Hardware wallet vs Paper wallet which is really more secure to keep cryptocurrencies in? They are the most common cold cryptocurrency storage forms and the secure thing about both are that they are not linked to the internet. But this does not mean that they are 100% indestructible. In reality, both have strengths and weaknesses. The question is which one offers more security for the holder of a particular cryptocurrency. They are both more secure than hot wallets (wallets that are connected to the internet – e.g. keeping coins on an exchange or on your computer) but they both have strengths and weaknesses. Hardware wallet vs Paper wallet:
Hardware Wallet vs Paper Wallets
Advantages of Hardware Wallets
A Ledger has created what is is known as a secure element which is a chip that adds an extra layer of security to your wallet. It prevents cyber hackers from trying to match a wallet’s power consumption pattern with a cryptocurrency key. This is known as a side channel attack in which hackers try use to invade and disrupt hardware wallets. Trezor does not use secure elements in their hardware wallet because they argue that secret chips present a closed security risk which violates the company’s open source priorities.
B Coin Support-The Ledger hardware support platform has developed a hardware wallet that can support up to 1100 coins. The Trezor hardware wallet can support up to 700 coins. Another nice feature of the hardware wallet is that all the coins can be supported in one place. Which makes the hardware wallet vs paper wallets extremely practical to manage.
C Pin Protection-Hardware wallets come with security features that each individual transaction is pin protected. You have to enter a pin number for every transaction you perform in a hardware wallet. Ledger and BitLox offer a physical method to enter the pin number on the wallet. Yet Trezor offers a more secure option by allowing the user to enter a encrypted passphrase.. The advantage of this security method is you can still enter your hardware wallet on a compromised machine.
Disadvantages of Hardware Wallets
A Any type of hardware wallet carries with it an upfront fee that ranges from $50.00-$685.00 which is a weakness when comparing hardware wallets vs paper wallets. No matter where a hardware wallet is purchased it will cost some money upfront. If a cryptocurrency holder only has a few crypto coins the cost to purchase the hardware wallet is not worth it.
B Unfortunately, there are those unscrupulous individuals who will market clone hardware wallets. They are sold on EBay or Craigslist. Do not purchase a hardware wallet on these platforms or used ones because they are susceptible to being compromised. If compromised you can lose all their cryptocurrency.
C Paper backups come into play if a hardware wallet is lost or stolen. Companies will offer paper support to write the seed phrase and some companies will offer cards to write the seed phrase on. The assets may be recovered with this paper backup.
Hardware Wallet vs Paper Wallet
Advantages of Paper Wallets
A There are several ways to make a paper wallet and some sites offer these tools for free. You can design a paper wallet and forget about your cryptocurrency for a while. They are free to design and there is no out of the pocket expense which is a nice feature of paper wallets.
B Paper wallets are immune to malware if they are constructed properly. Malware cannot penetrate a paper wallet and your assets are secure making a huge plus when comparing hardware wallets vs paper wallets.
C Multiple copies of paper wallets allow the crypto holder to create a couple paper wallets and leave them in secure locations keeping all assets they contain secure.
Disadvantages of Paper Wallets
A Paper wallets are vulnerable to damage which is a common weakness of paper wallets. The ink will run and the paper will not hold up to coffee or liquid spills. Vital information (such as QR codes can be lost) which could create a situation where assets could be permanently lost and compromised.
B The creation of a paper wallet will more often than not create compromises in the process. If the process is not followed accurately the paper wallet will be made wrong. There are so many security weaknesses with the creation of a paper wallet. Ranging from the wifi connection being weak to hackers interfering your private key of the paper wallet.
C These are two big issues with paper wallets: Users tend to reuse addresses because it is cumbersome to create a new paper wallet for every individual transaction. This will cause security risks for current and future holders of Bitcoin in the paper wallet. Your identity is compromised if a hacker traces the security signature key to the paper wallet.
Best Paper Wallet Providers
- MyEtherWallet or MyCrypto are Ethereum wallet providers. They allow to access wallets both via Hardware Wallets and via a paper wallet. Additionally, they offer an easy interface to create paper wallets for Ethereum, ERC20s and DeFi.
- Bitoin.com PaperWallet allows the user to store bitcoin information offline where hackers cannot access your information. The platform suggests that users download source codes and generate the seed from a computer that is offline.
- Cardwallet by Coinfinity offers a unique service by printing the paper wallet with Austrian State Printing Services and handing you over the physical card that holds the private key to your Bitcoin wallet.
How to create a Paper Wallet by yourself
1.Install Ubuntu on a Flash Drive
Open up LilLi and insert a flash drive
Select correct drive and if drive is not showing click refresh
Select “ISO/IMG/ZIP” selecting the Ubuntu ISO file downloaded in the previous step Choose “Format the key in FAT32 is selected” It has to be in this format
Click the “lightning bolt” to start the format and installation process
2.Go offline and test printer
Now disconnect the computer from the internet connection. Whether it is Wi-Fi or IAN connection disconnect the computer. Make sure remote access is not available to the computer and print a test page off the printer. The printer must be functional.
3.Use ubuntu to run your computer off the flash drive
Restart the computer by clicking F12 or F1 buttons will allow the computer operating system to be run from the flash drive Once the “Ubuntu system loads choose “try Ubuntu option”
Conclusion – Hardware Wallet vs Paper Wallets
Finally, the article has discussed the strengths and weaknesses of both paper and hardware wallets. Instructions on how to create both types of wallets or cryptocurrency wallets have been outlined. The top hardware and paper wallet service providers have been noted and the benefits of each of its wallet products have been discussed.
Enjoy using, holding, spending, trading or whatever you wanna do with your coins!
Disclaimer: Image Source: Unsplash.com – None of this is financial advice. All content on this website and this article is provided for informational purposes only. You must consult your financial advisor first before making any financial decisions.