What is an Ethereum hardware wallet?
An Ethereum hardware wallet is a physical electronic device that’s designed to store Ethereum and other cryptocurrencies. Also known as a ‘hard wallet’, this is the most secure wallet option for ether storage.
How do they work?
Hardware wallets store your private keys offline – a process also known as ‘cold storage’ – to keep them out of the reach of hackers. This means that hard wallets act as a kind of offline vault for your Ethereum. Exactly how they do this depends on the model that you buy; some will have different length PIN numbers, more or less advanced backup options, and possibly connect to other devices by USB or bluetooth. The best way to consider hardware wallets is as miniature computers that handle cryptocurrency without needing to be online.
What other types of wallet are there?
There are four main types of alternative ethereum wallets that you can consider. Here’s a brief look into the differences between them:
- Online wallet. Also known as a web-based wallet, this is a wallet that allows you to access your ether via a web browser. The private key is usually hosted by your provider, and they are solely responsible for its security. Good examples of web-based Ethereum wallets are MyEtherWallet or Coinbase.
- Mobile wallet. This is similar to an online wallet, only that it’s stored on a native mobile phone application. Examples for mobile wallets include Jaxx, BRD, and Abra.
- Desktop wallet. This is effectively a wallet that you can download and install on your PC. It stores the private key on your computer, giving you control of your funds and their security. Examples of good desktop wallets include Exodus, Mist, and Electrum.
- Paper wallet. This is basically a piece of paper with both the private and public keys of ether addresses printed on it. Just like the hardware wallet, it keeps the ether completely offline, making it a great choice for those looking to hold their coins for long-term. Some of the best places that allow you to create a paper wallet include ETHAdress and WalletGenerator.
What’s the difference between Ethereum hardware wallets and other wallets?
A hardware wallet is like a cryptocurrency safe. Unlike other wallets that require you to use some sort of application or download software on your computer to use, this wallet exists physically. It’s classified as a ‘cold wallet’ because it stores your ether private keys offline, making it safer than online, desktop, and mobile wallets, which need an internet connection for funds to be managed.
The most important factors when choosing a hardware wallet
When buying a hard wallet, you will want to consider:
The idea behind using a hardware wallet is to ensure that your ether is completely secure from hackers. Other than allowing you to store access to your funds offline, most wallets will have additional security features such as a PIN or recover passphrase, which will allow you to recover your funds.
Hardware wallets such as KeepKey, Ledger Nano S, and Trezor feature a display screen which is designed to let you view all the details of your wallet, including your balance and transaction history, without having to connect it to your computer.
Ease of use
There are hardware wallets out there that are very easy to use, meaning that you don’t need to have a technical understanding of cryptocurrencies. Wallets such as Trezor are ready to use right from the box: you just turn it on and you are good to go. Others, such as Ledger Nano S need to be configured using a computer application first. But generally, hardware wallets aren’t complicated to use, and you don’t need to be a tech wizard to use them.
All hardware wallets are usually small, but you can find some that are tiny, to the point where wallets such as the CoolWallet S come at the size of a credit card. You should consider the size and shape of the wallet depending on where you intend to keep your wallet.
Are transactions made using Ethereum hardware wallets anonymous?
Yes. As is the case with other Ethereum wallets, transactions between Ethereum hardware wallets are anonymous. Once you make a payment, only your public wallet address displays on the blockchain, and there’s no possibility of someone tracing it back to you.
Do I need to download any software?
Sometimes, yes. It depends on the hardware wallet you’re using. For example, if you are using KeepKey, Ledger, and Trezor Wallets, you will need to download an extension from your Chrome browser, or a native desktop or mobile application in order to configure your device.
How do I set up an Ethereum hardware wallet?
The process of setting up an Ethereum hardware wallet depends on the wallet you are using, but the process is usually very simple:
- Plug in the device via USB to your computer, and launch the native desktop application. (Alternatively, if you are trying to configure your hardware wallet with your mobile phone, and your wallet provider allows for mobile compatibility, you will be able to configure your hardware wallet with bluetooth connectivity to the native mobile application).
- Configure or sync the device.
- After the device is configured, you will have the option of creating a recovery seed, which is usually a string of words (12,18,24) that can subsequently be used on other devices to recover your funds in the event that your hardware wallet is misplaced, stolen, or damaged.
- Copy down this recover passphrase into a piece of paper, and store this in a safe place.
- You can then start adding wallet addresses for all your cryptocurrency funds.
How do I transfer ether from/to a hardware wallet?
To a hardware wallet
Start by setting up your device through the provider’s website, software or built-in screen (depends on the device). Click on the ‘Receive’ option in order to generate your Ethereum address, and then copy it. Head to the wallet you intend to transfer your Ethereum from, click on the send button, and paste your wallet address in the field provided. Now click ‘send’ and the ether will be transferred to your wallet’s address instantly.
From a hardware wallet
Use your wallet’s official mobile app or a compatible desktop app in order to unlock the wallet. Enter your password or PIN number to open the wallet, and then hit the ‘Send’ option. Now enter the public wallet address of the person you want to pay ether to and confirm your transaction(s).
What if I lose or damage an Ethereum hardware wallet?
In the event that you cannot use your hardware wallet, you will be able to recover your funds so long as you have kept the recovery passphrase created on initial setup. If you haven’t kept this, then it’s probable you will have lost your coins permanently.
What are the main Ethereum hardware wallet manufacturers?
This is a reputable manufacturer of hardware wallets run by security experts in the fields of blockchain applications and cryptocurrencies. Some of its hard wallets include Ledger Nano S and the Ledger Blue. It supports the storage of the largest amount of cryptocurrency keys on the market.
A manufacturer known for making hardware wallets with impeccable security features and its user-friendliness. The Trezor One, its signature hardware wallet, comes with an inbuilt screen that displays transactions and balances.
Compatible with various cryptocurrencies such as Litecoin, Dash, Bitcoin, Dogecoin, and Ethereum, this wallet is popular among investors who wish to hold multiple digital assets. It’s native app also comes integrated with the ShapeShift exchange.
Developed by a Taiwanese company known as CoolBitX, the CoolWallet S is the brand’s main hardware wallet, which takes the shape of a credit card and is designed for mobile users. It supports a number of top digital assets, including Bitcoin Cash, Litecoin, Ethereum, Ripple, and Bitcoin.
Should I use an Ethereum hardware wallet?
Honestly, it depends on your needs. If you are a long-term investor and want to store a sizeable amount of ether, a hardware wallet would be a great option as it keeps access to your digital assets completely offline. If you want to get similar security without having to spend the money, you could also consider a paper wallet. However, if you are a cryptocurrency trader and intend to access your wallet regularly, you will want to go with an online or a mobile wallet.
How can I find the best Ethereum hardware wallet?
Right here. We have reviewed the most reliable and reputable hardware wallets providers for you to pick the perfect hardware wallet provider.