4. What is a hardware wallet and why should you consider it?
This piece is written by @Peach Pop from Phezzan Discord server
If you don't want to lose your money that is in cryptocurrency, then you should definitely think about what kind of wallet to use.
I think you know that there are such types of wallets as hot and cold.
1. Cold wallets
Which do not have a permanent internet connection. Connection to the network is carried out only for a few seconds at the time of the immediate implementation of the transaction. It involves storing the currency offline under the protection of a reliable personal key.
2. Hot wallets
Constantly connected to the Internet. They are mobile, desktop or can work directly from the browser. They allow you to instantly buy or sell coins and tokens without the need for additional settings.
Using hot wallets for data storage is extremely risky because they are often hacked because they are constantly connected to the network. The Internet is full of stories of people losing their money by storing it in these wallets.
Cold or hardware wallets are relatively new, but they have already proven themselves very well in terms of security.
3. The main advantages of hardware wallets:
- Private keys are kept isolated from the Internet at all times. The signing of the transaction takes place on the device itself and then it is sent to the network.
- The transaction is signed with the physical push of a button. This is also an additional security measure, since it is not possible to sign a transaction without your direct physical involvement.
- Have an additional level of security. These wallets have an additional PIN code entry. If you enter the wrong code several times, the information is completely deleted from the device.
- Hardware wallets support a large number of currencies. An undeniable advantage for serious investors who diversify their assets.
- Invulnerable to malware that resides on your computer or smartphone. Even if you connect your wallet to an infected device, your data will be safe.
- Can be connected to a smartphone or PC.
- Such a hardware wallet can come in handy for those who frequently switch between devices. Especially if there is a large amount on the balance at the moment or large investments are planned in the future.
4. Hardware wallets have disadvantages:
- It can break. Like any physical device, it can break or get damaged. That's why it's best to carry it in a soft and, preferably, waterproof case.
- It needs to be carried with you. If you travel a lot, it's worth considering this factor.
- It's easy to lose it. The average hardware wallet is no larger than a thumb drive. This is both an advantage and a disadvantage, as it is very easy to lose with such a small size.
- It's not free. Yes, unlike an MM, a hardware wallet is bought for money, but think about it, which is more valuable to you - all of your crypto finances or a hundred bucks?
5. One of the best hardware wallets now is Ledger
Ledger is virtually impossible to hack. However, even if it succeeds, the hacked device won't be able to connect to the company's server because it won't pass cryptographic verification and becomes essentially useless. The company that produces this wallet has created an entire lab to study the weaknesses of hardware wallets and is constantly improving its creation.
In addition, unlike many other wallets, Ledger is based on two chips. One serves to store user data. The second acts as a proxy between the wallet and the outside world.
The chip responsible for data storage also controls the output of data on the wallet screen and accepts data entered by the user. Therefore, if the wallet screen and the computer screen display different data, then the user understands that it is necessary to interrupt the transaction. And this happens with every transaction.
In addition, the new Ledger models can connect to the device via both USB and Bluetooth.
The interaction is carried out through a special application.
Of the disadvantages of Ledger can be noted:
- The inconvenience of using the buttons on the wallet.
- According to unverified information, the user database is stored on companies' servers in unencrypted form. This can cause multiple attacks by fraudsters in order to get hold of your wallet data. You should be extremely careful and read all incoming mail carefully.
Is it worth buying a hardware wallet at all? It depends on your intentions.
If you are seriously thinking about trading cryptocurrencies in the long term and are worried about the safety of your assets, you should definitely consider cold wallets. Right now, this is one of the safest methods of storing your data.
However, you should not forget that you should buy such devices only in official stores or from official websites, as no one guarantees you safety when buying a wallet at any other place.
I wish you a safe trading and may the course be with you! Note:
Is it is possible to restore the Ledger by seed phrase in case of loss or breakage ? (By Sergo Banany from Phezzan Discord server)
Yes, of course you can restore your Ledger.
When you first "activate" the device, you get a mnemonic phrase that you can use to restore your data or transfer it to another device, if necessary.
BUT! You have to use their Ledger Live app. Since you will be using it to interact with the device anyway, this cannot be considered a problem.
More details on this, please check out this article from Ledger:
Last modified 10mo ago