attacks that can cost your entire balance.
The second method is to use a Software wallet which is installed on your desktop to store cryptos. In this method the software store your crypto holdings locally on your computer but if your computer is stolen or damaged or infected by virus then your crypto holdings at in the high risk.
Third method and one of the best method to store cryptos is Cold Storage method. Cold Storage means storing your cryptos in offline where wallet can’t be infected by a virus or hacked through an internet connection.
There are different types of Cold Storage in which Hardware Wallets considered as the best option to store crypto holdings securely.
What is Hardware Wallets?
The hardware wallet is a physical device programmed to storing the private key which used to secure crypto assets also ensure you’re the owner of holdings.
A hardware wallet stores your crypto holdings completely offline it only goes online whenever you want to make a transaction, and then be taken offline to facilitate portability and maximum security.
Benefits of Hardware Wallet.
To store cryptos, hardware creates an isolated environment which keeps your private keys safe on a secure chip, means you don’t have to depend on the internet to host your wallet or any software wallet where your private key left vulnerable.
Since Hardware wallet stores your private key offline, it reduces the hacking and virus attacks.
Even if an attacker somehow gains access of your hardware wallet, then attacker needs the PIN which created by you while setting up the wallet, if the attacker tries different pins, the device will self-destruct after the third wrong pin entry.
Also, you don’t have to worry if your Hardware wallet is lost because it is immune to remote attacks plus you can use the seed phrase to get back all the crypto holdings in a new hardware wallet.
In case, you’re using online or software wallet, all your details most importantly your private key stored on the third-party server, which is highly vulnerable for hacking attacks.
But on the other hand, in a hardware wallet, all your details and the private key is stored on the hardware wallet and stay in your hand.
Multiple Coin Support.
Hardware wallets support a vast amount of cryptocurrencies.
Latest Ledger nano X hardware wallets can support more than 1,000 cryptocurrencies this means you can put them onto a single device and manage them all in one place.
Software code of the hardware wallets are most of the time open source it means anyone can review and make their own changes to the code of the software. This helps to add new features and protect against virus and bugs.
These are all the benefits of hardware wallets, but this does not mean they are perfect to store crypto holding here are some drawbacks of hardware wallets you have to check out.
Drawbacks of Hardware Wallets.
You can use any online or software wallet for free. They charge you a small amount of fee for doing transactions using them, but a hardware wallet price starts at around $50 if you want more security features then wallet price goes beyond $100.
Due to high-security features in hardware wallets, it is not easy to make any transaction in two or three click.
In fact, it is not easy to set up a hardware wallet if you’re the newbie also you can’t do all the activities on the wallet without the device which have an internet connection and the software developed by the hardware wallet company.
Risk of Theft and Damage.
Hardware wallets stores cryptos very securely, but it is your responsibility to keep a hardware wallet away from wrong hands and natural damages like fire, flood.
Hardware wallets are the best option when you give priority to security for storing or making crypto payments.
If you have given security as the priority and decided to buy a hardware wallet, then it is also important to have the right knowledge about hardware wallets like where to buy and correct manner of using it.
There are many sellers available on the famous e-commerce sites selling already initiated top and recommended hardware wallets like Ledger or Trezor with the seed words on a recovery sheet. But as soon you fund the wallet scammer uses the seed words already generated to retrieve the stored currency.
That is why always buy hardware wallet from a legit website.
After buying a wallet here are some security tips to keep in mind when using a cryptocurrency hardware wallet.
#1 Use a Safe Pin and Memorize it.
#2 Keep your Recovery Words safe.
#3 Keep your Hardware Wallet Safe.
#4 Never store all crypto fund in one wallet.
If you follow these security measures, you’ll able hodl your cryptos securely for a long period.
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Originally published at https://ccoingossip.com on February 11, 2020.