Hard Wallet: What Is It? + 4 Tips When Using Hardware Wallets in Crypto
In the crypto market, safety comes first. How to protect assets in the most secure wallet? There are many ways, of which the most useful and simplest is to use a hardware wallet? Let's find out what is a hardware wallet, why should you use a hardware wallet in today's article.
- Hardware wallets are physical devices that store a user's passphrase/private key in an offline environment.
- Hardware wallets are the perfect choice for users who want to store assets for the long term.
- The most popular hardware wallets currently are Ledger Nano X, Ledger Nano S, and Trezor One.
What is a hard wallet?
Hardware wallets (also known as cold wallets) are relatively small physical devices, used for the purpose of securely storing private keys in offline conditions, without using use the internet continuously.
Being isolated from the internet and only connecting when users make money transfers helps to ensure that users' assets are safe from the risks of hacking, exploitation, etc.
Currently, hardware wallets are known as the absolute best cryptocurrency protection solution. When using a hardware wallet, users can absolutely not worry about the account being hacked, the only thing to pay attention to is to make sure not to reveal the private key and passphrase.
Learn more: What is Private Key & Passphrase?
How hardware wallets work
These wallets are typically shaped like a USB stick, which can be plugged into a computer to verify transactions. First, users need to connect the wallet with a few steps:
- Proceed to visit the official website of the wallet.
- Download the app and set up a new wallet.
- After setting up the PIN and confirming the 24-character recovery phrase, the user has completed the setup and can use the wallet.
The steps above may vary or be different for each specific wallet. When used, the operation to perform transactions is also very simple:
- When a user creates a transaction, the transaction request is sent to the hardware wallet.
- The user confirms the transaction after carefully checking the number and address displayed in the hardware wallet.
- The transaction is then sent to the blockchain.
Advantages and disadvantages of hardware wallets
If users want to store coins/tokens for a long time, hardware wallets will always be the perfect choice. Hardware wallets have a few outstanding advantages:
- Security: The security level of hardware wallets is generally much higher than that of other wallets, because the private keys of the wallet will be stored in a condition that is not connected to the Internet.
- Security: Even if the user loses the hardware wallet, others will also need to enter the correct PIN to unlock the wallet, with just a few incorrect entries, the wallet will be locked. Users who lost their wallet can also easily recover it with a recovery phrase.
- Portability : The hardware wallet is designed to be compact, easy to store, store or even carry with you wherever you go.
- Anonymity: When using cold wallets, users will never have to go through identity verification procedures.
- Property ownership: Storing assets in a cold wallet means that the user is actually owning the asset without entrusting it to other parties, literally according to the saying "Your key - Your coin".
- Independence: Hardware wallets are not dependent on any other third party apps or services.
- Compatibility: Hardware wallets are now compatible with almost all available operating systems.
Along with the above advantages, hardware wallets also have a few disadvantages that users need to pay attention to
- Cost: Unlike other wallets that are usually free to use, users who want to use cold wallets need to pay a fee, the price ranges from 50 - 200 USD.
- Complicated operation: With some types of wallets with many advanced features, users often take a while to study and get used to before using.
- Perishable: Because it is a physical wallet, the hardware wallet is quite small in size, so if you are not careful, it can easily be broken, damaged or dropped.
- Inconvenience in transaction: When you want to make a transaction to send crypto assets from a hardware wallet, users will need to connect the wallet to the internet via the software that the wallet company provides. The operations as well as the processing time will certainly be more and longer than other common wallets.
Limited storage capacity: Hardware wallets usually only support prominent coins/tokens and the number of blockchains supported is also less than other wallets.
Cold wallet and hot wallet
Cold wallet is the name of crypto wallets that are not connected to the Internet in general, in which, hardware wallets are the most prominent and popular cold wallets. Therefore, gradually users tend to use the phrase "hard wallet" instead of "cold wallet".
In addition, hot wallets are wallet software that is always connected to the internet, usually wallets of exchanges, wallet applications on PCs, phones, etc.
These two types of wallets have different characteristics and advantages and disadvantages, users need to understand these characteristics to use in each case.
The most basic point of these two wallets is that they are both used to store crypto assets. In addition, both wallets are capable of receiving and sending crypto.
