Topic: Online Wallets vs Hardware Wallets (Read 286 times)
Nice explanation - thanks!
Online Wallet
So, I assume you know online wallets. If you have your money in one of those (like e.g. your steemit account), then all the secret data concerning your money is stored on some server somewhere on the internet. There are several risks with that:
Someone could steal your password and thus gain access to your money. In a browser situation, this will most likely happen through a phishing-mail, cross-site-scripting or some nasty malware on your computer.
The server itself could get hacked, independently of your account. In that case potentially everyone that uses this specific service would loose their money.
The owner of the server could be dishonest and simply take away all your money. (This is mainly a concern with services that are not very well established yet)
Software Wallet
Then there are the software wallets. There, all the secret data concerning your money is stored on your computer. And only on your computer, unless you make some kind of backup. This is good because this way there's no server that could be hacked, and also no online login-data that could be stolen. But it brings other problems. Most notably there's the problem that you can never really be certain that your computer is not infected with some sort of malware. If this malware is clever enough, it can quite easily steal your money. In the end, it's not that much safer than a good online wallet.
Hardware Wallet
Then there are hardware wallets, like the Digital Bitbox. With those, all the secrets of your wallet are on the physical device. And they never leave the device. There is actually no way someone could steal the secret data from the device, except they steal the physical device and use some VERY sophisticated techniques to extract the data from the hardware directly. There are usually guards against that in place. Ok, so stealing the secret data is no longer an issue. But malware on your computer could still simply USE the Digital Bitbox once it is plugged into your computer to make payments without your knowledge. That's why there is a touch button on the device. No payment is made unless a human touches this button for at least 3 seconds. Until your computer can grow a real finger, this is a pretty big increase of security
So, I assume you know online wallets. If you have your money in one of those (like e.g. your steemit account), then all the secret data concerning your money is stored on some server somewhere on the internet. There are several risks with that:
Someone could steal your password and thus gain access to your money. In a browser situation, this will most likely happen through a phishing-mail, cross-site-scripting or some nasty malware on your computer.
The server itself could get hacked, independently of your account. In that case potentially everyone that uses this specific service would loose their money.
The owner of the server could be dishonest and simply take away all your money. (This is mainly a concern with services that are not very well established yet)
Software Wallet
Then there are the software wallets. There, all the secret data concerning your money is stored on your computer. And only on your computer, unless you make some kind of backup. This is good because this way there's no server that could be hacked, and also no online login-data that could be stolen. But it brings other problems. Most notably there's the problem that you can never really be certain that your computer is not infected with some sort of malware. If this malware is clever enough, it can quite easily steal your money. In the end, it's not that much safer than a good online wallet.
Hardware Wallet
Then there are hardware wallets, like the Digital Bitbox. With those, all the secrets of your wallet are on the physical device. And they never leave the device. There is actually no way someone could steal the secret data from the device, except they steal the physical device and use some VERY sophisticated techniques to extract the data from the hardware directly. There are usually guards against that in place. Ok, so stealing the secret data is no longer an issue. But malware on your computer could still simply USE the Digital Bitbox once it is plugged into your computer to make payments without your knowledge. That's why there is a touch button on the device. No payment is made unless a human touches this button for at least 3 seconds. Until your computer can grow a real finger, this is a pretty big increase of security
What is the difference?
The difference can be summed up with this Convenience vs Security.
Going deeper you can consider mobile and desktop wallets a combination of the 2. We created a "Cryptopedia" that compares and contrasts all the different wallet types including popular examples of each type.
https://midcrypto.com/pages/cryptopedia
The fundamental difference between hardware wallet and online wallet is that the private keys are stored in your personal hardware where no one from the web can access it as it is offline most of the time but when it comes to the online/web wallets, there is a risk of compromisation of the database even if you have taken enough security precautions. It is generally not recommended to keep funds in online/web wallets because it is less secure as compared to that of hardware wallets.
how can i have a hardware wallets? i must to write on paper??
When talking about cold storage - is it not enough to keep it in a hashed file in some usb stick? Why would you need a hardware wallet?
I cannot stress this enough, if you buy a hardware wallet - make sure it is the best highest quality, guaranteed product. I decided to go on the cheap side of things and regretted it.
Online wallet
-Unsecure, someone can hack you account
-You need internet access
-Free
Hardware wallet
-Extremly Secure
-Offline
-a little expensive
I prefer to Hardware wallet, altought it's little expesive, it's worth the security that offered
-Unsecure, someone can hack you account
-You need internet access
-Free
Hardware wallet
-Extremly Secure
-Offline
-a little expensive
I prefer to Hardware wallet, altought it's little expesive, it's worth the security that offered
A hot wallet means that it’s connected to the Internet. Two of the most popular examples of hot wallets are Jaxx and Exodus. Hot wallets are either hosted on your mobile device or desktop computer. However, hot wallets are super convenient because you have access to the wallet at your fingertips. Hot wallets are generally used for keeping a smaller amount of cryptocurrency on hand for frequent transactions or trading.
