Are Hard Wallets Safe?

Hardware wallets explained: This is how it works

Want to know how crypto hardware wallets work and if they really are as safe as everyone claims them to be? Then this is the place to find out everything you need to know from the experts.

We’ll walk you through the whole process of how hard wallets work and how you can get the best use of them. Throughout this article, we’ll cover everything from the security measures, to the types of crypto that you can store and more. Unsure if a crypto hardware wallet is for you?

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What is a crypto hardware wallet?

Before we get into specifics and start answering questions such as “is Trezor legit?”, let’s start off with the basics and look at what a crypto hardware wallet actually is. In the most simple terms, a crypto hardware wallet is a physical device where you can store your keys for cryptocurrency transactions and sometimes use it to perform other functions.

Essentially, it is the physical alternative to the more commonly used crypto software wallet. You can plug your crypto hardware wallet into your laptop or mobile device in order to perform transactions, perform transactions and more. Through this article, we’ll cover all of the functions that you can perform with a hardware wallet and answer that all-important question “are hardware crypto wallets safe?”.

How crypto hardware wallets work

A crypto hardware wallet is actually a key that comes in the form of a physical device. Rather than being a place where your funds are actually physically or digitally stored, the hardware wallet is the key that you can use to access your funds online. Hardware wallets work on the blockchain ecosystem, and having one allows you to access and authorize your outgoing transactions. Additionally, there are a number of other functions that you can use your hardware wallet for, including access to your regular email and social media accounts, but we’ll get to that a little bit later on.

Are hardware crypto wallets safe?

So are hardware crypto wallets safe? In simple terms, 100% yes. Not only are hardware crypto wallets safe, they actually provide you with the safest way to access your crypto funds. As we said above, your crypto assets are never stored in your hardware or software wallet, they always exist only on the blockchain. The hardware wallet is the key that provides you with access to your funds in the blockchain. Hardware wallets are extremely safe ways to store your keys and access your funds for a number of reasons, so let’s take a look at some of these below.

PIN and password protection

Like all of the best online banking apps and other financial accounts, your hardware wallet is protected by a PIN that you create yourself. Additionally, most hardware wallets also give you the option to double up on protection via a password. On top of that, you will also be asked to set up a seed phrase that you can use to protect your hard wallet in the event of loss, something that we’ll cover in more detail later in this article.

Cold storage

As your hardware wallet is a physical item that is kept with you at all times, neither your key nor your assets are ever stored online. This is known commonly as “cold storage” and is considered to be the most secure way of storing funds and financial assets – or the key to access those assets, as is the case here. Storing things offline means that they are 100% safe from online hackers and thieves. The best banks and trading websites will also store at least part of their clients’ funds in cold storage at all times. 

Physical item

In a world where everything is online or digitalized, we can often forget the advantages of having something physical on our person. Having something that you can physically touch and keep on your person means that you can keep an eye on it at all times. Of course, there is the risk of losing it, but hardware wallets have plenty of measures in place to ensure that you are still safe in the event of loss or theft. Let’s take a look at this in more detail below. 

Hardware is ‘harder’ to exploit

It’s a lot harder for someone to tamper with your hardware wallet or to exploit it in any way, as they would need to physically get their hands on it. With software wallets, everything is always online, and while your funds are generally kept safe, the software can be messed with in some way. 

What happens if my crypto hardware wallet gets stolen? 

OK, so we’ve looked at the advantages of how crypto hardware wallets work, and why having a physical online asset is safer. But one undeniable disadvantage of having something physical compared to something online is that the physical item can easily be lost or stolen. That is something that can undoubtedly happen, but there really is no need to panic at all. Crypto hardware developers know what they’re doing, and they’ve got you covered in this respect.

The key inside your hardware wallet is protected by both a PIN and a password. You are required to make a PIN and password that is insanely secure, and that cannot be tied to anything that could be easy for another person to guess or calculate. As a result, it’s near-impossible for a thief or anyone else to access your key, and ultimately your crypto assets.

As we briefly touched upon above, when setting up your hard wallet, you will be required to set up a seed phrase. This is what you can use to recover your keys and transfer them over to a different wallet, either hardware or software. In the event of loss or theft, all you need to do is use this seed phrase and transfer your funds as quickly as possible.

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How crypto hardware wallets work – Three easy steps

Set up 

Once you’ve purchased your hardware wallet and you’ve had that exciting unboxing moment, you can then follow the set-up instructions. Every brand is slightly different, but the usual steps are setting up your PIN, password and seed phrase. Of course, if you are transferring a key over from another hardware or software crypto wallet, then you will need to enter the seed phrase from your previous wallet.

Plugin

Once the set-up process is complete, you can then plug in your hardware wallet and get started. All you need to do is plug it into your laptop or mobile device (most should work on both) and get started. You will then just need to enter your PIN and/or password. For more specific details on each brand, you can check out our article entitled “is Keystone legit?” or one of our other crypto hardware wallet reviews here at Bitstacker.com.

Transact

You can now access your cryptocurrency funds on the blockchain and start performing outgoing transactions. This can be anything from private payments, betting account deposits, or trades using an exchange platform. Speaking of which, you can check out the best trading sites by using the crypto exchanges comparison here at Bitstacker.com.

Why transactions and trading are better with hardware wallets

Hardware wallets offer you more security and can save you time and fees when making trades and transactions. By using wallet-to-wallet trading, you can send cryptocurrency straight from your wallet to another. This means that you can bypass the process of the funds first being deposited into an exchange wallet. Essentially you are able to cut out the middleman here, saving yourself both time and money. Exchange wallets often charge fees, especially when it comes to withdrawals, so being able to forego them is always going to be a great advantage.

