So, hardware wallets are a big topic lately and they are even more popular today than ever before. This comes as no surprise, since the FTX collapse made people realize that storing your crypto on an exchange is just a terrible idea to start with.
There is nothing worse than losing all of your crypto because you failed to secure it properly, so let’s talk about this, as this is a big deal! Remember, the aim of crypto technology is decentralization, self-custody and financial independence, and this comes with serious responsibility.
But there are still a lot of people that don’t have hardware wallets, and there might be a lot of reasons for this. In fact, Rabid Mining did a poll in a recent livestream, and it was shocking that almost 50% of the participants did not own a hardware wallet.
Some people might wonder how hardware wallets work, if it is safe to store your crypto on it, the costs associated with buying a hardware wallet or they simply don’t care even having a hardware wallet.
Right from the start I will tell you, if you are serious about crypto, and you intend to spend, or are currently spending a lot of money to invest in cryptocurrencies, then you should absolutely take all the precautions you can to make sure that your crypto doesn’t get stolen.
So let’s go over a few key points and questions, to give you a better understanding on how hardware wallets work, and how you should be going about getting one.
1. Which hardware wallet should I buy and where should I buy it from?
There are many hardware wallets available on the market. I personally am a big fan of Ledger and Trezor devices, since they are the market leaders in this field and they offer a variety of different models to choose from.
When buying one of these, I would suggest that you buy from their official website or webstore directly, or from one of their official resellers. Below are affiliate links to each of their official websites, to enable you to get them from the official sources.
https://shop.ledger.com/?r=aec819985303 (LEDGER)
https://affiliate.trezor.io/publisher… (TREZOR)
I do not recommend buying hardware wallets from Amazon or EBay or similar online platforms, since you wouldn’t know if the device has been tampered with prior to shipping. Also, don’t buy used hardware wallets, EVER!
When receiving your device, make sure that the packaging is sealed and that the wallet itself has a security seal on it. By checking this you can have confidence that the product it not counterfeit or has not been tampered with.
2. Is my crypto stored on the physical device?
The short answer is NO. Crypto is stored on the blockchain and not on the device itself. However, the private keys, that you use to control your crypto, are stored on the physical device.
3. Is it safe to store my crypto on an exchange?
No, your crypto is absolutely not safe. When you store crypto on an exchange, you do not own the private keys for that crypto. Yes, it shows you your balance on the dashboard of the exchange, you can send and receive crypto to and from the exchange, but if the exchange collapses for any reason, you will not be able to access your funds and your crypto will be gone.
The only way to have total control over your crypto is to have the private keys for it. A hardware wallet does just that.
4. Does the hardware wallet need to be connected to a computer or my mobile device to receive crypto?
No. As mentioned earlier, crypto is received over the blockchain and you can receive crypto at any time of the day. It is only the private keys that are stored on the device, not the crypto, so it only needs to be plugged in when sending crypto elsewhere.
5. What happens if I lose my hardware wallet or if it gets damaged or stolen?
You can recover a lost, damaged or stolen hardware wallet if you have the SEED Phrase for that wallet and then restore it onto a brand new device.
When setting up a hardware wallet, you will receive a series of words that you need to write down on a piece of paper. It is very important that you do not make any scanned copies of the SEED Phrase or store it in a document on your computer or phone anywhere, as you will be exposing your SEED Phrase over the internet.
6. What happens if I lose my SEED Phrase?
If you lose your SEED Phrase, and you still have access to your hardware wallets, then most hardware wallet manufacturers provide a SEED recovery feature, which means that you can recover your SEED Phrase, and write it down once again on a piece of paper or card.
But, if you lose your SEED Phrase, AND you forgot your login password or PIN for your hardware device, then you cannot recover anything and your funds will be lost forever!
So make sure that you protect your SEED Phrase the same way that you protect your crypto by securely storing your SEED Phrase.
7. If crypto crashes or goes into a bear marker, is my crypto safe?
Crypto crashes do not affect access to your crypto. Only the FIAT currency value of the crypto is affected, as it will be worth less in a crash or a bear market, and it could affect centralized exchanges that might go out of business, but the crypto itself remain on the blockchain.
Since you hold the private keys for your crypto on your hardware wallet, nothing will happen to them, so this reiterate the importance of having a hardware wallet and I urge you to refrain from storing your coins on any exchange.
8. What happens if a hardware wallet manufacturer goes out of business and my device becomes dysfunctional for some reason or I lose it?
As long as you have your SEED Phrase you will be able to restore it to another hardware wallet, even if it is from a different manufacturer. Let’s say, just as an example, that for some reason, Trezor goes out of business, then you can happily restore your wallet on a Ledger device, or vice versa.
9. Can I see my crypto balance on the device itself?
No, the device itself is not connected to the internet, but instead the device manufacturer provides software that you can use to check your balances, such as the Ledger Live desktop or mobile app or the Trezor Suite desktop app.
This comes in handy, where you can see your balance whenever you like, but since the private keys are stored on your device, all outgoing transactions still needs to be signed with the physical device, so your crypto remains safe.
10. When should I get a hardware wallet?
My advice would be that you get a hardware wallet from the 1st day you start your crypto journey, but anytime is always a good time.
Do not wait until your crypto gets hacked and stolen or until you get scammed. I have seen many examples on the internet and social media platforms, where people have lost their crypto, only to act and purchase a hardware wallet after such a traumatic event.
These 10 questions are not an exhaustive list, so if there are any specific questions that you have about hardware wallets, which I haven’t covered in this video, then please drop a comment below and I will compile a list and cover it in a future video.
Please be safe out there, be proactive, get yourself a hardware wallet, or two, and get your crypto off of exchanges, as you only have full control over your crypto if you own the private keys to that crypto.
Remember the saying: “not your keys, not your crypto”…
