What is Hardware Wallet?
Let's find out Hardware Wallet meaning, definition in crypto, what is Hardware Wallet, and all other detailed facts.
A hardware wallet, a cold wallet, or cold storage, is an electronic device used to store cryptocurrencies. It resembles a USB stick in its design. Hardware wallets create an isolated space to store the public and private keys used to track crypto assets on specific blockchains.
While it’s common to say that hardware wallets store the actual cryptocurrency inside, they actually only provide access to the coins. For consistency’s sake, the functionality of hardware wallets is referred to as storing.
Hardware wallets have numerous advantages over hot wallets which require internet access to store cryptocurrencies. Cold wallets store private keys natively, offering reinforced security from malicious code. Private keys are used to identify the owner of the assets stored in the wallet. They also allow holders to transfer their crypto assets to and from the wallet.
Hardware wallets come with two key security features – a secure PIN code and a seed phrase.
The seed phrase is required to access the wallet if the user has lost their PIN. Even if a wallet is stolen, it's nearly unhackable, as most models will reset and burn any stored assets if the seed phrase is entered incorrectly multiple times.
The PIN is the most frequently used security measure as the user must enter it to access the contents of the wallet. Furthermore, users should keep their physical wallets in a secure place to avoid losing them or having them stolen.
Cold wallets can be used to sign any outgoing transactions. While the security measures are nearly fool-proof, the wallets themselves are easy-to-use for new investors or people who are not as tech-savvy. Hardware wallets can be used to store not only cryptocurrencies but also other assets, such as non-fungible tokens (NFTs).
Some of the most popular hardware wallet brands are Ledger, Trezor, and KeepKey. Most cold wallets are able to support multiple cryptocurrencies on different blockchains and may be compatible with some software-based wallets.