Hardware wallets explained
What does a hardware wallet do?
A hardware wallet is a compact device designed to store your private keys securely, signing transactions without exposing those keys online. This makes it a popular choice as a form of cold storage, separating your sensitive details from the internet.
If you’re sending crypto, the transaction details are sent to the device, which checks them and signs the request on its own hardware. Only the signature goes back to your phone or computer. The private key is never copied or shown to any other connected device, so if you have malware on your computer, it won’t see or steal the key itself. Still, it’s important to double-check the payment details on the wallet’s own screen. A compromised computer might try to trick you into confirming a different transaction. If you’d like to compare hardware storage to other methods, our guide to hot and cold wallets covers the differences.
How to set up a hardware wallet safely
- You should order the hardware wallet directly from the maker or an approved retailer, never from an unknown or second-hand seller.
- When it arrives, check the packaging for sealed, untampered wrapping before you open the box.
- Follow the setup steps shown only on the manufacturer’s own website, not from random emails, chat messages or unofficial videos.
- Copy the recovery phrase onto paper when the device first shows it. Don’t enter the phrase anywhere online, not on a website or mobile app, even if someone asks for it.
- Use a small test transfer to check that everything’s working, before you move a large balance.
What happens if the device is lost or broken?
The coins themselves are never on the hardware wallet; they sit on the blockchain. What the device controls is access, using the seed phrase you wrote down at setup. Lose or damage the device and you can still recover your funds: just get another compatible wallet and enter the phrase into that new hardware or certain software wallets.
If you lose that written phrase, recovery probably isn’t possible. It’s not a defense against mistakes like sending funds to the wrong person or falling for a scam. Always read each detail on the device screen, not just on your phone or PC. Crypto values can change quickly, and crypto is not risk-free to hold or move. For a step-by-step guide to getting your crypto off an exchange, see how to withdraw from an exchange to your own wallet.
Frequently asked questions
Do I need a hardware wallet to hold crypto safely?
No, you don’t. You can use an exchange account or a software wallet if you prefer. Each method has its own risks and protections. Hardware wallets keep private keys offline, which cuts the risk of online theft. The best option for you depends on the value you hold, how often you need to access your crypto, and whether you’re comfortable keeping a recovery phrase confidential and offline.
What should I do if my hardware wallet is lost?
The coins themselves aren’t gone, because your assets live on the blockchain. To regain access, get a compatible new hardware wallet (or a supported software wallet) and use your recovery phrase to restore it. Most devices use a PIN too, but only the recovery phrase lets you bring the whole wallet back, so make sure you’re storing it somewhere private and offline at all times.