Hard Wallet: what it is, types and how to use it
Hard Wallet is the name given to a type of cryptocurrency wallet that is widely used by investors of this type of asset.
Therefore, understanding how a hard wallet works is very important for beginners in the crypto market.
What is a Hard Wallet?
Hard wallet is the name given to a type of cryptocurrency wallet based on a physical device similar to a USB flash drive. This device is not connected to the internet and serves to store crypto assets securely and prevent hacker attacks, for example.
It is very commonly seen in the market that people confuse hard wallets with private keys: the first is the wallet in which the cryptocurrencies are stored, while the second is the words that work as the password for that wallet.
Regardless of the type of cryptoasset investor, it is essential that he has this type of security to guard his own assets.
It is also important to note that there is another type of wallet called a hot wallet, which is software-based and connected to the internet.
What is a Hard Wallet for?
The hard wallet’s function is to protect crypto assets against loss, theft, hacker attacks. It is a way of leaving the heritage properly protected.
This is, in fact, the opposite of what happens with traditional market assets, such as fixed income assets or even variable-income assets, in which custody remains with the brokerage firm.
However, in the world of cryptocurrencies, many consider it ideal for investors to own their own assets to increase their security.
After all, it is possible for exchanges to be hacked or have regulatory problems in the country, which can cause the investor to lose their assets.
The cryptocurrency market has adopted a system called the ZeroTrust System, a concept from IT that is based on the phrase “never trust, always verify” (never trust, always verify).
In this way, many investors in this market consider that the ideal is to have their own wallet and their own private keys. There is a popular saying in this industry that says “not your keys, not your coins” (not your keys, not your coins).
In other words: by having the keys to their own wallet, the investor can trade their cryptocurrencies freely, without limitations.
How does a Hard Wallet work?
First of all, to understand how the hard wallet works, it is possible to cite an example and think that cryptocurrency transactions work in a similar way to checks.
For example, it is possible to send money to a person’s account, specifying the amount and date of this transfer. But for that, you need your signature.
Thus, the bank receives the check and, confirming the check details, allows the transaction. In the world of cryptocurrencies, it works the same way, only in an automated and anonymous way.
Therefore, the investor can transact from a portfolio owned by the cryptocurrency brokerage and send it to an own portfolio whose management is done autonomously.
In this case, private wallets are like bank accounts. However, people will only know that the portfolio belongs to the investor if he counts, as these are neither personal nor non-transferable as is the case with conventional bank accounts.
It’s possible to send crypto assets from the private wallet to other wallets, whether cold wallets, hot wallets or even wallets present in cryptocurrency exchanges.
What precautions should I have when buying a Hard Wallet?
There are many such wallets on the market, and each one has favorable and unfavorable characteristics.
Among the types of hard wallets, the mostmoust famous are the Legder and Trezor, very well known and respected in this market. However, it is also possible to mention BitBox2, Seed Signer and Coldcard, among others.
The first precaution that an investor should take is to buy these wallets directly from their manufacturer. If he buys through a reseller, it is possible that the devices will be modified to steal their crypto assets.
Secondly, it is important that the delivery of the device is discreet: ask the delivery company to send the device in discreet packaging and, preferably, in a PO Box other than your own address.
In addition, it is interesting to have more than one cryptocurrency wallet, in order to divide your assets between them and avoid losing everything in case of a problem. Some prefer to leave part of the equity in the brokerage for more immediate needs.
Finally, the company that made the wallet itself has instructions to check whether or not the wallet has been tampered with. It is important to follow them step by step to ensure the safety of your assets.
How do I keep my Hard Wallet safe?
In fact, there are many precautions that can be taken to protect the hard wallet from theft, loss and hacking.
First of all, it is important to prevent anyone from being able to find the place where this wallet is stored. In addition, you need to protect yourself against the loss, destruction or theft of these wallets.
It is also necessary to be careful not to give the access password (PIN) that allows accessing the contents of the wallet, nor its keywords (which can be 12 or 24 words, depending on the model).
You also need to keep a backup of these keywords in case you need to use them again. These are some of the precautions to protect these assets with so much potential for profitability.
Finally, you can make an inheritance plan. There are automations in which it is possible to transfer the cryptocurrencies present in the address to another wallet if it is not moved for more than a certain period of time.
For example: if the portfolio is not used for more than 3 years, the assets will be transferred to the portfolio of your spouse or children.
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