In our “Crypto 101” blog article, we briefly touched on blockchain wallets which allow users to manage and trade different crypto.
👀 In this article, we’ll take a closer look at hardware wallets, explain what they are, how they work and ways to keep your crypto secure. We’ll also briefly explain the simple process in setting them up.
❓ WHAT IS A HARDWARE WALLET?
👉 Hardware wallets, also known as cold wallets, are a special type of bitcoin or crypto wallet that stores a user’s private keys🔑 in a secure hardware device.🔒
The term “crypto wallet” is a little bit misleading as the wallet doesn't really “hold” your digital cryptocurrency. Your hardware wallet is actually a piece of software that holds passwords - referred to in cryptographic terms as “keys”.🔑 These private keys grant you access to the crypto allocated to it on the transaction ledger, or blockchain.
🗝️ Your cryptocurrency address is your public key. This is the information you send to people who want to send you cryptocurrency. It works like an email address.
🔑 Your password, or a secret seed phrase, is your private key. Using cryptography, your private keys broadcast a unique digital signature to the network without exposing it, and forms as a proof of ownership, validating its authenticity in a transaction.
❓ HOW DO HARDWARE WALLETS WORK?
👤 Hardware wallets use a form of 2 Factor Authentication (also known as 2FA). What this means is that in order to access your crypto funds, you will need to prove your identity through something you have (like the physical wallet) and something you know (the PIN code for the wallet).
Hardware wallets often look like small USB devices. If you’re serious about securing your Bitcoin and other cryptocurrency, you will need to get a hardware wallet.
💻 In order to use your hardware wallet, you’ll need to connect it to your personal computer and download a program that can communicate with it.
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such. Bloom does not recommend that any cryptocurrency or NFTs should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.