What is a crypto hardware wallet?

When it comes to cryptoasset security, self custody is unquestionably the safest way to protect your digital assets.

Self custody simply refers to storing and securing of cryptoassets by yourself, rather than relying on a third-party to do it for you. More specifically, it means maintaining exclusive control over your crypto wallet’s private keys — a concept from cryptography that cryptocurrencies utilize.

One of the most effective ways to protect your private keys is to transfer your funds to a crypto hardware wallet — also known as a “cold wallet” solution.

A crypto hardware wallet is a physical device that stores the private keys used to access your cryptocurrency offline.

These devices typically look like USB sticks or key fobs and can be thought of as portable pocket vaults that digitally store the important information needed to access your crypto funds. 

Private keys

You may have come across the phrase “not your keys, not your crypto” before. This refers to who controls your private keys, which can be thought of as the PIN number to your bank account. 

When you hold cryptocurrency on a crypto or third-party platform managed by a company, the private keys to the wallet where those funds are stored are not held by you, but by the underlying company instead.

This means the custodial platform controls your crypto and you must place complete trust in the underlying company to properly secure your funds and prove that it maintains sufficient assets in reserve to cover any withdrawals you make at any time.

But even with the best security, keeping funds on custodial platforms is never advisable. Hardware wallets should always be used and offer the best possible security and protection against theft.

Most crypto wallets fall under the category of hot wallets. These include mobile wallets, desktop wallets and web-based wallet services. All of these are connected to the internet and store their respective private keys online.

This naturally presents a significant security risk. Keeping private keys stored online makes them potentially vulnerable to online hackers, as well as fraud and liquidity issues should the underlying service provider go bankrupt or disgruntled ex-employees attempt to steal funds. 

Cold wallets, on the other hand, are completely offline and only connect to the internet if and when the owner chooses to move funds onto or off of the device. No third-party trust is required. You remain solely in control of your funds in a hardware wallet, meaning you have 100% access to your funds at all times no matter what happens in the market.

To add or remove cryptocurrencies from your hardware wallet, you have to plug it into a computer or laptop and connect it to a hot wallet service or exchange.

If you have funds on the Kraken exchange and would like to know how to transfer those funds safely across to hardware wallet, such as Ledger, here’s a step-by-step guide.

Kraken to Ledger device
 

1. Using the Ledger Live mobile application, locate the asset you would like to withdraw from Kraken to your Ledge hardware device and click the “Receive” button.
    
2. Connect your hardware Ledger device to a computer and unlock it by entering your PIN number. Your Ledger device will synchronize with the Ledger Live app and show the new receive address for the chosen crypto asset on the screen.
    
3. Click “Verify.” The new receive address will appear on the Ledger Live app screen. Make sure both addresses are the same. If they are, click the “Copy address” icon.
    
4. Sign into your Kraken account and navigate over to the “Funding” tab > “Withdraw” and use the search bar to find the crypto asset you’re looking to move to your Ledger device.
    
5. Paste the receive address from your Ledger Live app into the withdrawal address box.
    
6. Finally, enter the amount of the chosen cryptocurrency you wish to send to your Ledger device and click the “Withdraw” button. A window will appear outlining the details of the transaction. If you’re satisfied with everything, click “Withdraw” again to confirm the transfer.
    
7. For clients who have two-factor authentication enabled on their Kraken accounts, you will be requested to enter a code from your authentication app before the transaction can be processed.
    

Kraken to Trezor device
 

1. Connect your Trezor hardware wallet to a computer and unlock the device.
    
2. Visit the official Trezor website and download the desktop app or use the website suite (if you haven’t already).
    
3. Click on the “Accounts” tab and locate the cryptocurrency asset you’d like to move to the device.
    
4. Click the “Receive” button to generate a wallet address > “Show full address” and confirm the address matches the address that appears on your Trezor device screen.
    
5. Copy the full address shown on the Trezor desktop app or website suite page.
    
6. Sign into your Kraken account and navigate over to the “Funding” tab > “Withdraw” and use the search bar to find the crypto asset you’re looking to move to your Trezor device.
    
7. Paste the receive address into the withdrawal address box.
    
8. Finally, enter the amount of the chosen cryptocurrency you wish to send to your Trezor device and click the “Withdraw” button. A window will appear outlining the details of the transaction. If you’re satisfied with everything, click “Withdraw” again to confirm the transfer.
    
9. For clients who have two-factor authentication enabled on their Kraken accounts, you will be requested to enter a code from your authentication app before the transaction can be processed.

Now that you know how to keep your crypto safe, are you ready to take the next step on your crypto journey? Click the button below to buy crypto on Kraken today!