There is a lot of debate surrounding whether hardware wallets are the pinnacle of personal security when it comes to storing cryptocurrency. They are much more secure than hot wallets but can it compare to cold wallets? In this article, we will explore the differences between a hardware wallet and a cold wallet and can hardware wallets become a true cold wallet.
Security Issues with Hardware Wallets
Many people like to mistakenly class hardware wallets as a cold wallet. This is not technically correct as many hardware wallets are just partially “cold” (Offline). However, as hardware wallets have been developed to the point that it is easy to use, it is a popular choice for beginners and experts alike.
Hardware wallets fall shy on security compared to cold wallets. This is mainly because almost all hardware wallets still rely on some sort of physical connection to an online device to work. This can be a hardware wallet that uses USB, Bluetooth or Wifi to transfer data for example. Even though it is cold 99% of the time, it is at risk when it is connected to a phone or a computer. That 1% can cause funds to be remotely stolen as we have seen in the past.
When Can A Hardware Wallet Become A True Cold Wallet?
A hardware wallet deserves the name of a cold wallet when it does not need any connection to work.
An example of such a wallet is the ELLIPAL. The ELLIPAL uses QR code technology to allow transactions to be done offline. As ELLIPAL works with a mobile App, only the App connects the internet while ELLIPAL works as a key. It can be called by users around the world as a true cold wallet and not just a hardware wallet!