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Hardware Wallets: “If You Don’t Own Your Keys, You Don’t Own Your Crypto”

2018 showed cryptocurrency investors that there are many risks to mitigate, including security, so what should they do better in 2019? Let’s talk hardware wallets, what they are, why you should use one, and other security best practices for the New Year.

Recent Cases of Crypto Theft

As the cryptocurrency industry is still nascent, it’s not surprising that we’ve had so many encounters with sub-par security in the past resulting in hacks and theft. Of the most recent attacks, hackers reportedly stole nearly $60 million worth of cryptocurrencies (6.7 billion yen) from the Japanese exchange Zaif, and that’s only the most recent.

Hardware Wallets: “If You Don’t Own Your Keys, You Don’t Own Your Crypto”

There’s an old saying in the crypto community that if you don’t own your keys, you don’t own your cryptocurrencies. In essence, that single statement summarizes the issues with cryptocurrency exchanges.

What is a Hardware Wallet?

A hardware wallet is a physical device that’s used for storing your private key securely away from anyone who’s not the primary user. These physical devices store your private key(s) in an encrypted offline environment, meaning your wallet won’t be vulnerable to the types of attacks carried out against exchanges and even individual investors using software wallets (a wallet on your computer or phone connected to the internet, also known as a “hot wallet”).

Why Should I Use One?

The answer is pretty clear here: security. Storing cryptocurrencies — especially for long term investments — with a hardware wallet ensures that you actually own the asset, and have additional protection.

How Do I Get One?

Investors have a variety of options for offline storage, including an air-gapped computer or paper wallet, but those have their own limitations. Fortunately, with the advancement of the cryptocurrency industry came many companies specializing in creating dedicated hardware for storing cryptocurrencies securely.

Security Tips

Of course, a hardware wallet is nothing more than a tool (albeit an effective one). With that in mind, it’s important to remember that ultimately it will only be as secure as you are. So here are some security best practices to use with your wallet.

  • Always backup your wallet seed and recovery phrase: This is the mnemonic passphrase you’ll need to recover your wallet should it ever be lost or stolen.
  • Always store your wallet, wallet seed, and recovery phrase separately and securely: If someone comes across your physical wallet and it’s stored in a safe, closet, etc. right next to everything you need to recover a wallet, then all you’re doing is helping the thief. Ideally, these three pieces should all be stored securely and in different locations (safe, safety deposit boxes, etc.)

The Takeaway

Now that we’ve talked hardware wallets and why they matter, you should have a better idea about why you ought to be using one. Hardware wallets are far more secure than storing crypto on your phone or personal computer and are leaps and bounds ahead of storing funds on an exchange. But remember, they’re not the ultimate be-all-end-all for crypto security — you are.

Want More?

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Tiffany Madison

3x co-founder, consultant, communicator, writer, ENTJ. Stage 3C breast cancer fighter. Free speech ❤ #blockchain #bitcoin #crypto #liberty #hempheals