Whether you are using the ELLIPAL, Ledger, Trezor, or any other brands of a hardware wallet, there is an essential basic technical concept that you should understand. If you know this concept well, you will never fall to scammers or mistakenly lose your cryptocurrency.
What are Private Keys?
When you create a new account on any wallet - ELLIPAL, Ledger, Trezor, etc., the wallet will use your username, password, and random elements to generate your private key. This long string of numbers and letters is unique only to you, and the wallet uses this to derive your coin addresses (public key) and gives permission to send coins. Because the private key creates the wallet and allows access to the wallet, it is the most crucial information you will need to keep.
User's Input + Random Elements -> Private Key -> Public Key
Private Key = Creates and grants access to the wallet
Public Key = Your coin address derived from Private Key, can be shared with others
How to Keep Your Private Keys?
As the private key is the root of your wallet, you can use your private key to recover your wallet if you accidentally delete it. However, a raw private key is difficult to write down or remember, so mnemonics is created.
Mnemonics is a set of 12 or 24 words that are derived from the private key. It acts as a back up to your wallet and can be used on any wallet to recover your coins. The wallet will derive it for you and will only show it to you once. Use this chance to write it down on a piece of paper.
Anybody can steal your mnemonics and recover your coins on their wallet if you are not careful, so please be careful where you keep them.
What is the Hardware Wallet's Job?
Cryptocurrency theft mostly happens online, so hackers will not look to steal your mnemonics but instead take the private key itself inside the wallet you are using. If your wallet is an online mobile or PC wallet, it is straightforward to hack. It is better to use a device explicitly designed to secure your private keys like a hardware wallet.
A hardware wallet uses many security technologies to help you keep your wallet safe. For example, the ELLIPAL Titan hardware wallet can create a 100% offline environment for your private key, meaning nobody will be able to steal it.
If you hold a lot of cryptos, a hardware wallet can be an excellent investment and help you sleep well at night.
Hardware Wallet and Its App
Hardware Wallets are offline; therefore, it cannot perform transactions without help. Every hardware wallet is made to be paired with an App on mobile or PC. Because the App is online, it helps the hardware wallet carry out the transaction.
This explains the flow:
1) The user wishes to transact.
2) The user creates a transaction on the App
3) The App seeks confirmation from the hardware wallet.
4) The Hardware Wallet uses the private key to confirm the transaction.
5) Once approved, the App sends the transaction.
Different hardware wallets use various methods to confirm. However, the most vital point to understand is that the private key always stays safely inside the hardware wallet. Even during a transaction, the private key remains offline and never come into contact with the App. If your computer or mobile phone is hacked, your private key will still be safe.
What if The Hardware Wallet Broke or The App is Down?
Once your private key is generated, and your wallet is created, it is not bound to only one hardware wallet or App. If your hardware wallet is destroyed or if the App is down, your coins are still safe because you still have the private key. Use the same private key and create the same wallet again in a new hardware wallet.