Crypto hardware wallet security is a concern now for all crypto users. The growing popularity and hike in the price of digital currency make it a target for many hackers. They want to take advantage of these valuable assets. So it is very important for crypto users to keep their digital currencies safe and secure.
“The economics of hacking suggests that attackers will continue to gravitate towards digital currencies as they increase in value and become more prevalent in our daily lives,” exclaims Jack Mannino, CEO of nVisium, a Falls Church, Virginia based application security provider.
The Concept Of Cryptocurrency
Cryptocurrencies are any currency whose presence is in the digital field. It is also known as digital currency because of its features and traits. It is a form of payment that is exchanged on the digital platform. These currencies are often called tokens. There are various cryptocurrency companies that issue these tokens which laymen can buy and even invest. Cryptocurrency companies include Bitcoin, Ethereum, Litecoin, etc.
Cryptocurrency works on a decentralized technology known as blockchain technology. Here every detail of the users is encrypted and a key is provided to the user that acts as their password. Crypto companies keep all the transactions in a digital ledger that the users can access.
The Concept of Cryptocurrency Wallet
Just like our regular wallets, cryptocurrency wallets serve the same purpose of storing our digital cash. These wallets ensure the safety of our crypto cash. When a user gathers cryptocurrencies such as Bitcoins they can store them in their digital wallet. You can imagine your digital currencies stored in a wallet the same way files are stored in any USB device.
Cryptocurrency wallets primarily are of two types: cold wallet or hardware wallet and software wallet or digital wallet.
With a hardware wallet, all your digital currencies are stored in any hardware device like that of a USB device. You just have to connect them to any smartphone or computer or tablet to access them.
On the other hand, digital wallets refer to those which are controlled digitally through any software or application. There is no external device involved.
Which Wallet To Use And Why?
Hardware wallets are any day better than software wallets. This statement does not conclude that digital wallets are only prone to hackers. There can be instances where a cold wallet is also hacked but the number of instances if compared with that of a digital wallet will be less.
Here are few reasons why hardware wallet is better than software wallets in cryptocurrency:
- Often in hardware wallets the private keys are stored in a more protected arena of a “microcontroller” and cannot be transferred as plain text from the device.
- Hardware wallets are more immune to computer viruses and malware than in the case of software wallets can steal the data.
- Hardware wallets can be used more safely. Private keys will never require the need to avail of the potentially unsafe software.
But as mentioned earlier, crypto hardware wallet security is also at risk. There are few precautions that can be taken to ensure the safety of the user’s crypto.
10 Rules That Ensures Crypto Hardware Wallet Security
Though hardware wallets are the most trusted places to store your cryptos, you can not just deposit them in your hardware wallet and sit idle. They are still prone to risk if not initialized properly or there are problems with updates in firmware. Let us look at 10 rules that if followed will ensure the safety and security of your digital cash.
1. Buy Your Crypto Wallet From A Trusted Source Or A Third-party
Always purchase your crypto hardware wallet from the official supplier. Never depend on any platform that has no originality in the products supplied. You can always opt for buying them from the supplier’s official website. This reduces the chance of your data being tampered with or stolen. There was an instance where a reseller from eBay got access to all the buyer’s data even though the product sold was completely new.
2. Stay Away From Pre-initialized Hardware Wallet
Pre-initialized hardware wallet can simply mean a copy of a wallet that could have been installed by a grifter. Always make sure you are the only person to initiate your crypto cold wallet before you start using it. Before initializing go through the setup process that has been given on the official website.
3. Always Use Device Generated Recovery Words
Never use pre selected recovery words. Always set your own recovery words. Always ensure that your wallet has been initiated from scratch and always use random on device recovery words. This is because the person that has got access to your recovery words can access your wallet and steal your coins.
4. Choose A Device That Has Attestation
Before buying any wallet, always ensure that you are being provided with some documents or something that proves the origin and authenticity of your product. Try to find out the software that is developed by the manufacturer of the device.
5. Test Your Backup
This is one of the most important rules that is often overlooked. Always verify your wallet’s backup. Your wallet’s backup contains a set of recovery words to see if they work on a different crypto hardware wallet. After the checking is done reset the whole setup and start setting them up from scratch. It is not recommended to use your usual software wallet for the checking. Information regarding this whole process will be available at your vendor or on the website from where you are buying it.
6. Store Your Recovery Words Separately And Securely
Avoid keeping your recovery words on your computer or keeping an image of that on your phone. They are not safe. The safest thing to do is write that down on paper. Later if you want you can laminate that paper to save that from degrading or other natural factors. Keep that paper safely. Always remember your pin will hold no importance if your attacker gets access to the recovery words. That is enough to break through your wallet and steal your coins.
7. Verify The Software That Communicates With Your Wallet
Hardware wallets make use of software for transaction initialization, firmware update, and many more. So always verify your software is safe because that is the prime thing that communicates with your wallet directly. To stop attackers from tampering with your cryptocurrency data, there should be code-signed executables available. With code-signed executables, the system that is operating automatically identifies the code signature every time there is a login. This is not the4 case with manual verification as it is done only once.
8. Try To Use Only One Dedicated Operating Device For Your Wallet
If you use one dedicated device to operate your wallet from, like one dedicated computer or one dedicated smartphone then it makes it a bit safer as no other task is carried out from that device. Once you start multitasking from the same design it is more prone to external threats as we all know “privacy is a myth now.” By using your hardware wallet from one PC that has a rigid configuration you increase the security of your digital cash. And along with that also ensure that the internet is disconnected from that device. The Internet is a huge threat and the only threat to crypto hardware wallet security.
First, you have to impair all the firmware configuration of your device to ensure nothing connects during the booting process.
9. Search For A Wallet That Has Multi Sign Functionality
“Multi signature” is a process that allows more than one key while authorizing a transaction. This will ensure a multi level of crypto hardware wallet security. Here while carrying out the transaction more than one private key will be required that can be stored in different cold wallets.
10. Manually Check When A New Multi Signature Address Is Generated
Multi signature wallets are made up by merging many private key owners into one address that is stated in a script. This type of address is called P2SH or “pay to script hash”.
There are just 10 rules to ensure your crypto hardware wallet security. The digital world is now more prone to hackers so the users need to take as much protection as required to ensure their digital currency is safe. There are a number of crypto hardware wallets available. Check everything before buying.