What is a hardware wallet & do you need one?
The Sandbox gives you a quick introduction to hardware wallets.
Simply put, a hardware wallet, also sometimes referred to as a cold wallet, is a cryptocurrency wallet in hardware form, such as a flash drive-type device, which is used to store your cryptocurrency funds and NFTs offline. Some examples of hardware wallets are Ledger and Trezor.
Your software or online wallet, which is also known as a hot wallet, can become easy targets for thieves, scammers, and hackers if you are not careful to protect your credentials, or if you do not keep up-to-date on the known scam tactics used by such shady people. Examples of software wallets are MetaMask and Bitski.
Hardware wallets are a very important key component of blockchain ecosystems. They provide you with additional security when you are interacting with blockchains, whether that be Ethereum, Polygon, and so on.
Your hardware wallet is basically a key - or an offline storage for your private key in other words. Your crypto funds and NFTs are not actually stored on the hardware wallet itself - those are still stored on the blockchain. The hardware wallet's private key unlocks the addresses on the blockchain where your funds and NFTs are stored.
Your private key is also protected by a PIN code of at least 4 to 8 digits on your hardware wallet. So should your hardware wallet end up in the hands of a shady thief, they will usually have three attempts to work out what your PIN is. After (usually) three failed attempts, the hardware wallet will reset itself to factory settings, effectively deleting the private key stored within it.
But do not worry, you can restore your private key as long as you know your secret recovery phrase, which usually consists of 24 randomly-generated words given to you when you first set up the device.
When you perform transactions on the blockchain, you will need to "sign" a confirmation for that transaction, which proves your ownership of the private key. It is not possible to sign for any transactions without this private key, so nobody can make a potentially unauthorised transaction unless they physically hold your hardware wallet in their hands.
The fact that this private key is completely isolated from the internet adds an extra layer of security. In other words, it's kind of like 2-factor authentication, but much better (you should still have 2FA turned on wherever you can, however).
If you are someone who has a large amount of cryptocurrency funds, such as SAND, in their wallets, then yes, we recommend that you should seriously consider using a hardware wallet. The same goes for those who like to collect or trade in high-value NFTs, such as LANDs.
LANDs are the most sought-after NFT in The Sandbox, as such they are also targeted by scammers attempting to steal them from your software/online wallet. They attempt to do this by using a number of different tactics, such as posing as a staff member or trying to get you to connect your wallet to a compromised third-party dapp. See the Account and Wallet Security page for more information.
Hardware wallets may offer plenty of other benefits to you as well. It should be noted that these benefits may depend on the exact hardware wallet that you choose.
As well as being your very own mini Fort Knox, hardware wallets can also act a portable key to log you into DAPPs without having to create a new account. And sometimes, depending on the wallet you select, can also be used to log you into certain non-blockchain websites too, such as social media.
You can also trade directly from hardware wallets, especially with the help of third-party platforms like Radar Relay.
Hardware wallets are also compatible with multiple blockchains. Allowing you complete control over all of your tokens under one private key, whether they are on Ethereum, Bitcoin, Polygon, and so on, including alt coins.
There may be other benefits offered by hardware wallets, but these can differ depending on the wallet that you choose to purchase. Make sure you research your hardware wallet options thoroughly and compare each manufacturer's different models to determine which is the best fit personally for you and your needs.
While you could potentially purchase hardware wallets from websites like Amazon and Ebay, or from a computer hardware store, we strongly advise you against that, even if there's a low-ish price tag or discount offered (we know those are hard to pass on). The reason being because you will have no guarantee that the hardware wallet was not tampered with and compromised (for example, by warehouse packers). You should only buy them from the manufacturer's official website - while they probably won't be discounted, the extra pennies spent will mean there is less chance that the wallet was tampered with, because you got it directly from the official source. What's a few extra pennies to protect potentially tens of thousands worth of cryptocurrency?
Here are just some examples of hardware wallets and the links to their official websites:
The Sandbox does not officially endorse the products linked above. The Sandbox has also not personally vetted the products. They are shared here purely for your convenience and to encourage you to research multiple products to find the best fit for your personal needs. We want you to stay safe on the blockchain.
- If you are looking for opinions, reviews, and personal experiences on hardware wallets, you could join and ask the community in The Sandbox's official Discord (click).