A hardware wallet is a device for users who seek more security. It is often used to protect larger amounts of crypto and is the first choice of many hodlers. What are the advantages using such a device?
What is a Hardware Wallet?
A hardware wallet is a device that will store your private keys and keep them physically separate from any computer or smartphone. In order to interact with the device, you will need a second component which is usually some sort of wallet software that either supports the device or is directly supplied by the hardware wallet manufacturer.
Most of the software that supports hardware wallets are so-called thin clients. Only a few crypto offer full node support and in the most cases the software is not convenient to use with the devices. ́
The device itself is either connected by USB or by Bluetooth. This enables to use hardware wallets in combination with computers and smartphones as well.
Since the private keys are kept physically separate from any other device, hardware wallets are indeed considered one of the most secure solutions. An attacker would need direct access to make a transaction.
A computer or smartphone might be hacked remotely. This is not possible with a hardware wallet. In all cases it will require physical access to the device in order to alter its functionality. But the biggest threat are remote hacking attempts using phishing, key loggers or other malicious techniques.
So, it is safe to say that a hardware wallet offers as much security as an average user can ask for.
While offering great security features a hardware wallet is less convenient to use. You have to connect the device each time you like to interact with your cryptos and this means that you need to always carry it with you.
Even if you choose a combination of a hardware wallet and a smartphone you still need to unlock both devices each time you like to interact with the wallet. Same goes for the heightened security. You have to remember a pin code for the hardware wallet and possibly one for the software counterpart.
Backups on the other hand follow industry standards using a seed phrase that you need to store in a secure place. A hardware wallet is the best choice if you like to opt for more security while sacrificing a lot of convenience.