What Is A Hardware Wallet?

Keeping your bitcoin and other cryptocurrencies safe is of paramount importance for investors. With exchanges getting hacked left and right, investors are desperate to keep their valuable cryptocurrencies safe. That is best done with a physical cryptocurrency wallet also known as a hardware wallet. But what is a hardware wallet?

 


A cryptocurrency hardware wallet is a physical device that keeps your private key safe and away from the prying eyes of criminals while giving the user easy access to their cryptocurrencies.

Typically, users keep their private key on the same computer they use daily, or worse, let exchanges handle their private keys. But computers are susceptible to hacking and malicious software and exchanges are even worse. Moving funds to a hardware wallet with a newly generated key pair will ensure that the stored cryptocurrency is as safe as it can possibly be.

There are several popular hardware wallets, they all perform the same basic functions: Generating a new private key, offline and within the device itself, displaying the corresponding public key to allow coins to be sent to the device, displaying information about what is held on the device and they usually offer an easy way to get cryptocurrencies off the device for spending or sending elsewhere.

The three most popular wallets are KeepKey, Ledger (Nano S) and Trezor. Another product, OpenDime, isn’t technically a hardware wallet because of limited functionality, but it is a cheaper option that has a lot of the same functions. Essentially, it is a one-time use wallet that will allow you to continually add funds but must be physically destroyed to take the funds out.

Deciding what is the best hardware wallet for you comes down to your own needs and what you need.

Compare Hardware Wallets

Trezor

The Trezor wallet costs $99, it has its own screen and can generate keys offline. It also provides the user with a 24-word seed that can be used to recover the account if the Trezor is lost or stolen. It can also add a passcode to that seed for more security. It works with several web wallets and a Chrome extension can be used to provide more functionality.

In addition to Bitcoin, Trezor supports virtually any cryptocurrency whose developer enables support. Litecoin, DASH, BCash, Ethereum and other major cryptocurrencies are supported.

KeepKey

KeepKey Icon

The KeepKey wallet has largely the same features as Trezor but has a larger screen and an aluminum casing. It also costs $99. In addition to 24-word seeds, KeepKey is also capable of both 12 and 18-word recovery seeds.

Like Trezor, KeepKey is compatible with most altcoins, if the developer has enabled it.

Ledger Nano S

Ledger Nano S

The Ledger Nano S is the thinnest of the three wallets, costs $95 and it is the most unique of the three. KeepKey’s firmware is actually a port of the Trezor firmware. In the extremely unlikely event that one is compromised, the other likely will be as well, so the Ledger Nano S has an advantage there.

While the Trezor and KeepKey are essentially small computers on a stick, the Nano S is far more secure from a hardware perspective, using bank-grade security chips in addition to a microcomputer. Its earliest firmware, however had some security flaws.

The user experience with the Nano S is fairly similar to the other two devices. One major difference is that the Ledger has to add support for each altcoin, rather than the other way around. Still, most of the popular cryptocurrencies are supported, though Monero is a notable omission at the time of publishing.

While buying any of these devices, or any hardware wallet, it is important to buy from a reputable dealer and read up on any reported vulnerabilities. Never purchase them second hand and only get them from their official stores or the official Amazon store of the company that sells them. There have been reports online of resellers sending buyers compromised devices, or devices with their seeds already generated, on EBay.

Outside of that, it is difficult to go wrong picking any hardware wallet. They are more secure than a web wallet, exchange or even a local wallet and far easier to set up, use and store than a paper wallet.