Signing and confirming transactions

In addition to storing the keys that give you access to your assets on the blockchain, crypto hard wallets also facilitate signing. Each transaction that you make on the blockchain needs to be signed off by you. Your blockchain signature is used to prove your ownership of the key and is impossible to forge or replicate in any way. You can think of it as a digitized version of old school, traditional banking, back when we had to physically go to the bank, provide ID and physically provide a signature to send wire transactions.

Are hardware crypto wallets safe to use with devices other than your own?

While we generally never advise devices other than your own for any transaction, whether it be a friend’s or a public device, there’s actually a low risk of using your crypto hardware wallet on a device that isn’t yours. The hardware wallet is in itself an additional layer of solid armor that protects you against the likes of malware, hacking, cyber attacks and phishing. As a result, you are actually protected when using your hardware wallet on a device that isn’t secure itself.

What are the best crypto hardware wallets for September 2023?

If you’ve already been convinced to get your first crypto hardware wallet, or you’re looking to upgrade to a better one, we can help you find the best cryptocurrency hardware wallets right here at Bitstacker.com. Our experts have compared and rated all of the best wallets based on a number of different categories. Based on your budget, needs, and the volume of your assets, we can help to find the right one for you.

All of our crypto wallet hardware reviews have been constructed and rated in a categorized way. The idea behind this is that you can find the right wallet for you based on what you want. We rate wallets in terms of price, performance, and even look at size. While it might sound superficial, the size and shape of a crypto hardware wallet can really matter. For example, some people hate the big and bulky look, while others hate the fact they can’t read the small and nimble ones.

We’re venturing a little bit off-piste here, but the bottom line is that no matter how specific your needs may be, we can help to find the right device for you here at Bitstackers.com. Why not start off with our review of Ledger? Here we aim to quash your doubts by answering those all-important questions, including, is Ledger legit? Take a look around our site and find your ideal hard wallet today.

How do crypto hardware wallets work vs software wallets

So now we’ve reached the ultimate comparison battleground: crypto wallet hardware vs software, which one is best? As is the case with most directly comparable items, there are a lot of advantages and disadvantages to both, so let’s take a look at what the main pros and cons of each are.

To start things off, let’s take a look at what they have in common. Essentially, they offer the same service – a place to store the key that gives you access to your blockchain and the means to perform transactions. One thing that can be agreed upon, is that using either a hardware or a software crypto wallet is far safer than simply keeping your funds with a crypto exchange. Now though, as promised, let’s pick out some of the pros and cons of both.

Hardware wallets are safer

While software wallets do implement top-of-the-range technology that is highly likely to keep your funds and keys completely safe, there is always the risk that software can be accessed and/or manipulated by hackers and cyber attacks. By using a hardware wallet, this is a risk that is almost completely eliminated.

Hardware wallets are more expensive

Now we get to one of the big disadvantages of hardware wallets – they are far more expensive. While the majority of software wallets are free – most half-decent crypto exchanges will actually give you free access to one – hardware wallets definitely are not. In fact, a hardware wallet can set you back anywhere between $70-$250 for example.

Software wallets are more convenient

It might be a small element, but software wallets are far more convenient, as it’s basically just another app that’s added to your phone. Hardware wallets give you another thing to carry around, and crucially to forget as you go out the door. Still, we’d say that’s a small price to pay for such a high level of security.

Can I mine crypto with my hardware wallet?

No, despite it being a physical item that looks quite fancy, it is essentially still a wallet in the same way as its software counterpart is. For other functions, including mining, you will still need other platforms. You can find the best crypto mining platform for you here at Bitstacker. However, we should warn beginners that mining definitely isn’t easy, and is certainly not for the faint-hearted. Before you give it a go, we strongly suggest finding out how cloud mining works by using our guide.

Are hardware crypto wallets safe? Here’s the verdict

If safety is what you are looking for when it comes to accessing your cryptocurrency funds, then a hardware wallet is definitely worth your while. For casual currency holders, a software wallet might suffice, but as your volume increases and your transactions become more frequent, the need for a hardware crypto wallet increases. Take a look around our site and find your ideal crypto hardware wallet today here at Bitstacker.

How crypto hardware wallets work FAQ

❓ How do hardware crypto wallets work?

At first glance crypto hardware wallets may appear to be quite complex and difficult to use. However, understanding the concept of how they work is actually straightforward, and using one is even simpler. Don’t believe us? Then take a look at our experts’ guide to Crypto Hardware Wallets and How They Work here at Bitstacker.com. We promise you’ll be pleasantly surprised!

🤔 Do hardware wallets actually store crypto?

We know that you would love to hear that there is a straightforward yes or no answer to this question. Sadly though, we’re going to have to disappoint you. In order to answer this question properly, we first have to take a step back and look at how cryptocurrencies work in relation to the blockchain. Fortunately, you can find a quick and easy guide by following the link to our website.

💰 Are hardware crypto wallets worth buying?

The answer to this question is somewhat subjective, and perhaps the best question is if they are worth it for you? We have created an article that takes an in-depth look at crypto hardware wallets to answer these questions. Ultimately, our article should help you to make an informed decision on whether or not they are right for you.

🔑 How do you store crypto on a hardware wallet?

A complete guide on how to do this can be found on our site at Bitstacker.com. Find your ideal hardware crypto wallet today and more with our experts.

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