A hardware wallet is a unique type of cryptocurrency wallet, be it Bitcoin or Altcoins, which securely stores the user's private keys in a hardware device.
They provide significant advantages over standard software wallets:
- Private keys are usually stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext immune to computer viruses that can steal from software wallets.
- Can be used securely and interactively, as opposed to a paper wallet which must be imported to software at some point, reintroducing the security issues that it was meant to avoid in the first place.
- Most of the time, the software is open source, allowing a user to validate the entire operation of the device
- Usually, the user has to interact physically with the wallet by pressing a hardware button to confirm a transaction, which makes the wallet immune to keyloggers, viruses and other malware found everywhere nowadays.
The cost of wallets such as a Nano Ledger S, Trezor, etc. is insignificant for the amount of security they provide, and they are preferred by a lot of people.
According to recent findings, cryptocurrency hardware wallets are ranking in the top ten sales items, in online retail markets such as Amazon.