You need a wallet to store and manage cryptocurrency. This is a special software that displays the balance of your crypto assets and provides the ability to accumulate cryptocurrency and make payment transactions.
Physically, this program can be located on a desktop or mobile device connected to the Internet, on a third-party server, or on a removable device that connects to the network as needed. These devices are called hardware wallets.
Why a Hardware Wallet Is Better than a Software Wallet
The main function of a cryptocurrency wallet is to close access to assets for everyone except the owner. For these purposes, a public key and a private key are provided.
The public key generates the public address of the cryptocurrency account. This address is used to fund your accounts in any of the possible ways.
The private key is used to confirm your right to spend funds stored in the account. Any expense transaction, be it Solana to Wazirx exchange or buying an air ticket, must be confirmed by your signature and the private key generates it. If someone else gets your private key, you will lose access to your assets.
For this reason, the private key must be kept in the strictest confidence. When you create a software wallet, you are presented with a mnemonic phrase to keep secret. This phrase is an abbreviated version of the private key and is known as the recovery phrase.
Is complete secrecy of a software wallet possible if information is processed through a device and a provider? It is for this reason that software wallets are classified as hot.
A hardware wallet is cold storage. Your keys are stored on a microchip inside the device and are inaccessible to intruders. Even if the device is stolen, it is impossible to extract information from it. However, if you do not have a backup, you will no longer be able to use your funds.
How a Hardware Wallet Works
When you first connect a purchased hardware wallet to another device, all important information is displayed on its screen. You will receive a recovery phrase and set a pin code.
The recovery phrase should be written on the supplied recovery sheet or on a regular sheet of paper and stored in a safe place. If something happens to your device, you can restore access to your accounts. The PIN code performs the same functions as the PIN code of a bank card.
Do not write the recovery phrase on any device. It can be hacked, stolen, and then the acquisition of a special device will turn out to be meaningless.
Never share your recovery phrase with third parties. As long as you have the private key, you can generate public keys and public addresses, but not vice versa.
Cryptocurrency Management With a Hardware Wallet
The public address is used to credit cryptocurrency to your account. Any actions related to the sending of assets from the account must be confirmed on the screen of the hardware wallet. After confirming the transaction, the device generates a signature to complete it.
A piece of hardware wallet software is designed to communicate with other hardware devices. These applications allow you to perform any transactions with your assets, including the purchase of physical goods and payment for services.
Which Hardware Crypto Wallet Is Better
There are many top crypto hardware wallets available online. In these lists, the following devices usually occupy the leading positions:
- Ledger Nano X is a cross-platform device that supports 37 coins and 1000+ tokens.
- Trezor Model T is a cross-platform hardware wallet that can hold over 1,300 coins and tokens.
- Ellipal Titan is a hardware crypto wallet completely isolated from all networks. The device uses only QR codes to access the network.
Every year the variety of hardware wallets is growing, and their functionality is becoming more and more perfect. And if you really need such a device, you already have a lot to choose from.
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