If you trade in crypto frequently, then you understand how important it is to keep your digital assets safe.
One way to do this is by using a hardware wallet. As per a report, the crypto hardware wallet market is set to be valued at US$877.69 million by 2026. Cryptocurrency’s growing demand and positive perception is boosting the demand for crypto wallets. Here, we look at what a hardware wallet is and whether you should get one.
What is a hardware wallet?
A hardware wallet is a physical device, like a USB, that stores your private keys and cryptographic information offline. It is a type of crypto wallet that keeps your money secure and away from your phone or desktop. This means that even if your computer is hacked or infected with malware, your funds will remain safe. Hardware wallets are considered to be one of the most secure ways to store cryptocurrencies because they’re not connected to the internet. Therefore, they are less vulnerable to hacking. Some of the most popular hardware wallets include the Ledger Nano S and Trezor Model T.
Differences between a software and hardware wallet
For one, software wallets are software programs connected to the internet that store your private keys and allow you to interact with the blockchain; for example, Electrum. Hardware wallets are physical devices that store your private keys and allow you to interact with the blockchain.
Secondly, software wallets are generally less secure than hardware wallets, as they can be infected with malware. Hardware wallets are much more difficult to hack as they are not connected to the internet and are stored offline.
Thirdly, software wallets usually have a user-friendly interface that is easy to use. Hardware wallets usually have a more basic interface, as they are designed for security first and foremost.
Finally, software wallets are often free or low-cost, while hardware wallets usually come at a higher price point.
There are also online wallets, or hosted wallets, that are run by crypto exchanges. However, they can be risky as you don’t have any real control over your tokens. So if the exchange is attacked, you might end up losing all your crypto.
Benefits of using a hardware wallet
There are several benefits of using a hardware wallet:
- The level of security provided by hardware wallets is nearly impossible to match by any other wallet.
- Hardware wallets allow you to store your private keys offline, which reduces the risk of them being compromised.
- Hardware wallets can be used to sign transactions offline, which further increases security.
- Some hardware wallets also come with a built-in program, which allows you to confirm that the transaction is going to the correct address.
That said, they are not without their disadvantages. For one, they can be tiresome to operate owing to the multiple steps involved in setting it up and using it. Software wallets don’t require as much effort as they are already on your personal computer. Plus, hardware wallets are still subject to physical threats, like losses and attacks. Additionally, bear in mind that they can be super expensive, costing anywhere between US$50 and US$700, so make sure you have the financial capacity to purchase one.
Do you really need a hardware wallet?
If you are serious about cryptocurrency, then yes, you need a hardware wallet. On the other hand, if you are just starting out and only have a small amount of cryptocurrency, then a software wallet may be sufficient. However, if you have significant amounts of cryptocurrency, or if you plan on trading frequently, then a hardware wallet is a must-have.
How to choose a hardware wallet
When choosing a hardware wallet, there are several things you should consider:
- Compatibility: Make sure that the hardware wallet is compatible with the devices you want to use it with.
- Ease of use: Look for a hardware wallet that is easy to set up and use.
- Security features: Make sure the hardware wallet has all the security features you need, such as a built-in display, offline transaction signing and two-factor authentication.
- Price: Hardware wallets can vary in price, so choose one that fits your budget.
- Research: In the end, when choosing any wallet, prioritize thorough research.
Cryptocurrency users who wish to remain anonymous often choose to use a hardware wallet, as their private keys are not stored on a central server. This means that even if the hardware wallet is lost or stolen, the user’s funds will not be accessible to anyone unless they possess the pin or code to unlock it.
All things considered, hardware wallets are fashioned for those who are dealing in significant amounts of crypto and want to keep their money secure. It may be expensive; but rest assured, a hardware wallet is worth it in the long run.
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