Hardware wallet refers to a specific kind of Bitcoin wallet that lets the user store his private keys within secure hardware devices. Unlike standard software wallets, the hardware wallet comes with a lot of beneficial features. The private key is stored in a well-protected area and cannot be easily transferred from the device. Moreover, it is also immune to viruses which are designed to steal from other software wallets. The software being open-source, the user is free to control all device operations. The wallet can be used in a secured manner, unlike the paper wallet which has to be imported to software for use.
The hardware wallet will have nearly all features of software wallet security as far as protecting it from physical thefts are concerned. However, hardware wallets are indeed high-value targets. They are many ways in which they can also fail to keep your Bitcoins safe and protected. So, it is important to assess the risks when you are deciding how much amount you should keep in it. For instance, the hardware wallet cannot stop you from getting tricked into sending Bitcoins to an incorrect address. So, when you are dealing in high stakes, it is recommended that you use multi-factor confirmation for a recipient’s address. The hardware wallet will depend on a Random Number Generator for generating the private key securely. But it is challenging to verify this number’s authenticity. An insecure RNG will create wallet keys which can be eventually rebuilt by attackers. Security for any device will entirely depend on how it has been implemented. So, when there are bugs at the hardware and software levels, attackers can easily break in.