Over there years I have written countless articles about crypto wallets. During this time I discovered that there are a ton of questions about hardware wallets that demand answers.
In this hardware wallet FAQ, I aim to address all your hardware wallet questions. Whether you’re a novice exploring the idea of buying your first device or an experienced user, you’ll find a wealth of information here.
Common Hardware Wallet Questions
1. What is a hardware wallet?
A hardware wallet is a secure, portable key used for accessing crypto funds. Hardware wallets safely store private keys offline, ensuring protection from hackers and common crypto scams.
They are ideal for managing blockchain assets like crypto, NFTs, and connecting to dApps.
2. Is crypto stored in my hardware wallet?
Crypto and other digital assets are not stored in the hardware wallet itself, they reside on the blockchain.
The hardware wallet stores your private key. This key is used to access your address on the blockchain where your crypto is stored.
3. Are hardware wallets really necessary?
A hardware wallet is not necessary to use when investing in crypto. It is the most secure option though. There are other types of wallets available to use such as software wallets and cryptocurrency exchange wallets.
I always say: if your digital assets cost more than a hardware wallet, then you should have a hardware wallet to store them in. If not, then it might not be worth investing in a cold storage wallet.
Hardware wallets offer both pros and cons, so consider them before making a decision.
4. When should I get a hardware wallet?
You should get a hardware wallet when you hold a substantial amount of crypto assets that you don’t want to lose or have stolen from you. If you fear losing any of your crypto investments, then it’s time to get a hardware wallet.
For me, the decision was easy. Once I had invested more money into crypto than a hardware wallet cost, I knew it was the right time.
5. How do I set up a hardware wallet?
Typically, the setup procedure for most hardware wallets is quite similar. Here’s how to set up a hardware wallet:
- Unbox the hardware wallet and check all contents.
- Connect the wallet to your device via USB or Bluetooth.
- Follow the on-screen instructions to select your preferred language and create a new wallet.
- Safely record the provided seed phrase and store it offline.
- Verify the seed phrase to ensure accuracy.
- Set up a PIN or password for added security.
- Update the firmware if necessary.
- Install the relevant cryptocurrency wallet app on your device.
- Synchronize the app with the hardware wallet.
- Your hardware wallet is now ready to securely manage your cryptocurrencies.
6. Do hardware wallets require an internet connection?
Hardware wallets require interaction with an internet-connected device, like your computer or phone, to initiate and approve transactions. However, a hardware wallet can still receive funds even when it is powered off and not connected to the internet.
Think of it this way. A hardware wallet is your personal offline signature for making secure transactions on the blockchain.
When you want to initiate a transaction, the hardware wallet assists you by signing the transaction offline, ensuring its security.
The device is connected to the internet briefly, only to broadcast the transaction and complete the process.
7. How often should I update hardware wallet firmware?
You should update your hardware wallet firmware at least once per month or as updates become available.
Frequent firmware updates help protect against potential vulnerabilities and ensure compatibility with the latest developments in the cryptocurrency ecosystem.
8. Do hardware wallets have fees?
Hardware wallets do not have any fees for users. The only expense users pay is the initial cost of the hardware wallet. There are fees unrelated to the device that users still have to pay when transacting on the blockchain.
Here are the typical fees that cryptocurrency users encounter when making transactions:
- Network fee. This fee is charged for processing transactions on the cryptocurrency network, ensuring the smooth and timely validation of your transfers.
- Exchange fees. These fees cover the services provided by the exchange and may vary based on the platform’s offerings.
- Swap fees. These fees are associated with the conversion of one cryptocurrency to another type.
- Marketplace fees. Charges incurred by users when buying, selling, or interacting with Non-Fungible Tokens (NFTs) on online platforms dedicated to NFT trading.
9. What if I lose or damage my hardware wallet?
If your hardware wallet is lost or damaged, your assets remain safe because they are stored on the blockchain. If this happens you can import your secret recovery phrase into a new wallet to recover your account and access your funds.
10. What if a hardware wallet company goes out of business?
If a hardware wallet company goes out of business and stops manufacturing wallets, you can still access your funds by importing your secret recovery phrase into a different hardware wallet brand.
Worse case, you could access some hardware wallets using a software wallet. But it is not recommended.
11. Can multiple hardware wallets use one seed phrase?
Yes, you can use the same seed phrase on as many hardware wallets as you want. Although, I wouldn’t recommend it for security purposes. The better option is to only import your seed phrase if needed, such as if you damage or lose your wallet.
12. Do I need a software wallet if I have a hardware wallet?
No, you don’t need a software wallet if you already have a hardware wallet. Hardware wallets offer equal capabilities, support a wider range of cryptocurrencies, and provide superior security compared to software wallets.
However, combining both hardware and software wallets can further enhance security.
That said, I use a software wallet for transactions and a hardware wallet for securely storing my digital assets.
13. Can I back up a software wallet on a hardware wallet?
You can back up a software wallet like Metamask on a hardware wallet by importing the recovery phrase, but this would defeat the purpose of the hardware wallet’s security.
To ensure maximum security, it’s best to create a new wallet and transfer your funds from the software wallet to the new cold wallet.
14. Are hardware wallets compatible with crypto exchanges?
Hardware wallets are compatible with both centralized and decentralized exchanges, allowing you to transfer cryptocurrencies from any exchange to your hardware wallet in the same way you would send them to a software wallet.
15. Can I stake and store NFTs with a hardware wallet?
Most hardware wallets do support staking cryptocurrencies and buying/selling NFTs, but it’s essential to verify that the specific wallet you plan to purchase supports the assets you intend to manage.
Here is a complete list of the best hardware wallets for NFTs.
