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The hardware wallet then signs the transaction internally using the private keys stored in its secure environment. It sends back the signed transaction to your device, which then broadcasts it to the blockchain network. Throughout this process, the private keys never leave the hardware device, significantly reducing exposure to online threats such as hacking or malware.
Additional Functionalities and Limitations
Some hardware wallets go beyond simple storage. They allow you to interact with web3 applications—such as decentralized finance (DeFi) platforms or NFT marketplaces—by signing contracts or transactions. However, this introduces a potential risk: if you unknowingly sign a malicious contract, attacker-controlled smart contracts could gain access to your assets.