Crypto glossary
Hardware wallet
A hardware wallet is a small physical device that stores crypto private keys offline and signs transactions internally, so the keys never touch a computer.
A hardware wallet generates the private keys inside the device and keeps them there. To send funds, the wallet app on a computer or phone prepares the transaction, the device signs it internally and only the signature goes back out. Many models use a secure element chip similar to those in bank cards, and all of them show the transaction details on their own screen for confirmation.
Ledger and Trezor are the best-known makers. A hardware wallet is the most common way to keep a cold wallet, and it can also be one of the keys in a multisig setup. During setup it displays a seed phrase that serves as the backup if the device is lost or broken.
The device protects the keys, not the user's judgement. Signing a malicious approval on a hardware wallet is just as final as on a hot wallet, so checking the screen matters. Devices should be bought from the manufacturer, and the seed phrase should never be typed into a computer.
Example
To send 0.5 BTC, a user prepares the transaction in the companion app, checks the destination address and amount on the device screen and presses the button to approve; the private key never leaves the device.
Related terms
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