All crypto industry participants are looking for the most secure way to store their assets — reliable wallets. Hardware wallets can be the obvious choice.
A hardware crypto wallet is a compact physical device resembling a flash drive, credit card, or car keychain that autonomously generates digital transaction signatures and secret keys.
The devices are equipped with a display that shows transaction information and a few navigation buttons, for example, to enter a PIN code or confirm a withdrawal of funds. The hardware wallet is controlled by one or more microcontrollers (chips), which generate and, relatively speaking, store confidential cryptographic data.
How A Hardware Wallet Works
Cryptocurrency is stored in a blockchain, not in a wallet, and that’s obvious. Wallets are responsible for private keys, the use of which gives the owner access to their assets in the blockchain.
Hardware wallet in offline mode — private key storage. To access digital assets, the wallet must be connected to a device that has Internet access. After that, the user has to log in to the software provided by the developers of the hardware wallet. Through it, the user can view the balance and perform transactions.
When making a payment, the transaction is signed inside the hardware wallet chip, and the keys are not transferred to the stationary device even when the system is connected to the Internet. All transactions required for a transaction are made inside the hardware wallet. The device gives only the result — the electronic signature of the transaction. The buttons on the cold wallet are used to confirm the transaction and not the keyboard of the device to which it is connected.
Hardware wallets have three levels of security:
- PIN code. It is required each time you access the device menu. After several unsuccessful attempts, the wallet is blocked.
- Secret software password. The password is generated automatically by the gadget itself. It is stored offline.
- Seed-phrase or mnemonic code. The code (a phrase of 12 or 24 words) is generated during device initialization and is used to restore access to the lost wallet.
Top Hardware Wallet Manufacturers
Ledger was founded in 2014. An octet of cryptography and business experts stood at the origins. Eric Larcheveque, the founder of the French Bitcoin Center, is among the eight creators. Providing maximum wallet security is the core of Ledger’s ideology.
Ledger is now a team of 170 professionals developing various products and services to protect cryptocurrency assets, including Ledger hardware wallets already sold in 165 countries.
The most popular Ledger hardware wallet model is the Ledger Nano S.
Benefits of the model:
- use of a dual-chip architecture (ST31/STM32);
- expanded list of supported cryptocurrencies;
- support for the most popular operating systems;
- OLED display;
- protective metal plate of the case;
- ability to connect a second account with a separate password and PIN code.
Trezor is a pioneer in hardware wallet development. The company was established in 2012 in the Czech Republic. There is a legend that its appearance is the result of the theft of 3,000 bitcoins ($12,000 at the 2012 exchange rate) from Marek Palatinus, the head of the Satoshi Labs blockchain company.
After the incident, Marek Palatinus realized that the safest place to store digital assets would be cold hardware wallets. The first Trezor T hardware wallet was released in 2013.
Benefits of the model:
- multi-level security system;
- durability and water resistance of the case;
- the wallet supports popular operating systems — Windows, Linux, Mac;
- supports and stores the most popular cryptocurrencies — Bitcoin, Bitcoin Cash, Ethereum, Zcash, DASH, and others;
- compatible with various popular software for accessing crypto wallets — MyEtherWallet, Electrum, MultiBit, Mycelium, and others.
Hardware Wallets: Everything Has Its Price
The only significant disadvantage of hardware wallets is their price. Users that are used to free applications are not always willing to pay for security and risk losing all their crypto assets to save on the cost of the device — 100-150 euros.
TON Labs Security Card — an alternative to “hardware” from TON Surf
TON Surf developers have created an alternative to hardware wallets — TON Labs Security NFC Card. The TON Labs Security Card is a physical device used to store private keys and allow the user to access their Free TON account.
The high security level of encrypted data storage is achieved by using a single-chip architecture, a multi-signature smart contract and an encrypted private key.
TON Labs Security Card advantages:
- No cables or connectors are required to connect the TON Labs Security Card to a computer or smartphone. All you need is a mobile device with NFC technology;
- the simplest procedure to restore access to encrypted data in case the card, PIN-code or secret password is lost. The user only needs to register in a free restore service;
- Free TON SDK open source application allows the user to program the card ‘for himself’. The TON Labs Security Card has 120 kilobytes of storage.