How Does a Crypto Hardware Wallet Work?
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- Опубликовано: 5 окт 2021
- Ever wonder if you need a crypto hardware wallet? If you have a bit of cryptos hanging in the cloud or some app, it might be the time to put your crypto in your own pocket. After all, this is what cryptos are meant for! I.e. a democratization of banking. When you hold your own crypto and not allow an institution to hold it, you take control of your assets. The security is much higher as it is not prone to the massive hacking that can affect even large crypto institutions. A hardware wallet is offline so this makes it orders of magnitude harder to hack because they must physically take your 24 seed words from you to gain access to your assets. Watch the video to learn how easy it is to get started with your own hardware wallet.
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The way I think of it is this. A hardware wallet is like a key box at a car dealership. You buy the key box (hardware wallet) and that key box has a lock on it (seed phrase) with a blank key. When they send it to you, there is nothing of value in the box, and the key to the key box is blank, so the manufacturer of the key box could never give someone a key to your keybox because it hasn't been cut yet. During setup of the hardware wallet, you cut the key to the wallet. Meaning that you are the only one in possession of that key.
You now have a key box (wallet) that only you have a key to. NOW you can start putting the keys to the cars (your crypto) in the key box. The cars are out on the lot, and unless you have the keys to the cars, along with the car, they are safe. Each car (crypto address) has it's own key. So unless you have the right key, for the right car, you can't unlock it and steal the car (crypto).
Now imagine that the cars are invisible, and that the owner of the dealership takes the locked key box home with him and no one knows where he lives....and he's got the only key to the key box. That's self custody. If he leaves the key box at the dealership with it unlocked....he is trusting the salesmen with the keys to all the cars. That's what happens when your crypto is on an exchange. If every goes well, all is fine....unless your salesman is SBF and he decides to give the car keys away to his friends. Not your keys, not your crypto.
Okay you seem knowledgeable, great comment. I’m wondering, this 24 word phrase, accesses an address right ? And anyone can randomly create one at any time and then put money on this address it seems. So this address is already there existing somewhere in the chain ? Like a house that hasn’t been sold, but now you’ve bought it and moved in once you create and enter your key? It also doesn’t seem like that many words for it to be impossible for someone to guess. I don’t know. Or it’s created when you enter that phrase ?
Hi, thanks for your efforts in explaining all these stuff to easily be understandable. I'm newbie to the crypto and I want more clarification.
What make hardware wallet different from software wallet cuz they are basically the same as the 24 words is the key to wallet?
The hardware wallet will be meaningless if someone found our 24 seed phases, cuz they can access to our wallet online anyway?
or does the hardware wallet actually function as a disconnector between our seed phases and the cloud after finishing the wallet setup?
Or maybe the hardware wallet limits the number of devices even if they got the seed phases?
I can't distinguish between the two so far, could you help explaining more clearly?
Thanks mate
Wrong.
The 2mb storage is to allow you to install apps on to it. You need an app to allow it to recognise a certain type of crypto. The cheaper ones have less memory so you can only install up to 6 or so different apps therefore 6 different types of coin. This one allows you to manage up to about 100 coins. The memory isn't to store the 24 word phrases.
can I use it for bainace and bitso?
Great video! Thank you for the detailed information!
That was a great breakdown. Thanks so much!
Excellent video thanks
How to set it up?
Can it connect to both a computer or/and a phone? A cabled connection or by Bluetooth or by both?
@1:26 Gestures wildly saying “on the cloud” … 🤣👍🏼 … just like everyone does.
Lol.... distributed ledger that self verifies. =D
Everything is on the blockchain. Your crypto doesn’t reside on the wallet. If your passphrase is compromised your hardware wallet is worthless.
really.. then what's the use of hardware wallet
Then what’s the point of the wallet?
@@jennycasey7297 are you asking about a hot or cold wallet?
