A cryptocurrency wallet is needed to use, send, receive, and store coins. These wallets are broadly categorized as hot and cold wallets. A hot wallet is an online wallet and needs an internet connection to use, whereas a cold wallet need not be connected to the internet, to be used. Paper wallets and hardware wallets are the two most common cold storage types. To know more about the paper wallet vs hardware wallet differences, read below:
A paper wallet is a cold storage wallet and is like a normal document that contains your private keys, QR code, and the cryptocurrency address. This wallet is considered extremely safe from hackers as they are not connected to the internet. But setting up and generating the paper wallet can be quite confusing and depends on the software used to create it. Moreover, since there is no backup for it, the users have to be careful in keeping it safe.
A hardware wallet is a device, like the USB drive. This device can be connected to the computer using the USB port. It is a physical device that stores all your private keys securely. Since these are not connected to the internet, and the private keys are generated offline, it is considered as a secure option. Additionally, it has security features that protect the device from malware and virus and hence difficult for hackers to steal.
In a hardware wallet, all the private keys are stored in a USB-like device and are available offline. Most of these devices come with a display screen so that the private key is visible and comes with an easy to use interface. Whereas in a paper wallet, the private keys are printed out onto a paper. If you have many such private keys, it can lead to confusion if printed on the same paper. Even if you have those on multiple papers, it can become difficult to manage.
When it comes to the security aspects, both paper and hardware wallets have their fair share of advantages and disadvantages. A paper wallet is considered extremely secure as it is offline, and no hacker can use it to steal cryptos. On the other hand, a hardware wallet is also secure but comes with more security as all the private keys are stored offline on a device. Some of the hardware devices also come with added security elements like a chip with extra security. That means even if there is any virus or malware on the machine, the hardware device is not affected by it and does not cause a security breach.
The major advantage of a hardware wallet is, it has an option for backup recovery, which is not available in a paper wallet. If you lose the paper wallet and don’t remember the private keys, your digital assets are gone!
A paper wallet is at a higher risk of damage. Most of the people think of a cold storage option for their long term assets. If you have printed your private keys on a paper, then over time, it may fade, or some may even misplace it. But with a hardware wallet, your private keys are safely and securely stored in a device that is least likely to get damaged as it is a sturdy piece of hardware.
When it comes to the cost factor, the paper wallet has a definite advantage as it can be used free of cost. Whereas for a hardware wallet, there is a considerable upfront cost as the device needs to be purchased. The price of the device varies based on the features it offers. Additionally, if you only have a small number of tokens to store, the cost is too much.
Depending on the hardware wallet you buy, it supports many different cryptocurrencies and all that can be put in one place and managed. So coin management is easy in a hardware wallet. The same does not apply for a paper wallet.
As you can see, there are both advantages and disadvantages of using the paper wallet and hardware wallet, but both are secure wallets. So choose what is right for you based on usage and preferences.
Paper wallets are considered extremely safe from hackers as they are not connected to the internet.
Hardware wallets store all your private keys securely, so you might need a hardware wallet.
It just acts like a USB device that protects the device from malware and virus and hence difficult for hackers to steal.
Hardware wallets protect the device from malware and virus and hence difficult for hackers to steal.
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