Hardware Wallets Explained: How They Work & How To Use Them

A hardware wallet is a cold crypto wallet making the system of blockchain well-fortified. As the name suggests, they have nothing to do with the internet. They are built to store all your crypto assets offline. It could be an electronic gadget such as a USB, Bluetooth, or any other hardware device. Technically, the most basic purpose that it serves is to secure an individual’s private keys persistently.

Now, these private keys are ingress for the holders to handle their funds. They are like a specific pin code with which any individual can illegally lay access to a user’s funds. So, they need strong protection. Therefore, users are opting for hardware wallets.

Some of the well-trusted and popular hardware wallets are Trezor, KeepKey, Ledger, etc. Among these, Trezor is the most recommended one. Trezor Model T vs One has been recently trending as both of them offer excellent protection and are quite attractive as well. These devices are gaining popularity mainly because they provide a feature called a passphrase.

The passphrase is encryption that prevents keyloggers from recording the user’s pin whenever they enter it on any device.

Below, let us know more about the functionality and utilization of these bitcoin wallets.

How Do They Work?

Source: bitcoinmagazine.com

One thing the user must keep straight in one’s mind is that a hardware wallet stores private keys, not cryptos. The complete functionality of this wallet is done through these keys. No transactions can be carried out without complete access to the private keys. The length of such keys varies from 25 to 36 characters.

One can understand its system by relating it to the functionality of how a computer works. The wallet has a small screen with two/three buttons on it, making it functional and interactive. The users need to sign in with the help of private keys to proceed with the transactions. Remember that the keys are never transferred to any server during the process. Also, these wallets cannot connect to the internet on their own. It is to be utilized just like a remote to control the crypto assets. So, the sending and receiving are throughout protected.

And, unfortunately, if you happen to lose your wallet device, there is a seed phrase system that will help to recover the private keys. The only necessary thing to do is jot down the seed as soon as it gets generated. Rest the design of these devices is handy. Users can even plug their wallet devices in accordingly and use them. Thus, the working of these wallets is such that end users will never get into an online mishap. Their primary function is to insulate the keys so that they can never get stolen.

How To Use Them?

Here are a few steps guiding how to use them:

  1. First things first, connect the device either with a phone or laptop.
  2. Now to make the wallet ready to use, set a specific code to secure it from the wrong hands.
  3. After the registration, a public key is shared by it that lets the users carry out the transaction.
  4. Then to confirm any of the transactions, input that specific code on the device.
  5. And for additional safety, wait until the transaction is complete.

Why Use Them?

Source: crypto-news-flash.com

Let us look at some of its key benefits:

1. Very Safe and Secure

These wallets provide complete control of transactions where physically, one will type in the PIN for every trading action on the blockchain. They are one of the safest trading mechanisms for cryptocurrencies.

2. Portable and Convenient

They are very easy to carry everyday everywhere. And so is the signing-in, trading and then signing-out process. The whole thing is actually fun.However, the plug-in feature can make it  less convenient in some cases.

3. Multiple Access

The wallet also comes with the feature to access numerous blockchains. One can simultaneously have access to Ethereum & Alt. Coins, Bitcoin, Lumens, and more, at the same time.  Moreover, a single recovery seed is enough to create a backup for each of them.

4. Instant Recovery

The seed phrase gives an easy recovery and backup to the funds. The users need only to put effort into keeping the seed safe.

Things To Remember While Using Them

Source: bitcoinist.com

Purchase the wallet from a well-known manufacturer. Do not purchase a second-hand hardware wallet. Some of the wallets also come with a holographic sticker. They are the sign that indicates that the device has been tampered with. So, please do not go for it if you feel something is unusual. Even though they are super protected, never trade a huge amount before rechecking the receiving address. Always be sure of the recipient’s address.

Keep both the hardware wallet and seed phrase in a safe place. They are also required to be protected from thieves, scammers, and elements like fire and water. Store them in the most guarded place. It is just that the device needs to be handled with common sense. Also, it is an expensive gadget. So, it must be cautiously looked after.


To be brief, Hardware wallets are also known as cold wallets. It enables a secure crypto bridge in the blockchain. However, it is not essential to have a hardware wallet. But they are to protect and save your funding. Nevertheless, an effort of discipline and management is required to own such wallets. And there is no doubt that they are a great initiative towards cybercrimes like data hacking. Plus, providing a more secure environment to the world of cryptos.

Although, they may not be suitable for everyone. A few of its initial settings are not beginner-friendly. Regular backup of information is a must for every wallet user to save from future destruction. If you are a long-term investor and don’t trade on a daily basis then a hardware wallet is your peace of mind.

Thus, with due diligence, please do your own research before making any such crucial decisions.