A“cold” wallet is stored offline. This can be in the form of a paper wallet, a hardware wallet (like Trezor), or even on a USB stick. So if someone hacked or stole your mobile or desktop, there’s NO WAY they could access your crypto assets. Two of the more popular examples of hardware wallets are Trezor and Ledger.
They're often used for storing larger holdings of cryptocurrencies to keep them offline and off exchanges. They are basically like a savings account.
Hope this helps!
A“cold” wallet is stored offline. This can be in the form of a paper wallet, a hardware wallet (like Trezor), or even on a USB stick. So if someone hacked or stole your mobile or desktop, there’s NO WAY they could access your crypto assets. Two of the more popular examples of hardware wallets are Trezor and Ledger.
They're often used for storing larger holdings of cryptocurrencies to keep them offline and off exchanges. They are basically like a savings account.
Hope this helps!
What is the difference and how can I have the best option?
listen if you want the best security and also spend a tiny bit more money than a hardware wallet is ur best option or just wait for ETHOS to come
What is the difference and how can I have the best option?
The online wallet does not guarantee you secured your account because it is only a low security and a lot of holes for it to be hacked. The hardware wallet is that most of its users have a cash discount and that it suddenly scares them to lose their money so they use hardware wallets that are secured to secure their money
There is the big difference between online wallets and hardware wallets. Online wallets security is pretty low. Hardware wallets security is high. If you can buy a hardware wallet, It will be a good choice.
Online wallets are basically any wallets that you can access anywhere from any machine. They are convenient if you want fast access to your funds. But that convenience comes with the risk of the wallet getting hacked. It’s happened to many people before. Hardware wallets like Nano Ledger or Trezor are offline wallets. They are less proned to hacking but obviously not as convenient since you need to have the hardware device to get to your funds. There is really no perfect wallet. There are advantages and disadvantages to all of them.
Online wallets offer greater convenience. You can generally access your Bitcoin from any device if you have the right passwords. All are easy to set up. The disadvantage is the lower security. With your private keys stored in the cloud, you have to trust the host's security measures.
Hardware wallets are small devices that occasionally connect to the web to enact bitcoin transactions. They are extremely secure, as they are usually offline and therefore not hackable. However, they can be stolen or lost. Some large investors keep their hardware wallets in secure locations such as bank vaults.
Where i can get hardware wallet? Can it be sent directly to my country?Hardware wallets are small devices that occasionally connect to the web to enact bitcoin transactions. They are extremely secure, as they are usually offline and therefore not hackable. However, they can be stolen or lost. Some large investors keep their hardware wallets in secure locations such as bank vaults.
And you can receive directly to your country.
Can you tell which type of wallet a user is completing the transactions on when viewing say, the Blockchain? Reason is, a friend and I are debating that on the Blockchain you can determine whether one is using an online wallet vs a hardware wallet. I need some support on whether this is true. Cheers.
As of now, I don't find any software that could know which wallet you are using by checking transaction ID.
If you are looking for a wallet which is safe I suggest you hardware wallet and desktop wallet like electrum.
For mobile, mycelium and electrum for android.
The biggest difference is convenience. An online wallet is usually point click and use. A hardware wallet must be purchased, learned, backed up and then used properly. See this story of a guy who lost $30K using Bitcoin Trezor:
https://www.wired.com/story/i-forgot-my-pin-an-epic-tale-of-losing-dollar30000-in-bitcoin/
As others have said when using an online wallet you're trusting the handling and security of coins to that site. In this case it's a good idea to keep balances low and ideally spread across different sites so if anything does happen your losses are contained.
https://www.wired.com/story/i-forgot-my-pin-an-epic-tale-of-losing-dollar30000-in-bitcoin/
As others have said when using an online wallet you're trusting the handling and security of coins to that site. In this case it's a good idea to keep balances low and ideally spread across different sites so if anything does happen your losses are contained.
Can you tell which type of wallet a user is completing the transactions on when viewing say, the Blockchain? Reason is, a friend and I are debating that on the Blockchain you can determine whether one is using an online wallet vs a hardware wallet. I need some support on whether this is true. Cheers.
Nope, it's impossible to say between software, online, and hardware wallets. Though it MIGHT be possible to know if a certain address is an address of a certain exchange or not by looking at the transactions of that certain wallet though a blockchain explorer.
Not 100% sure, so correct me if I'm wrong for those with more knowledge on this.
What is the difference?
Hardware (cold) wallet = Better security
Online (hot) wallet = Better liquidity
I primarily keep a good amount of coins on my Ledger Nano S, I leave ICO tokens on a MEW, and the rest is on exchanges. The only reason I leave it on the exchange is because it's not worth the withdrawal fees.
Can you tell which type of wallet a user is completing the transactions on when viewing say, the Blockchain? Reason is, a friend and I are debating that on the Blockchain you can determine whether one is using an online wallet vs a hardware wallet. I need some support on whether this is true. Cheers.
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