Protecting your cryptocurrency tokens with a hardware wallet
If you’ve been involved with blockchain for even a small amount of time, you may have heard about a so-called “hardware wallet.” What are they for and why would you need them in an “app first” world? It might seem like an extra annoyance to carry around this extra little device, but it can be more than just a keychain dongle. That’s right, cryptocurrency hardware wallets are increasing in capability and now offer features beyond “be your own bank.” Ready to learn more? Let’s get started!
Cryptographic Hardware Wallets
Hardware wallets are cold storage devices (and if you don’t know what that means, you need to take a step back and read our Wallets page!). Because they are cold storage, they are not connected to the internet, and provide greater security for your tokens by being less easily hacked. If you are using some tokens as a long-term investment or like a ‘savings’ account, then hardware wallets are what you need for your security!
The very first mass-produced hardware wallet was the Trezor. This device only supported Bitcoin for a very long time, but updates have added support for additional crypto-coins like Litecoin and Zcash. One of the most-loved features of the Trezor was its ability to automatically generate new receiving addresses and ability to recover the device contents in case of loss or theft of the device itself. These “seed phrases” are often made up of 12, 18, or 24 words that can be used to restore a Trezor, including access to all the cryptocurrencies it tracked. How? Check out this Ask an Expert on Hierarchical Deterministic (HD) wallets for more details!
Hardware wallets offer greater security than software wallets because it is a separate, offline device. It is not connected to the internet until it is plugged into your computer, and encryption helps prevent it from being hacked when it is. So if something happens to your computer or phone, like crashing or theft, your hardware wallet, with your keys and crypto will still be okay (unless you break or ruin it)! You can protect your device with a password too, which is an added layer of security in case of theft. They are small enough to easily transport, and easy enough to use that it makes sending and receiving simple and pretty quick.
Land of 1,000 options
Okay, so we’re not really talking about a thousand actual different options, but the number of hardware wallet devices to protect your blockchain assets is increasing. And that means us consumers will one-day enjoy a wide variety of features and costs to suit most needs. Already today we have cryptocurrency hardware wallets like Trezor, Ledger Nano S, Digital Bitbox, and KeepKey. Beyond that, Jaxx is planning a hardware device and several other options may be in the works.
Which device is best for you? First, you should check which devices support which blockchain assets. Some may only support Bitcoin, while others like devices from Ledger can be expanded for other native assets. As subtokens on Ethereum become more common, we can expect better support for things like Augur, Gnosis Melonport, and other ERC20-compatible tokens. (See the bottom of this page for reviews of hardware wallets)
More than a digital wallet
Did you know that newer hardware wallet devices can be used not only to secure your cryptocurrency and blockchain tokens, but also can be used to secure accounts with two-factor authentication.
Much more secure than receiving a text message on your mobile phone, physical 2FA devices have long been employed by large corporations with secrets to protect. Of course, it’s possible to handle 2-factor with an app on your phone, but you give up some security in the process. If your phone is lost or you fail to back up the 2FA application, you may be left without access to your accounts.
The most secure feature of hardware wallets beyond their encryption and protective features is the fact that it is a separate device from your phone or laptop, which prevents malware or hacking from easily happening. Unless the device is broken, stolen, or destroyed, you are pretty safe!
Lastly, plugging in a hardware wallet into your USB may be a bit easier to use because you won’t have to type (or mistype 😉 any long codes. For these reasons and more, a security device separate from your phone is highly recommended.
Different functions and features
While new features are being tested with each new product, it’s important to remember that simplicity can be especially good for a device that is supposed to protect something potentially valuable. None of the devices currently available are waterproof, but we hope to see that change in the near future. Another aspect to consider is how good your vision is and how a small screen could be a hinderance when confirming information. Lastly, the user interface is something to consider. Most devices these days only have a couple buttons. Some have only 1!
Hardware Wallet Reviews
We will be publishing hardware wallet reviews that provide you with an idea of how the device works, and pros and cons for different devices. You can find these reviews below! Stay tuned for more details as we expand our hardware wallet section with more full reviews coming soon!
If you are looking for the most secure way to store your crypto, Trezor hardware wallet may be just what you need. Check out our Trezor wallet review.
Curious about which hardware wallet is right for you? Check out our review of the Digital BitBox. Watch Jeremy go over the features of the device, as well as a demonstration on how to use it!
Protect your cryptocurrency with a hardware wallet! The Ledger Nano S hardware wallet is one we reviewed here. Our blockchain expert, Taylor, goes over important factors to consider for the wallet, and the goods and bads he discovered in using it.
Did you make an investment in crypto, but then you discovered you didn’t know the best place to store it? Maybe you want to be sure you securely store it before you invest?
In this video, we go over the how to store your cryptocurrency, as well as four different types of wallets. It will be a useful resource in your investments!