When the next bull run hits, you will need a reliable place to hold your digital assets. This 2020 Cryptocurrency Hardware Wallet Guide was designed to explain fundamental concepts behind hardware wallets, and deliver examples of hardware wallet storage, such as the Ledger Nano S vs the Ledger Nano X. Upon reading this guide, you will have a firm understanding of the digital wallet nomenclature, as well as the safest hardware wallet option for you.
Do you want to find secure storage for your digital assets?
This 2020 Hardware Wallet Guide Will Breakdown Topics Such As:
- What Hardware Wallets Are and How Hardware Wallets Work
- Hot Storage vs Cold Storage
- Other Types of Wallets
- Are Hardware Wallets Necessary
- Ledger Nano S vs Ledger Nano X
- How to Buy a Hardware Wallet
What is a Hardware Wallet?
Hardware wallets are small, physical devices (e.g., a USB drive such as the Ledger Nano X) which isolate your private key from the internet, as opposed to other types of wallets (e.g., Web and Mobile Wallets) that keep your private key exposed on the internet at all times.
Hardware wallet storage is known as “cold storage” because it is not connected to the internet, as opposed to “hot storage” methods that are internet-connected. Cold storage diminishes your exposure to the vulnerabilities that online digital asset storage methods are susceptible to.
The famous saying is “not your keys, not your crypto.” Cold storage’s major advantage is private key maintenance and ownership. In other words, when you store cryptocurrency in a hot wallet, you do not have custodianship of the private key. Hence, whoever has the custody of that hot wallet’s private key is the true owner of the cryptocurrency. With a hardware wallet, you are the true owner of your private key, and as such, the true owner of your cryptocurrency.
Want to learn more about cryptocurrency? Check out our 2020 Beginner’s Guide to Cryptocurrency.
Other Types of Wallets
Aside from hardware wallets, there are at least a half dozen other types of wallets, such as paper wallets, mobile wallets, web wallets, and desktop wallets. Not all of these wallet methods are recommended. More on that to follow.
Wallet types vary by several measures. One of the more prominent factors that differentiate wallets is the degree of personal ownership to which users maintain over their private keys. In other words, different wallet types vary because while some wallets allow you to have complete control of your private key, other types of wallets have key custody and take that control away from the user.
Paper Wallets: Paper wallets are often found in the form of a QR code that is printed on a piece of paper. The QR code can be quickly scanned. Once uploaded, the digital wallet’s long, alphanumeric key is generated instantly for the convenience of the receiver and sender.
Mobile Wallets: Mobile wallets typically come in the form of apps on your smartphone. This wallet type is most often used by people that frequently use cryptocurrency for small purchases on everyday goods. The app owner can access the information contained within the application.
Web Wallets: Your private key is held online by a third-party. While this mode of storage offers mobile flexibility, it constantly leaves your private key in the control of someone else.
You deserve to be the owner of your cryptocurrency.
The hardware wallet serves almost like a magic door that hides an alphanumeric code, the private key. The only time that alphanumeric code appears is when the door is open, (when the device is connected). The magic door can only be open during the time of connection.
Are Hardware Wallets Necessary?
In most cases, the answer is yes. Hardware wallets are especially necessary if you plan on making long-term holds. However, even if your plan is to mostly day-trade cryptocurrency, you should have some satoshis stacked to the side on a hardware wallet, offline, that you don’t touch. Keep it out of sight.
One common misconception about hardware wallets is that the device itself stores cryptocurrency. That is not true. Hardware wallets only store a private key. The private key is not on a hard drive that is connected to the internet like a hot wallet. Most people don’t turn off their wifi so their computers are all susceptible to hacking. That includes any private keys stored on the hard drives. Hardware wallets keep private keys on a separate device.
How to Buy a Hardware Wallet
Now that you understand the importance of a hardware wallet, your next step is to purchase one at the best price. The most well-respected and popular hardware wallet options include the Ledger Nano S and Ledger Nano X.
Both options are available in the Swyftx Shop, and come highly recommended by our team.
The Ledger Nano S vs X
The difference comes down to battery, connectivity, screen size, and the size of the device’s memory. However, it really comes down to how much cryptocurrency you want to store. For the beginning cryptocurrency user, a Ledger Nano S will do just fine. However, as you continue to stack your sats, you may want to consider the Ledger Nano X, with the added convenience of mobile bluetooth connectivity for signing transactions without the need for your laptop/computer.
Ledger Nano S:
- Up to 20 wallet apps at once
- USB Micro B Connectivity
- No Battery
- 128 x 32 pixel screen
Ledger Nano X:
- Up to 100 wallet apps at once
- USB Type C+ Bluetooth Connectivity
- 100 mAh battery
- 128 x 64 pixel screen
Hardware wallets are the top storage choice for cryptocurrency owners due to the security level. Online storage options do not let you maintain full ownership of cryptocurrency because they do not give you your private key. Hardware wallet options like the Ledger Nano S and X allow you to maintain control over your cryptocurrency.