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What are hardware wallets?

Blockchain

The security of your cryptocurrencies is a matter that you should take very seriously. Many more when it is more common than you think today for crypto scams, whether with methods like phishing or injecting malware into your computer.

Today we will talk about hardware wallets, small devices that will help you keep your private keys safe and away from the world's dangers.

What are private keys?

Before getting into the matter, you need to know this term, as it is of the utmost importance to understand the operation of hardware wallets.

Private keys have a similar function to a conventional key, but the only difference is that these keys are used to unlock your funds and spend them. That is why it is essential that only you have access to those keys; obviously, it is not a good idea to use “password1234”. 

The ideal solution for storing your private keys is to keep them as far away from the internet as possible. Some choose to write them down on paper, but let's face it, it's hard to remember a password that looks like this: JbgY43*!vIPL.g4k&5LvJ%

To solve that problem, hardware wallets were invented, which we'll discuss now.

What are hardware wallets?

These wallets are small physical devices that are exclusively designed to protect your private keys within them. They never connect to the internet, so it is almost impossible for someone to access them remotely. If someone physically tries to open it to gain access, a protocol is activated that “suicides” the device, deleting all the information it stores.

Apart from the security offered by the fact that it is not connected to the internet, some wallets also provide the option of a PIN to be unblocked to boost their safety even more.

Hardware wallets are often used to store large amounts of cryptocurrencies, which are not needed daily.

The first hardware wallet

The idea came from two Bitcoin enthusiasts, Pavol Rusnak and Marek Palatinus, in 2011. The concept was to increase user security with a device that was easy to use and, above all, relatively inexpensive.

Something like a small computer that could be used anywhere without needing the internet. In addition, the product had to be faithful to the blockchain's philosophy and open source.

After two years of development, in 2013, they presented “Trezor One.” Since then, Trezor has been one of the most important companies in the security sector for crypto assets, with annual sales of millions of dollars.

How do they work?

You must first connect it to a computer or mobile phone via USB to make a transfer from your hardware wallet. It is important to emphasize that the information will never leave the device since all the “important” processes are done automatically by the machine.

Once connected, a specific software will open to manage the transfer. All the necessary data to carry out the movement is entered there, such as the address that receives the cryptocurrencies and the amount to be sent. Then the software sends all the information to the wallet, generating a private key. Finally, the user must only confirm the payment, and the cryptocurrencies will be unlocked and sent.

Recommendations for using a hardware wallet?

When configuring your wallet for the first time, you must write your seed phrase on paper because if you forget the PIN or your device is damaged, it is the only possible way to recover your cryptocurrencies.

That seed phrase should be kept in a safe place, and you should save it on your computer or phone for no reason. Here you have to go for the old-fashioned paper technique.

Is it necessary to have a hardware wallet?

The simple answer is yes. It is the best way to store your savings or large sums of cryptocurrencies in a safe place. However, you must remember that you are responsible for keeping your money in an impenetrable vault. If you forget how to access it for any reason, you will join the many stories of people who forgot the passwords to their hardware wallets and lost millions of dollars.

For your day-to-day expenses, store your crypto in a wallet that you can access quickly and easily without neglecting security. The best option is to create an account in El Dorado, where you can buy cryptocurrencies with your local currency and make payments in a matter of minutes.

Start your path to financial freedom with us. Just click here and see the magic. 

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