Hardware wallets are small and portable devices which empower users to manage the keys to their bitcoin in a way that combines security with convenience. Essentially, they serve as an extra layer of protection which stands against malevolent attacks that may happen on infected computers.
Further Reading: What Are Bitcoin Wallets[1]
If you’re HODLing your bitcoin, then you can resort to cheaper and more convenient cold storage options (like a computer that never gets connected to the internet, a USB flash drive, a paper wallet, some form of bearer item or even a plaque of metal). However, if your needs extend to trading or making payments with bitcoin, then hardware wallets are essential to sign transactions in a safe environment that hackers won’t be able to access remotely.
It’s also possible to use your hardware wallet as a cold storage solution (you only connect it to your computer once to move your bitcoin keys onto it, and then store it in a safe environment). This way, you benefit from the advantage of on-device, private-key generation and greatly reduce risk by removing the likeliness of attacks via phishing, viruses, malware and spyware.
Security experts are known to destroy the devices that they use to generate random passwords and private keys, as their processing units are mathematically more likely to replicate the result than another computer with similar specifications. Correspondingly, hardware wallets should be as personal as your toothbrush: Get them new and in the kind of packaging which guarantees their untampered nature, use them while they’re still safe and then avoid passing them on to a second owner. Coldcard, one of the manufacturers presented in this review, goes as far as adding a “SHOOT THIS” marker on their products’ circuit boards for emergencies where privacy and security must be