In general, cold wallets are often used for long-term and safe storage purposes. Hot wallets, on the other hand, are used for purposes that need convenience and speed such as transactions, interactions with Dapps , etc.
|HOT WALLET||COLD WALLET|
|Mode of operation||Always online||Always offline, can only be done with a wallet|
|Security level||Vulnerable to attack||Immune to hackers, viruses|
|Number of coins supported||Unlimited||Limited|
|Operation to use||Simple operation||Complex operation, many steps|
|Price||Free||50 - 200 USD|
|Transaction speed||Fast, simple operation||Lower, more operations|
|Property ownership||Asset trust for the exchange||Self-preservation and storage of assets.|
4 things to pay attention to when using hardware wallets
After it is clear when to use hardware wallets and the advantages and disadvantages of hardware wallets, how to choose a suitable hardware wallet with the most reasonable price? Let's take a look at a few things to watch out for when using a hardware wallet.
Choose a reputable and reputable manufacturer
Hardware wallets will be the place to store a large amount of the user's own assets, no one wants to use the products of unprofessional or scandalous companies. It is best to choose companies that have a reputation for many years of operation in the market, products that have been tested for quality.
In addition, when buying hardware wallets, users should also go to the official stores of the manufacturing companies to buy genuine products. Only buy a completely new wallet, with the seal intact, and absolutely do not use the old recovery on the wallet (if any).
Keep the wallet recovery code safe
The recovery code is the key to the user's assets, which is also used in case the user wants to restore a new wallet. Recovery codes are extremely important and should always be kept completely secure.
Choose a wallet according to your needs
Each wallet type has different features and is aimed at different user groups. There are wallets that can connect via USB and even bluetooth, making it easier for users to make transactions.
When you want to use a hardware wallet, users should consider which coins/tokens the wallet supports, is the operation easy to use, is the interface user-friendly, etc.
Please check the information carefully before confirming the transaction
Sending and receiving operations on hardware wallets will be more complicated than on other wallets, so always double check and make sure the wallet and blockchain information is correct. Do not rely on the security of the hardware wallet that becomes subjective.
Outstanding hardware wallets today
Along with the increase in hacks/exploit, crypto users' demand for hardware wallets is also increasing. Based on the information table below, it can be seen that the two most popular wallets are Ledger and Trezor. In which, Ledger has 2 main products, Ledger Nano X and Ledger Nano S, Trezor's main product is Trezor One.
Ledger Nano X
Ledger Nano X hardware wallet is said to be the most advanced, secure device at the moment to protect your cryptocurrencies.
- Ledger Nano X can be used conveniently with iPhone phones due to Bluetooth connectivity, manage cryptocurrency anytime, anywhere, transfer money easily.
- Store 100 coins and more than 5,500 different types of electronic assets at the same time.
- Manage and send NFTs directly on Ledger Live.
- Large, sharp display with 2 buttons.
- There is security with a PIN.
This is currently the most prominent product line of Ledger, the only minus point compared to other wallets is the more expensive price.
Ledger Nano WILL
If Nano X is the most complete version of Ledger, then Nano S is the most popular product. Nano S has some of the following features:
- Store 3 – 6 coins at the same time and support more than 5,500 different types.
- Connects to your computer via the included USB cable and to your Android phone via the adapter accessory.
- Small in size, lighter than Nano X.
- There is security with a PIN.
- Affordable price.
Learn more: Ledger Nano User Guide WILL
A few differences between Nano S and Nano X:
Trezor is a hardware wallet released in 2013 by the company SatoshiLabs, based in the Czech Republic, which is also one of the oldest hardware wallet lines in the world. Trezor One is one of the company's most prominent product lines with notable points:
- Support 1000+ coins and tokens: BTC, ETH, BNB, AXS… All managed through Trezor Suite web and desktop version.
- Trezor One supports connecting Ronin wallet to manage AXS, SLP tokens of the game Axie Infinity
- Large electronic screen, displaying transaction information, and 2 physical buttons to help users manipulate sending and receiving.
- Connect to a computer via the included USB port or connect to an Android phone via an OTG adapter.
- Trezor One has a mid-range price tag.
Hardware wallets are an effective tool to protect users' assets. However, users also need to understand their purpose of use from which to choose the most suitable wallet for themselves.
See also: Best bitcoin wallets
Sep 30, 2022