It’s understandable that thanks to the security level of Blockchain, people assume that cryptocurrency is beyond the reach of danger. Others, that understand the risks that endanger the safety of their coins, usually try to establish proper security measures. From firewall to multiple confirmation procedures, the amount of tools at our disposal is enormous. However, cold storage devices and particularly hardware wallets, represent the last piece of the puzzle that forms your crypto-safety.
We’ll perform a detailed scan of all aspects of hardware wallets, to reach an informed decision regarding the use and effectiveness of physical cryptocurrency wallets.
Features that Complete the Blemishes of Other Safety Tools
The most notable, and also the most important feature of hardware wallets is that they are not online. Therefore, as a good friend-writer at UKCarreerBooster once wrote, “Hackers have no bridge to cross”. Once you load your riches, the hardware device keeps the information safe and the only way to access the funds again is when the wallet is plugged in.
Software wallets can be protected, nevertheless, an experienced and skilled attacker could breach your security and steal your funds. Even the large scale cryptocurrency markets like Coinrail fell under the attempts of hackers who managed to pull out almost all coins that were part of the trade. Luckily, the company policy was to keep 70% of the invested funds locked within a hardware wallet, and leave 30% online, which is a projected amount that satisfies trade volume requirements. Many companies were not that lucky, the consequences were so deep some markets even faced bankruptcy.
It makes a lot of sense to use hardware wallets for Bitcoins you don’t want to use for a while or use only in case of large transactions. Keeping all your valuable assets online is not as nearly safe, especially knowing what experts some hackers have become.
A study conducted in 2017 claims that more than 4 million Bitcoins are lost forever due to a number of reasons. It can be anything from forgotten passwords to stolen, misplaced or broken laptop. The good thing about hardware wallets is that in case you lose the device there are ways to recover your coins which depend on the model.
Completing the Chain
We already had the opportunity to mention the vulnerability of software wallet security and the weight it represents to your financial plans. Hardware wallets can connect multiple security measures in order to provide a complete chain of protection.
Per example, you plug in the wallet, start the transfer and learn later that your transaction didn’t reach its destination. Multiple confirmation processes allow you to receive a confirmation message with the recipient address. If the address doesn’t match the one you wanted it’s easy to cancel the transaction.
Connecting your hardware wallet exclusively to full node is another great example of team spirit among security measures. For those unaware, full node is basically a network of computers that verify blocks and transactions against every Bitcoin rule. This means that all the transactions that happen, or any data transfer are completely in regulation with the rules. As a result, your transactions are safe so nothing bad will get inside your hardware wallet and harm the integrity of your keys.
Opportunity for Investors
The United States Securities and Exchange Commission (SEC) is looking into creating a Bitcoin-ETF, an investment tool with Bitcoin as the main asset. This could make cryptocurrency more appealing for investments, however, it appears that security is one of the main concerns of the SEC officials. It is reasonable to expect that any investor with basic care for the future of the investment would require some assurances. It’s not unusual for investors to have a difficult time understanding how blockchain technology works, so it is of paramount importance to provide a reasonable risk level.
Hardware wallets should be the knight in shiny armour of cryptocurrency security, keeping in mind all the above-mentioned benefits. It should be enough to persuade large investors that offline devices are the best place to keep dormant funds and keep active only what they are willing to lose. This sort of financial behaviour could even show its effect on the value of coins, which would make the market even more fluent.
Blockchain technology is secure, it offers users privacy and data integrity but that doesn’t make our passwords and our computers unreachable. Different types of malware are popping out regularly, looking for a way to illegally obtain your coins. Software wallet solutions provide a certain amount of protection, however, the results show that it’s simply not enough. Hardware wallets provide safety measures that regular software wallets are not able to secure. Combining hardware wallets with other cryptocurrency security options seems like more than a reasonable decision.
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