What Is a Hardware Wallet?
A hardware wallet is a small device, which usually physically resembles a typical USB stick. It is specially designed to store cryptocurrencies. A hardware wallet works by initially creating an isolated space that stores both public and private keys in order to track a user’s digital wealth on particular blockchains. In other words, the hardware wallet does not truly store the real coins, but only provides access to them.
Hardware wallets are also loosely referred to as cold wallets or cold storages and are in direct contrast to hot wallets.
The advantages of this cold storage cryptocurrency wallet include providing native storage of private keys and offering more security from malicious codes. Private keys are crucial pieces of data that identify the real owner of stored assets and allow holders to send and transfer them at will.
A hardware wallet requires users to provide a secure pin, safeguard a seed phrase, and physically protect the wallet. Additionally, it helps not to keep all the funds on a single device.
A user-set PIN blocks unauthorized access to a wallet. However, a hardware wallet allows pin resets via a seed phrase, which is a list of words that needs to be memorized or securely saved by the user during the initial setup.
Apart from securely storing cryptocurrencies, cold storages allow users to sign outgoing transactions by simply touching the “Confirm” option. And even with their heavy security, they are easy to use since there are apps that facilitate the transfer of funds for users who are not tech-savvy.
Some of the most popular hardware wallets in use today include Trezor, Ledger, KeepKey, CoolWallet, NGrave, and SafePal Wallet, which have evolved to support multiple cryptocurrencies.
Author
Kadan Stadelmann, CTO of Komodo, is a leader in blockchain interoperability and atomic swap technology.
Kadan Stadelmann is a blockchain developer, operations security expert, and Chief Technology Officer of Komodo, an open-source technology provider that offers all-in-one blockchain solutions for developers and businesses. Komodo works closely with organizations that want to launch their own custom decentralized exchanges, DeFi platforms, and independent blockchains. Its flagship technology and end-user application is AtomicDEX - a mobile and web-compatible non-custodial multi-coin wallet and atomic swap-powered DEX rolled into one dApp. Kadan strongly identifies with Komodo’s open-source vision and ideology. His dedication to the Komodo project is founded on an unwavering desire to make the world a better place. In addition to cryptography, blockchain technology, and development, Kadan is interested in literature, mathematics, astrophysics, and traveling.
