What are hardware wallets and safes and what can they do?
Hardware wallets and safes for Bitcoin and other cryptocurrencies are considerably more secure than regular software wallets
you can install on your computer. To connect them, you need a free USB port.
- They are immune to computer viruses that like to steal data and bitcoins from classic software wallets.
- Private keys are stored in a protected area and cannot be transferred from the device in plain text.
- Access to the device is protected by a PIN.
- Currency transfer transactions are authorised with a password.
- Intuitive use - hardware wallets usually have a small display with buttons.
- You can take your hardware wallet with you anywhere.
- Some HW wallets support multiple cryptocurrencies.
Cryptocurrency risks
Although HW wallets and cryptocurrency safes offer the highest level of security, there are still risks you should know
about.
Wallet theft
Most HW wallets and safes are protected by a PIN code, so if you lose it, no one can access your virtual currency unless
they have your PIN. A weak PIN can still be guessed, however, so make sure it's secure.
The longer the PIN, the more possible combinations there are. Some models start an automatic countdown timer that is extended for each time the PIN is entered incorrectly. There is also a recovery feature that can give you access to your cryptocurrency if you ever forget your PIN.
For example, a hardware wallet from the company TREZOR will prompt you to write 24 generated words on paper the first time you start it, which is used to regain access to your cryptocurrency in case you lose your device or somebody steals it from you.
Beware of phishing
Phishing is a social engineering method by which an attacker can try to misuse your sensitive data. In case of cryptocurrencies, an attacker may impersonate an acquaintance or relative and ask you to transfer money to his or her Bitcoin account.
Use up-to-date antivirus software
Your hardware wallet can't check if the recipient's public key (address) is correct during the transaction. A malicious application on your computer may change this address, which means that you will unknowingly authorise a transaction that will send your money to somebody else. It is important to always double-check and triple-check the address before making any transactions and use up-to-date antivirus software.
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