Hardware wallets, otherwise known as cold wallets are wallets that are offline and on hardware. The most popular one, Ledger, looks like a flash drive. These are high security wallets because they are mostly offline and only connected to the internet for a transaction.
If used properly, hardware wallets can save you major potential losses that many crypto owners suffer every day. Investors have lost billions due to hacks, scams, and other forms of attacks on their wallets.
While hardware wallets store your private keys offline and significantly increase the security of your digital asset portfolio, they don’t rule out the possibility of losses if not used properly. The following are important tips to keep in mind if you’re considering using a hardware wallet to secure your hard-earned investment.
Buy from verified sources
Let’s start with how you buy your hardware wallet. Ensure that you only buy your wallet directly from the manufacturer, or a verified retailer. This is because there’s a chance that the device has been tampered with if you buy from a random person.
As a result, your portfolio can potentially be wiped out as soon as you put your private keys on the wallet. For example, if you wish to buy a ledger wallet, visit the official website to buy, ensuring you have the right web address.
If it is from a retailer, ensure that it is a reputable platform, known in your country. This will save you from either paying for a product you’ll never get, or buying a compromised device. Either way, you lose, so do your due diligence before paying.
Keep your recovery phrase safe
This cannot be overemphasized. Your recovery phrase is a string of 12-24 words you’ll be provided with when setting up your wallet. Write them down and store them somewhere safe, because these words are the only way you can recover your portfolio should your device get damaged or stolen.
Also, do not share your recovery phrase with anyone, because whoever can access it can access and do with your portfolio as they please.
Keep it up-to-date
Hardware wallets run on software. This means they need to be updated regularly to keep functioning properly. The manufacturers release new updates from time to time to improve security and user experience. Some updates may even be because of security vulnerabilities they noticed and are trying to protect you from.
By updating your firmware regularly, you’ll be using the latest version of the software at every point in time, which greatly reduces your chances of falling into trouble.
Use a strong PIN
Your hardware wallet uses a PIN in addition to the recovery phrase. When setting a PIN, ensure that it isn’t something anyone can easily guess such as your date of birth, or any number associated with you. Criminals may have such information and try them out to try to access your wallet.
Your PIN should be a unique combination of numbers that only you can even think of, and it shouldn’t be 0000. Also note that just like your recovery phrase, you should never share your PIN with anyone.
Always double check addresses
The thing with crypto transactions is that you get to use a wallet address to send funds. It is a long string of numbers and letters which can be confusing. However in your own interest, always double check to ensure you’re sending to the right address.
This is critical because funds sent to the wrong address cannot be recovered, unless the receiver is magnanimous enough to send them back. This is not guaranteed, so it’s better to take your time and avoid such mistakes.
Conclusion
These are the important things to keep in mind if you’re considering using a hardware wallet. If you follow these tips, you’ll be much more likely to secure your investment and prevent avoidable losses.
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