A Hardware Wallet is a special type of Bitcoin Wallet which stores the user’s private keys in a secure hardware device.
They have major advantages over standard software or hot wallets:
- Private keys are often stored in a protected area of a micro controller, and cannot be transferred out of the device in plain text
- Immune to computer viruses that steal from software wallets
- Can be used securely and interactively, as opposed to a paper wallet which must be imported to software at some point
- Much of the time, the software is open source, allowing a user to validate the entire operation of the device