When you buy Bitcoin, you have to decide where to store it. If you buy from an exchange, then they usually automatically give you a wallet. Any cryptocurrencies you buy go in there.
While an exchange wallet is free and convenient if you want to cash in or trade your Bitcoin regularly, this solution might not be the most secure option. You might want to transfer the Bitcoin you buy to your own wallet instead.
One way to do this is to buy a hardware wallet. How do these wallets work, and why should you use one?
What Is a Hardware Wallet?
Hardware wallets use a piece of hardware and some software to help you store and manage cryptocurrencies. First, you get a physical storage device that often looks and works like a regular USB stick. This device stores the keys that you get when you buy Bitcoin. These keys are your proof of ownership.
If you want to look at your investments, trade them or use them to buy something, then you access the software program or app that comes with the wallet. This software adds functionality to the wallet's hardware storage allowing you to make transactions.
So, the program uses the stick to create an information and transactional platform so that you can manage your coins. However, your proof of ownership keys never leave the hardware device.
The program enables transactions inside the device. The output you see doesn't contain any details of your keys. They aren't transferred to your computer or network device at any point. They stay secured on the stick.
Why Use a Hardware Wallet?
While cryptocurrency ownership comes with a degree of anonymity, this doesn't mean that your Bitcoin investments are always secure. These investments attract hackers.
If someone gets access to your keys, then you basically lose your coins. Once they transfer them somewhere else, you can't get them back. So, you need to choose the most robust wallet solution you can. While third-party wallets on exchange sites are secure, they have some vulnerabilities.
If you plan on buying a lot of Bitcoin or holding it for a long period, then a hardware wallet is a more secure solution. As long as you keep the device safe and remember your password, then your keys are protected.
This kind of wallet never needs to transfer your keys to an online device. So, it won't be affected by viruses. Plus, even if hackers get into your computer, they'll find no trace of the details they need to access your Bitcoins.
To find out more about hardware wallets and how to use them when you buy BTC cryptocurrency, talk to crypto consultants.