Cryptocurrency hardware wallets are an essential tool in the Cryptocurrency space, but as you're here, the chances are you already know this. Whether you're an avid Crypto-enthusiast or just taking your first step into the world of self-custody - hardware wallets are the safest way to secure your digital assets.
We won't go into too much detail on the ins and outs of how hardware wallets work, however, you should understand that your wallet doesn't hold any cryptocurrency at all, rather it holds the private keys which give you ownership over the Cryptocurrency you own on each respective blockchain (learn more about how Cryptography works here). This means the goal for any Cryptocurrency owner should be to store and protect these private keys as best they can. Hardware Wallets enable you to do just that, by storing your keys in a secure offline environment.
Now, you know you need a hardware wallet, but which wallet should you go for? In this guide, we're going to cover all the most important considerations when choosing a hardware wallet.
First of all, you need to consider what coins you're looking to store on your wallet. Are you planning on only storing Bitcoin or do you have a selection of Altcoins that need protecting too? You should carefully consider which coins you need to store in your wallet as different wallet providers support their own unique selection of coins, tokens and blockchains. Not only this but for each individual coin they may support staking, buying/selling or just sending and receiving. This is an important first step in narrowing down your choice of wallets.
Cryptocurrency hardware wallets are designed to securely store your private keys in an offline environment. However, each hardware wallet comes with its own layer of security features. Here are some of the key security features of hardware wallets that you should be on the look-out for:
Secure Element: The secure element is a tamper-proof hardware chip that stores your private keys and other sensitive data. It's designed to protect your data from unauthorised access and ensure that it cannot be extracted or copied by attackers.
PIN Code: A PIN code is a personal identification number that is used to access your hardware wallet. The PIN code is typically between 4 and 8 digits long, and it must be entered correctly before you can access your wallet. The PIN code is an important security feature because it protects your wallet from unauthorised access, even if the device is lost or stolen.
Seed Phrase: A seed phrase, also known as a mnemonic phrase, is a series of 12 to 24 words that can be used to recover your private keys in case your hardware wallet is lost, stolen, or damaged. The seed phrase is generated when you first set up your wallet, and it must be kept in a secure place. With this feature, you can recover your funds even if the hardware wallet is lost or damaged. You can find more information on how to protect your seed phrase here.
Two-Factor Authentication: Some hardware wallets support two-factor authentication (2FA) to provide an additional layer of security. With 2FA, you must provide a second form of authentication, like a fingerprint or a one-time code, in addition to your PIN code to access your wallet.
Firmware Updates: Hardware wallets receive firmware updates from time to time to patch security vulnerabilities and improve their performance. These updates are usually released by the manufacturer and can be installed using the wallet's software.
Offline Storage: Hardware wallets are designed to be used offline, which means they are not connected to the internet when you are not using them. This is an important security feature because it makes it much more difficult for attackers to access your private keys remotely.
Device Verification: Some hardware wallets support device verification, which means they will only work with a specific computer or device that has been previously authorised. This feature adds an extra layer of security by ensuring that your hardware wallet can only be used on trusted devices.
Ease of use
Often disregarded by many who are new to Cryptocurrency is just how user-friendly (or not) a hardware wallet can be. Wallets are available in all different shapes and sizes from small USB stick-size devices like Ledger and BitBox to larger mobile phone-sized devices like Ellipal and Coldcard. Whilst this isn't often a limiting factor in most people's decision-making, it's worth considering how tech-savvy you are and opting for a hardware wallet that matches your technical ability. This not only includes the longer-term use of the wallet, but also the initial setup process. If you're looking to get a better understanding of how easy your hardware wallet will be to setup and use, check out our product guides - we go through the whole process from start to finish so you know exactly what to expect before you buy.
Our advice to newbies, just keep it simple, choose whatever feels comfortable but do expect that it may take a little bit of time to get accustomed to using your new wallet. In our opinion, a little trade-off in ease-of-use is often worthwhile if it means you have a more secure place to store your Crypto.
Hardware wallets can be connected to devices through various methods, each with its advantages and disadvantages. Here are the most common connection types for hardware wallets:
|USB (USB-A/ USB-C)||The most common type of connection for hardware wallets is through USB. Most hardware wallets come with a USB cable that can be used to connect the device to a computer or mobile device.||
|Bluetooth||Some newer hardware wallets support Bluetooth connectivity. This type of connection allows you to connect your hardware wallet to a mobile device without the need for cables.||
|NFC||NFC (Near Field Communication), and it's a type of connection that allows you to tap your hardware wallet against a compatible device to establish a connection. This type of connection is often used for contactless payments, and it's becoming more common for hardware wallets as well.||
|QR Code||Some hardware wallets support QR code connectivity, which involves scanning a QR code on the device to establish a connection.||
We all know reputation is important, no less so in the Cryptocurrency industry where trust is a very scarce commodity. With so many hardware wallets to choose from on the market today which companies are pioneers and which might have malicious intent?
Before you commit to storing all your Cryptocurrency in one wallet, consider doing a bit of research into the wallet manufacturer, explore their website, social media pages, reviews from other users and even how long the business has been running to gain some useful insight.
A key feature in some hardware wallets is the use of open source technology, this allows users to view and audit the source code themselves, ensuring that there are no hidden vulnerabilities or backdoors that could compromise the security of their cryptocurrency. This transparency also allows the community to contribute to the development and improvement of the hardware wallet, leading to a more secure and trustworthy product.
Whilst many agree with the use of open source technology, some industry leaders still consider there to be a strong case for not open sourcing certain information about a hardware wallet as it could highlight exploits for malicious attackers.
Last but not least, you need to consider what price you're willing to pay for your new hardware wallet.
We've left this until the end, and for good reason too, if you've followed all of the criteria above and narrowed down the hardware wallet that meets your specific needs then should price really be an influencing factor on your final decision?
Sure, if you have a tight budget then you can still get a good quality wallet for less, whilst perhaps sacrificing on security and/or ease of use, but recognise the importance of choosing a wallet that is right for you and that initial investment can last for many years to come.
By considering all these factors, we hope you're now in a much better position to make an informed decision and choose the hardware wallet that best meets your needs.
We stock a wide range of hardware wallets from brands we trust and use ourselves, if you need any questions answered then please reach out to us and we'll be more than happy to help.