A hardware wallet is a small and portable electronic device that carries the private keys that sign and authorize transactions. Its most important advantage is that it allows the use of the private keys offline, away from prying eyes, even when you are transacting online.
You will typically connect it to your computer via USB and sign off a transaction. There are also a few that use the Near Field Communication (NFC). Since they are 100% reliable to protect you against all forms of attack, they have been singled out as the safest place to store your private keys.
For Storing and spending bitcoin
The wallet is designed in a way that it shields your private keys from online connections. After connecting your device to your PC (via USB), your transactions are signed on this secure element without any likelihood of any leak to your computer to the internet.
In order to protect your private keys from Man In the Middle attacks (MIM), security cards in your wallets act as a mesh screen, requiring visual confirmation to sign everything. This way, no transaction is ever authorized without your consent.
If you plan on storing for a long time, using these wallets is the most secure way to do it since your private keys associated with your bitcoin stash are held offline in encrypted form.
Advantages of a Hardware wallet vs. other wallets
- Your private keys are stored in a secure area of a microcontroller. It is impossible to transfer them out in plaintext
- It is immune to PC viruses that attempt attacks on normal software wallets
- Designed to be used interactively and securely with minimal procedures
- You can validate their entire operation because most times, their software code is open source
- They are portable, therefore, easy to carry around.
Even though, hardware wallets are a relatively new addition to the cryptocurrency experience, the list to choose from is rapidly growing.