This article is telling about:
- Advantages of hardware wallets;
- What a hard wallet is;
- Its safety and security;
- How to use a device;
- Hard wallet legalisation.
The invention and growing popularity of cryptocurrency motivates developers to create reliable and secure ways to store and commit transactions, and among the many variants offered an offline bitcoin wallet is at the first place. These devices boast a variety of features, both in terms of functionality and security that the most promoted computer programs, phone applications or Internet resources do not possess. They are quite material and don’t depend upon any external or online conditions and regulation. They can be used anywhere in the world and at any computer operated with Windows, Linux or Chrome OSs. That’s why experts – up to the founders of large cryptocurrency exchanges – and newcomers give preference namely to hard wallets.
What is a physical bitcoin wallet?
There is no such a computer user who had never seen a flash memory. Some people actively use optional modems for the mobile Internet, also having the form of a usual flash memory, with USB-interface and equipped with LED-indicator. So any hard wallet has got the same design and way of connection as the mention devices do. The valuable thing for bitcoin storage looks like a keychain or car alarm. Really! However, what kind of security guarantees does such a thing provide?
Levels of safety and security
Offline key storage
There is another term for hard wallets and it sounds like “cold storage”. The secret key – the only purpose of intruders – is contained solely in the memory of this device. Remote servers, computer hard drives, mobile gadgets, etc. – all this has nothing to do with our subject.
Even if the key – let it be only theoretically – fall into the wrong hands, the secret code in its memory will remain secret. Firstly, to activate the device you need to enter a PIN and the key itself is written in an encrypted form. One needs to know the password to perform any transactions.
The best bitcoin hardware wallet is the wallet that is equipped with a display. The newest models are equipped with a screen, which greatly simplifies the conduct of financial transactions, because all the necessary information – addresses and transferred amounts – are in sight and completely reliable.
Protection against intrusion
Hard wallets operate on the principle of one-way connection. In the same way the computer mouse functions. This avoids recording a third-party soft, such as spyware into the memory. Also, there is no any operating system on the device. This fact increases the level of protection.
How to use a hard wallet?
We have already described the most actual devices in our previous publications. They were Trezor, Ledger and KeepKey. Each of them is fairly considered to be the best bitcoin hardware wallet. Each has got a range of advantages and high levels of security, stylish design and advanced features. But what about using one of them? Let’s have a Trezor test drive!
So, let’s imagine that you became a happy owner of hard wallet Trezor. You had to wait a while, and it’s not 2 or 3 days, and maybe a couple of months, since you are not able to buy such a device in a regular electronics store. The order is made directly from the manufacturer. Trezor is made by SatoshiLabs. The cost according to the latest data equals 99 dollars.
In addition to the main unit the USB cable is included in the package. Firstly connect the wallet to the PC with this cable. After connecting a special browser plugin My Trezor you must install by visiting the resource https://wallet.trezor.io. Installation is automatic.
After installation the soft Trezor will offer you to simulate the PIN. A set of digits is made not on the device, but in the browser on the obscure screen keyboard. The numbers on it each time change their order and the correctness of the set is checked on the display. This feature prevents stealing the PIN, even when the PC screen is completely viewed by outsiders.
The next and very important step is to come up with a phrase or a short sentence of 24 characters, i.e. so called “seed”. And of course, remember this phrase by heart! This password will help you recover data if you lose the device or it will be stolen. Trezor uses both BIP39 and BIP44 algorithms, so you can recover data on any other hard wallet.
Let’s move on to financial matters. To open the Transactions Lab directory press the left button. Then choose Receive and you’ll get you BTC address. It has got a view of a long line with figures and letters. There is also a QR-code for mobiles.
When you receive BTC, the cryptocurrency transaction will be shown as “unconfirmed”. Within 15 minutes this inscription in the Timestamp section will change into date and time, which indicates the completion of the process. You have the money!
To send BTC visit the account page and choose Send. In the payments section enter the recipient’s address and the amount. How long does it take? Scan the recipient’s QR-code. For this purpose the function is provided.
After pressing Send write your PIN. Please double-check the address and money carefully. Pay attention to fee as well. In case of an address error, amount or improper conditions, click Cancel. The state of the transaction will be observed on the hard screen and in My Trezor.
As you can see a physical bitcoin wallet is not only a safe and reliable storage for BTC but a very simple device to use. Even an inexperienced user can operate it easily. The only thing remains. What about the legislation as for the hard wallets in your country? They can be considered as uncertified data encryption devices and strictly prohibited. Mind it!