When looking to invest in Bitcoin, one of the most important things you will need is a Bitcoin wallet. A Bitcoin wallet lets you store your Bitcoins securely and trade them as well. When choosing a Bitcoin wallet, you’ll have to decide between an online wallet or offline wallet. Both have their advantages and disadvantages. But today, we’re going to talk about why you should opt for a hardware wallet.
What is a Bitcoin hardware wallet?
A hardware wallet is an example of an offline wallet. It’s a USB device that encompasses a closed security system and contains a Bitcoin owner’s private keys. A hardware wallet mimics a big USB flash drive and encompasses a panel, microcontroller, and robust storage system. To be able to use funds in the hardware wallet, you have to plug it in a computer. Although online Bitcoin wallets offer a lot of conveniences, Bitcoin hardware wallets come with their fair share of advantages. These are the reasons you should choose a Bitcoin hardware wallet over the online options:
1) Your private keys are critical to the security of your Bitcoins
The fact that hardware wallets are offline wallets, your Bitcoins are 100% secure, unless you choose to give someone else your private keys. With a hardware wallet, your private keys are stored offline, which means no hacker can access them. Not even a malware infected computer can compromise your private keys. However, with an online wallet, your private keys are stored online, which means savvy hackers can’t access them and steal your Bitcoins. It’s even worse to store your private keys in Bitcoin exchanges because they will have full control of your private keys. It’s a jungle out there; you can’t trust someone you’ve met online with your private keys.
2) Hardware wallets enable you to manage other cryptocurrencies besides Bitcoin
Hardware wallets come with the capability to store multiple cryptocurrencies. For example, a hardware wallet, such as the Ledger Nano S is capable of receiving firmware updates. This capability can support multiple cryptocurrency storage. Hardware wallets also enable you to switch between various cryptocurrencies on one device. Some of the cryptocurrencies the Ledger Nano S supports besides Bitcoin include Ethereum, Bitcoin Cash, Litecoin, Ripple or Ark.
Most cryptocurrency investors are attracted to wallet technologies that allow them to store multiple digital currencies on a single device for convenience. That’s why hardware wallets are rapidly increasing in popularity.
3) Some Bitcoin hardware wallets can enable you to do online transactions securely
You might buy a hardware wallet and realize that it doesn’t support your cryptocurrency. Or maybe, you like the convenience of online wallet; some hardware wallets can help you satisfy those needs. Some modern hardware wallets allow the two-factor authentication process, allowing you to set up your Bitcoin hardware wallets as a second key to gain access to your online wallet securely. The two-factor authentication technology is certified by the Fido Alliance, which means it guarantees the security of your private keys. The technology can also be used to secure your social media accounts, such as Facebook, Google Plus, Github and drop box. Another example of a hardware wallet beside Ledger Nano S is Trezor.
4) Bitcoin hardware wallet’s platform is open source
Open source software enables you to authenticate the whole operation of the device. This is to make sure that the transaction is as secure as possible.
The choice between a Bitcoin wallet and an online option pretty much depends on your preference and your trading models. If you’re looking to day trade Bitcoins, or you have small amounts of Bitcoins, then an online wallet is a convenient option. However, if you want to store lots of Bitcoins and invest long-term, then a hardware wallet is the best choice.