Hardware wallets

What is a hardware wallet

A compact device for saving digital money is equipped with a small display and navigation buttons (mechanical or touch).

Equipment is similar to a digital flash card in form, connects to a computer or notebook via USB-port.

Passwords and the owner's private cryptographic keys are not moved to servers and are stored autonomously. To send cryptocurrency, the wallet is connected to a computer.

A private key containing alphanumeric information is required for operation. The code data is not stored in a general-purpose operating system (Windows, Mac or Linux), but on a microchip.

Security of electronic money storage is ensured by the following algorithms:

• A PIN code to control the wallet;
• a password that provides access to the data on the account balance and movement of electronic money;
• A secret phrase for restoring the password in case of its loss.

Savings in the device are saved off-line before connection to the computer. Wallets are equipped with a blocker for installing other software. Devices often have support for Windows, MacOs, Linux, and a mobile version for Android.

What are the differences between a hardware wallet and other types of cryptocurrency wallets

The differences between a hardware wallet and other types of cryptocurrency storage:

• When using online wallets, passwords are stored on remote servers, so there is a risk of losing savings if your computer is hacked, software is broken. Hacking and confiscation of software, digital storages, software errors, bankruptcy of the manufacturing company, code breakdowns, etc. are also possible.
• Software wallets, unlike hardware wallets, can be damaged by unauthorized people or infected by viruses. Computers and laptops are 1,000 times more susceptible to hacker attacks than a compact portable gadget. When software storage is compromised, the private key to the wallet can be lost.
• USB flash drives have less protection than specialized cryptocurrency storage gadgets. It is possible to copy and read information from a simple data storage device on any software. If a flash card is stolen or lost, the funds will not be saved. Malware can replace e-money recipient's address when making transaction. Flash drives with a PIN code to access personal data are more secure.
• Mobile wallets for smartphones are special applications and are at risk of damage by viruses, hacker attacks. The hardware device has autonomous software, multi-level protection and is connected to the Internet after a password is set.
• Electronic wallets of different payment services can be damaged by viruses and are vulnerable to hacker attacks. Passwords and private keys can be compromised after access to the digital vault.

Advantages and disadvantages of hardware wallets

The list of advantages of hardware vaults include:

• high level of operational security;
• maximum control over the balance of savings;
• increased protection against hacker attacks and malicious applications;
• support for a large number of digital currencies;
• regular software updates;
• compactness and mobility of the device;
• availability of PIN-code, biometric verification and other protection options against unauthorized damage;
• Possibility to extract seed-phrase and private keys;
• high degree of protection against changes in temperature, humidity, etc.

The disadvantage of hardware wallets is the high cost of the devices. To make payments and transfers, the equipment must be connected to the Internet.

What criteria to choose a hardware wallet

When choosing a hardware device, the following characteristics are taken into account:

• size, weight;
• the number of basic and additional functions;
• the level of resistance to hacking;
• The number of supported electronic currencies;
• technical characteristics (moisture resistance, vulnerability to temperature changes);
• admissible number of transactions;
• number of keys and other types of security;
• compatibility with mobile devices (smartphone, tablet), etc.

Manufacturers produce equipment up to 10 cm in length or mini-storage devices in the form of a flash card. Improved models are similar to minicomputers and have a touch screen and buttons.

Multicurrency

Many devices are designed to store and conduct operations with the main types of digital money. Developers add new currencies and popular coins to improved models. Rarely used coins are not supported by all standalone gadgets.

Transaction frequency

In addition to saving savings with the wallet, owners perform transactions to sell and buy digital currencies. The number of transactions is often limited. However, in some devices, the transaction register can be increased.

Ability to use via smartphone

When selecting equipment, take into account the rules for connecting to other equipment. Many wallets have built-in software for working via smartphone, tablet or computer. For some devices, additional software is purchased to expand the functions, combining work with other services.

How to protect yourself when purchasing a hardware wallet

The device is purchased taking into account such security criteria as:

1. The level of physical security. The most reliable devices are those with a one-piece titanium body, resistant to tampering. Less secure are wallets made of strong plastic and aluminum alloys.
2. Reliability of the software. Devices with a sophisticated software system have a high level of protection. The low level of tamper-proofness distinguishes equipment based on the standard Windows.
3. Reputation of the manufacturer. Specialists advise to buy equipment from certified companies.
4. Access recovery system. Updating codes should be easy for the owner and difficult for intruders. The most reliable devices are those with secure offline storage.
5. Complexity of the security system. Access to the device is possible after entering a password or multi-level unlocking operations with the owner's personal data.

Where to buy a hardware wallet

Specialists advise to make the purchase of purses on the portals of manufacturers or proven dealers. In Russia, representatives of CoolWallet, Ledger, KeepKey, Trezor products are the firm Walletz or cryptonist, but their cost of wallets is several times higher than on the official site.

Before the deal, it is necessary to check the updated status of the official hardware reseller on the websites of the manufacturers.