A hardware wallet is a physical electronic device designed solely to secure Bitcoin. The main innovation is that the hardware wallet must be connected to your computer, phone or tablet computer before it can be used for Bitcoin. If you’re serious about security and easy and secure bitcoin storage, hardware wallets are a good choice.
Bitcoin hardware wallets keep private keys separate from vulnerable and Internet-connected devices. Your private and important keys are stored in a secure offline environment in the hardware wallet, even if the device is connected to a computer infected with malware, it is completely protected. Because bitcoins are digital, cybercriminals can potentially target your computer software wallet and steal it by accessing your private key.
The most popular and best bitcoin hardware wallet
- Ledger Nano S
Producing and storing private keys offline ensures using a hardware wallet. Hackers have no way to access your bitcoins. Hackers have to steal hardware wallets themselves, but even then, they can be protected with a PIN code. Don’t worry about stealing, losing or damaging your hardware wallet. You can always recover your bitcoins as long as you create a hidden backup code.
Bitcoin hardware wallets are not free, but if you have a significant amount of bitcoin, you can be worth it.
How hardware wallets work
Safe hardware wallets are offline devices. They store your private keys offline, so it’s not possible to hack. This means that you can even use malware-infected computers.
Security risks with hardware wallets
No matter which wallet you choose, remember: your bitcoins are only safe if the private key is secure, a secret remains, and most importantly – only controlled by you!
Follow these three basic principles to prevent theft, fraud, and other damages:
Produce your private keys in a secure and offline environment. Except in the case of insignificant amounts, in which case the keys may be created in a hot wallet. Back up your private keys. This will help protect your bitcoins from being damaged due to hard drive failure or other problems or accidents. Ideally, you should use backups created in cyberspace to protect against the possibility of fire, theft, and so on.
Encrypt the wallet for extra security. If you steal a hardware device or wallet, this will help prevent physical theft of your funds. Securing your bitcoins is the most important step for any bitcoin user.
Hardware wallets are safer than any other software wallet, such as one that runs on your Android or iOS device or desktop. However, hardware wallets have some unique security risks that you should be aware of.
Set up the device
Most hardware wallets add a special bar to the package to make any manipulation more prominent.
Bitcoin private keys are based on encryption. Random number generators, also known as RNGs, are used to create private keys that guarantee bitcoins.
If the manufacturer of the random number is not random enough, it means that someone else can easily recreate the private key of the cryptocurrency hardware wallet. The attack happened in the past with blockchain.info, a web wallet. More than 300 BTCs were destroyed because blockchain.info does not use good RNG, so a hacker was able to reproduce private keys and steal coins.
One way to help prevent this is to use the word 25 custom hardware wallet. This means you can technically add your RNG to a computer RNG to make sure your private key is really RNG-based.