What is a hardware wallet?
A hardware wallet is a device that can be used for storing the private keys and public keys of any cryptocurrency, Bitcoin included. One of the main advantages of hardware wallets is the fact that they are cold wallets (= not connected to the Internet). This makes every hardware wallet much safer than even the most secure hot wallets, including web and mobile wallets out there.
Are there any other cryptocurrency wallet types?
Hardware wallets are not the only type of cryptocurrency wallets. Read our ultimate guide to Bitcoin and altcoin wallets to find out what types of wallets exist and which one is right for you.
How a hardware wallet works?
When setting up a hardware wallet, it generates a seed that you have to write down. The seed is a combination of 24 words in a certain order. Sometimes, the seed also can contain 25th word – a passphrase user has to think of.
The seed can be used to generate wallet address and private keys for any cryptocurrency. The same wallet address and the same private keys will always be generated from the same seed. Because of that, if you lose your wallet or it gets stolen, seed can be used to recover all your funds.
The wallet itself is also protected by 4-8 digit long PIN user has to think of.
In order to setup a wallet and use it, it has to be connected to a PC or a smartphone via the USB cable (or Bluetooth connection, in some cases). Most wallets have companion apps, which can be used for initial setup, updating the firmware of wallets or funds transfer. Note: only download companion apps from official sources!
Can a hardware wallet be hacked?
Technically, every electronic device can be hacked – there are no 100% secure systems out there. However, cryptocurrency hardware wallets are as close to being 100% secure as it gets. This type of wallets is not connected to the Internet, meaning that the hacker cannot even try to crack your device remotely.
Therefore, the only way for a cryptocurrency thief to try to exploit your device is to physically access it. In other words, someone can only do something to your hardware wallet if it gets stolen or lost. Even in this case, the wallet cannot be used by the thieves straightaway, because they do not know the password. Hacking the wallet in this case is certainly possible, but still very, very difficult.
The only real threat to hardware wallets is buying them from unofficial sources. If you buy the wallet from eBay, for example, there is a real chance that the software of the device has been modified. In the worst case, this can lead to losing all the funds. Here is a story of a man who lost his holdings after using a hardware wallet bought from reseller. Long story short: don’t buy hardware wallets from third-party sources!
Best hardware wallets
Note: all the wallets listed here have a screen. This provides an extra layer of security, allowing the sensitive information to be displayed on the wallet itself and not on the connected PC or mobile phone.
Ledger Nano X
Nano X is the latest model in the lineup of the French company Ledger. It can store up to 100 cryptocurrencies simultaneously. Thanks to the great software support from the company, the list of supported cryptocurrencies is growing all the time.
The most obvious upgrade compared to Nano X is the Bluetooth support. However, there are other upgrades too, such as support for more cryptocurrencies.
- Storage of up to 100 different cryptocurrencies
- Bluetooth support
- Great software support
- Much higher price compared to the Nano S
- Has to be charged
Ledger Nano S
Possibly the most popular hardware wallet out there, the Nano S remains a compelling option even today, three years after its launch. It supports a wide selection of cryptocurrencies, is fairly compact and affordable.
- Costs just 59 USD
- Good software support
- Does not require charging
- Compact design
- Software update experience can be buggy
Trezor was the first company ever to come up with the idea of cryptocurrency hardware wallet back in 2014. That alone means a lot. Trezor T is an upgraded version of Trezor One. It ditches the two physical buttons in favor of a color touchscreen – something that few other wallets have. Aside from this and support for a few extra cryptocurrencies it is largely similar to Trezor One.
Although touchscreen might seem just a gimmick, it is a security feature. It allows users to input seed and other sensitive information on the wallet itself, and not on the connected device, which could be infected with malware.
- Highly secure
- Compact, sleek design
- Expensive at 170 USD
Launched in August of 2014, Trezor One was the first ever Bitcoin hardware wallet, hence the name. Over the course of the last 5 years it has earned a fairly good reputation among cryptocurrency community. It is stable and easy to use.
- Not that expensive at 80 USD
- The first-ever hardware wallet
- Has a large user base and good reputation
- Compact design
- Less secure than the Trezor T
Coolwallet S is a credit card sized device that is designed to be as intuitive to use as posssible. Instead of relying on USB for connection, it connects to devices wirelessly, making it compatible with iOS gadgets.
- Intuitive to use
- Sleek design
- Small user base
- A relatively small choice of supported coins
KeepKey is a direct Ledger and Trezor wallet competitor, offering a similar set of features. It connects to devices via USB. Perhaps the biggest selling feature of this wallet is in-built crypto exchange.
However, the extra functionality comes at the cost of size. The device is bigger and somewhat less portable than the competing solutions.
- Attractive price (80 USD)
- Limited choice of cryptocurrencies
- Pretty chunky and bulky compared to the competition
- Less-than-stellar support
Honorable mention: BitFi
Smartphone-sized BitFi is a wallet designed by the company of John McAfee, a highly controversial figure in cryptocurrency space. The businessman claimed that the wallet is “unhackable”. Ironically , it has already been hacked several times.
- Created by the company of crypto aficionado John McAfee
- Has a big color touchscreen
- Not as secure as claimed
- Not as compact as some of its rivals
- Relatively expensive at 120 USD, considering its drawbacks
Frequently asked questions
What is the best hardware wallet for storing Ripple (XRP)?
The most secure option would be the Trezor T wallet. However, Ledger offerings are also very secure (if you don’t mind Bluetooth in Nano X) and, in some cases, more convenient.
Which wallet supports Litecoin?
All the wallets listed here support storing LTC either natively or after minor software modifications.
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