Many special hardware wallets are available for you to store Bitcoins. Popular wallets are Ledger and Trezor. These are pretty easy to use and allow you to keep your bitcoins safe from intruders. Besides, only like this you absolutely can be sure the Bitcoins are yours and nobody can steal your coins. Similar wallets include KeepKey, Digital Bitbox and Coldcard. How do they work?
Most hardware wallets work pretty simple. These are physical tiny computer like devices that themselves are not connected to the internet. You hook them up on a computer, after which you open them safely through a personal pincode for example. Most wallets are opened via an extension on a browser, or a standalone application on the computer.
To read the wallet or in order to receive Bitcoins, you do not need internet access at all. But if you want to transfer Bitcoins out of your wallet, you do need a connection.
Paper backup and private key
On most of these hardware devices you can easily create a new wallet. Alternatively you can import an existing wallet. Importing happens by entering the words of your paper backup. This paper backup is also called a seed. This seed consist of 12, 18 or 24 words which you can write down and store in a secure spot. By entering this seed in any wallet, you can access your funds and make Bitcoin transfers.
The hardware wallet stores your private key. This private key gives you access to make transactions with your Bitcoins. Your public keys are available to everyone, these are created by your private key and are used to receive Bitcoin and store information about all transactions in the blockchain.
As such, it is also good to understand that it is possible to use multiple hardware wallets. This is because with Bitcoin all the data is available in the public ledger, the so-called blockchain.
Like all hardware wallets, a Ledger is a small device that you hookup to your computer or phone with a usb cable or in this case even via bluetooth. Ledger offers a really easy user interface and allows you to store Bitcoin as well as many different alt coins such as Ethereum, Monero and XRP.
The Ledger also comes with a special app for your phone, and is generally considered as a safe way to store your Bitcoins. It is considered as maybe the easiest and most user friendly ways compared to other hardware wallets.
There are many different Ledger products available these days, which might make choosing the right one for you a little harder.
The Trezor is another well known hardware wallet. It was one of the first on the market but used to be a little cumbersome in its use. This little hardware device had become a lot more sophisticated over time and more user friendly. It now comes for example with a touchscreen which makes entering your pincode a lot easier.
The Trezor comes with its own software interface that you can open on most browsers. You do not need to download anything, you simply go to Trezor’s website and connect your Trezor to the computer.
KeepKey is a hardware wallet developed by shapeshift.io. This shapeshift is an easy way to trade Bitcoins or other coins with each other. Shapeshift is not considered as a cheap service, but is rather easy.
KeepKey allows you to make trades without having to login to any cryptocurrency market with more complex interfaces. It works rather easy. It allows you to add a pincode and optional passphrase. There is only one product available, so that makes choosing also a lot easier.
The Digital Bitbox is maybe one of the cheapest hardware wallets out there, and is also the most simple wallet. It is the smallest USB device available. It is also build on fully open source software.
Apart from a hardware wallet, you can also use the Digital Bitbox as a two-factor authentication tool.
The ColdCard is very different the the ones above in terms of how it looks. It basically looks like a bankcard or creditcard but is actually a tiny computer. You do not use USB to connect with it, but Bluetooth. It is easy therefore to connect your phone, tablet or computer with it as long as it has Bluetooth.
Since the Coldcard is like a creditcard size device, it is easy to bring with you. However, the device itself is not a piece of plastic, so you cannot bend it as much as a plastic card.
Another different aspect of the Coldcard is that it comes with a number based seed. This is contracy to the word based seeds of other wallets. This may be easier for non-English speakers, but in order to import your seed into a different wallet, you do need to map the numbers with the correct words.
Do you need a hardware wallet?
In order to store Bitcoins, you do not need a hardware wallet like all above. Another option is to use a software wallet and store your private key on your computer or phone. This however is considered as less secure.
For a more secure way you can also choose to not store the private key on the computer and to have a seed or paper backup that you work with. Enter these words each time you use a software wallet and you’re good to go.
But here you do need to worry about having a backup of this backup. What if you paper trail gets lost? Where is your backup in this case? A hardware wallet makes it easier and more secure to have your private key secure.
All hardware wallets come with their own software. But you don’t have to use their software. In fact, one of the most used software wallets in general is Electrum. Electrum allows you to also use any of the above hardware wallets to securely safe your private key and to manually approve transactions.
Please note there are also other hardware Bitcoin wallets available. We recommend to only use established wallets that the community approves off. Do not buy random wallets on online shops without proven track records and reviews. Also do not buy hardware wallets that you can not be sure they have not been tempered with.
Other wallets that seem secure include
SatoshiFire is a website for current trends in banking and cryptocurrencies. Our main goal is to help readers stay up-to-date, keep track and make sense of the ever-changing banking and cryptocurrency market. Read more about SatoshiFire and its editorial team.