A bitcoin wallet is a device that stores and manages the private keys you hold for your cryptocurrency. It works the same as the money you keep in your wallet or purse, or your bank details stored on your credit or debit cards.
What are the different types of cryptocurrency wallets?
There are two types of wallets: Hardware and software. A hot wallet is an application that lives on your computer or smartphone, or even on the web, while a hardware wallet is a separate physical device (much like a wallet or purse). It is also called a cold wallet. This hardware wallet is connected to a PC or mobile device to perform transactions.
Software wallets vary in price from free to, well, not free, so they’re great for those who are just starting out. Since hardware wallets are chargeable, there is a financial investment to be made up front.
Why do you need a hardware wallet?
It’s important to note that you don’t need a hardware wallet to buy, store, or send bitcoin or any other cryptocurrency. Some people hold several thousand dollars in bitcoin or other cryptocurrencies and don’t use a hardware wallet.
However, where hardware wallets stand out is in the increased security they offer over an app that runs on a smartphone, computer, or in the cloud. Having a device that places a void between your private keys and other applications, the internet, and bad hackers provides significantly improved security against hackers and viruses.
In short, hardware bitcoin wallets give you complete and total control over your private keys.
What are the advantages and disadvantages of hardware crypto wallets?
The advantages of hardware wallets
Improved security: A total void between your private keys and everything in between.
Better control: You hold your keys and can keep them separate from all your other devices.
Easy transportation: Bitcoin hardware wallets are small and easy to carry. But they can also be safely stored in a safe or security deposit.
No dependency on any third-party app or web service: Applications and services come and go without being linked to a publisher.
The disadvantages of hardware wallets
Cost : bitcoin wallet hardware solutions are not free.
Additional complexity: There’s always a learning curve with the hardware, and some bitcoin wallets have some pretty advanced features that will have you looking for the manual.
Loss, destruction, theft: Equipment can break, be lost, be stolen, become obsolete, or succumb to all kinds of mishaps.
Another element to take into account: If you need to make a transaction, you will need your wallet on hand!
What should you consider when buying a hardware cryptocurrency wallet?
Yes, a hardware wallet for bitcoin offers greater security, but you still need to make sure that you are purchasing a trusted device from a reputable source.
You also need to decide on the level of security you need. For some, the waterproofing of a separate hardware wallet is sufficient, while others will feel the need to step up that security and have a device that offers higher levels of security, biometrics, and even isolation of the device. device from possible sources of attack, such as USB chargers.
You also need a backup, just in case. This could be another hardware wallet or a “cold storage” solution that can include printing your private keys on paper, or even stamping or engraving them on metal.
Another consideration is the price. Unless you are planning on holding huge cryptocurrency investments, it can be a bit difficult to spend over $ 100 on a hardware wallet.