What is a gap wallet?

Air-gapped wallets are a type of cryptocurrency wallet designed to be completely disconnected from the internet and any form of wireless communication.

Air-gapped wallets typically sign transactions offline and interact with online devices via QR codes or micro-SD cards.

Air-gapped wallets are generally considered more secure than other types of wallets.

However, air-gapped wallets are not foolproof and require users to assume a high level of responsibility. They are more suitable for those who hold large amounts of assets long-term.

What is an air-gapped wallet?

An air-gapped wallet is a cryptocurrency wallet designed to be completely disconnected from the internet and any form of wireless communication. The types of wireless connections isolated include Bluetooth, Wi-Fi, NFC (Near Field Communication), and sometimes even USB drives.

The term “air-gapped” comes from leaving a physical “air gap” between the wallet device and any online network or wireless communication, providing an extra layer of security to prevent hacking and exploits.

How does an air-gapped wallet work?

To stay disconnected from the internet and wireless communications while facilitating transactions, an air-gapped wallet relies on scannable QR codes or micro-SD cards, which are small removable storage devices that can store transaction data.

Air-gapped wallets usually use computer-based software applications that support partially signed Bitcoin transactions(PSBT) or other similar partially signed transactions for different cryptocurrencies.

Let’s see how an air-gapped wallet operates during a Bitcoin transaction.

Step 1: Create a Partially Signed Bitcoin Transaction(PSBT)

Typically, users initiate a transaction using a Bitcoin wallet on an online device, specifying the recipient’s Bitcoin address and the amount to send.

Since this online device does not hold the user’s private keys, it cannot fully sign the transaction. The partially signed Bitcoin transaction(PSBT) contains all transaction details except for the digital signatures signed by the user’s private key.

Step 2: Sign the Transaction

The unsigned transaction is transferred to the user’s air-gapped wallet via scanning a QR code. The transaction can also be recorded and stored as a file readable by a micro-SD card.

The air-gapped wallet holds the private key and can sign the transaction offline. It’s important to note that the air-gapped wallet will never connect to the internet or wireless communication, which theoretically protects the private key’s security.

Step 3: Broadcast the Transaction

The fully signed transaction is transferred back to the online device via QR code or micro-SD card.

The online device then broadcasts the signed transaction to the Bitcoin network. The transaction is processed and confirmed by miners and recorded on the blockchain like any other transaction.

Types of air-gapped wallets

Air-gapped wallets can take various forms, but the following are the most common.

Air-gapped hardware wallets

These are dedicated hardware devices designed for offline storage of private keys. These wallets can facilitate transactions without exposing the private key to online environments or wireless communications.

They typically feature a digital screen (to display transaction information) and physical or touch buttons (to manually approve transactions).

Air-gapped computers

Users can also use an entire computer as an air-gapped wallet. This computer usually never connects to the internet and is dedicated to storing private keys and signing transactions.

Unsigned transactions are typically transferred via USB flash drive to the air-gapped computer, and signed transactions are transferred out in the same way. This method can be more complex and requires higher technical skills.

Air-gapped smartphones

Similar to air-gapped computers, smartphones can also serve as air-gapped wallets. The phone can be factory reset offline. Wallet software is installed via SD card or similar methods. This approach is also complex and requires advanced technical knowledge.

Differences between air-gapped wallets and other wallet types

To better understand air-gapped wallets, it’s helpful to compare them with other wallet types.

Wallets can be classified in various ways; here, we look at the similarities and differences between air-gapped wallets and other categories.

Classification based on network connectivity

Hot wallets

Hot wallets are those connected to the internet in any way. They are easy to set up, allow quick access to funds, and are convenient for traders and high-frequency users.

Cold wallets

Cold wallets are completely disconnected from the internet, using physical media to store keys offline, making them a safer choice for storing cryptocurrencies. This method is also called “cold storage” and is ideal for long-term investors or “holders.”

An air-gapped wallet is a special type of cold wallet, but not all cold wallets are necessarily air-gapped.

Classification based on physical form

Hardware wallets

Hardware wallets are physical devices that can store private keys offline. They are cold wallets and offer higher security. They are typically used for long-term storage of large amounts of cryptocurrency.

Software wallets

Software wallets are programs or applications installed on computers or smartphones. They usually connect to the internet and are therefore hot wallets. This category includes web wallets, desktop wallets, and mobile wallets.

