How Many Hardware Wallets Do You Need? (To Keep Your Assets Safe)

Hardware wallets are the most secure solution for storing digital assets like crypto and NFTs. But, how many hardware wallets do you need? After all, they aren’t cheap. Nonetheless, you want to keep your assets safe.

You only need one hardware wallet to securely store your digital assets. However, using multiple hardware wallets allows you to quickly restore your wallet if it’s lost or stolen and diversify your storage risk. Ultimately, it depends on your budget and needs.

Here’s what you will learn:

How Many Hardware Wallets Do You Need?

There is no set number of wallets you should own. The best way to determine how many hardware wallets you need is by identifying the risks of only using one device. So, let’s start there.

Risks of owning one hardware wallet

You can’t recover your assets quickly

If your wallet is lost or stolen, you’ll need another hardware wallet to restore your funds. You do this using your wallet’s recovery seed phrase. But to use your seed phrase, first you need a compatible wallet.

Without another wallet, your assets remain on the blockchain and are at the mercy of whoever now has your hardware wallet. If you ever lose your hardware wallet, you should transfer them to a new wallet that utilizes a new seed phrase as quickly as possible.

No storage diversification

Having only one wallet means your assets are stored in one place. This poses a huge risk if you were to lose your wallet or fall victim to one of many scams.

Although most cold wallets are designed to keep unwanted users out, there are still ways your wallet could be accessed by someone who you don’t want to have access.

• Phishing links: These malicious links are one of the most common types of scams in the crypto space. If you click on one of these links and connect your wallet, you could be giving the scammer access to your wallet and the assets within. Even a hardware wallet won’t stop you from voluntarily giving a scammer access to your funds.
• Seed phrase exposure: Your wallet’s seed phrase is your greatest line of defense against hackers and scammers. But, if someone were to get ahold of your phrase, whether willingly or not, they instantly gain access to your wallet and everything in it.
• Fake/counterfeit hardware wallets: Unfortunately, even fake hardware wallets exist. If you buy and begin using a fake device, you can kiss all your assets goodbye. These wallets are commonly purchased on resell sites like Amazon and eBay, as well as unofficial retailers.

Considering these risks, you can see why owning at least two hardware wallets makes sense.

That said, if you’re a small-time collector and don’t have a lot invested in digital assets, then perhaps you aren’t as concerned as someone who’s invested thousands or even millions of dollars into crypto and NFTs.

Ultimately, deciding how many hardware wallets you need comes down to personal preference and your own risk factors.

If you use your hardware wallet for transacting, such as buying and selling crypto and NFTs, then your risk is higher than someone who only uses it for storage.

Likewise, if you bought your wallet from a reseller or are thinking about doing so, you have a much greater risk because your wallet could be compromised, as opposed to someone who bought their wallet directly from the manufacturer.

Why Should I Own 2 or More Hardware Wallets?

Here are the main reasons why you should own two or more hardware wallets.

To have a backup

It’s never a bad idea to have a backup wallet in case yours goes missing or gets damaged. Preferably, if your wallet goes missing (especially if someone else likely has it), the safest thing to do is to transfer your assets to a new wallet using that also uses a new seed phrase.

To do this, you’ll need another hardware wallet. It doesn’t even need to be the exact same wallet you lost. It just needs to be one that supports the same BIP standard, which is the technical term for how your wallet generates its seed phrase.

Most reputable hardware wallets like Ledger and Trezor utilize the BIP39 standard, which uses a mix of over 2,000 words to create a 12 to 24-word recovery phrase that’s used to access your wallet on the blockchain.

So as long as your backup wallet uses the same BIP standard, it will work.

To diversify your storage risk

If you have a lot invested in digital assets, the safest thing to do is diversify your storage risk. The best way to do this is by using multiple wallets. 

Using more than one wallet ensures a majority of your funds remain safe, even if one of them is hacked.

For example, let’s say you own $10,000 worth of ETH and you store it all in one hardware wallet. What happens if your wallet is hacked? 

You’d lose all $10,000 of your ETH.

What if instead, you diversified your storage by using 3 wallets? Then you’d have approximately $3,333 in each wallet. So, if one wallet is hacked, you’d only lose $3,333 as opposed to all $10,000.

That’s a much better scenario, and well worth the cost of buying 3 hardware wallets for a total of $150 to $900 (depending on which hardware wallets you buy), compared to losing all $10,000 because you didn’t diversify your storage.

To create a clone wallet

A clone wallet is another hardware wallet that utilizes the same secret recovery phrase. That’s right, you can use the same recovery phrase on multiple hardware wallets.

Of course, this is a risk in itself because if your seed phrase is exposed or your wallet is hacked, so is your clone wallet.

