What is a hardware wallet?
A hardware wallet is a physical electronic device that stores the private keys to crypto assets in a highly secure, malware proof unit. A hardware wallet cannot be hacked or attacked by viruses. It can be used to store and transact various cryptocurrencies. Open source software is used allowing the user to validate the entire operation with the device.
Cryptocurrency protocols are confirmed by sending signed notes of payment across the internet. These messages, referred to as Transactions, are signed using a special algorithm. In order to sign the transactions, a unique key is required. The hardware wallets hold the keys and help you securely 'sign' the transactions.
Why is the hardware wallet the safest means of keeping coins secure?
Why not use a USB Flash Drive? Any software can read and copy the private address and malware can manipulate the receiving address. But more importantly, if the USB Flash Drive is lost, then the crypto currencies/ assets are also lost.
What about a Paper Wallet? Whilst a paper wallet is a secure means of storing cryptocurrencies, if the piece of paper is lost or stolen, then your crypto assets are gone with it. Also you will need to manually type out your private key every time you transact, which is prone to error and inconvienient.
How does a Software Wallet compare? Software wallets are private online wallets where you can store crypto assets. By nature of being online, they are vulnerable to being hacked in various ways. Software wallets keep your private keys either on your computer or on the internet! If using a software wallet, hackers can gain access by hacking your computer or the servers of the services you use.
However, since hardware wallets don’t currently cater to all cryptocurrencies, a combination of hardware wallet/s and software wallets is inevitable if one holds a range of crypto coins.
With Hardware Wallets, you can be assured of,
- malware proof secure element
- offline storage of crypto assets
- private key and passphrase restores crypto assets even if the original hardware device is lost (see below)
- allows safe transactions (send and receive)
- generates multiple addresses allowing unique address to be used with every transaction if so desired
At present time, hardware wallets are the safest means of storing your crypto assets.
Which wallet is right for me? How do I decide?
The first thing to look at is the compatibility of cryptocurrencies purchased, or hoping to purchase, with the coins supported by each hardware wallet type. Not all coins are supported by any of the wallets. Have a look at our Wallet FAQ pages for a list of coins supported by each hardware wallet.
If you plan to purchase a range of coins, it is highly likely that you will need a combination of software wallets in addition to your hardware wallet.
Other considerations include ease of use, and cost.
What is a Recovery Seed?
The recovery seed is a 24 word recovery phrase, which is automatically generated for you during the initial configuration of your hardware wallet. You can restore your crypto assets in case of theft or loss of the wallet. It is crucial for this to be recorded safely kept private.
Do I select the pin?
Yes, you get to choose a pin code to protect your hardware wallet. Select one that is at least 4 numbers. Even if the computer with which you use your hardware wallet is hacked, the hackers will not be able to gain access to your pin.
What happens if I lose or damage my hardware wallet?
Guard the pin code and 24 word recovery seed with your life! If you have these, you can simply purchase another device and reclaim your crypto assets.