What is an Air-Gapped Wallet?
An air-gapped wallet is a type of digital wallet that is not connected to the internet or any form of wireless communication. This type of wallet remains disconnected from various forms of data sharing methods such as NFC, Bluetooth, and USB drives.
The title of this type of digital wallet suggests that it does not have any installed systems to remain connected to any type of data transmission channels. This type of digital wallet design is used as a prevention and safety measure against hack attempts and cyber-attacks.
How does Air-Gapped Wallet Work?
Air-gapped wallets allow investors to store their digital currency reserves away from the reach of any online user. However, these wallets can use methods such as QR codes and micro-SD cards to transfer data and digital reserves from one place to another. They are computer-based software applications with Partially Signed Bitcoin Transactions or PSBTs.
In this manner, air-gapped wallets can make transactions with other PSBT devices to trade different types of digital currencies. Here are some steps involved in a BTC air-gapped wallet transaction:
In the first phase, the investor has to create an air-gapped wallet. This wallet does not have private key of the user since it is partially signed. When the investor makes a PSBT transaction, it contains all transaction details but instead of the digital signature it is signed by private key.
The air-gapped wallet scans a QR code to confirm a transaction. Another way to confirm and record a transaction is saving file on a micro-SD card. The wallet uses private keys to sign the off-line transactions. This wallet is not connected to internet or any other type of wireless communication to keep the private keys safe.
A fully-signed transaction can be sent to online devices using micro-SD cards. Online devices can update signed transactions on the blockchain. In this manner, the transaction records are verified by miners.
Classification of Air-Gapped Wallets
Here are some common types of air-gapped transactions:
Hardware Wallets
Air-gapped wallets can be present in the form of hardware devices such as USBs. These wallets allow investors to store private keys in an offline manner. In this manner, the wallet users are able to make transactions without revealing their private keys in an online setup.
Some hardware wallets can have digital screen that display transaction details and allow users to confirm transactions using manual verification methods.
Personal Computers
In some instances, investors are able to use personal computers as an air-gapped wallet. This PC is not connected to the internet and used for the purpose of storing private keys and signing transactions. Users can transfer signed and unsigned transactions on the system can be transferred from one device to another using USBs.
Smartphones
Another device that can be converted into an air-gapped wallet is smartphone. The user can employ the factory reset method and refrain from connecting to an active internet or Bluetooth connection. They can install the air-gapped wallet setup using SD card transfer or other methods. This process is complex and requires advanced technical skills for implementation.
Limitations of Air-Gapped Wallets
Air-gapped wallets are very secure because it is not connected to any form of wireless communication. In this manner, it is virtually impossible for a hacker to access the wallet reserves. Furthermore, no one can detect vulnerabilities or point of interception in this type of wallet account.
However, the user can be exposed to virus transfers from USB devices or SD-cards. This can take place while the device uses USB port for charging or installing app updates.
Another issue with air-gapped wallets is protection against theft, damage, and loss. Therefore, the users should make backups to store their private keys and security details to ensure best protection against such risks.
Furthermore, this type of wallet is not commonly used since it requires a considerable amount of technical skills and knowledge to navigate.
Conclusion
There are many variants of air-gapped wallets on the internet. However, investors can pick the best options based on factors such as issuer reviews, community feedback, user-ratings, device compatibility requirements, and reviews etc.