A clone wallet isn’t so much for security as it is for convenience. A clone wallet simply enables you to have access to your wallet in different locations.

Let’s say you keep one wallet in your safe at home, but you want to access it from your office at work. In this case, you’d need another wallet. That’s where a clone wallet comes in.

Again, I don’t personally recommend having a clone wallet. 

The only time I recommend having two hardware wallets that use the same seed phrase is if you lose one and are using the other wallet to recover the lost wallet.

In this case, you’d use the backup wallet to generate a new seed phrase to get a new wallet address.

Then, once you have a new address to send your assets to, you’d sign into the lost wallet using your old secret recovery phrase to send your assets to your new wallet address.

Once you transfer all your assets to your new wallet address, you discard the old seed phrase and never use it again.

For gifting or sharing

If you plan to gift crypto or other kinds of digital assets to your friends or family, a hardware wallet is your best option considering it’s the most secure.

You wouldn’t want to gift someone $500 worth of crypto just to have them get scammed and lose their money the next day, would you?

By gifting a hardware wallet, you’re setting an example of how to properly store and manage crypto assets. 

At the same time, you can use that moment to inform others how to set up their wallet and why it’s so important to utilize a cold storage device.  

Alternative to Owning Multiple Hardware Wallets

There are some alternatives to owning multiple hardware wallets if you don’t want to buy more than one.

Use your hardware wallet solely for storage

The most important thing is to use a hardware wallet to store your assets. As long as you use one dedicated hardware wallet for storage, you’re already doing a much better job of securing your assets.

By keeping your hardware wallet offline and using it solely for storage, you minimize the risk of your funds being stolen by online hackers and falling victim to numerous scams.

Use a software wallet solely for transactions

Using a software wallet (hot wallet) like MetaMask is fine for buying, selling, and trading assets like crypto and NFTs. So as long as you don’t keep anything of value stored there. 

For example, if you buy a $1,000 NFT using your software wallet, immediately transfer it to your hardware wallet for safekeeping.

Likewise, when you’re ready to sell that NFT, transfer it back to your software wallet before selling. 

This ensures your hardware wallet isn’t prone to any scams or hacks from connecting it to the internet, while your software wallet never has more than one thing of value stored on it in case it does get hacked. 

Hence, reducing the overall risk.

Use a custodial wallet for buying and selling crypto

Custodial wallets are managed by a third-party service. For example, crypto exchanges like Coinbase and Binance are both custodial services that allow you to store crypto.

Although custodial wallets are extremely convenient since you only need a password to access them, they are much less secure than a hardware wallet or even a software wallet.

Also, custodial wallets don’t support NFTs.

If you’re okay with trusting a third-party platform with your funds, then keeping them there is one option. However, I don’t recommend it.

Similar to a software wallet, it’s best to only use a custodial wallet to purchase crypto. From there, you’d want to transfer it to your hardware wallet for storage.

Then when you’re ready to cash out, simply send it back to your custodial wallet.

As you can see, all of these alternatives still require you to own one hardware wallet. The goal should always be to store your assets in a hardware wallet.

The type of wallet you use to transact isn’t as important as the one you use for storage. Hence, you can get away with using a single hardware device.

Is a Hardware Wallet Really Necessary?

You don’t need a hardware wallet to buy and sell assets like crypto and NFTs. But a hardware wallet ensures your assets remain safe by reducing the risk of being hacked. If you own more than $100 worth of assets (the cost of a hardware wallet), you should use a hardware wallet.

That said if you’re willing to spend hundreds of dollars on digital assets but you aren’t willing to spend $100 on a proper storage solution—you have no business investing in blockchain-based assets.

Statistics prove that crypto users are more than likely to fall victim to scams or get hacked at least once, considering billions of dollars worth of Bitcoin have been stolen and trillions of intrusion attempts have been made over the years.

And that’s not even including other cryptocurrencies or NFTs.

The only exception is if you don’t care about the potential risk of losing your funds, or if you’ve invested less than $100 into digital assets.

How Many Crypto Wallets, Is Too Many?

There is no limit to how many hardware wallets you should own. That said, having too many wallets could get confusing if you have assets in each one. Plus, as new wallets come out the technology could improve, leaving you with a bunch of outdated devices.

Having numerous wallets, though, can have its benefits. 

You can better organize your holdings and manage your assets by using numerous wallets for various cryptocurrencies and other types of assets, for instance. 

Also, keeping your daily transactions in a different wallet will lessen the chance you will lose all of your money in the event of a breach or theft.

Yet, having an excessive number of wallets might be a bother. 