@@davidm8405 I guess I don’t know. I use robinhood and ima just keep my coins there. I doubt robinhood will go anywhere anytime soon
The hardware wallet holds your private key. Not your crypto
Been thinking about getting one of these thanks for the advice!
Ledger’s software is not very user friendly at times. User beware. There are some occasional stupid design decisions in their UI.
No prob! It was a mystery to me before using it.
each to their own (as it should be). why not just write your seed phrases of all your wallets in a notepad. then encrypt the file in a container . and encrypt as many times you want containers into containers (like Russian dolls) - and then put on any usb and hide it ? chances someone even knows what the encrypted file hidden in (limitless) containers is next to none. Thanks for the video tho :)
So what is the differents between the 24 words on paper compared to a paper wallet ?
Good video Francis
Thanks!
So hardware wallet is basically a Key for our Cloud asset that help us access it without logging in input phrase etc on such metamask or any wallet? And the masterkey is the Word manually written in paper or somewhere?
Thank You, Very informative.
So is your key stored on the wallet or the coins itself?
Just the keys
So if your cold wallet only stores your keys and it has its own keys that you have to store somewhere, then how is it different than having hot wallet and storing its keys ?
Your laptop/computer can be hacked/keylogged. So if you ever enter you password for your hot wallet/seed phrase you can be hacked. Also you're trusting the company of that software that their software is secure. Hard wallet is 100% as secure as you make it.
Hot wallets are connected to the internet. Thus, increasing the risk of getting hacked by an order of magnitude.
You’re the only one with the key
Because it's a device disconnected from the network and power grid. A self contained safe house for your key that not a single person can access unless they're physically holding a gun to your head.
I bought a ledger on ebay back in 2017 to keep my bitcoin on. Looking back now that was a stupid thing to do. But I haven't had any issues with it.
Why was it stupid?
@_KT5 I bought a ledger from an unknown source on ebay. Who know what they could have done to it.
Thank you
1:20 Who makes them?
Will this protect my crypro from an exchange going under? And does it still make money if i take ot off an exchange like coinbase?
yes and yes
Are you allowed to take it to amazon fresh ?
Yes.
so it basically holds your seedphrase lol
i just bought one yet i can buy sell and move crypto while nano x is off
why did i buy this and whats the point of ever putting it on ?
So how is a hardware wallet any better than just writing your private key down on a piece of paper if you're writing your 24 seed on a piece of paper anyway?
Good Question
Can a hardware wallet be used to purchase things with Bitcoin if I don't own a cell phone?
but if you can use it from the app, then does it not become an online wallet?
No it requires connection to the device every time.
2024. Ledger asked all users to Update versions their COLD wallet otherwise u cannot use it.
How is that cold? When THEY know ur keys and how much you have.
Just wanted to say that the main hero in squid games looks like you!
Don't watch those
Ha! Everybody watched squid games. Including myself.
That’s racist
@@philipkaas shut up man watch the video
@@indianumberonecountry but it is
Okay, excellent. This, I never understood fully. Thank you so much. This is my issue at present: I have Cardano staked on Yoroi, some Elrond staked on Maier, and some Harmony Staked from their chrome browser extension. I recently purchased a nano X and a nano S for the harmony. (The x doesn’t support)
How do I use my hardware wallets and keep staking? Do I need to move everything from the online wallets? I’m just not sure how to make this transition.
How do you know the 12 words it generates does not belong to someone else? Thanks
it's a matter of probability, chance is 1/2^256, watch andreas antanopolous about it.
It's actually 24 words. The number of combinations has digits as long as 10x this comment. While it can happen, the likelihood is ridiculously small.
Can you transfer funds to your bank account once it’s on the hardware wallet?
You need 3rd party apps or exchange , not directly to Banks .
Do you know if these can these only store crypto, or can it also store NFTs etc?
Super helpful! I can tell that you actually know how this works compared to some other RUclipsrs lol.
