In this article, we are going to explore the definition and utility of a blockchain hardware wallet. Also, we’ll discuss some of the most popular hardware wallets currently on the market. Finally, we’ll explore some of the benefits of keeping crypto assets in hardware wallets or cold storage.
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Hardware Wallet Definition
A blockchain hardware wallet is a small physical device that crypto investors use to store their assets. Furthermore, a hardware wallet offers some of the best preventative security measures against falling victim to a hack. Also, hardware wallets allow users to store a variety of crypto assets offline without constant connection to the internet. Accordingly, some people refer to a hardware wallet as cold storage.
Hardware wallets come in a variety of different shapes and sizes. However, they’re all fairly small devices. Most hardware wallets are no smaller than a USB stick and not much larger than a standard credit or debit card. Ultimately, the primary utility of a hardware wallet is to provide crypto investors with the utmost security and convenience for storing their assets.
Other Types of Crypto Wallets
Hardware wallets are a type of crypto wallet. Below, we’ll briefly differentiate the definition and use cases of hardware wallets alongside other types of crypto wallets.
Hot Wallets: A crypto wallet with a continuous connection to the internet.
- Browser Wallet (e.g., MetaMask)
- Mobile Wallet (e.g., TrustWallet)
- Built-In Exchange Wallet (e.g., Binance)
Ideal Use Case: Many frequent investors and regular traders will use hot wallets to store a small percentage of their holdings. Although hot wallets carry increased risk with an internet connection, they offer convenience, flexibility, and the general consensus that hot wallets offer sufficient security for trading. The majority of the exploits of hot wallets are not a result of security failures from within the wallet. Instead, hackers have gained access to users’ information using phishing emails or other malicious attacks.
Cold Wallets: A crypto wallet that does not require any or continuous access to the internet, either as a physical device or downloaded software.
- Hardware Wallet (e.g., Ledger)
- Desktop Wallet (e.g., Electrum)
- Paper Wallet
Ideal Use Case: Cold storage wallets offer the best security for preventing hacks and theft of funds. In addition, unlike some hot wallets, cold wallets will always be non-custodial. This means that users have control and access to their funds at all times. Traders and investors tend to use cold wallets for storing the majority of the funds they won’t use or need for trading. A common practice amongst traders is trading with a set amount of funds in a hot wallet and transferring any profits straight into cold storage.
Another analogy of hot and cold wallets is thinking of them as your regular wallet and bank account. People carry small amounts of cash around for spending but keep their life savings in secure storage.
Top Hardware Wallets
When comparing the security features of different cold storage wallets, hardware wallets will often come out on top. Also, many hardware wallets use two-factor authentication (2FA) as an additional precautionary measure. Below, we’ll discuss some of the top physical hardware devices for crypto storage currently available on the market.
Image from BlockGeeks: Best Hardware Wallets in 2022: Blockgeeks Crypto Awards
Ledger SAS launched its Ledger device series in 2014. Its Ledger device range is arguably the most popular hardware wallet selection available, with substantially more Google and Amazon reviews than other leading hardware wallet brands. In particular, Ledger Nano S was one of the first crypto hardware wallets to launch. Ledger Nano S includes a micro-USB cable to connect the device to a desktop or laptop. Here, the users can install up to three different applications (depending on the size of the applications) and can store more than 5,500 different types of cryptocurrencies and non-fungible tokens (NFTs). At under $75, Ledger Nano S offers an affordable, easy-to-navigate introduction to blockchain hardware wallets.
In addition, Ledger offers Ledger Nano X with Bluetooth connectivity and a much larger capacity to its sister wallet. Further, Ledger Nano X is able to host up to 100 applications alongside the same compatibility of cryptocurrencies as Nano S (5,500+). Both Ledger Nano S and Nano X are compatible with more than 50 other wallets and include a PIN code and 24-word recovery (seed) phrase.
Although Ledger is known as one of the longest-standing crypto hardware wallets in the industry, a compromise on its central management system made in July 2020 has knocked its reputation in some peoples’ eyes. None of the users’ assets or devices were directly affected. However, the hackers gained access to Ledger’s customers’ data, including names, email, and home addresses. Subsequently, some of Ledger’s customers fell victim to phishing attacks resulting in the theft of funds after that. Nevertheless, many people still choose to invest in Ledger hardware wallets for their security, ease of use, and brand identity.
The Trezor wallet range may not have the same amount of reviews online. However, the pioneering hardware wallet company was the first to invent the crypto hardware wallet. After Trezor was established by SatoshiLabs in 2013, they launched its Trezor Model One in 2014. Furthermore, the portable and convenient hardware wallet offer investors the utmost security for storing their crypto assets. Plus, Trezor promises users will be set up and ready to go in just ten minutes with their easy-to-follow intuitive user interface (UI).
Being shy of $90, Trezor Model One offers more than 1,000 different cryptocurrencies storage. Further, storage of non-fungible tokens (NFTs) is also possible by installing a third-party app. Also, presenting users with a monochrome interface with two pushbuttons, Trezor Model One incorporates an innovative security protocol by SatoshiLabs, promising the highest security protocols to protect users’ funds. Trezor also offers Trezor Model T, which offers compatibility with nearly twice as many coins. In addition, the device offers a full-color touch display, with PIN, passphrase, and device recovery available on the wallet.
