Why use hardware wallets for crypto currencies
Online storage of crypto currency is risky
Recent years have shown that cryptocurrency exchanges are not secure. They are one of the most popular targets of hackers. Only in January 2018 the Japanese Coincheck exchange was hacked and $543 million in NEM tokens stolen. The file-sharing sites are not secure. This has been known for many years.
But computers and smartphones, on which the private key for the wallet is stored, can also be hacked with ease. Paper wallets are safe. However, if the money is circulated via the Internet, the private key must be imported to the PC. With the help of malware, decryption can also occur here.
A hardware wallet is like a portable safe and currently the safest solution. The coins are stored offline (cold storage) and only if necessary the Hardwallet Wallet is connected to the PC or mobile device.
Four hardware wallets that pay off
There are currently four very popular and secure hardware wallets. The Nano S ledger, the Keepkey and the Trezor are compatible with Windows, Mac, Linux and Android and are connected to the corresponding devices via a USB cable. The transactions can be tracked, checked and verified via an OLED display. In case of loss, damage or theft of the device, everyone has the possibility to make a backup copy. The backup phrase consists of 12 (Keepkey) or 24 words (Ledger Nano S, Trezor). So the coins can be restored. The Coolwallet S stands out and has special features. The length of the backup phrase can be selected here (between 8 and 24). However, all four wallets are difficult to hack, even if they are connected to a device compromised by malware. Each one uses a pin to perform transactions.
A closer look at the four hardware wallets
The Ledger Nano S is currently one of the most popular hardware wallets on the market, because it is not only safe, but also appealing in design. It is the size of a USB stick. Other information is also available. Not only Bitcoin is supported, but also Ethereum and Altcoins. To use the Hardware Wallet, the Ledger App must be downloaded.
The Keepkey Hardware Wallet is much larger. It has an anodized aluminum housing with a large, clearly arranged OLED display. Supported are Bitcoin, Ethereum, Litecoin, Namecoin, Dogecoin and Dash. Since the Swiss crypto exchange Shapeshift has taken over this hardware wallet in 2017, a significantly more secure connection with ShapeShift is guaranteed.
Trezor was one of the first hardware wallets that originally stored BTC. Altcoins and ERC-20 tokens are now also possible. In addition to the OLED screen, this wallet is equipped with two buttons to confirm transactions and firmware updates. Transactions require not only the PIN, but also two-factor authentication (2FA). If the device is lost or damaged, the backup phrase of 24 words is required. To restore it, it is necessary to connect it to an online wallet. This Hardware Wallet can also be used as a password manager. GPG can also be used to encode and sign documents.
The Coolwallet S clearly stands out from the previous ones. It is the size of a credit card and is the first wireless hardware wallet on the market including a built-in display. The connection takes place via encrypted Bluetooth with an iOS or Android device to which the CoolWallet app is downloaded. The wallet, which contains a small rechargeable battery, is charged via a special charger. Additionally there is a button to navigate through the features. The private and public keys are stored on a microchip on this electronic card. In addition to BTC, Litecoin, Ethereum, Ripple and Bitcoin Cash can be used.