=D
Just woow Explaination for Beginners ;)
Thank you, very informative. What I need to know is how much is the fee for withdrawing your crypto from Ledger. I have a software wallet and found that the fees are very high for transferring crypto out of the wallet.
Fees are free from ledger. But what your referring to are ¿😕🤔 Transfer fees (gas) that depend on transfer speed . Very cheap as I remember .
I do not see any reason to use a hardware wallet. Just remember your worlds thats it. İmport it to metamask use delete. What will be the benefit of this wallet?
Great video but being new to crypto I have a question. Does my crypto still earn while it’s safe in the wallet? Or, does that mean I’ve taken it offline and now it sits there not making me money? If the answer is “No it doesn’t earn” then why would I want to lock up my assets? Obviously the point of investing is to make gains. Please help. Thanks
What kind of crypto do you own? It would still appreciate in value regardless of where it is. If you put 1 btc onto a hardware wallet and withdraw it in 10 years, your 1 btc will be worth whatever btc is worth in 10 years. The benefit of putting it onto a hardware wallet is to take it off of an exchange where it could be hacked or possibly withheld from you.
@@Michael-xb5zq I own XRP, XLM, Algorand, ETH and CRO.
Thanks for answering this. This was never explained in all the videos I had searched regarding hardware wallets.
When you buy a house, the house appreciates or depreciates in value according to it's value in the current economy (determined by demand/supply). It does not need to be for sale to change in value, it just needs to exist and be yours., and you can sell it when you want. Same with BTC, whether it's in an exchange or a cold wallet. If it is bitcoin, it has the value of bitcoin, no matter how it is stored.
@Michael-xb5zq thanks. I have been wondering that myself!
Credsticks were once sci-fi, and now a reality. How long will it take for this to transition from techy to normalized to being required?
With transactions getting much cheaper, it might even be preferred to avoid the bank fees.
I don't understand this stuff at all. But I've won a hardware wallet at a crypto info day. So now, I'm trying to decide whether to keep the thing or sell it on eBay. 🙂
good vid
ThX!
If all you need is the 12 word key, then why do you need the wallet? Just key into the blockchain no? Thanks
If you put your seed phrase on a public blockchain it will be public data and someone will steal it.
There is a thing in cryptography as public and private key. Private key gives you access. Public key can be seen by all and not compromise your access.
To my knowledge, Keystone is the best wallet for anti-blind signing. After all, it has a 4-inch display lol.
The hardware wallet thing is still a bit confusing to me, but it is interesting
All it does is keep your secrets in a more secure environment and provide software support if you decide to use their software.
It still is. I suppose one have to learn about cryptography to really dig deep. At least private and public keysl.
So essentially the fancy security of this hardware wallet is no more secure than a paper wallet considering the 24 word recovery phrase grants access to the actual stored currency. The weakest point of failure is your level of security.
The risk of a paper wallet is if you don’t save the change address private key and do a partial spend you could lose your funds.
Some recommend a metal wallet that doesn't burn. Of course you store the 24 phrase in a safe place. Safety deposit box. A safe, etc.
Where can I buy this ledger hardware wallet
Link in vid description.
We buy bitcoin and we are fast and reliable
I am just afraid I'll lose crypto and money doing these transfers. I already lost money transfering money from coinbase to coinbase wallet by following instructions on YT video, it did send money to the coinbase wallet but when I tried to book it back to coinbase, the money never arrived. Turned out the address I copied on clipboard was different than address for my coinbase account. I now understand that you can put in a receive money request and copy the address it shows you on the crypto you are using.. Also to use ledger I think you have to use the coinbase wallet, which for me converts my local currency (euro) automatically into dollars..
Bullets on screen are always nice, maybe time stamped talking points. So we can get the value we are here for, leave a like and subscribe for making that Easy for us, and get onto the next thing.
I did like and sub and comment anyways because I appreciate you posting it.