It can be challenging to keep track of all the private keys, seed phrases, and passwords that are needed for each wallet if you have a lot of them.

Also, using numerous wallets can raise your risk of error, such as sending money to the wrong wallet.

How many wallets are too many, then? 

As a general guideline, it’s best to maintain effective security procedures and limit the number of wallets you carry.

This entails employing a limited number of trusted wallets that are tailored to your individual requirements, such as a hardware wallet for long-term storage and a software wallet for everyday transactions.

The ideal number of wallets for you ultimately depends on your unique circumstances and objectives.

To keep your money secure, it’s critical to conduct thorough research, select a wallet you can rely on, and adhere to appropriate security procedures.

Do I Need A Different Wallet for Each Cryptocurrency?

You don’t need a different hardware wallet for each cryptocurrency. Most cold-storage wallets support hundreds or even thousands of currencies and numerous blockchain networks. Check which currencies a wallet supports before you buy it, then you’ll know if it’s right for you.

Nevertheless, there are some circumstances in which having numerous wallets can be useful. 

For instance, to avoid confusion, you might want to put your crypto in a different wallet if you routinely trade or transact in a particular cryptocurrency. 

The choice of whether to use separate wallets for several cryptocurrencies ultimately depends on your personal requirements and preferences. 

Using a single hardware wallet that supports various currencies is a great choice if you’re just getting started with crypto and don’t have a sizable portfolio.

How to Use Multiple Hardware Wallets to Secure Your Assets

To use multiple hardware wallets to secure your assets, designate one wallet for storage and another for transactions only. This reduces the likelihood of both wallets being compromised and allows you to keep a portion of your assets in cold storage at all times.

Your storage wallet stays offline and secure, while your transaction wallet is used to sign transactions involving your assets. 

This strategy adds a degree of security to your assets, especially if you keep a large sum of crypto or other valuable assets in your wallets.

Here are some other tactics for using multiple hardware wallets to keep your assets safe.

Store backups

Storing backups is a further method for using several hardware wallets. One wallet can serve as both your main storage location and a backup.

This will enable you to easily and quickly recover your funds in the event that your primary wallet is lost, stolen, or damaged.

Employ different brands

It’s a good idea to utilize different brands when operating multiple hardware wallets.

As a result, there is less chance of a single point of failure. Your assets stored on a different brand of wallet will still be secure even if a vulnerability is found in one particular brand.

Clear signing vs blind signing 

Hardware wallets offer clear signing, which means they show the transaction’s specifics on their screens and ask you to confirm them before signing and submitting them to the network.

This minimizes the possibility of mistakenly sending your assets to the wrong address or agreeing to a fictitious contract that grants someone access to your wallet.

By allowing you to inspect the transaction details, you can ensure everything is proper before you sign.

As an alternative, some software wallets employ blind signing, which entails signing transactions without displaying the transaction’s specifics on screen.

To authenticate the transaction before it’s signed and relaid to the network, they instead rely on a secondary verification technique, such as a two-factor authentication code or a confirmation message.

Blind signing might be quicker and more practical than clear signing, but it also puts you at greater risk of making mistakes or falling for scams.

Overall, clear signing is a more transparent and safe approach to signing blockchain transactions than blind signing.

What Is the Best Hardware Wallet?

The best hardware wallet is one that’s affordable, secure, and compatible with numerous tokens. My favorite hardware wallet is the Ledger Nano X. It’s cheap, it uses sophisticated security measures, and it supports over 5,500 coins and tokens along with multiple blockchains. Plus, it’s easy to use.

Here are the main features that make a good hardware wallet.

• Security: The aim of any hardware wallet is to provide a high level of security for your funds by utilizing advanced security features like a secure chip element, a custom operating system, PIN codes, and biometric authentication.

• Compatibility: You want a wallet that supports multiple assets, like crypto and NFTs, plus various blockchain networks. Additionally, you might want one that’s compatible with various operating systems such as Windows, Mac, Linux, and mobile devices.

• User-friendliness: No matter which device you choose, a good hardware wallet is easy to use with a simple interface for managing your funds and transactions.

• Durability: A good hardware wallet is made with high-quality materials and is built to withstand wear and tear from regular use.

• Open source software: Some users prefer a hardware wallet that’s open source. This allows the community to audit the code and confirm its security. That said, some of the most reputable wallet brands like Ledger remain closed-source. So this depends on your personal preference.

• Customer Support: A company that provides excellent customer support and has a good reputation for resolving issues promptly is always a bonus.

Overall, the best hardware wallet is one that balances security, ease of use, compatibility, and durability while also providing excellent customer support, and maintains a solid reputation amongst the crypto community.

Frequently Asked Questions