Educational information, not financial advice.
A hardware wallet keeps the private key on a small device that never shares it with your computer.
The flow
- Your computer builds an unsigned transaction as a psbt (BIP 174).
- The device shows amount, recipient and fee on its own screen.
- You confirm; the device signs and returns only the signature.
Protections inside
- Secure element: many devices store keys in a chip built to resist physical extraction.
- Air gap: some devices use QR codes or SD cards and never connect by USB.
- Own screen: malware on your computer can change what it shows, not what the device shows.
- Change verification: the device checks that change goes back to your own keys (BIP 32 paths).
What you must still do
Verify addresses on the device screen. Buy from the maker. Check firmware signatures. In multisig, use devices from different makers so one bug cannot take everything.