What Is a Cryptocurrency Wallet?
Before we proceed to explain the “Hardware Wallet.” It is essential to clear yourself with a Cryptocurrency Wallet. It does not relate to the wallets’ category, but it is more software that focuses on holding the passwords. These passwords are referred to as keys of two types, “Public key” and “Private Key.”
Both the keys look alike, the strings of randomized numbers and letters. These keys are almost identical, implying that the Public key gives you access to the cryptocurrencies you acquired to enable the account number and identifier function. However, it is easy to perform XTZ to XPR exchange transactions with these wallets.
On the other hand, a Private Key will work like your account password and routing number, enabling you to spend the funds tied with the wallet.
Therefore, overall, Cryptocurrency Currency storage works more of a password manager and less of a wallet.
What Is Hardware Wallet?
A hardware Wallet is known as an electronic device that tends to store the private key of users. They are particularly immune to hacking attacks. The biggest vulnerability of it is physical theft. There are multiple top hardware wallets for cryptocurrency available to use.
It is easy to preserve this device to support a 4-8 digit PIN code that helps prevent the thief from accessing the private keys. Hardware Wallet also lets the users restore the complete content during the recovery phase.
It allows the transaction to sign inside the wallet, implying no private key will transfer to another wallet or anywhere.
How Does Hardware Wallet Work?
Like other wallets, Hardware Wallet also works in unique ways that provide the user with Convenience and security at the same time.
It holds cryptocurrency without any acceptance of the Internet. It means the risk of the computer being hacked will reduce, and the wallet’s keys settle during the whole process.
In contrast to the hot cryptocurrency storage software, this Cold Cryptocurrency storage acts like a password manager that holds two special keys, “Private Key” and “Public key.” These keys further give the right to the user to use crypto without any hassle.
As the hardware wallets are viewed as USB devices, they don’t require connecting to the computer. To communicate with it, they need a “Bridge program.” A walled-off tunnel sends the data to and from the wallet without actually displaying it to the operating system.
It is easy to see the bridge program as software, as it allows the download to see what is in your wallet. At the same time, it helps to track funds and move them.
All the reputable cryptocurrency wallets enable you to create a PIN or the Password. However, in the case of Hardware wallets, the users have the flexibility to use both the passwords and PINs concurrently. Also, the PIN gets recovered with the help of a seed phrase.
Suppose you have the cryptocurrency funds with a third-party “hot” wallet or on an exchange. Then, there is no need to owe them. The service provider will act as your custodian, just like the bank.
It guarantees you access and holds the funds for you. Using the hardware wallet is the most reliable way to access your cryptocurrency every time you need it.
Once you run through several features offered by the companies across different wallet models, you will find several differences. Two providers that include Ledger and Trezor, also rule the Hardware wallet space with their several options.
When it comes to the third-party wallet and exchanges, Ledger supports about 50 services, while Trezor is coming in second at 15. Therefore, it is essential to consider both the downsides and deliberately choose the provider and the wallet model that suits your necessities.