I didn’t even know this existed
Because of this device, I'm ready to go and spend some dogecoin for the first time. But now to find someone that will accept it.
My question is if you transfer your crypto to that wallet does it sit at the price you transferred it or does it move with the market?
Imagine if you bought a rolex. A really rare one that appreciates over time. If you placed the rolex in a safe and the market moves up. Your rolex moves up in price with the market value.
One would only realize the fiat (eg: $) value of their crypto, once they sell the crypto for the fiat - presumably that is sold at the market rate.. During when crypto is held and not sold, it could be valued according to anything at any time (market rate or not; and if you want to choose market rate, whose exchange’s market rate would you chose? They are all often slightly different at any moment ), as its value then is just “on paper” (theoretical, because it hasn’t actually been sold yet). Same dynamic for anything else (eg: a house).
Can someone help me with something please?
Crypto currency goes up and down. Does that record on the key too?
It will update once connected to Blockchain
I will advice you sall your bitcoin now it early due to market crisis and I know the company that buys bitcoin the price you bought it when it was high
Cool 😎 thanks 🙏 bro
=D
God the amount of spam crypto comments I’ve seen on RUclips is unreal. There can’t possibly be people out there stupid enough to message someone about investing while browsing RUclips???? With thousands of videos on how to do this exact thing?????
yes it's ridicilous, like 50% off all comments are spam-bot-scammers. Just report the main comment when you see them as Spam, and they all should disappear.
It's pretty bad but I try to delete as many as possible.
Cool vid. I’m still a bit confused though how you transfer the money from the exchange into the wallet. So not only is there a fee to buy Bitcoin on an exchange but also to transfer it into a wallet?
The exchange, i.e. coinbase or robinhood, needs to support a wallet address. So it's basically moving from one wallet into this thing.
Well if there is a check mark then he’ll yeah it’s legit! Jk. Good video. Still scared to send anything from my Coinbase lol
Very informative video! Can you make a duplicate backup copy the first hardware wallet into a new, blank second hardware wallet, in case the first wallet has a hardware failure?
If there is a catastrophic event and the crypto network is down indefinitely, how do coin owners recover their coins?
You can have a second hardware wallet so you can important your assets immediately after losing the first. If you have second before losing the first, you'll end up importing the assets into the second wallet with nothing in the first.
I haven't looked at the corner case of "if all copies of ledgers are lost" then what happens. This is unlikely since the ledger (the accounting of the coins, not this physical device) is duplicated many times across the network. If a number of computers are down, one can still have a copy of the ledger.
@@BeatTheBush Thanks for the clarification about the duplicate hardware wallet. If there is a catastrophic WW3 and the crypto networks are not functional for an extended period then it may be difficult to recover the coins in the aftermath, unless the networks can recover and be operational again just like where they left off before the catastrophe.
@@ytviewer172 I think what BeatTheBush is calling the ledger is what others call the blockchain. Although I am not an expert, my understanding is that the blockchain is a complete list of all crypto transactions that have taken place. Each transaction on the list is verified by and then stored by multiple different servers at various locations within the network. This may be thousands or tens of thousands of servers (maybe even millions) around the world since crypto currency is world wide.
If 90% of all servers that contain the blockchain were wiped out at the same time, the information is still stored somewhere on the other 10% of the original servers. Most of the infrastructure around the globe would probably be in ruins and therefore accessing the remaining 10% of the servers would probably be nearly impossible until the required infrastructure was rebuilt.
I think if ever there was a catastrophic event that bad, we would all be in survival mode and nobody would probably be using crypto for anything for quite some time. We would probably be bartering real goods and services for for necessities to survive.
so all it is its a usb with a notepad file containing your keys and phrases.....but a bit more secure
so basically a usb drive with a pin code??
Yes, encrypted USB drive. That's what any hardware wallet is in essence.
you can install about 50 apps max :(
is it possible that ledger itself steal our crypto since they created the wallet and they know everything about it and they may even know the key words since they give you the words.
