Overview of The Hardware Wallets Available on The Market Right Now
One of the biggest problems facing new cryptocurrency investors is where and how they can safely store their investments, without facing the risks of hacking and corruption. Luckily for them, there are many different types of ‘wallets’ that mimic the traditional wallet that we use to hold paper money.
For example, a hardware wallet is another form of ‘cold storage’, which is used to hold a user’s private keys in a secure hardware device. Cold storage refers to keeping a reserve of cryptocurrencies offline. You can connect your hard wallet to any laptop or computer, using the USB port, and start storing and spending different cryptocurrencies easily. Some of the best rated hardware wallets are the Trezor Model T Hardware Wallet and the Ledger Blue — Final Public Batch. In the world of cryptocurrency, a hardware wallet becomes a necessity as it is immune from viruses, so it remains protected from potential security breaches as you are the sole owner.
Another type of wallet that cryptocurrency investors can use is known as a hot wallet. One of the main differences between a hardware wallet and a hot wallet, is that the hot wallet is one that is online and connected to the internet. A real-life analogy of a hot wallet is someone carrying physical cash on them. This means that these funds are available to spend and exchanged instantly, as well as able to be withdrawn on demand. One of the biggest risks of keeping currency in a hot wallet is that computers and online systems will always have some sort of vulnerability that can be eventually be used by hackers and different malware alike to break into the wallet and give them access to your currencies. However, the reason that hot wallets are so appealing to new investors is because of how easy they are to set up. In order to open your own one, it is as easy as signing up to a new account on an exchange or any other similar online service.
Although crypto wallets do offer their own layers or protection, it is always beneficial to take some additional steps of your own. For example, it is crucial that you do not store your seed phrase and your actual wallet device in the same place. Keeping them separated ensures that it will not be easy for people to guess your seed phrase and assess your cryptocurrencies. Similarly, it has been said that it is important to physically engrave your seed phrase in a piece of metal, especially if you plan on using this for long-term storage. A seed phrase refers to a list of words that store all of your information that you would ever need in the event that you have to recover a wallet. If your computer breaks or the hard drive becomes corrupted, you can download the same wallet software again and use the paper backup to get your own cryptocurrencies back.
If you do not feel comfortable using a hot wallet to store your different coins and currencies, you could use a cold wallet. This terminology refers to all the wallets that are used to store cryptocurrency that are not connected to the internet and that remain offline.
Pros & Cons:
When it comes to the benefits of having a hardware wallet, there’s a lot to be said — it’s secure, virtually immune to computer viruses, the security is heightened with the addition of enabling extra passphrases and multiple cryptocurrencies are allowed to be held on one device. It’s usually used to keep larger amounts of money on, funds that are not meant to be regularly accessed.
And in contrast, the disadvantages of having a hardware wallet are just as extensive, as it’s a physical USB-type item, the chance of losing it, and thereby losing all your data/cryptocurrencies, is there. Malware (if existing on the user’s PC) can swap the recipient’s address for one that’s owned by the hacker, and ultimately, they’re not cheap by any means.
Comparing existing solutions:
Looking into different devices available in the market, you might find yourself debating the top three available which are (as ranked by price):
Trezor ONE White — relatively small, secure, compatible with Windows, Linux and Mac, supports up to 300 currencies, and it costs roughly $100.
Ledger Nano S — small, USB-like device, secure, compatible with Windows, Linux and Mac, supports up to 30 currencies, and it costs $120. It has the advantage of having arguably the best interface out of all wallets, making it easier to use.
KeepKey — not so small, easier to keep track of (as it’s roughly half a hard-drive’s size), secure, compatible with Windows, Linux, Mac and Android, supports over 30 currencies, and it costs $129.
When it comes down to choosing which device you prefer, it depends on what cryptocurrency you would like supported, the price range you’re looking at, and what kind of size you’re comfortable with. Over-all, the Ledger Nano S is considered the most popular, being of small-size, easy to use and relatively affordable.
Conclusion:
In conclusion, whether debating between a hot wallet or a cold wallet, one must take into account the different factors in play, whether you feel secure having a wallet that you can physically hold and thereby be the sole-owner of (cold wallets) or one that you can have access to no matter where you are in the world (hot wallets) — so the best choice would be to consider both, as per your personal needs.
