Hardware wallets for storing your cryptocurrency are considered as one of the most convenient and safe options out there. Cryptocurrencies can easily be accessed using hard wallets. We always think of a pouch when we hear the word “wallet,” in which we can hold physical money. With private keys and public addresses, we control the storage and transfer of digital assets.
The Need for Cryptocurrency Hardware Wallets
A hardware wallet is a physical device that acts as a flash drive. It is where your private keys are stored. The device is secure enough that people store millions of cryptocurrency in hard wallets in secret vaults each year.
A wallet with hardware can be used with different digital assets from various blockchains. This makes it possible for you to manage cryptocurrencies such as Ethereum, Bitcoin, Lumens, and other alt coins.
A hardware wallet, often a small plug-in computer, is a mobile key to secure access from anywhere to your crypto property. Without having to create new accounts, a hardware wallet will “sign-in” to many dApps. You can even sign in to standard services such as Google and Facebook with them.
You can connect directly from your hardware wallet through to other platforms. This is one of the safest ways to trade digital assets while keeping your tokens in custody at all times. Instead of being deposited in an exchange wallet, the assets trade directly from your wallet. This saves you time by skipping withdrawal delays and fees.
In the hardware wallet itself, cryptocurrencies are never processed. They just exist on the blockchain. The private key unlocks the lock on the ledger. Since the blockchain is everywhere, what you need to communicate with your tokens is your hardware wallet.
A PIN and an optional passphrase protect your private keys stored on the hardware wallet. If your computer wallet is run over by a robber, it’s almost impossible for them to steal the money. The keys are never released to the internet to keep them from being robbed. This is why it is referred to as cold storage.
Keeping Hardware Wallets and Cryptocurrencies Secure
You may be protected from a digital attack by having a hardware wallet set up with a verified backup in a secure location. However, you are still vulnerable to potential physical threats such as burglary or hostage.
Never claim you hold cryptocurrency to anyone. If you do, be sure to keep to yourself the real value of your assets. When asked how many bitcoins you own, just return the question by asking how many euros/dollars they own.
If you are participating in online communities for cryptocurrencies, safeguard your real identity and always be conscious of the data you exchange. You don’t want to be the subject of a heist.
Do not keep your recovery sheet at home with the assumption that it is safe. A vault of a bank is much secure. Without immediate access to your backup, you are at less risk to physical threats
Keeping Up With Cybersecurity Trends
It is important to always be aware of cybersecurity threats when handling cryptocurrency transfers. Typically, you will get an email on a web page or through a messaging network when you want to deliver a request for transfer of cryptocurrencies. To substitute this email with one of its own would be a trivial action for malware. Many malicious software bits actually track the clipboard to overwrite the email you copied with one that belongs to a hacker.
To avoid falling victim to this attack, always check the recipient’s address on the device before approving the transaction and double-check it with another channel of communication. Ask for the address to be sent by SMS, for example, or another messaging app to verify it.
Massive efforts were made to secure these endpoints, ensuring that they could not in any way be counterfeited. The most famous example is the “smart card,” introduced in Europe in the 80s (the United States would have to wait nearly 40 years) and used today to secure payment networks around the world.
Internal Workings of Hardware Wallets
It helps to know the internal workings of hardware wallets that you use. Some wallets are better than others on account of many factors including the processing environment which is defined by its operating system. To manage its processing environment, any microcontroller requires an operating system (OS). There is no exception to this for secure elements. Nonetheless, many Secure Elements operating systems are quite old and lack the versatility and accessibility required to handle most new applications of cryptocurrencies.
Having an understanding of the third parties that work with the hardware companies can also reveal a lot about how seriously they take the safe storage of cryptocurrencies. As a matter of fact, third parties have developed more than half of the coins compatible with certain devices. You would be amazed at the sheer amount of risks associated with not only software but hardware.
Edel is an Editor with a decade of print and digital media experience – specializing in Science, Technology, Finance, Entertainment, and Advertising. He is also a stock and cryptocurrency investor. When Edel is not editing or analyzing charts, you can find him with his DIY lightbox taking timelapses of plants.