Just like how liberty safes gave the FBI an override code for one of the safes they sold and everyone I knew that had one didn't feel secure anymore.
So if you lose the wallet you lose your coin on the blockchain? I’m confused
You don’t lose your coins, you just can never access them again. You lose all the private keys if you lose your seed phrase.
@@martinlutherkingjr.5582
Right which is the same thing as losing your coins, boneheaded answer imo
@@andrem1238 Actually, there aren’t any coins, it’s just a ledger.
@@martinlutherkingjr.5582 IN PRACTICE, that means losing your coins
If you lose your wallet, hopefully you still have the 24 word recovery phrase in a safe place somewhere. If you have that, you do not lose your access to your coins.
Are you buying shiba inu? Can you make video why you choose dogecoin over shiba inu as better investment than shiba inu your next video
Because one seems like a copy cat.
@@BeatTheBush shiba inu is a dog.
Shiba Inu is going to make a lot of people millionaires
So it is inferior to an encrypted USB, I see
Should we trust ledger the company? And why?
People trusted liberty safes and we know how that turned out. I would trust no one but maybe close family members.
uhhh, i just went to the bathroom and there was like 10 dudes smoking pot in there
No talk of hardware wallets?
I was wondering if your bitcoin will lose value, goes up and down, even if it’s in hardware wallet?
yes
Are you an electrical engineer?
Yes
So it’s a device that saves 12 words to it….
Thank you for your video!
It was very helpful.
(But don’t trust any crypto like dogee. Everything is Bitcoin)
I use Exodus for Bitcoin, Tether, Ethereum and Litecoin. And I am thinking about buying a Ledger for Bitcoin.
Interesting where hardware wallets will go as cryptos get more popular.
My favorite Asian
=D
This aged well ... 🥴
A lot of dogecoin? This guy got rich
Not really. It goes up and down A LOT.
I wouldn't use Ledger wallet even if it's free. Do your investigation.
Did you say 10k Bitcoin in a hardware wallet? No one has 10k Bitcoin would put it in a hardware wallet lol
Quite possible an early HODLer could be using it for storing 1 of 7 keys in a multisig.
@@martinlutherkingjr.5582 true
Lol... ONE bitcoin then. =D
So what I’m understanding is the company that produces the hardware wallet could easily have a data breach with your recovery phrase and then you can have all your crypto stolen?
Unless you have a compromised device the secrets should not be transmitted to ledger.
Ledger does not have your 24 word recovery phrase and they tell you never send it to them either.
@@BeatTheBush Ok but when they send you the replacement how do they install the recovery key? Or do you do that yourself from the recovery phrase?
@@markm0000 yourself
@@markm0000 the recovery key is generated by the device itself (once you turn it on).No one knows your private key unless the device is tampered before hand. This is what is important getting a genuine hard wallet
Did I hear that this man was a Dogecoin whale back in 2021? How did that work out sir?
Meh, I survive. Comedy vid coming tomorrow
Thank you for all the 411 with out all the BS neighbor.
Many companies exchanges etc are insolvent and going through problems. The biggest problem is that as a customer you can't take your money away. So you don't have to make any videos anymore when customers lose their money to these defaulting institutions. CEO FTX already says that many more tear 3 exchanges are going to collapse and people will lose their money. Focus your videos on that. Because losing your money is negative advertising for crypto. And people are already cautious. So stop with videos and find out which exchanges are at risk first.
he even doesn't know what he's saying
HORRIBLE EXPLAINATION!!! YOUR THOUGHTS WERE JUMBLED AND ALL OVER THE PLACE!!! 👎🏽👎🏽👎🏽
Noted, will make it more concise next time.
@@BeatTheBush Ignore him, your video was amazing :) Malaking is braindead to not understand what you're saying lmao
It works like a toilet. But you get to flush your dollars into it 💵
Thank you