A special type of wallet that stores the user’s private keys on a secure, physical hardware device. It can be used to conveniently send and receive currencies by simply plugging into an Internet-enabled device and authorizing yourself. This type of wallet is considered the most secure option and possesses several major advantages over other wallet types. Private keys are isolated from your computer or smartphone for the highest level of protection. These hardware devices are immune to viruses or malware and can be used to interact with software without being exposed to vulnerability. While certainly there are risks, there have been no verifiable incidents of crypto stolen from hardware wallets to date.
Hardware devices connect to the manufacturer’s own web interface to access the blockchain. This web page cannot steal a user’s private keys. Hardware wallets cannot show receipt or balance of cryptocurrency – they store and secure private keys and create spending transactions. Some hardware devices offer software interfaces that show balances and history, but cannot access private keys.
The most commonly used hardware wallets are Ledger and Trezor, and both are considered to be the most secure. Both make it easy to perform all crypto transactions while securing your private keys. Downloadable companion software can be used to easily check balances with real-time rates even when your devices are not connected to a computer. Both offer cold storage of a wide variety of cryptocurrency assets, and have unlimited capacity. The companion app offers a simple, step-by-step process to manage sending and receiving cryptocurrency. Accounts can be recovered using another hardware or software wallet if the hardware device itself is lost, stolen, or damaged.
The risks involved when using a hardware wallet relate more to security practices such as not properly storing your recovery phrase, failing to protect your confidential PIN code, or being tricked into sending assets to the wrong address. It is important that hardware devices be purchased only from trusted sources, and to ensure the package is unopened and the device itself has not been initiated upon receipt.