Hardware Wallets - Another Way Of Storing Cryptocurrency

Hardware Wallets Oct 11, 2021

There are many digital wallets. With the rise in popularity of cryptocurrency, there is greater need for these, as well as more variety: if a user used to turn to mobile apps or websites to store their cryptocurrency, now they have the possibility a physical wallet that, not being connected to the internet, is much less vulnerable to cyberattacks.

How Hardware Wallets Work

Hardware wallets are physical devices that hold private keys generated by an RNG system (random number generator) by way of a cryptographic device called an HSM (Hardware Security Module).

Cryptocurrency is still accumulated on the blockchain as before, but the keys contained in the hardware wallet allow access to it and because of that, access to user funds. In order to do transactions, the device needs to connect wirelessly to a smartphone, or a computer via USB, with a password needing to be entered, but the blockchain operations are authorized inside of the hardware wallet so that the keys never leave the device. This is especially important in terms of security, which is the most highlighted feature of hardware wallets.

For the scenario of loss or theft, they offer 2 factor authorization (2FA), they can offer passphrases instead of single words, and a seed phrase from 12 to 24 words created according to the BIP-39 standard, which chooses these words in a random way. The owner of the hardware wallet would need to keep this seed phrase in a safe place as well as offline (like on a piece of paper that no one else can access) in order to regenerate the private keys and regain access to their funds via another wallet if they no longer had the previous one.

All of these characteristics make hardware wallets the most trustworthy option to cold store various types of cryptocurrency and tokens at the same time. The exact number of these supported coins and tokens depends on the model of each hardware wallet.

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What To Expect For The Next Generation Of Hardware Wallets

Since their invention in 2011, hardware wallets have been implementing distinct innovations for even more practicality and, especially, security - since this is the quality that defines them.

For example, the Keevo Wallet introduces a double MCU chip architecture (like that which banks use) that allows for the keys to not be stored in the wallet device, but it generates a new one for each transaction. The transactions are authorized through a system of multi-factor authorization and multi-signing (that is, other devices can be necessary, as well as biometric data such as facial recognition, scanning a QR code, etc for the hardware wallet to permit access to what it contains within it). This reduces even further the possibility of someone unauthorized administering the cryptocurrency that the hardware wallet keeps.

The Keevo Wallet’s equivalent to seed phrase restoration of funds is its Carbon Key system, separate backup device that encrypts the information with a random key and then sends it to Keevo to be kept separate (Keevo’s partner in this is Iron Mountain, a company specializing in enterprise information management with a presence in 50 countries). This way, one does not run the risk of losing the piece of paper one which they wrote the seed phrase, which adds another layer of protection to cryptocurrency savings that a user might have.

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Furthermore, Keevo has changed the typical small screen that hardware wallets have, with a 2.8” all color touch screen, for more simple and intuitive use. It also has a biometric sensor, digital fingerprint reader, and 8V lithium battery that gives up to 6 hours of continuous use, among other improvements that bring it closer to a tablet than a hardware wallet, while at the same time it still has all of the essential functionality and characteristics of one.

Hardware Wallets: Product and Service

In something different from other wallets, Keevo also has plans for storage of private keys in partnership with Iron Mountain, protection against loss and theft, and encrypted backup and update services.

Another innovation of Keevo’s is the beneficiary service, where a user is able to decide who they would like to leave their cryptocurrency stored by their Keevo Wallet to, in the event of their passing. To do this, it will be necessary for the beneficiary to have the death certificate of the user. That way, the cryptocurrency stored using the Carbon Key will not be lost, but rather will be transferred to another person designated for this process, without the need of the original owner sharing the private key or password beforehand.

If Keevo is very well a pioneer in offering these types of services, it is to be expected that these become available in other physical wallets as well with time. This all points to the future of hardware wallets including monthly service charges in order to take advantage of all of the benefits the wallets can offer to the fullest extent possible.

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