.jpg&w=1920&q=75)
What are Hardware wallets?
Just like we keep our cash or cards in a physical wallet, $BTC, $ETH, $EGLD, and many other tokens are stored in a digital wallet, which can be either hardware or web-based. Well-known web-based wallets are MetaMask, Phantom, Maiar, and Coinbase; all these wallets require you to set a password, followed by giving you a secret key generated from a variety of random words. Most people usually write these words down in a safe place in case they need to recover their wallets.
On the other hand, hardware wallets are “physical” digital wallets where your tokens are stored on a device that looks similar to a USB, and often these are also referred to as cold wallets or offline wallets. The main difference is that hardware wallets are not connected to the internet and store a user's private key on the drive. Given multiple hacking incidents, fraud, and computer viruses on web-based wallets, crypto experts are encouraging token holders to store their assets on a hardware wallet, far away from all internet-based malware.
Why should I secure my tokens with hardware wallets in the first place?
The most practical reason to use a hardware wallet to store your tokens is the level of security it provides. Undoubtedly, this is unmatchable by web-based wallets because it is not connected to the internet and thus unaffected by malware; it deflects the possibility of hackers and viruses erasing all your digital assets. There are a couple of downsides that come with hardware wallets. First, compared to web-based wallets, they come at a much higher price, ranging anywhere from $50 to $700. Furthermore, hardware wallets don’t guarantee threats; loss, physical thefts, attacks, and even natural disasters where your wallet is involved could all be factors that affect your tokens.
Nevertheless, it also depends on how much cryptocurrency you own, other online security measures you have in place, and the risk you can afford. However, most experts advise that a hardware wallet is a must-have if you have a substantial amount of cryptocurrency.
How to secure your tokens
Hardware wallets are stripped-down versions of computers that only perform the simplest of functions, which can be anything from 2 to three, including a small button and sometimes a screen. A hardware wallet not connected to a PC is not connecting to the internet; therefore, technically has no harm. But when a user wants to use their wallet, they need to plug it into a PC; the wallet can only receive, access, retrieve, or swap crypto after the user has signed in using their private key, different than a web wallet that typically requires password logins.
So, once you have decided that you want to use a hardware wallet to store your tokens, here is how setting up your hardware wallet will work in most cases:
- Figure out which wallet is most compatible with your situation. Some of the most well-known wallets are; Trezor, Ngrave, Ledger, and KeepKey. Depending on which tokens you own, the majority will make your choice. Make sure you do not buy your wallet secondhand and that it comes from a legitimate distributor.
- Set up the wallet’s online platform on your device. You will need an online platform to make all your transactions after plugging your USB wallet into your PC. Make sure that your internet connection is secure. The platform will provide you with a recovery phrase.
- Write down your recovery phrase and store it somewhere offline and secure.
- Set up your private key and make sure it is stored in a safe place with you. The wallet will also give you a PIN that you need to keep in a safe place. If both the private key phrase and PIN are lost, there is little to no chance you will be able to restore your wallet and what is inside it.
- Plug your wallet into a device and unlock it with your PIN. Make sure you are connected to a secure network.
- Create a transaction on the wallet platform and sign it off with your private key.
For more information and FAQs about hardware wallets, check out the following sources:
Articles and Websites
- https://bitpay.com/blog/hardware-wallets-explained/
- https://blog.trezor.io/?gi=d0c28f93a3f6
- https://www.ledger.com/academy
