You don’t have to be a coder to safely store your crypto! Guide to Hardware wallets

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Hardware wallets are a must-have item for every crypto owner that wants to keep his coins safe. And you don’t have to be a coder to start using one! Online wallets are often hacked and even some of the biggest exchanges have proven to not be secure. Starting from the Mt. Gox hack ranging to the most recent quadrigaCX CEO “death”. Past events show that the safest way to store your crypto holdings is keeping them in your “sock” also known as offline cold storage or Hardware wallets.

What is a hardware wallet?

By definition, Hardware wallet is a special device that keeps your cryptocurrency private keys in a safe offline device. It is only possible to unlock your wallet with physical access and a 4-8 character alphanumeric phrase. They are immune to computer viruses and private keys cannot be transferred out of them in a plain text format. The most secure and adopted way of storing cryptocurrency is using a hardware wallet.

How do hardware wallets work?

The whole principle of a hardware wallet, as stated before, is to keep your funds safe. Most hardware wallets are USB connectable offline devices that require a password to authorize. You do not have to enter your private key every time to log in but a self-chosen password. Wallet requires physical confirmation for each transaction. This ensures that third-parties can not access your funds remotely. Wallets comes with downloadable user interface software which makes them easy to use. Transactions can be made offline and executed after the host device is connected to the internet ensuring maximum protection. Wallets come with a seed phrase for restoring lost or forgotten password.  

Security risks

Although hardware wallets by themselves are fully tamper proof, hackers often bypass their security using malicious third party devices or uncareful use. Methods for stealing from hardware wallets:

  1. Address swaps – Address swaps do not directly interfere with your hardware wallet. They usually occur when there is a computer virus on your device. Malware functions in a way of swapping transaction address to fake one and sending funds to hackers wallet.
  2. Fake production – Decoy wallets that have different hardware components. Fraudsters use the embedded hardware to remotely access your “hardware wallet”. It is easy to bypass this security issue by buying wallets from their original merchants only.
  3. Third party interference during the delivery process – When a person tampers or interferes with your wallet hardware. Every wallet comes with a tamper-proof sticker. This sticker is a safety measure to see if someone has physically interfered with your wallet.

The most popular hardware wallets

Bestcoininvestments advice on which wallet to choose

Although all wallets are doing their function of securing your funds and are fairly simple to use, you must choose the one which side functions suits you best. I personally am using Ledger Nano S wallet because I never bring it out of my home and the price/performance ratio suited me the best. If you are planning on taking your wallet on the road Trezor would suit you best. If you like to have nice things and you do not care about the price of the wallet then KeepKey is your go to. There is no best wallet and you just have to choose which wallet suits you best!

Ledger Nano S - The secure hardware wallet

Photo by Wikimedia Commons