Cryptocurrency has entered its second decade. Yet despite its many impressive achievements, the security and storing of the crypto assets still remain a hot question. There exist many storing options such as desktop wallets, paper wallets, cloud storage, hardware wallets, and so on. In all these types, hardware wallets are considered to be the safest option, yet reports also reveal that despite hardware wallets enjoy a high reputation, the hardware market has lost 1.7 Billion USD worth of cryptocurrency since 2017. This loophole demands a better solution, isn’t it? This demand brings us to a comparison between hardware wallets and a contesting crypto storing option- smart wallets.
So which one is safer- hardware wallet or the smart wallet?
To be able to compare the two appropriately, we need to have a proper understanding. So let us consider them one by one:
A brief summary that encompasses key elements of hardware wallets:
Hardware wallets comprise of small portable devices that work as USB, and it stores private keys and the information of your crypto funds. The funds are connected through a link to the wallet address and a private key, which acts as a security layer.
The Upside of hardware wallets:
- The private keys are encrypted in the hardware device and are saved offline.
- Whenever the user needs to access his or her funds, they can use it online.
- The hardware wallets are safer, even on an unsafe computer, due to their encrypted nature.
The Trezor and Ledger are the two key players in the market that have earned a strong reputation for offering reliable hardware wallets services.
- It uses a Zero Trust system that adds several layers of protection, as a defense against third-party manipulations.
- It is a single-purpose device, which means that there are no apps or downloads related to the hardware. This again renders this wallet to be a highly safe option.
- This one uses BOLOS, a unique operating system. This operating system is integrated into a- ‘EAL 5+ certified secure chip,’ which sits inside the Ledger wallet.
- It offers a tamper-resistant environment for important data and funds.
- The tight-security chip of Ledger hardware gives the hackers a hard time to scoop out any important information out of these chips.
The downside of hardware wallets:
Although hardware wallets offer strong layers of security, yet they fail to offer robust security. In addition, because these hardware wallets come with layers and layers of security as a defense against third-party manipulations, it adds another set of issues. Let’s look at the downsides of hardware wallets here:
- Hardware wallets can’t offer any restoration of your funds once you lose your hardware wallet device, and you lose the backup phrase.
- In cases where the private keys get compromised, the user can’t work around the situation and is forced to transfer the funds to an entirely new hardware wallet.
- The same layers also end up making it a process-heavy setup for the user to make any transactions. It demands the user a certain level of technical knowledge, which can be a put-off for a few users.
- The process-heavy setup nature of these wallets also makes them ‘not so easy to use’ wallets for everyday transactions.
- Another aspect that makes Trezor a little demanding hardware wallet is the fact that it requires- ‘MetaMask extension’ for the Chrome web browser, in order to allow the users to access his or her account, or to check funds, or to sign transactions, or to manage smart contracts and so on.
Smart wallets; and why they are better:
The above factors push us to search for some secure option. Thanks to God, there exist smart wallets as a rescue to our problems. The way smart wallets function is that they store the funds in a smart contract. This smart contract is secured on the blockchain ledger. The access to this blockchain requires a username and a password that allows the user to it from any mobile platform.
- Please note there is a distinction in the access- one the smart contract and the other is the blockchain address access. This point makes smart contracts highly safe and it also offers several useful functions to it.
- Smart contracts allow the users to raise the levels of the security mechanism as per their desire, which makes the funds- ‘loss-proof.’
- The user is always in full control of the private keys.
- Smart contracts offer ‘multiple accounts’ features with unique addresses and private keys.
- They offer the user to set spending caps, and the option to freeze funds at any point of time.
Why is Pillar a great option as a smart wallet?
Pillar’s main focus is to improve the security quotient in the crypto sphere, while still offering the user the ease and tension-free spending online. It is a smart choice to make as it offers a lot of beneficial features such as:
- Pillar offers a mobile app that comes with an ‘entirely end-to-end’ user experience, which is based on Pillar’s own smart contract.
- The smart contract of Pillar even allows the users to enjoy the benefits of both the hardware wallets and smart wallets. They allow the user to use the hardware wallet to manage the smart contract.
- The private keys are encrypted in a chip that stays in the users’ mobile. This multi-layer security feature offers robust safety.
While hardware wallets are strong options, we would say smart wallets are smarter options. Pillar is a great example that brings together the benefits of both the worlds and caters to today’s user, who is always on the go, needs easy access with tamper-proof security.