Why use a hardware wallet?
1: It keeps your crypto in your custody so no one can take it away.
2: It keeps crypto offline in cold storage, so you are safe if your computer or phone is hacked.
3: It cannot be hacked like a computer because it has no Internet connectivity.
4: It secures your crypto using a seed phrase that is easy to write down on paper and store in a safe place indefinitely.
5: It can be used with any number of devices, so you don’t need to worry about migrating your coins between computers.
What’s your excuse for not using a hardware wallet?
Most of you are not using a hardware wallet. You keep Bitcoin with an exchange like Coinbase, or an app running on your phone or desktop. But these come with major risks:
1: Computers and smartphones are vulnerable to malware that can and will steal your crypto. Even an iPhone can be jailbroken to extract your wallet seed.
2: The exchange holding your Bitcoin can be hacked, go out of business, or have its assets seized or frozen by the government.
Don’t trust desktop or mobile wallets
Many people who decided to keep their Bitcoin in an app came to regret it. Bitcoin Core took a few hours to sync in 2013 but now can take weeks. Multibit was a great wallet in 2015 but now doesn’t work on many computers
. Many people who got Bitcoin in 2010 forgot the password they used by 2019. Modern computers are notoriously insecure. Key loggers
and remote access trojans
can record your keystrokes and copy all your files. At one point in the lifetime of Windows XP, it only took a few minutes for the average computer to become infected once exposed to the Internet.
Don’t trust exchanges and other third-party custodians
When you buy cryptocurrencies, you are betting that our economy will experience a dramatic shift to digital money
. We have no idea which businesses or apps will survive that shift or how long it will take. Imagine if you had to pick just one company to bet on the future of the Internet during the dot com boom. Are you smart enough to pick Amazon.com rather than Pets.com? The only thing that you can trust to survive almost any economic upheaval is a backup stored on paper (or even better, metal) under your control.
Don’t trust file backups
Don’t trust paper wallets
Paper wallets and brain wallets
were good for their time, but I know many people who misplaced their paper wallet or forgot the exact phrase they used for their brainwallet. Some people who used a paper wallet found out that it could only be decrypted using the exact browser used to make it
. Paper wallets and brain wallets also compromise your privacy by forcing you to keep all your Bitcoin in a single address.
Keep your recovery seed safe
You can generate the seed completely offline and without using a computer – just plug in your hardware wallet directly to a power source. Instead of paper, use a Billfodl
to keep your recovery words protected against fire and flood.
Because they are universal, a BIP-39 recovery seed is also the best way to secure your legacy for your family, so consider adding instructions to locate your recovery seed in your will.
Do you need help setting up a hardware wallet?