A hardware crypto wallet is a device that stores your private keys (information regarding your transactions). It is such a device that is not easy to hack and hence offers better security than smartphones. It is not a vault per se but a device to store information on transactions. It’s a medium to download your cryptos and access crypto exchange platforms.
Since the market of cryptocurrencies will boom, as per speculations, hardware storage is inevitable. A comparison between Trezor Model T vs Trezor One can give you an idea about which device to choose. Both have exceptional features like cold storage, PIN code, recovery speed, and address verification. Model T is the latest version and hence more expensive.
Either you can upgrade the old one or buy a new device for yourself.
Your keys, Your Coins
As the hardware is not your vault so if you lose your wallet, it doesn’t mean you lose the fund. The idea is to keep your private keys safe. The executives of renowned crypto wallets have pointed out that whoever owns the private keys owns the coins. It means the keys must be in your possession to access your coins and, therefore, your funds.
A private key is a cryptographically secured chain allowing the user to use crypto assets. It is also called the seed phrase, as it can help initiate asset recovery in case of theft or loss. It is in the form of BIP39, which consists of 12 or 24 letters that help recover the coins. You must write it down on a piece of paper and store it safely offline.
If you don’t have those magical letters with you, it is impossible to recover your assets. You can recover your asset through a seed phrase using another hardware wallet. It is not compulsory to get access through the same hardware wallet. Another option for you is to get your coins through software wallets available in the market.
The list of software wallets is largely starting with Spot, Wasabi Samourai, and Electrum. You have the privilege of choosing anyone for asset recovery at your convenience. Most industry experts advise keeping the seed phrase with you in an offline mode to protect you from cyber theft. Failing at it can cost you your coins, as said, ” your keys, your coins.”
What Happens If You Don’t Have A Seed Phrase Backup?
To have access to your hardware crypto device, you need private keys. What if you don’t have them (the private keys)? Are your coins lost forever? A big no. In case you don’t have private keys, you can recover them using the seed phrase. The risks attached to not having a seed phrase are:
No Way To Reset The Seed Phrase
Now, you can get access to your funds via seed phrase, but if you lose the seed phrase, it cannot be restored. It is unchangeable and remains the same. Once lost, you may lose your assets completely without a chance of getting access again.
More Freedom, More Risk
Since cryptos are based on the blockchain, you have the freedom to use them without interference from any intermediary. But with freedom comes great risk and responsibility. It is your responsibility to keep your backup phrase safe with you. No one will advise you or help you recover if you lose it.
It is on you to keep it safe with you to access your assets. There is no adviser like in the banking system to help you out in case of loss.
Disaster Is Waiting
You know that losing is not an option for you. If you may lose the seed phrase, you can lose your coins. You know what happens next if the paper is lost or lands in the wrong hands. There is no logical reason why you should not keep your seed phrase safe and sound.
Tips To Protect Your Hardware Crypto Wallet
As it is said, “prevention is better than cure” you must try to protect your wallet before theft, loss, or damage. You can use these simple yet effective tips to protect your hardware crypto wallet.
Always Buy From A Reliable Source
It would be best if you tried to avoid supply chain risk when buying hardware wallets, as there are chances of getting tempered by any middleman. They use the information for their benefit, which can be detrimental to you.
Don’t Accept Pre-Installed Wallets
If you have received a pre-initialized wallet, you are willing to put your assets at risk. It is only you who should initialize the wallet and no one else; otherwise, it may be attacked easily by attackers.
Don’t Type Or Photograph
Smartphones these days have text predictions enabled in them. If your device is hacked, you may risk losing confidential information. Remember your PIN to access your device and never type or photograph them. Never store your pin and recovery password together.
Use A High-Assurance Workstation
Try to operate your wallet from an assured host PC. It should be offline, and transactions should be done via hardware wallet. You can lock the device’s firewire configuration to protect its booting integrity.
Buy Multi-Signature Devices
More than one authorization to the device keeps the device safe. Multi-signature is a means to secure your wallet from a single point of failure. In the case of a device used by multiple users, transactions from the wallet must be done carefully.
Like every device has its pros and cons, the hardware crypto wallet is also the same. It is an easier way to manage your transactions of cryptos if you are very much involved in the business. In the near future, the cryptos market will expand, and hence the demand will peak.
With developing technology, new features will be added to upgrade your device. As of now, losing your seed phrase can cost your accessibility to your coins. However, future advanced technology may find a solution to this problem soon.