With both Trezor models, users receive a personal seed phrase between 12 and 24 words upon setting up a device. This allows users to recover their funds from an online backup.
With a retail price of $139, Ellipal Titan takes the design of crypto hardware wallets to the next level. As the world’s first “air-gapped” hardware wallet, Ellipal Titan’s design ensures full network internet isolation. In short, this means that there are no components or requirements for interacting with the internet. The Ellipal Titan device itself is akin to a small smartphone with users transferring data in QR code format. As such, this offers the highest protection against online or remote attacks.
Ellipal Titan is ideal for periodic investors or day traders needing an all-in-one solution for altcoin storage. Accordingly, Ellipal Titan is compatible across 40 different blockchains, supporting over 10,000 different coins and tokens. Plus, new assets are added each week! The Ellipal brand endorses full transparency and trustlessness for its users, using offline cryptographic solutions for data transfer and storage. For non-fungible tokens (NFTs), Ellipal provides access to WalletConnect, which offers a gateway to the number one NFT marketplace, OpenSea.
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Ellipal also offers Ellipal Joy, a mnemonic phrase-generating device with cryptographically verifiable randomness using the BIP39 standard mnemonic phrase protocol. The device is completely random, offline, and open-source. In addition, Ellipal offers luxury leather cases for the Titan wallets. Also, Ellipal Security Adapter Plus offers a further layer of security “acting as an insurance door lock”. The adapter “avoids a direct connection to the data cable and also the data theft” and is ideal for charging.
Another popular hardware wallet brand is SafePal, incubated in 2018 by the world-leading crypto exchange, Binance. In May 2019, the SafePal S1 hardware wallet launched alongside a user-friendly, convenient mobile app, followed by the Cypher Seed Board wallet and a protective leather case. The SafePal S1 hardware wallet offers users storage of more than 30,000 different crypto assets, including NFTs. Plus, the S1 wallet uses multiple layers of security protocols, including a self-destruct mechanism! With a retail price of $69, the SafePal S1 wallet is on the more affordable hardware wallets.
Users can interact with the SafePal wallet using the SafePal mobile app. Further, the app features a built-in wallet and crypto exchange. The SafePal app provides a convenient place for users to manage assets within their hardware wallet, software wallet, or trading wallet. In addition, the app offers a fiat on-ramp that allows users to purchase certain crypto assets with credit and debit cards. Plus, users can use SafePal as a port to hundreds of different dApps across an array of blockchains.
Weighing 124g, the SafePal S1 wallet is surely lightweight and credit card-shaped. As such, it offers a convenient and portable way to store and manage crypto assets. With no Bluetooth, USB port, WiFi, or internet connectivity, the SafePal S1 offers true cold storage of assets.
Based in South Korea, D’CENT is an up-and-coming hardware wallet brand showing continued adoption. Using the same security chip as that of Ledger and Trezor (certified as EAL5+), the D’CENT hardware wallet incorporates a novel biometric twist into its security measures. Moreover, as a small device around three inches long, the D’CENT wallet is pioneering biometric authentication using fingerprint scanning technology.
D’CENT offers users three different wallets with management tools available within its mobile app. At the time of writing, D’CENT’s three wallets are Biometric Wallet, Card Wallet, and a mobile software wallet. D’CENT Card Wallet has a built-in radio frequency (RF) antenna that enables near-field communication or “NFC technology.” In short, this allows the transfer of data between two devices within close range. As such, users can manage and transfer funds by simply tapping a mobile device with D’CENT’s Card Wallet.
Benefits of Having a Hardware Wallet
So, now that we’ve answered “what is a hardware wallet?” and discussed some of the top hardware wallets available, let’s look at some of the advantages of using a hardware wallet.
First, using a hardware wallet means that all assets are kept offline, removing the large vulnerability of an internet connection. Offline storage removes the risk of online hacks and attacks. However, it is worth bearing in mind that if you were to open a phishing email that automatically triggers a keylogging or key capturing attack, a hacker would be able to view every button pressed on your keyboard. As a result, this means that a hacker could see the password used for your hardware wallet. It is critical to the security of one’s funds to be wary of opening any suspicious emails.
Another benefit of using a hardware wallet is the full accessibility to funds at any time. By offering more security than online hot wallets, hardware wallets are the safest place for crypto investors to store the majority of their holdings. In addition, most of the hardware wallets available are extremely portable and convenient. For people wanting to cross borders or move abroad with their wealth, hardware wallets offer a more suitable and cost-effective alternative than cash in the bank, gold bars, or other physical deflationary assets.
Exploring What is a Hardware Wallet – Summary
Crypto hardware wallets offer the most secure form of storage for cryptocurrencies and non-fungible assets. Often referred to as “cold storage,” hardware wallets allow users to store their assets offline without a connection to the internet. Furthermore, there are a variety of different types of hardware wallets. Various brands are pioneering innovative security solutions for offline cryptographic storage, from biometric authentication to self-destruct mechanisms.
For readers who have yet to invest in cryptocurrency, start with our Crypto For Beginners course at Moralis Academy! Here, we offer students a step-by-step guide to creating a crypto exchange account, investing, and transferring your assets into cold storage using a hardware wallet. For further reading on how blockchain is playing a role in the Web3 evolution, see our “Web3 Browsers” article! Or, for a deep dive on how blockchain can drastically improve efficiency across a range of sectors, read our “Blockchain in Supply Chain” article next!