Hardware wallets are the best way to store your cryptocurrency if you want to make sure that it is stored in a safe and secure place, and that is where hardware wallets come in. They are specially designed devices that allow you to store your private key offline so that it is not exposed to hacks and cyberattacks.
Well, in this article, I'm going to tell you how they work. What are crypto wallets? How hardware wallets are safe, how you can use them to protect your investments and a comparison of some of the best hardware wallets out there
What Is Crypto Wallet In General
Let's first understand crypto wallets in general. Since the onset of the crypto space, we have been experiencing cases of people losing money on popular exchange platforms due to hacking, with the latest case targeting the most popular game, Axie Infinity. In the attack, which stands as the second biggest attack in history, the hackers made away with $600 million from the Ronan network, a blockchain network that runs the gaming platform, Axie Infinity.
Now, these cases of crypto theft have resulted in companies pushing for more secure and safer ways of transacting in crypto, and thus came crypto wallets.
What are crypto wallets?
So what are crypto wallets? Crypto wallets can be thought of as digital wallets similar to the leather wallets that we carry in our pockets that have cards and cash, but with the main difference being that in crypto wallets you store your passcodes to the crypto you have in a particular blockchain.
Now, crypto wallets can be software-based like online wallets or mobile wallets; for example, the Guarda wallet, the Exodus wallet, the Meta Mask coin-based wallet, and the Trust wallet; they can be hardware-based like USB devices or physical cards. Now, hardware wallets are the most secure type of crypto wallet, as they are not connected to the internet and therefore less likely to be compromised by hackers.
what makes hardware wallets safe
So what makes hardware wallets safe? Well, you may ask yourself, "If my cryptocurrencies are stored on the blockchain, won't my crypto hardware wallet need to connect to the Internet to access the blockchain?" Well, hardware wallets are safe because they keep your private key offline and away from potential hackers.
Now, let's take a closer look at how they do this. First, it's important to understand that to make a blockchain transaction, you need to have your private key. This is what allows you to sign the transaction and essentially prove that you are the owner of the crypto funds being sent.
Now, if your private key was stored on your computer or online somewhere, it would be relatively easy for a hacker to access it and use it to make unauthorized transactions. This is why hardware wallets are so important because they keep your private key offline and away from potential hackers.
So then that's great, but what if my crypto hardware wallet is lost or stolen? Well, in addition to storing your private key offline, crypto hardware often also incorporates extra layers of security like lock pins, two-factor authentication, biometric locks, and something called a seed phrase.
The seed phrase is really important because if someone discovers your seed phrase, they will have access to your cryptocurrency, so it's extremely critical to write down your seed phrase, which would generally be like 12 unique words, and keep it somewhere safe.
If your hardware wallet is lost or stolen, you will use the same seed phrase to regenerate your private key, so always keep your seed phrase safe, both online and on hard copy.
Best Crypto Hardware Wallets
So let's talk about some of the best crypto hardware wallets. There are many different types of cryptographic hardware wallets out there on the market.
1 Ledger Crypto Hardware Wallet
The Ledger crypto wallet is the most popular crypto hardware wallet provider, offering the Ledger Nano X, the Ledger Nano S, and the Ledger Nano S plus wallets. So these devices are roughly the size of a thumb drive and have an operating system called the Blockchain Open Ledger Operating System.
At the moment, their flagship model, the Ledger Nano X, has competitive cryptocurrency compatibility with more than 5,500 cryptocurrencies and tokens in one place, and you can install up to 100 applications, including popular assets like Bitcoin, Ethereum, and XRP. Ledger offers a Ledger Live mobile app and a high level of security with its secure element chip, which is used to store cryptographic data.
Its unique features include optional Bluetooth connectivity, USB connectivity, a clear OLED display screen interface, and two navigation buttons for confirming transactions.
2 Trezor Crypto Hardware Wallet
Let's move on to Trezor, We are currently supporting 19,146 coins and tokens. Trezor is another well-known hardware wallet that offers the Trezor One and the Trezor Model T models. Trezor, unlike Ledger, uses your computer screen as a web interface for pin inputs and other functionalities.
While this provides a more positive user experience on a larger screen, it does introduce security vulnerabilities due to using an Internet-connected computer. It has an SD card, and it also supports Shamir's secret sharing method to keep keys secure, but it lacks Bluetooth connectivity at the moment.
Trezor doesn't have a mobile app, but it does come with the Android app Trezor Suite, which allows you to do transactions on your smartphone. The Chrome browser is now the Trezor Model T, which currently sells for about $310 directly from the manufacturer.
3 Grid Plus Crypto Hardware Wallet
Let's move on to the next grid, plus a larger touch screen, so no more squinting or multitasking pin inputs with your computer. At the moment, the hardware wallet only supports Bitcoin and Ethereum.
Now the device comes with one safe card that looks like a traditional credit or debit card; the card is what stores your pin-protected private key, and it's a pretty cool concept because you can always carry the card around to transact with a designated shop provided that they have the Grid Plus device.
The larger touch-screen interface also provides easier readability while you're going through transaction messages. the only caveat is having to buy another safe card if you need to make multiple backups or create many wallets so the grid plus lattice one currently goes for $397 directly from the manufacturer.
4 Safe Pal Crypto Hardware Wallet
And finally, we've got a safe pal with the safe pal S1 crypto hardware wallet. This hardware wallet was made with the intent of introducing a more affordable hardware wallet; it supports 20 blockchains and tens of thousands of coins and tokens.
It also syncs with the Safe Pal mobile app, or you can use QR codes to scan transactions to your phone using the card's inbuilt camera. Additionally, it offers a Demonic card for storing passcodes and private keys, as well as a USB connection.
Its controlled buttons allow you to interact with the display screen now, on the flip side, though safe pal does not connect to Wi-Fi, NFC, or Bluetooth. It also self-destructs in the event of any malfunction.
Very important: make sure that you save your seed phrases in hard copy when using this wallet. You can get the safe pal 1 directly from the manufacturer for about $50.
Some Potential Risks
You have it—the four best crypto hardware wallets. Now, no matter which crypto hardware wallet you choose, you can rest assured that your coins will be safe and sound. Hardware wallets are the best way to store cryptocurrency, so again, it's important to make sure that you have a backup of your seed phrase somewhere safe, like writing it on paper all day; this is called a paper wallet.
Another potential risk is that crypto hardware wallets can be vulnerable to "fishing attacks, in which scammers try to trick you into revealing your private key or phrase.
We can avoid phishing attacks by only downloading crypto hardware wallet software from official sources and not blindly signing transactions, but additionally, crypto hardware wallets can be vulnerable to "wrenching" attacks, in which malicious people use physical force or threats on you so that you give them your wallet and passcodes.