Why Use a Hardware Wallet? Do You Really Need One?

Why should I use a hardware wallet to keep my bitcoin safe?


If you want to store your crypto safely, there are several options out there. A hardware wallet is one of the best ways to protect your money. This type of device stores your private keys offline and uses a secure chip to make sure no one can steal your coins.

A hardware wallet stores your private keys in a way that makes it very difficult to gain access to the information. But what happens if you lose your device? What if hackers find a way into your system? You could lose everything.

There are many different types of wallets. Some are software-based, and others are physical devices. There are even some hybrid solutions that combine both. Hardware wallets like Trezor and Ledger are considered the safest option because they don’t rely on third-party servers. They do require a little extra setup, though. 

Hardware wallet pros


Some of the benefits of owning one are that a hardware wallet is considered one of the safest ways to store your crypto. Since they don’t involve any computers, they’re immune to malware attacks. It allows you to access your funds even when your computer crashes.

They generate your private key offline, so there is no danger that one can access it over the internet.

Finally, Its physical size makes it easier to carry around, so it’s ideal for transporting your coins when needed.

Limitations of hardware wallets


Although hardware wallets provide great protection, they do come with certain limitations.

They can’t protect you from threats such as phishing attacks, loss of devices, theft, or even physical damage. In addition, the process of sending and receiving funds can be complicated, especially if you don’t want to use a smartphone or software wallet. You’ll need both a computer and a USB stick to make transactions.

Another drawback to using a hardware wallet is that it’s often difficult to find compatible options. Some models work with specific operating systems, while others don’t support certain features, such as multi-signature technology.

In short, hardware wallets are not completely safe. But they are still far safer than keeping your keys online. 

When do I need a hardware wallet?


To buy, store, or send bitcoin, you do not need to own a hardware wallet. Hardware wallets, on the other hand, can greatly improve security by lowering the danger of your bitcoin being stolen.

In other words, you don’t necessarily need a hardware wallet if you’re just starting out with cryptos, but if you have significant amounts or if you plan on making frequent trades, then a hardware wallet will definitely be essential. 

How does a Hardware Wallet protect your Bitcoin?


Hardware wallets store your private key physically within a chip in the device itself. They generate your 12 or 24 words seed phrase offline, hence they’re called air-gapped devices (not been in contact with the internet).

The device requires a PIN code. When you make a transaction, you sign with the device’s private key. No one can steal your money without your private key.

Where Can I Buy a Hardware Wallet?


There are many places where you could buy a hardware wallet, ranging from popular online retailers such as Amazon to specialized crypto stores. You might even find one at your local computer shop. However, we recommend purchasing directly from the manufacturer to ensure that the product arrives quickly and without issues.

If you intend to use a hardware wallet solely for Bitcoin storage, then we suggest the ColdCard hardware wallet from Coinkite. This device is easy to set up, works well, and provides a secure way to store your coins offline.

Otherwise, if you want to keep multiple cryptos safe and accessible, then we highly recommend the Ledger Nano S hardware wallet. It’s simple to use, looks great, and offers plenty of space to store assets.

What if I lose my Hardware Wallet or it breaks?


The best way to secure your crypto is to use a hardware wallet. However, what happens if you misplace your hardware wallet? Or worse, what if it breaks? Luckily, there are ways to make sure your funds aren’t completely gone for good.

All hardware wallets come with seed phrases. These are basically random words that allow you to access your crypto assets without having to remember complicated passwords. Seed phrases are incredibly important because they give you the ability to recover your digital currency in case you lose your wallet, or it gets damaged.

Your hardware wallet should include instructions about how to generate your seed phrase. This process involves generating a random string of words, writing down every single letter, storing it somewhere safe, and never sharing it with anyone. 

For safety, print your seed phrase off of your wallet’s paper backup document. Once printed, store that piece of paper in a fireproof or safety deposit box. Make at least 3 copies of it. Split it into multiple parts and store each part in a different place (bank, your friends and family, etc.). In the event your wallet does break, you’ll still be able to recover your funds. 

How can I set up a hardware wallet with MetaMask?


MetaMask allows you to connect one of several types of hardware wallets to your browser.

You can install MetaMask on most browsers. If you’re already logged into another site, just log out and log back in. Go to the menu bar and select “Add Hardware Wallet.” Choose your device type. For example, choose “Ledger Nano S” and follow the instructions.

If you don’t see your device listed, try searching for it. On some devices, you’ll have to manually add your device.

Once you’ve added your device, you’ll want to download the Chrome extension. The Chrome extension will ask you for permission to access your wallet information. Answer yes. You’ll now be able to open Metamask in chrome.

How can you secure your private keys and secret recovery phrase?


There are several options for securing your private keys and recovery phrase, but generally speaking, it’s best to keep them offline.

The crypto tag is gaining popularity. It is a titanium plate on which the user engraves the secret word of the hardware wallet. The titanium plates are unbreakable, which aids in the protection of the secret phrase. The disadvantage is that it is not reusable, therefore, if you make a mistake when engraving, you must purchase new plates.

Simply write down your keys and store them safely. As a reminder, it is your responsibility to ensure that the paper is not damaged or loses its integrity. Laminating the paper and storing it in your bank locker will extend its life. This process, however, cannot guarantee the paper’s long-term safety. 

Why is it important to keep ownership of your private keys?


The private keys are the most important thing about crypto wallets. Your private keys give you full control over your money. If someone else gets hold of those keys, they can take out your coins and send them somewhere else without your knowledge. They could even steal your entire balance.

You might think that the private keys are stored securely on a device like a smartphone or a laptop, but there is no way to guarantee that. Someone with physical access to your computer or phone could easily copy the keys and use them to log into your wallet. Even worse, malware could infect your device and steal your keys.

In fact, many people don’t know how to properly protect their private keys. You must treat them just like cash; you never let anyone see them, and you always carry them with you.

Why is self-custody necessary with hardware wallets?


The biggest problem with cryptos today is trust. If you want to use crypto, you must trust someone else to safeguard your funds. A large percentage of people believe they don’t need to do anything special to protect their holdings, but that just isn’t true.

There are numerous ways that you can lose access to your funds. For example, you might lose your private key. Or you might make a mistake during a transaction. Or maybe your computer gets hacked. Whatever the case, if you keep your funds stored on a centralized exchange, you are putting yourself at risk.

A hardware wallet solves this issue by creating a unique set of cryptographic keys for every asset held within it. When you create a wallet, those keys are securely generated and backed up. Your private keys never touch the internet, so you always maintain full control over your funds.

If you ever lose your device containing your keys, you simply download another copy of your wallet software onto a new device and restore your account from backup. Because hardware wallets store your keys offline, they provide superior protection against theft, malware, and hacking attacks.

Remember, you alone and nobody else should know your private keys.

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CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com

Sarah Wurfel

Sarah Wurfel

Sarah Wurfel works as a social media editor for CaptainAltcoin and specializes in the production of videos and video reports. She studied media and communication informatics. Sarah has been a big fan of the revolutionary potential of crypto currencies for years and accordingly also concentrated on the areas of IT security and cryptography in her studies.

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