Paper wallets

Paper wallets are essentially QR codes printed on paper, containing the cryptocurrency address and private key. Transactions are conducted by scanning these QR codes.

An air-gapped wallet is a type of hardware wallet, but not all hardware wallets are air-gapped. Technically, paper wallets can be considered air-gapped, but using a paper wallet for transactions usually requires importing the private key into software wallets, which breaks the “air gap.”

Classification based on control over private keys

Custodial wallets

In custodial wallets, the private keys are controlled by a third party (e.g., a trading platform). They are generally easier to use but carry much higher risks than non-custodial wallets because the holder relies on the third party to secure their cryptocurrencies.

Non-custodial wallets

Users have full control over their private keys. These wallets allow users to fully control their cryptocurrencies without involving any third party. Most desktop, mobile, and hardware wallets fall into this category.

An air-gapped wallet is a non-custodial wallet, but not all non-custodial wallets are air-gapped.

Differences between air-gapped wallets and hardware wallets

While an air-gapped wallet is a type of hardware wallet, there are some significant differences.

Connection to the internet

Air-gapped wallets never connect to the internet. As mentioned above, they perform transactions by ensuring the private key remains offline at all times.

Hardware wallets can also store keys offline but typically connect to an online device to sign transactions. They are designed to keep private keys stored inside the hardware at all times, but during transaction signing, they do connect to an online device.

User experience

Air-gapped wallets may require more steps to complete a transaction, whereas hardware wallets often have a simpler, more direct signing process because they are designed for direct connection with online devices.

However, if used properly, hardware wallets can still provide high security because, by design, they keep private keys isolated even when connected to a device.

Both air-gapped and hardware wallets offer high security by keeping private keys offline, but air-gapped wallets take it further by strictly isolating devices from internet-connected systems.

Are air-gapped wallets safer?

The crypto community generally considers air-gapped wallets to be more secure than other wallet types.

This security advantage stems from the fact that air-gapped wallets are created and used on devices that have never connected to the internet, thus isolating them from network threats such as hacking, phishing, and malware.

Storing private keys on completely offline devices makes it much harder for malicious actors to steal private keys without physical access to the device.

Risks and limitations of air-gapped wallets

While highly secure, air-gapped wallets are not infallible and can still have potential vulnerabilities. If a user accidentally connects the air-gapped device to the internet or if malware is introduced via USB (some air-gapped wallets use USB for charging and updates) or any other medium, the device’s security can be compromised.

Maintaining physical security to prevent theft, damage, or loss of the device is also challenging. Users should follow best practices for securely backing up their keys and protecting themselves from such risks. Proper and diligent use of an air-gapped wallet also requires a high level of technical expertise.

Choosing the right air-gapped wallet

Cryptocurrency holders considering investing in an air-gapped wallet should consider the following factors before selecting a device:

Compatibility

Ensure the wallet supports the cryptocurrencies you intend to store. Different wallets may support different cryptocurrencies—some are designed only for Bitcoin. Check whether the wallet supports your desired cryptocurrencies before making a decision.

Reputation and reviews

Research the wallet’s reputation and see what other users in the crypto community say on platforms like Twitter, Discord, and Reddit. Trust and support within the crypto community are key factors. Mature wallets with strong community backing are usually more reliable and less likely to have security flaws.

Developer community

Evaluate the development community behind the wallet on platforms like GitHub, and pay attention to ongoing updates. Active development indicates regular maintenance, bug fixes, and security improvements.

User experience

Consider the ease of use and user interface. Well-designed, intuitive interfaces make managing your funds more convenient and accessible.

Conclusion

Air-gapped wallets offer a high level of security for cryptocurrency users, especially those holding large amounts long-term. They protect private keys by storing them on devices that are never connected to the internet or any wireless communication, thus defending against online threats.

Despite their high security, air-gapped wallets are not completely foolproof and require users to take high responsibility. Maintaining the integrity of the air gap and ensuring physical security of the device are crucial to keeping it secure.

Not every user needs to use an air-gapped wallet. For frequent traders or those holding only small amounts of cryptocurrency, other wallet types may be more convenient. Ultimately, the choice of wallet depends on the user’s needs, risk tolerance, and ability to manage wallet security. **$BGSOL **$BGSC $BGTESTME