Just as a physical wallet holds traditional coins and bills, a hardware wallet is the physical device that keeps cryptocurrency safe. Its main function is to store the private keys that allow owners to gain access to their cryptocurrencies. Anyone new to cryptocurrency should learn about hardware wallets so they can protect their investment and safeguard their information.
Unfamiliar with crypto wallets? Learn about five different wallet types.
What is a Hardware Wallet?
Hardware wallets are small electronic devices that attach to the owner’s computer. They are like miniature computers that store information about cryptocurrencies that the owner possesses. It features a security system that is resistant to thieves and hackers and yet still allows the owner to participate in exchanges and transactions easily.
Hardware wallets can be purchased online for modest costs. It’s never a good idea to purchase hardware wallets from second-hand sources, just reputable dealers. When hardware wallets are resold, there’s no guarantee that the devices haven’t been compromised.
Cryptocurrency experts agree that anyone dealing with a large amount of cryptocurrency should invest in a hardware wallet to keep their information and their currency fully secured.
Using a Hardware Wallet
When cryptocurrency funds are moved to the hardware wallet from the owner’s computer, it generates a private key within the device. The private key is a code that matches up with a public key to enable owners to identify and verify themselves and others so that transactions can take place. This digital signature process prevents forgery and easily authenticates legitimate transactions. Hardware wallets are much more secure than other options including software wallets and exchanges.
There are several different kinds of hardware wallets on the market and the three most popular are Trezor, Ledger Nano S, and KeepKey. While there’s no wrong choice between them, it’s a good idea for consumers to review the pros and cons of each hardware wallet so they can choose the one that is best for them.
- Supports many cryptocurrencies, including Bitcoin, Ethereum (and Ethereum tokens like OCC), DASH, BCash and more
- Extensive security that requires a 24-word seed plus an optional passcode to that seed
- Full account recovery options in case the hardware is stolen or lost
- Enjoys an excellent reputation on the market
- Intuitive design and screen are user friendly
- Smaller screen than KeepKey but larger than Ledger Nano S
- Plastic exterior with no protective metal cover
- Doesn’t support as many currencies as the Ledger Nano S
- Costs more than the Ledger Nano S and is the same price as KeepKey
Ledger Nano S
- Most affordable choice of the three hardware wallets
- Supports a range of cryptocurrencies, including Bitcoin, Ethereum (and Ethereum tokens like OCC), ZCash, DogeCoin, Stellar and Ripple
- Supports more coins than either KeepKey or Trezor
- Duo security chip construction results in added safety
- Sturdy aluminum casing protects the device
- Thin, compact size makes it easy to travel and transport
- Relatively new on the market
- Usable on multiple operating systems, from Linux and Windows to Google Chrome.
- Compatible with many types of coins such as Bitcoin, Ethereum, Dogecoin and LiteCoin.
- Simple interface, large screen and intuitive design makes it easy to use.
- Features 12, 18 and 24-word recovery seeds.
- Attractive design includes aluminum casing and a large screen that rates highly in consumer satisfaction.
- Often the most expensive of the hardware wallet options.
- Limited ERC20 token compatibility.
- Larger in size than either Trezor or Ledger Nano S, making it slightly less portable
- Costs more than the Ledger Nano S and is equal to the Trezor.
Any Hardware Wallet is Worth It
Cryptocurrency investors have a lot of incentive to secure their cryptocurrencies. As the values rise, so will the efforts for hackers to try to access wallets. A hardware wallet is the best way to prevent this from happening. Whether people choose Trezor, Ledger Nano S, or KeepKey, they’ll have peace of mind knowing that they are in control of their coins and don’t have to worry about losing their investment.
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