so as you're watching this video right now how confident are you that the
device you're using whether it's your phone whether it's your computer or
whatever is actually only doing what it's supposed to be doing and nothing
more and how much are you prepared to bet
that you're right one of the questions I often see is the question of you know
our Hardware wallets really worth it do they really make a difference versus a
software wallet and now they're any better than something like a paper
wallet so in this video I'm just gonna look at five specific things that
hardware wallets do that help you to dramatically increase the security of
the way you secure and hold your crypto and if you haven't really done so hit
subscribe now where you can stay and loop that content I'm act help you find
your way in the crazy and often hostile environment that is cryptocurrency so
the first feature of any decent Hardware wallet is secure key generation the
private keys are the unique cryptographic secrets that allow you to
essentially sign and send transactions on a crypto network and anybody who has
those private keys can do the same there is no concept of like verified ownership
or anything else like that so hardware wallets are designed and sometimes even
have special hardware that can actually generate the private keys in a secure
way so rather than using your normal computer to generate these key values
where any virus or malware could take a copy of them and steal them using a
hardware wallet generates these keys off line and what that means is that even if
your computer is infected with viruses and malware while you're setting up your
hardware wallet your keys themselves are not at risk of being stolen something
that no software wallet can come close to matching and you know while it's
possible to do this in a secure way using things like tails Linux and dice
it is a lot of work and there are a lot of things that you can mess up never
mind the fact that using something like tails Linux won't actually help you if
someone has installed like a USB key logger
on your computer or something like that the second thing that how we walls do is
they allow you to securely store private keys in the sense that a hardware wallet
is far more than just a USB stick our hardware wallets are specifically
designed to resist the kinds of physical attacks that people might make so that
even if someone has your hardware wallet if they don't know the pin
for this wallet itself they actually can't access any of the private keys
that are on there to be fair securely storing private keys
is something that most software wallets do well any decent software it will
encrypt the private keys that are stored in it and generally only decrypt those
keys to sign and send transactions but even then you're actually relying on
your software wallet to do all of these things correctly the third really
important thing that our hardware allows you to do is securely use your private
keys in that I often see people say oh hey you know I'll just have a paper
wallet and I'll just store all of my Bitcoin offline in a paper wallet or
something like that so that never touches a computer and that's all well
and good until you want to send or spend those crypto in some way in that one of
the biggest challenges with paper wallets is the way most people use them
is they will end up just sweeping those funds through a software wallet one of
the biggest challenges with using a paper wallet is the process for actually
accessing and using those private keys particularly in a secure way is actually
not easy at all one of the key things that a hardware wallet does it doesn't just
store your private keys on the device but allows you to use them to be able to
send funds receive funds almost as easily as you would with a software
wallet except with the security of using a device which keeps the keys offline
even as you're using them the fourth thing that how we were let's do and this
is perhaps the most important one is they actually allow you to validate the
operation of the software wallet that you are using most of us simply take for
granted that our computer software is doing what it should be doing most of us
take for granted that the hardware is doing what it should be doing and
nothing more and one of the big challenge of the crypto wallet is that
assuming that your wallet is doing what it should do only what it should do and
nothing more can actually be a really dangerous assumption especially when it
might not be obvious to you just looking at what's on your screen that the
software is in fact doing something different behind the scenes than what it
is showing you in its normal user interface in one of my videos which
looks at a hardware wallet versus malware it really clearly demonstrates
the way that a maliciously design software wallet can make you think that
it's sending funds to one place but surely send them to someone else instead
and you have a hardware wallet your software wallet on your computer or
phone will generate a transaction and it will then send that transaction to your
hardware wallet and you can use your hardware wallet to verify the details of
that transaction you know who it's been sent to how much is being sent and only
if all of those things are correct can you choose to then sign the transaction
on the hardware wallet and then the signed transaction is sent back to the
software wallet which is then responsible for broadcasting that
transaction on the Internet and the beauty of this is that if the software
wallet tampers with the signed transaction in any way it will no longer
be valid in addition to letting you verify the details when you're sending
transactions a hardware wallet also allows you to verify that the receiving
addresses that you're being shown your software wallet match the private keys
on your hardware wallet and what that means is even if your operating system
or your software all that have some sort of malware in them where basically it's
about to do something different than what you've asked it to have send the
funds to someone else you will immediately be able to see that with a
hardware wallet there's almost a sense in which having a hardware wallet lets
you see inside and make sure that only exactly the right thing is happening
inside your software wallet as well whereas if you're running a purely
software based wallet basically you'll be punching in the address that you're
sending funds to you'll be asked for a password to sign the address and you
just have to hope for the best and trust that the software that you are using is
doing the right thing and while it's possible to do things like verify the
installation of a software wallet when you install and I've done a video on how to
do that with electrum the fact the matter is you still have no way of
really knowing that what is running on your computer right now has not been
tampered with by someone else by some other software process on your computer
or something going wrong in the operating system on the flip side of
that for any decent hardware wallet you can use third parties wallet software
something like electrum to verify and validate that the hardware wallet is
also only doing exactly what it should do and isn't doing something like
sending your private keys to the wallet vendor or anyone else though it should
be mentioned that not all Hardware wallets allow you to use third party wall
software and do effectively ask you to completely trust that the vendor has
done the right thing the final important thing that our Hardware while it gives
you is a full stack of software of hardware of documentation and support
that allows you even with a minimal amount of knowledge to use the device in
an extremely secure way in that for 99% of people even if you have no experience
in crypto whatsoever if you simply get your hardware wallet use the software
that comes with it and follow all the documentation and recommended processes
that the hardware wallet vendor gives you you will immediately have a very
secure environment to keep your crypto safe and while there are advanced things
that users can do like generating your seed phrase with dice you know using a
different wallet client using something like multi-sig all of these things are
optional extras and if you just stick to using your hardware wallet in the way
that the manufacturer recommends you are going to have a very secure environment
with the key thing being you keep your seed phrase off line and secure if you
are looking to buy a hardware wallet I've put together a bunch of information
on my website that looks at some different wallets the different features
but if all of that is too confusing the reality is that you really can't go
wrong with a ledger or a trezor my personal opinion is still that the
ledger products that the ledger Nano s or X are still more noob friendly than the
traceur and especially in terms of how they're supported on mobile devices in
my mind Ledger Nano X probably still has easily the best mobile experience of
any hardware while in the market so if you are on a budget then the Ledger Nano S is still
a fantastic Hardware wallet and if you'd like to buy one of those and help me in
the process I've got affiliate links in the
description thanks for watching I hope that was helpful
hit like if you think that other people would find this video useful and hit
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that helps people stay safe in the crypto space and to recover if they get
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