Now that we’ve discussed decentralized and centralized mobile wallets and exchanges, it’s time to talk about the most secure, total self custodied wallets in the industry, that being cold storage wallets, or as they are more commonly known, hardware wallets.
A hardware wallet is an offline, encrypted physical device that is the sole access point for your cryptocurrency holdings. With this offline cold storage device, you and only you can gain access into this highly secure wallet. You can think of a hardware wallet as a vault for your cryptocurrency.
While a hot wallet or online wallet is constantly connected to the internet and vulnerable to hacks and viruses, a hardware wallet is only connected to the internet when in use, it provides an additional layer of security and protection from external threats.
So, with that in mind, here are (5) advantages of a hardware (cold) wallet.
Your Private Key is Unexposed
In the crypto world there is an old saying: “If it ain’t your keys, it ain’t your cheese”. What this means is that if you don’t own the private keys to your crypto assets, then those assets are not truly yours. Only when you control the private keys are you the full custodian of your assets.
With a hardware wallet, the only place you’re ever required to enter your private key is on your encrypted hardware device. Since your password never comes anywhere near a computer, your hardware wallet is never exposed to the possible security risk of being copied or hacked.
Security Pin Encryption
Most of today’s hardware wallets are encrypted with security pin encryption. This is like two-step verification when entering websites and mobile apps. While some hardware wallets even comes with the extra security of biometric login.
In the unlikely event, that someone gets hold of your wallet and tries to break in using your code, the security features of the device will automatically lock them out after 3 attempts.
Ability to Hold Limitless Multiple Currencies
Seeing that digital currency and cryptocurrency don’t take up much space, you can store unlimited amounts of cryptocurrency in your hardware wallet, and most hardware wallets allow you to store ERC20 protocol tokens.
No Vulnerability to Hacks and Viruses
Crypto wallets stored on a PC, over the internet, or through mobile networks can all be affected by viruses and hacks. With hardware, cold storage wallets, you are only exposed to the internet during transfers of your crypto.
The majority of hacks and viruses are designed to attack system software, which means they won’t compromise the security of a hardware wallet device at all.
Transaction Verification
Every transaction you make must be verified through your hardware wallet, which is encrypted, so without access to your cold storage wallet, it’s impossible for anyone to make transactions.
In Conclusion
Now there are several manufacturers in the business. I’ve linked the two most popular hardware wallets, Ledger and Trezor, plus the newest one to the market which looks like the future of hardware wallets, Icoin Technologies.
Regardless of which wallet you choose, it’s imperative that you get a cold storage wallet, if you plan to hold cryptocurrency for any period. As I said earlier, “If it ain’t your keys, it ain’t your cheese”. Having a hardware (cold) storage wallet if the most anonymous and secure way to totally custody your cryptocurrency and own your cheese.
I Remain …
Author: Majeed A. Kariem, CBP
C4-Certified Bitcoin Professional | President, Blockchain Merchants Assoc.
[email protected]
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For more info on the Blockchain Merchants, click here; for previous columns, click here.
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