While crypto has taken the world by storm, keeping it in your possession and, most importantly, keeping it secure is inevitable. Well, that's where hardware wallets come into play. If you aren't sure what hardware wallets are, then this article will explain how hardware wallets keep crypto safe and protected.
What Are Hardware Wallets?
Keeping cryptocurrencies in your own custody means taking every measure to ensure their safety, and that's what hardware wallets are made for. Let's take a closer look at the reasons now that you know what they are.
A hardware wallet is designed to keep a user's private keys in a secure offline storage mode (also known as cold storage). In other words, they are not linked to the internet, excepting when they are briefly connected to a computer for a task.
These devices are typically small, portable, and designed to be easy to use. Examples of hardware wallets include:
- Ledger Nano S
- Coldcard Wallet
And many more.
Are Hardware Crypto Wallets Safe?
Before you study how the hardware wallets work, it's crucial that we know whether it's a reliable option or not. The question is; are hardware crypto wallets 100% safe, or is there some ambiguity? Let's find out.
Hardware wallets enable users to securely store their private keys using a physical device, giving them greater control over the security of their digital assets. They often resemble USB drives and come in different form factors, but their primary purpose is to keep your private keys safe and secure, especially when signing transactions offline. This makes it challenging for illicit individuals to access and steal assets.
The software- and web-based wallets, on the other hand, are virtually always available from the internet, which opens more attack vectors to hackers. Hackers are unable to access the contents of hardware wallets devoid of an internet connection. Due to this, most crypto asset holders consider hardware wallets to be a very safe option in this regard.
How Do Hardware Wallets Work?
As we know that hardware wallets are highly trusted among crypto holders, the following sections will investigate the details of how it works.
Hardware wallets are simple devices that are designed to perform a few specific tasks related to the storage and handling of cryptocurrency. Whenever a transaction of any kind is carried out, it must be signed through a private key.
Hardware wallets sign transactions internally through a piece of software called a crypto bridge that connects the wallet to the blockchain from the device itself.
In order to retrieve unsigned transaction data from a hardware wallet, a user needs to connect their hardware wallet to a PC. After a transaction is signed using a private key on a hardware wallet, it is transmitted to a bridge, which then broadcasts it to the rest of the blockchain network. This process allows the transaction to be added to the blockchain and made available to the rest of the network.
In this complete process, the private key doesn’t leave the hardware wallet at any point, ensuring the crypto remains safe and protected.
How to Use a Hardware Wallet?
While the method to use a hardware wallet differs with each model or device, the overall idea is the same, and that is:
- Connect the wallet to a computer or smartphone using a physical interface such as a USB port or Bluetooth connection.
- When you first set up your hardware wallet, you will be prompted to create a PIN code. This code is an additional security measure that is used to protect your device and the private keys it contains.
- Your hardware wallet's accompanying app will provide you with a public address, also known as a wallet address, that you can use to receive and send cryptocurrency. This address is essentially a string of letters and numbers that represents your public key, and it can be shared with others in order to receive payments or send transactions.
- Your hardware wallet must be verified by entering your PIN before you can send cryptocurrency to another address.
- All that's left is to wait for the confirmation message to appear.
Hardware wallets are an effective way to keep your cryptocurrency assets safe and secure. These specialized devices allow you to store your private keys offline and sign transactions without exposing your keys to the internet, reducing the risk of hack attacks and other forms of cybercrime. In this way, the hardware wallets keep crypto safe.