Hardware wallets are considered one of the safest ways to enhance the security of your crypto assets. However, they may not be the best option for everyone. In this article, we will take a closer look at the main disadvantages of hardware wallets.
- High cost
The disadvantage of hardware wallets compared to many hot wallets and software wallets is that they require an initial investment. Typical prices range from a few thousand yen to tens of thousands of yen, so it is important to choose a high-quality product if you want to prioritize security. This initial investment may be a big burden, especially for beginners who only hold a small amount of cryptocurrency.
- Low convenience
A hardware wallet is a physical device that requires you to connect the device every time you make a transaction. Hot wallets , on the other hand, are convenient because they can be accessed instantly from a smartphone or computer. For traders who trade frequently, the disadvantage of using a hardware wallet is that it can be cumbersome.
- Risk of physical damage or loss
Since hardware wallets are physical devices, they are at risk of being damaged or lost due to falls or water damage. For example, if the device is damaged by fire, water, or impact, you may not be able to access the crypto assets stored in the wallet. Also, without a recovery phrase, there is a risk of losing your assets completely in the event of loss.
- Difficulty in managing recovery phrases
When using a hardware wallet, a recovery phrase (usually 12 to 24 words) is generated. This is essential to recover your crypto assets in the event of device failure or loss, but it is very important to manage it. If the recovery phrase is leaked to a third party, there is a risk that your crypto assets may be illegally obtained. Also, if you lose your recovery phrase, you may not be able to access your crypto assets yourself.
- Technical support and setup hurdles
Setting up a hardware wallet requires a certain level of technical knowledge. For first-time users, setting up the device and managing recovery phrases can be complicated, and it can take time to fully understand the security measures. Another disadvantage is that support systems may be limited, meaning that immediate support may not be available when a problem occurs.
- Cryptocurrency and blockchain compatibility issues
Not all hardware wallets are compatible with all cryptocurrencies and blockchains. Especially when new tokens or protocols emerge, support may be delayed, which may result in the hassle of migrating to another wallet. This may reduce convenience.
- Risk of physical theft
Hardware wallets are physical devices and therefore subject to the risk of theft. This is especially true if you have family, friends, or cohabitants. If your device and recovery phrase are stolen, you risk losing all of your crypto assets.
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