16. What is the easiest hardware wallet to use?
The most user-friendly hardware wallet is Tangem, an NFC-enabled cold wallet card that lets you manage over 6,000 coins and tokens through a simple open-source phone app. Setup takes less than 5 minutes, making it extremely convenient to use.
Here’s my hands-on review of the Tangem cold card wallet, or you can simply watch this video for more insights.
17. Are hardware wallets safe?
Hardware wallets are made to be highly resistant to hacking and cyber-attacks. They also come with added security features such as a Secure Element chip, biometric authentication, and a user-generated PIN code.
That doesn’t mean hardware wallets are 100% secure. Users must employ hardware wallet best practices to ensure their wallets aren’t compromised.
Here are some crucial hardware wallet best practices you should always follow:
- Never share your secret recovery phrase with anyone.
- Avoid storing your recovery phrase on a computer or smartphone.
- Keep your recovery phrase physically secure to prevent loss or theft.
- Trust only what you can see on your hardware wallet’s display.
- Refrain from connecting your hardware wallet to random or untrusted websites.
- Keep the amount of cryptocurrency you have on your hardware wallet confidential.
18. Can hardware wallets be hacked?
Hardware wallets are generally secure against hacking, and incidents are infrequent, usually requiring physical access to the device.
However, a more common threat arises from phishing attacks. Clicking on deceptive links could result in the loss of your wallet’s funds.
If a hardware wallet were to be hacked, the most likely methods of attack would involve power glitching (a physical attack), side-channel attacks (exploiting emitted information), and software attacks.
19. Which hardware wallets are open source?
An open-source hardware wallet increases security and transparency for its users. The most reputable open-source hardware wallets include:
- Keystone
- OneKey
- Ellipal
- Trezor
- imKey
20. How much do hardware wallets cost?
Hardware wallets generally cost between $40 to $400. More affordable options may lack some luxury features, while higher-priced devices come with additional perks like large touchscreens and biometric capabilities. Security remains largely the same regardless of price.
If you’re looking for a reliable budget-friendly wallet, I recommend Tangem. For those with a bit more to spend, Keystone is an excellent choice.
21. Do hardware wallets go on sale?
During holiday seasons like Black Friday, Cyber Monday, and the weeks leading up to Christmas, many hardware wallets are often offered at discounted prices. However, you don’t necessarily have to wait for a sale; we offer special discount codes that you can use year-round.
Take advantage of these exclusive hardware wallet discount codes:
- View Keystone: Enjoy 8% off your order with code: CYBERSCRILLA
- View Tangem: Enjoy 10% off your order with code: ERMC4H
- View OneKey: Check for available discounts.
- View Ellipal: Check for available discounts.
- View Ledger: Check for available discounts.
- View imKey: Check for available discounts.
Use the provided codes during checkout to secure your savings. Happy shopping and safeguarding your digital assets
22. Where can I buy a hardware wallet?
You can buy hardware wallets online from the manufacturer’s website, Amazon, or in stores like Best Buy. For guaranteed authenticity, it’s advisable to purchase directly from the manufacturer.
Do not buy hardware wallets from classified sites like Facebook Marketplace, Craigslist, etc.
The risk of getting scammed is significant if you buy a hardware wallet through a private seller.
23. How many hardware wallets do I need?
You only need one hardware wallet, but for better security, it’s recommended to have at least two wallets. By having additional hardware wallets, you’ll be better prepared in case one of your devices is lost, stolen, or broken and you need to access your funds quickly.
This extra wallet is known as a “backup” in the crypto community. Personally, I have more than 9 backup wallets. I know, it’s a bit overkill. But I test and review a lot of wallets…
24. How long do hardware wallets last?
Hardware wallets typically have a lifespan of around 5 to 10 years. However, some wallets, like Tangem, have less hardware and can last for over 25 years.
To extend the longevity of your wallet, it’s essential to adhere to the manufacturer’s instructions regarding proper storage and charging protocols.
25. Where should I keep my hardware wallet?
Store your hardware wallet in a small lockbox or safe at home for protection from theft and harsh conditions. Alternatively, a bank’s safety deposit box works well. Regardless of where you store it, make sure it’s in a cool and dry place.
The most crucial aspect is your wallet’s seed phrase. Losing it means losing access to your funds permanently. To safeguard it from fire and water damage, consider using a metal seed phrase plate for storage.
26. Can I trust hardware wallets?
Yes, you can trust hardware wallets to store your private keys offline away from potential hackers. Security experts consider hardware wallets the most secure method for storing cryptocurrencies, and millions of people place their trust in them.
27. Can hardware wallets be traced?
All hardware wallet transactions are permanently recorded on the blockchain, making them traceable by the IRS and government authorities. So, even if you store your hardware wallet in a secure location, the transaction history remains accessible for regulatory purposes.
28. What makes a good hardware wallet?
A good hardware wallet incorporates various security features to ensure the safety of your assets. These features include a Secure Element chip, open-source firmware, and air-gap technology. Additionally, it should be reasonably priced and compatible with the specific coins you intend to store on the device.
29. What is the best hardware wallet?
The best hardware wallet is the Keystone Pro. It is secure, affordable, and simple to use. Plus it supports over 5,000 coins and tokens across 200 blockchain networks.
That said, the best hardware wallets may vary depending on individual preferences. But overall, I can’t say enough good things about the Keystone Pro.
For a firsthand experience, I encourage you to read my hands-on review.
Ultimately, hardware wallets offer secure protection for your cryptocurrencies. By understanding their features and following best practices, you can keep your digital assets safe and accessible.
Choose wisely, follow security protocols, and enjoy the peace of mind they provide for your crypto holdings. Peace…
