Most crypto people would agree that the best way to store bitcoin and other cryptocurrencies is with crypto and bitcoin hardware wallets. There not only make it easier to store crypto but also make it more secure. Here is why you should get one.
Hardware Wallets Explained
Cryptocurrency is slowly becoming a household name. It will be no surprise if half of all internet users use a crypto hardware wallet in some way before the year 2030.
After gaining recognition in 2014, bitcoin, which is the first-ever cryptocurrency, has remained on a steady rise in value. This year we saw it go up to $70k before falling back down. Other cryptocurrencies like ETHER, SHIB, ADA , DOT, DOGE, etc have also experienced a massive increase in value.
Hardware Wallets Explained
2021 has seen many new people join the cryptocurrency space. In a recent report, Binance, one of the most popular cryptocurrency exchanges, announced a staggering 28.6 million users this year.
With such a number of users on just one exchange, you will agree with me that the industry is growing rapidly. But not many of these crypto users know about wallets and how to safely secure their assets offline.
Bitcoin and Crypto Hardware Wallets
A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often also offers the functionality of encrypting and/or signing a transaction.Wikipedia
Before you own crypto you must first create a crypto wallet. A wallet is kind of like a bank account. Many of you already have software crypto wallets on your devices. But these wallets offer less security compared to cold hardware wallets and paper wallets. In this article, we are focusing on crypto and bitcoin hardware wallets because it is one of the most secure ways to store cryptocurrencies.
Hardware wallets are devices that store your cryptocurrencies offline. By storing them offline, you get extra security and protection against many kinds of attacks, like phishing and malware attacks. This kind of attack can easily affect hot wallets like mobile, desktop wallets, and even the wallets on exchanges.
Hardware wallets are very small devices that can fit right into your pocket. Knowing that such a small device can offer you so much security is very interesting. The most exciting part about hardware wallets is that many of them can log you into dApps without having to sign up.
Some can even enable you to login into your regular apps like Gmail and Facebook.
With a hardware wallet, you can actually store all your cryptocurrencies in one place regardless of their blockchains. One hardware wallet is capable of storing Bitcoin, Ether, Ada, Doge, Solana, Dot, to name a few.
You can back up all these coins with just one recovery phrase and transact with all of them anytime from your wallet.
How Hardware Wallets Work
Hardware wallets only store your public and private keys while your actual cryptocurrencies remain on the blockchain in the digital ledger. Private keys as the name implies, are the key to unlocking your address on the blockchain where your assets always stay. Think of it as a complex password.
The blockchain can be accessed anywhere in the world, allowing you to send or receive crypto at any time.
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Many cold wallets offer very tight security. For instance, a paper wallet is very secure and can never be stolen in an online attack. However, if someone manages to physically locate it, they can steal your cryptocurrencies, because your keys are directly printed on the paper.
But this is not true with a hardware wallet. Apart from keeping your keys offline, a hardware wallet is also protected by a PIN and sometimes a passphrase. This offers extra security.
Meaning even if someone stole your hardware wallet, it is almost impossible for them to access your private keys and steal your cryptocoins. That’s because the keys are stored locally in the wallet and never on the internet.
Furthermore, hardware wallets have an easy option for you to recover your keys even if you lose the hardware device or it breaks. This can be done easily by restoring your crypto onto another device using the seed phrase from your backup.
A seed phrase or recovery phrase is a list of words that can help your re-generate your private keys. The seed phrase is all you need to move your keys from one hardware wallet to another.