Do I really need a hardware wallet?
Are you new to crypto and have recently purchased some Bitcoin or another cryptocurrency? The crypto world is a rapidly changing and dynamic environment, offering plenty of opportunities. In addition to trading crypto on an exchange, you can transfer cryptocurrencies between wallets and use them for instant transactions.
I often receive payments in cryptocurrency for various online tasks as an online content creator. Using PayPal to receive payments for freelance work can be costly compared to using crypto, making it a good and economical alternative for me.
However, when you start out in crypto, do you really need a hardware wallet, or is a software wallet sufficient? In this article, I’ll explain 5 reasons why you should consider using a hardware wallet in crypto.
The Difference Between a Hardware Wallet vs Hot Wallet
Hardware wallets are physical devices that store private keys offline, making them more secure against hacking. They are like a physical USB drive for your crypto. Hot wallets or software wallets are apps or programs on your computer or smartphone. They store private keys digitally, making them more convenient but potentially less secure.
For instance Solana, a blockchain platform, similar to Ethereum. Phantom is a software wallet specifically designed for interacting with the Solana blockchain. It provides a user-friendly interface for sending and receiving Solana tokens, interacting with dApps, and staking Solana. While Phantom is a convenient choice, it’s important to remember that as a software wallet, it carries the risk of being compromised if your device is hacked.
Ledger Nano X hardware wallet
Do I Need a Hardware Wallet in Crypto?
Again hardware wallets like Ledger or Trezor are devices that store private keys for your crypto offline. Next, some good reasons why the more advanced crypto user considers using a hardware wallet instead of a hot wallet.
Reason 1: Security
The primary reason for using a hardware wallet in crypto is security. Unlike software wallets, which store private keys on your computer or phone, hardware wallets store them on a physical device that’s offline. This significantly reduces the risk of hacking.
If someone gains access to your computer or phone, they might steal your private keys and control your crypto funds. With a hardware wallet, your private keys are physically protected, making it much harder for hackers to steal them.
Additionally, hardware wallets often have built-in security features like PIN codes and recovery phrases, providing extra layers of protection against unauthorized access.
Reason 2: Not Trading Crypto Just Holding
Another reason to use a hardware wallet is if you’re primarily holding crypto rather than actively trading. If you’re not frequently buying, selling, or transferring your crypto, a hardware wallet can be a more secure and convenient option.
Hardware wallets are designed for long-term storage. They offer a secure way to store your crypto over time without the constant need to access it. This is especially useful if you’re planning to hold your crypto for years or even decades.
While software wallets can also be used for long-term storage, they carry the risk of being compromised if your device is hacked or lost. A hardware wallet, on the other hand, provides a physical layer of security that can help protect your crypto from these threats.
Reason 3: Hardware Wallet is Much Easier to Maintain than a Laptop
Hardware wallets are generally easier to maintain than laptops. They’re designed to be simple devices with minimal functionality. This means there’s less to worry about in terms of updates, security patches, and other maintenance tasks.
Laptops, on the other hand, require regular updates to their operating system and software, as well as ongoing security maintenance. These tasks can be time-consuming and can increase the risk of accidental errors or security breaches.
With a hardware wallet, you typically only need to update its firmware occasionally, which is usually a straightforward process. This simplicity can make hardware wallets a more convenient and low-maintenance option for storing crypto.
Reason 4: The Amount of Money Invested
The amount of money you have invested in crypto is also a factor to consider when deciding whether to use a hardware wallet. If you have a significant amount of money invested, the added security of a hardware wallet can be well worth the cost.
Hardware wallets provide a higher level of security than software wallets, making them a good choice for protecting larger sums of crypto. While software wallets can be sufficient for smaller amounts, the risk of losing your funds increases as the value of your crypto grows.
If you’re holding a substantial amount of crypto, the potential benefits of a hardware wallet in terms of security and peace of mind can outweigh the initial cost.
Reason 5: Staking Crypto Offline
Staking crypto offline using a hardware wallet can be a beneficial strategy for advanced crypto users. Staking involves locking up your crypto in exchange for rewards, but it can expose your funds to potential risks if your private keys are compromised.
By staking your crypto offline with a hardware wallet, you can significantly reduce the risk of hacking. When you stake your crypto, your private keys are stored on the hardware wallet, which is offline and therefore protected from internet-based attacks.
This can be especially useful for advanced users who are staking large amounts of crypto or who are looking to earn passive income over the long term. Staking offline with a hardware wallet provides a more secure and reliable way to maximize your crypto earnings.
Read more here: Best hardware wallets for staking crypto offline
Best Examples of Hardware Wallets in 2024
Next some good examples of popular hardware wallets that can be used to secure your crypto savings.
Ledger Nano X
This is an USB device that is designed to work with your mobile through Blue Tooth. With the Ledger Nano X, you can secure and manage over 5,500 coins and tokens. Including Bitcoin, Ethereum, XRP and more.
Ledger Flex
The Ledger Flex is a more ‘gadgy’ way of storing digital assets offline. The Ledger Flex is uses a touchscreen, where you can sign and transact crypto from the palm of your hand. It also uses the Ledger Live app on your mobile phone and is a very popular device.
Ledger Stax
Finally, the last of the Ledger devices: Ledger Stax. This device is also a touchscreen solution, but is a more eco-friendly option. Ledger Stax™ can last on standby status for days, and up to 10 hours in use on a single charge.
Ellipal Titan
Ellipal Titan is a fully air-encapsulated hardware wallet that relies only on QR codes for data transmission. Where other hardware devices are mostly using USB or Bluetooth Ellipal does not rely on these connections. Going with Ellipal Titan as your choice of crypto hardware wallet means choosing an option that is air-gapped.
SafePal
Safepal is another modern crypto cold wallet that uses WiFi, USB, Bluetooth, and Airgapped devices. Particularly, the SafePal S1 enables you to secure, send, buy, swap, and exchange crypto most easily. Finally, paired with the SafePal App, you can secure and manage crypto anytime, anywhere.
Do Beginners in Crypto Use a Hardware Wallet?
Beginners in crypto often don’t start with a hardware wallet. The initial cost and complexity of setting up a hardware wallet can be daunting for those new to the crypto world. Many beginners start with software wallets, which are free and easier to access and use.
However, as beginners gain experience and start investing larger sums of money, they may consider upgrading to a hardware wallet for added security. Hardware wallets are particularly recommended for those holding significant amounts of crypto or for those who are planning to store their crypto for the long term.
5 Reasons for a Hardware Wallet in Crypto & Best Examples was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.