Hardware Wallets Explained
Okay, so these types of wallets can be a bit confusing due to the fact that. Technically speaking, even a desktop or a mobile wallet can be considered a hardware wallet due to the fact that it requires a hardware device to run the programs themselves.
However, the main way hardware wallets are different, is in the fact that they are physical and electronic devices that use a random number generator to generate public and private keys. These keys are stored on the device itself, and the device is not connected to the internet in any way.
Hardware storage devices are essentially cold wallets and are deemed as one of the most secure ways to truly store cryptocurrency.
These wallets are essentially flawless when it comes to their protection against online attacks, since, after all, they are not connected to the internet in any way, perfect, right? Well, they have risks when it comes to firmware implementation.
Hardware wallets are also not that new user friendly and the funds are a lot harder to access. It’s just a really time-consuming way to store cryptocurrencies, and while they are excellent for long-term investments, they are extremely inconvenient when it comes to making everyday purchases through the usage of cryptocurrency.
There have been numerous software solutions out there to try and solve this dilemma when it comes to ease of access, where you can directly connect your hardware wallet to an online trading platform through a secure way that means that your keys never leave your device, however, by keeping your currency in cold storage, you have the highest chances of keeping it secure.
The only time we would consider using a cold storage device such as a hardware wallet to store cryptocurrency is when you want to hold onto your cryptocurrency for a long time or if you are holding an extremely large and valuable amount of cryptocurrency that you would not want to get compromised in any way.
The most secure options out there when it comes to hardware wallets are the ones that allow you to set up PIN codes to secure your device, and some even have the option to implement a recovery phrase that can be used in the event of getting your wallet lost.
Paper Wallets Explained
As the name itself might lead you to believe, a paper wallet is a literal piece of paper, where you can write down or print out a crypto address and its private key. These are typically printed out in the form of QR codes, and these codes can be scanned at a future date to execute any cryptocurrency transactions that you want to make.
Many paper wallet websites even go so far as to allow you to download their code in order to generate a new address and even keys while you are offline. These wallets are the most resistant when it comes to online hacking attacks and can be considered an alternative option when compared to cold storage devices.
Keep in mind that nowadays, paper wallets are dangerous, and you simply have to understand the risks assuming you decide to go down this path. One of the main flaws when it comes to paper wallets is the fact that they are not suitable for sending funds partially, and will generally allow you to send the entire balance of cryptocurrency all at once.
Imagine that you have 100 of a certain type of cryptocurrency, but you only want to send 30.
You have to first send all 100 to another type of wallet, such as a desktop, mobile or web wallet, spend the 20, and then return the 70 that remains to a new paper wallet.
As such, this can be extremely time-consuming, and not at all a convenient way to store cryptocurrency when you want to spend it regularly.
