Since its invention in 2010 Bitcoin has gone from a value of around $0.0008 to over $42,000 per coin.
Many other cryptocurrencies have been created over the years, and the technologies associated with them have grown and changed. If you are investing in crypto you need to understand the ways you can store them.
For a rundown of what a hardware wallet is and why you need one, keep reading.
What Is Crypto?
A cryptocurrency is a digital currency that is secured on a blockchain. Cryptocurrencies generally operate on decentralized networks through a distributed ledger and stand apart from fiat currencies as they are not issued by a central authority.
Cryptocurrencies are almost impossible to counterfeit and no government can interfere or manipulate them, making them incredibly secure. When you first invest in crypto you can buy it from an exchange and then store it in a digital wallet.
There are different digital wallets, and they vary in terms of the types of crypto they can hold.
These digital wallets often called "soft wallets" most often work as browser extensions. They are generally quite secure but do have some limitations and vulnerabilities. If you have a large amount of crypto, you will want to invest in a hardware wallet.
What Is a Hardware Wallet?
A hardware wallet is a physical device that you can use to store your crypto. Hard wallets generate a set of private keys that can be used to access your crypto. You should keep these keys stored offline as you don't want anyone else to be able to access them.
When you set up a hard wallet you will choose a pin that needs to be put in to access your funds and all transactions need to be physically signed off.
Benefits of a Hardware Wallet
The biggest benefit of a cryptocurrency hardware wallet is security. Every day people are hacked and fall victim to scams which results in them losing some, if not all of their crypto. Security is one of the most important aspects of blockchain technology, and using a hard wallet helps with this.
The private keys of hard wallets are not susceptible to viruses, so they cannot be stolen that way. As long as you store them in a safe, physical location no one should ever be able to access them.
If you want to make any transactions to or from a hard wallet it must be connected to your device. This makes it impossible for someone to steal any of your crypto without actually having physical access to your wallet. When storing crypto for long periods a hardware wallet is ideal as you know that your funds will be completely secure.
There are various hardware wallets available, but they are generally all very compact. Trezor has two devices, the Tezor One and Trezor Model T. Both are small enough to fit in your pocket, making it easy to take them anywhere and transfer crypto from wherever you are.
Digital vs Hardware Wallet
When comparing a soft wallet vs hard wallet the main difference is the level of security. Hard wallets are often seen as the superior choice, but soft wallets do have their advantages.
The main benefit of using a soft wallet is the speed and ease of access they provide. Most of them can be accessed by simply opening the browser extension and putting in a password.
Anyone who wants to transfer their funds or use other features such as staking quickly may benefit from keeping at least a portion of their crypto in a soft wallet.
Another major advantage of soft wallets is that they are free. A hardware wallet can cost upwards of $200 which puts a lot of people off, especially if you don't have a huge amount of crypto.
The more money you have invested in crypto, the more worthwhile it is to pay for a hard wallet. You also want to bear in mind that when you invest in crypto you do so hoping it will increase in value. A $200 wallet might not seem worth it to store $500 of crypto, but if it increases in value and becomes worth $5,000, the investment will be far more reasonable.
Trezor One vs Trezor Model T
Both devices by Trezor are ideal for most people, but some small differences may affect your choice.
The Trezor one is compatible with over 1,000 different tokes, which is more than enough for most people. There are some, however, that the Model T can hold which the One cannot, such as Cardano (ADA) and Ripple (XRP). You will want to check the compatibility of the coins you use before making your purchase.
The Trezor One has a simple display with two buttons to carry out processes. The Model T has a more appealing full-color touchscreen display. With this, you can enter your pin on the Model T directly, whereas with the Trezor One you have to enter it in your computer when it is connected.
The Trezor website has a more detailed comparison of these two models where you can see some of the more specialized differences.
What if My Hard Wallet Is Lost or Breaks?
While this can be very inconvenient, it doesn't necessarily mean you will lose all of your crypto. All software and hardware wallets have a seed phrase made up of 12-24 words. As long as you have this you should be able to recover your crypto.
Because of this, it is incredibly important that you keep your seed phrase secure. It is good practice to store your seed phrase in a different location to your hard wallet to maximize your security.
Do You Need a Hardware Wallet?
The main thing you need to think about is security - how much crypto do you have and how important is it to keep it safe? As your crypto portfolio grows the need for a hardware wallet will increase, so it is definitely something you should be thinking about.
Gasbox has various resources related to crypto storage and other information. If you have any questions about hard wallets or other aspects of crypto click here to contact us today.