A hardware wallet is a special type of cryptocurrency which stores the user's private keys in a secure hardware device.
They have major advantages over standard software wallets:
- private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext
- immune to computer viruses that steal from software wallets
- can be used securely and interactively, private keys never need to touch potentially-vulnerable software
- much of the time, the software is open source, allowing a user to validate the entire operation of the device