The wallets are meant for managing your private key or better to manage your mnemonic phrase (in case of HD wallets). We are here analyzing how this is achieved in case of hardware wallets and the the differences with wallets installed on a laptop/desktop or a mobile device from a technical point of view.
Special protected memory area
In many hardware wallets and somehow in modern smartphones, the software can store private informations in a protected area of the memory. This is possible because of security chips specialized in such functions. In such a way the software can use the device to store cryptographic material inside this special memory area that cannot be accessed by other applications or require additional special authentications in order to do that.
In many hardware wallets and somehow in modern smartphones, the software can store private informations in a protected area of the memory. This is possible because of security chips specialized in such functions. In such a way the software can use the device to store cryptographic material inside this special memory area that cannot be accessed by other applications or require additional special authentications in order to do that.
This area is protected from all other applications and also from the operating system itself. It is also encrypted to avoid additional risks when the OS is down.
Many hardware wallets (the most of HD hardware wallets) have an equivalent chip. So this kind of device is therefore more secure for managing your key.
Smartphone wallets
Advantages in smartphone wallets:
- special storage for protected informations;
- easy to install;
- easy to carry and manage;
Disadvantages in smartphone wallets:
- easy to access by not authorized persons;
- many times smartphones are with a lot of insecure apps where the source is not known;
- problems in case of device lost;
- not good for long terms holding;
- wallets are normally with poorer features and functions;
Desktop/laptop wallets
In a laptop or desktop with a standard OS (like apple mac or windows for example) there is no equivalent special storage capability. So the wallet which is operating in a laptop or desktop keeps informations encrypted and when you try to access them, you are required to provide the passphrase to decrypt all informations which are on the hard drive and load them into memory.
When is decrypted, the information is sitting on the application’s memory which should be protected from other applications, but this is only if the OS is working correctly, configured correctly and not abused by virus or malware. Otherwise, infact, if the computer is compromised, malicious software can access the data stored into an application’s memory. And this obviously leads to big problems.
For these reasons using desktop wallet is very insecure. If you are planning to use a wallet with a desktop, you should use it together with an hardware device in order to have best results in terms of security. Moreover if your holdings are high.
Hardware wallet
Definitely using hardware wallet is more and more secure. Using an hardware wallet, however, implies that you are very diligent in making backup of your 24 words phrase and keeping it very carefully.
Using an hardware wallet making no backup or storing the backup wrongly will lead to risks for the security of your funds.
With an hardware wallet, the private key is held by the device and segregated inside. There is no sharing of the key out of device. When a signature is required by the software part of the wallet, the signature is performed inside the device and the already signed transaction is produced as output. This makes the wallet highly secure.
