A significant question that early adopters, advanced traders and even newbies to the crypto world ask is; do I really need a hardware wallet to secure my cryptos? Well, the simple answer to this question is, yes, you do! Let me break it down for you.
Over the last couple of years, there has been a series of high-profile hack attacks on some of the primary exchange platforms in the crypto world. On top of that, there has been a constant stream of personal crypto attacks.
While you don’t need a hardware wallet to store, send, or buy cryptocurrencies, they can help improve your crypto holdings; security. That said, in this article, we will discuss the basics of hardware wallets to give you a better understanding of how they protect your coins. By the end of this article, you will be in a better position to decide if owning a hardware wallet is the best decision for you.
What is a Hardware Wallet?
As we mentioned briefly in the introduction, software wallets can be highly vulnerable to hackers and security holes. And that is why hardware wallets were developed. Hardware wallets are there so that you don’t have to trust software to hold your crypto’s private keys. Unlike software wallets, the hardware wallets store your private keys on a physical device. The best part is that the device comes with specialized firmware that provides your keys with additional security.
Essentially, there is a channel of communication between your hardware wallet and your computer. In that, you can send your Bitcoin transactions to your hardware wallet to be signed then they are returned to your computer as signed transactions. That way, your private keys will never exist on your computer, where they tend to be vulnerable to hackers and viruses.
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What are the Advantages of a Hardware Wallet?
In comparison to software wallets, hardware wallets come with a wide range of advantages. That includes;
- Hardware Wallets are Super Secure
With a hardware wallet, you are guaranteed the safety of your cryptocurrencies even when your Computer’s security is compromised. A cold offline wallet gives you the much-needed layer of protection against malware, phishing and cyber-attacks.
- You Can Store Many Assets in One Location
Another great thing about hardware wallets is that it works seamlessly with multiple blockchains. That allows you to manage your Alt. coins, Ethereum, Bitcoin, among others, on a single device. The best part is that you can back up all your coins with just a single recovery phrase.
- Access to Wallet-to-Wallet Trading
You can also trade directly from your hardware wallet. This is always the safest way to trade your cryptocurrencies. That’s because you retain custody of your crypto assets at all times. This is a better option than depositing your assets to an exchange wallet. You will love the fact that it saves you the trouble of withdrawal limits and deposit delays.
- Ultimate Convenience
A hardware wallet is a small device that resembles a flash drive. That said, it’s portable, allowing you to access your crypto assets from anywhere safely. What’s more, the hardware wallet can easily log you into dApps without having to create new accounts. In fact, you can even use the hardware wallet to log into regular apps such as Google.
Cons of a Hardware Wallet
On the flip side, hardware wallets have a few drawbacks. That includes;
- The upfront purchase cost
As compared to software wallets, hardware wallets are more expensive. For that reason, if you are just going to buy and sell your cryptocurrencies quickly, this cost may feel like a stretch. Hardware wallets are ideal for traders who plan to hold their crypto assets for a longer period.
- The User experience
Hardware wallets have such a poor user experience interface. It certainly takes people a long time before they figure out exactly how their hardware wallets work. Additionally, you will need to take extra steps to retrieve and connect the hardware wallet.
- Location barrier
The last drawback is that you need to be in the same place as your hardware wallet to access your crypto assets. That means you can easily find yourself in a situation where you need to use your crypto assets, but you can’t because you don’t have the wallet with you.
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How Will a Hardware Wallet Keep your Crypto Coins Safe?
Today, hackers have taken their game to the next level. They have designed viruses that target and identify private keys then send them to hackers. These viruses have been there for a while now, but with time, they keep getting sophisticated.
By design, hardware wallets ensure your private keys never leave your device. This secures your private keys from such attacks. Also, it gives you the crypto holder peace of mind. There is no denying; it can be hectic trying to manage private keys and software wallets simultaneously, all while ensuring your computer stays safe from hackers.
A hardware wallet also guarantees you that your crypto won’t move unless you intend it to. On the other hand, it can be hard to secure internet-connected software. But with a physical hardware wallet, you have an outstanding level of confidence in the security of your crypto assets.
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You are not particularly required to store your crypto assets in a hardware wallet. But still, it’s crucial to do that. A hardware wallet is vital even if you have a small investment. That’s because hardware wallets provide thorough security to your private keys. Certainly, you want your crypto assets to stay safe.
Even if you misplace your hardware wallet, your crypto assets are backed by a single seed phrase. Essentially, this is a recovery phrase that can help regenerate your private keys. Using this seed phrase, you can move your crypto assets to another hardware wallet.
Also, by using a hardware wallet, you are effectively becoming your own bank. This might not be for everyone, but there’s definitely some form of comfort in knowing that you have complete control over your cryptocurrencies.