With the advent of cryptocurrencies to the financial world, many people have been interested in making investments in these new digital assets, which has required apart from a previous study of the ecosystem, certain tools that allow you to participate safely in the market.
The cryptocurrency wallet is one of those tools that should be used for the storage of our funds, especially if we want to protect and be in absolute control of our cryptocurrency. This is because the exchange houses where they are purchased are not a good option to keep them in the long term.
There are a variety of options in terms of wallet refers to, called cold and hot storage. Versions in software, hardware, mobile and even paper, that offer access to the blockchain through private keys that demonstrate the property of the user.
The different types of wallets offer unique characteristics in the same way, some are easier to use than others, more practical and also with different levels of security. For this opportunity we will see the particularities of a hardware wallet and what are the best alternatives in the market
What is a cryptocurrency hardware wallet and how do they work?
The hardware portfolio is an electronic cold storage device, which is characterized by adding high levels of security in the safekeeping of cryptocurrencies. They are those specially used by users who have plans to make long-term investments in the market.
This portfolio works through the integration of a security chip in the hardware, which avoids the need to use the private key in the computer at the moments in which you want to make a transaction. This means that the user's private keys will be kept offline at all times and transactions will be signed only by entering a PIN code, thus preventing them from being compromised in the face of any threat.
On the other hand, the portfolio needs integration with a software wallet to be able to execute operations. This is usually designed by the same company that develops the hardware, but there are also several software options that provide compatibility with the devices in use.
A remarkable feature that it has, is that along with the application of extra layers of security, it also provides the ability to secure backup through a seed phrase, which in the case of damage or loss would allow it to be restored again in another wallet.
It is also important to note that most of these hardware wallets have support for different cryptocurrencies and have adapted quickly to the innovations that the ecosystem has had, such as SegWit and some bifurcations.
Trezor wallets will not include support for the CashAddr addresses of Bitcoin Cash
Pros and cons of portfolios in cryptocurrency hardware
As it is in the case of the rest of the wallets regardless of their type, in the hardware model we can find many pros and cons related to their characteristics, design and operation, which will determine how optimal this alternative can be according to the user's activity in the cryptocurrency market.
The main point in favor that this kind of device has and that can be deduced from the aforementioned, is the guarantee of safeguarding the funds and the level of security it offers, so that transactions and storage do not run any kind of danger with its use. It also has the advantage that it can not be copied or duplicated to access private keys and has a restore point using keywords that allow you to backup your content at all times.
However in terms of the negative aspects or points against, we have that it is not free to use and the price is usually quite high, which does not make it accessible to any user. That is why it is important to determine the purposes and amounts that will be handled in cryptocurrencies, in order to evaluate if it is really necessary.
Added to this, other disadvantages that may arise, is that due to their physical condition runs the same risk as any other object. It can break, deteriorate or be damaged by any substance, causing its failure or malfunction.
Main Hardware Portfolios
Trezor
Trezor is one of the most popular hardware wallets and was the first of its kind in the cryptocurrency market. Currently has support for Bitcoin, Litecoin, Ethereum, Dash, Ethereum Classic, Zcash, NEM, Namecoin, Dogecoin, Tokens ERC20 standard Ethereum and other bifurcations as Bitcoin Cash and Gold.
The Trezor model, in addition to the cryptocurrency storage, includes a two-factor authentication option and can also be used as a password manager. It is an easy to use and configure device and it has the ability to restore by means of secret words.
This hardware portfolio is constantly updated, giving support to new crypto currencies and adding new functionalities. Currently it is available for a price of 89 euros.
Ledger Wallet will have native versions for the desktop and mobile platforms
Ledger Nano S
Ledger Nano S has become the preferred hardware wallet of the majority of the community. It has a support of up to 27 cryptocurrencies, including Bitcoin, Ethereum and another series of Altcoins. The wallet is used as a USB device in any computer, however it can also be used without being directly connected.
It has an OLED screen for verification of transactions and its price is in the order of 79 euros, which is a plus point compared to the previous one. In addition to its excellent security, it has had a rapid adaptation to market innovations.
Ledger Nano S for its price and quality ratio, is the main entry option for users of the cryptocurrency market in this class of hardware portfolios.
KeepKey
KeepKey is another alternative available in the market, currently supports Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Dogecoin, Namecoin and Dash. It is responsible for generating the user's private keys, as well as their storage and signing transactions.
The device also facilitates the backup option, after having generated the private key with a recovery phrase composed of twelve words and among its functions is also included protection by PIN code.
This team is integrated with the ShapeShit platform allowing a direct exchange of foreign currency and in the case of confirmation of transactions to be made, approval is required through the use of the physical button included.
Another remarkable aspect is that it supports the operation with the Electrum, Multibit and Mycelium wallets.
Wallet Ledger Nano was the best-selling Christmas product in Nevada in 2017
Final words
The development of hardware wallets has been an important contribution to the security for the storage of cryptocurrencies in the ecosystem, although all models may have their shortcomings, it is the safest thing to do in terms of safeguarding cryptocurrency.
In spite of this, it is important to take into account when its acquisition is essential, since its cost is not available to all market participants, which would only be advisable for investments in high quantities and in the long term.
It is to be expected that with the continuous development of cryptocurrencies, new options will be seen at a more accessible price and with the same security features, in the same way that those already available are expected to keep abreast of future innovations.