As rewarding and exciting as crypto can be, it’s most certainly not without its gut-wrenching risks. We all have several concerns when navigating crypto, such as losing your seed phrase, sending money to the wrong address, or worst of all, your wallet is compromised and your crypto is stolen. While there are many different ways to reduce these risks, one of the best practices you can follow to safeguard your crypto is using a hardware wallet. Hardware wallets, also known as “cold storage,” allow you to keep your crypto offline and minimize the risk of hackers or scammers accessing your crypto.
In this post, we will explain what exactly a hardware wallet is, how it works, why you should use them, where to find them, and how to even store your $SAMO on one. Expect to come away from this article with a better understanding of WHY you might want to secure your crypto with a hardware wallet and HOW to get the job done.
What Is a Hardware Wallet?
Before diving into what exactly a hardware wallet is, it’s worth noting that there are two types of paths you can take to store your crypto: hot storage (online) and cold storage (offline).
Hot wallets are always connected to the internet (hot storage), existing on your mobile devices, desktops, laptops, and browsers, such as Chrome. These are the most popular wallets used for storing crypto because they’re easy to use and access. However, while this constant connectivity and instant access are convenient, like any program or device with internet connectivity, they’re easily accessible to hackers.
A hardware wallet (cold storage) works similarly to a hot wallet; they allow you to store, send, and receive your tokens. Also, they have their own public key and private key. A public key can be thought of as your account/username, and the private key is the password to your wallet. Other than the hardware wallet being a physical object (often in the form of a USB), the biggest difference between these two wallets is that the hardware wallet isn’t connected to the internet. This means that the wallet’s contents aren’t vulnerable to online attacks. Even when you connect your hardware wallet to the internet to send or receive tokens, the wallet’s private key is kept offline because hardware wallets are a form of cold storage that isn’t connected to the internet.
While hardware wallets are excellent for safely storing your crypto, storing your crypto on a physical device opens the door to you potentially losing your wallet, having it stolen, and even being destroyed in a natural disaster. Furthermore, storing large sums of crypto on a physical device, such as a Ledger, may not be the best path to take. Depending on how much crypto you own, it could make sense to explore a custodial service provider that assumes the risk of storing your coins while providing insurance on the coins they store. For these reasons, it is worth exploring additional backup solutions to store your coins – such as storing your seed phrase in a bank vault, getting a backup device, and/or using a custodial service provider.
How Does It Work?
Once your wallet is connected, the device is active and can sign and approve transactions. One common misconception is that the hardware wallet itself is “holding” these coins. In reality, it simply controls the flow of coins in and out of your wallet by storing your private key. Once connected to the internet, the device accesses your private key so you can send tokens and/or update the balance of the coins in your wallet.
Why Should You Use One?
Security should always be front and foremost when navigating the web; crypto is no exception. The use of a hardware wallet puts you in complete control of who can access your funds and when. For example, an online hacker can’t access your wallet’s private key to steal funds from you when using a hardware wallet.
Just because you are using a hardware wallet does not mean you are immune to bad actors in the space. For example, when your wallet is connected to the internet, you should remain wary of which transactions you sign and which websites you link to your wallet. In addition, while it is much harder to wipe a wallet when using a hardware wallet, you can still lose some funds by connecting your wallet to a malicious program.
Where to Buy
To be safe, ALWAYS buy your wallet directly from the device manufacturer. Never buy from an intermediary, such as Amazon or eBay. By doing so, you run the risk of storing your coins on a repackage hardware device and the third-party seller using the wallet’s private key to access your funds.
So, which hardware wallet should you use? We strongly suggest you research on your own the pros and cons of each wallet before making your own decision. However, the two most popular hardware wallets are Trezor and Ledger.
- Color touch screen.
- Steel construction.
- No Bluetooth.
- No mobile applications.
- 1800+ supported currencies.
- Bluetooth capabilities.
- Small display size.
- Marketing Database faced a security breach in 2020.
How to Use
When using your hardware wallet, your best resource will always be from the device manufacturer. In Ledger’s case, you will need to download a third-party application. The same goes for Trezor. Once installed, you can then move on to attach your wallet to the hot wallet of your choice. Phantom, for example, has an easy-to-follow tutorial that can be found here.
When navigating crypto, you must put security first and foremost. There are many ways to safeguard your crypto, but few are as easy, effective, and secure as using a hardware wallet. Now that you better understand why these devices have become an integral part of the industry, you should seriously consider how a hardware wallet could be used to safeguard your coins.