What is a bitcoin wallet? And why hardware portfolios, known as "cold wallets", are essential today for those who undertake to invest in this growing sector.
A bitcoin wallet is a device that stores and manages the private keys you hold for your crypt currency. It works the same as money you keep in your wallet or purse, or your bank details stored on your credit or debit cards.
What are the different types of crypt currency wallets?There are two types of wallets: Hardware and software. A software wallet ("hot wallet") is an application that lives on your computer or Smartphone, or even on the web, while a hardware wallet is a separate physical device (much like a wallet or purse) . It is also called a "cold wallet". This hardware wallet is connected to a PC or mobile device to perform transactions.
The price of software wallets ranges from free to, well, not free. They are therefore perfect for those who are just starting out. Since hardware wallets are chargeable, there is a financial investment to be made up front.
Why do you need a hardware wallet?It's important to note that you don't need a hardware wallet to buy, store, or send bitcoin, or any other crypto currency. Some individuals hold several thousand dollars in bitcoin or other crypto currency and do not use a hardware wallet.
However, where hardware wallets stand out is in the increased security they offer, compared to an app that runs on a Smartphone, computer, or in the cloud. Having a device that places a void between your private keys and other applications, the internet and bad hackers, allows for significantly improved security against cyber attacks and viruses.
In short, hardware bitcoin wallets give you complete and total control over your private keys.
What are the advantages and disadvantages of hardware crypto wallets?
The advantages of hardware wallets:• Improved security: a total void between your private keys and everything in between.
• Better control: you hold your keys and can keep them separate from all your other devices.
• Easy transport: Bitcoin hardware wallets are small and easy to carry. But they can also be safely stored in a safe or security deposit.
• No dependency on a third-party application or web service: applications and services come and go without being tied to a publisher.
The disadvantages of hardware wallets:• The cost: Bitcoin wallet hardware solutions aren't free.
• An added complexity: there is always a learning curve with the hardware, and some bitcoin wallets have some pretty advanced features that will have you looking for the manual.
• Loss, destruction or theft: Equipment can break, be lost, be stolen, become obsolete or succumb to all kinds of mishaps.
• Another thing to consider: if you need to make a transaction, you will need your wallet on hand!
What should you consider when purchasing a crypto currency hardware wallet?
Yes, a hardware bitcoin wallet offers greater security, but you still need to make sure that you are buying a trusted device from a reputable source.
You also need to decide on the level of security you need. For some, the waterproofing of a separate hardware wallet is sufficient, while others will feel the need to step up that security and have a device that offers higher levels of security, biometrics or even isolation of the device from possible sources of attack, such as USB chargers.
You also need a backup, just in case. This could be another hardware wallet or a "cold storage" solution, which could include printing your private keys on paper, or even stamping or engraving them on metal.
Another consideration is the price. Unless you are planning on holding huge crypto currency investments, it can be a bit difficult to spend over $ 100 on a hardware wallet.