There are several factors to consider when deciding whether you should use a hardware wallet to store cryptocurrency or choose another crypto storage option.
One of the first considerations is the value of the cryptocurrency you need to protect. Unlike most software wallets, a crypto hardware wallet requires an upfront purchase, typically costing around $60–$250 depending on the manufacturer and model. For someone holding a relatively small amount of cryptocurrency, the added cost and effort of purchasing and setting up a hardware wallet may not be necessary. In these situations, a reputable desktop or mobile self-custody wallet may be a more practical option.
A hardware wallet becomes more important to consider as the value of your cryptocurrency holdings increases. There is no specific dollar amount at which everyone should switch to a hardware wallet because the level of financial risk a person is comfortable accepting varies considerably. For one person, protecting $10,000 in cryptocurrency may justify purchasing a hardware wallet, while another may not consider one necessary until their holdings are worth $100,000 or more.
Hardware wallets are generally considered one of the safest ways to self-custody cryptocurrency because they are designed to keep the private keys used to access crypto funds isolated from internet-connected devices. This form of crypto storage is commonly referred to as cold storage.
However, using a hardware wallet does not eliminate every security risk. The user remains responsible for protecting the wallet's recovery seed phrase and other backup information. If the hardware wallet is lost, damaged, or stolen, the cryptocurrency can normally still be recovered using the seed phrase. If both access to the wallet and the recovery seed phrase are lost, however, the cryptocurrency may become permanently inaccessible.
For this reason, the security of a hardware wallet ultimately depends not only on the device itself, but also on how carefully the owner protects their seed phrase, private keys, backups, and physical access to the device.
