Air-Gapped Bitcoin Wallets: What Are They and Should You Get One?

Air-gapped Bitcoin wallets take security to the next level by keeping your private keys completely offline. 

But unlike traditional hardware wallets that connect via USB or Bluetooth, air-gapped wallets use QR codes, NFC, or SD cards to sign transactions offline as well — minimizing exposure to online threats.

In this guide, you’ll learn what air-gapped Bitcoin wallets are, how they work, what types of air-gapped wallets exist, and why you should (probably) get one. 

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What Are Air-Gapped Bitcoin Wallets?

Air-gapped Bitcoin wallets are hardware wallets that never connect to the Internet or other networks to increase the security of your bitcoin.

As with typical Bitcoin hardware wallets, air-gapped wallets are also used to generate a seed phrase, derive and store private keys, and sign transactions. 

However, while “traditional” hardware wallets connect to your computer or other device via a USB cable or Bluetooth to complete transactions, air-gapped hardware wallets use SD cards, NFC, and/or QR codes to transfer information to your online devices without connecting to them directly. That means that when you sign transactions, both your hardware wallet and seed phrase remain completely offline before you then transfer the signed transaction to an internet connected device to broadcast it to the Bitcoin network. 

Air-gapped Bitcoin wallets are also considered helpful in increasing the security of multi-signature BTC wallet setups, as the signers of this type of transaction don’t need to be connected to a computer or each other over any sort of network.

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How Does a Bitcoin Air-Gapped Wallet Work?

Air-gapped Bitcoin wallets use Partially Signed Bitcoin Transactions (PSBTs) that are transferred via an SD card, NFC, or QR code to transfer transaction data without direct internet access. That way, your private keys remain offline, reducing potential attack vectors. 

Here’s how a bitcoin transaction works using an air-gapped wallet, step by step:

1. Create a transaction on an internet-connected device: You initiate a bitcoin transaction using a software wallet or another wallet device on your computer.
2. Transfer the unsigned transaction to the air-gapped wallet: This is done via an SD card, NFC, or QR code. Which functionalities are supported by this type of wallet depends on the manufacturer and the specific model.
3. Sign the transaction offline: The air-gapped wallet signs the transaction without ever connecting to the internet. This makes PBSTs an arguably safer method of sending bitcoin than “standard” bitcon transactions.
4. Transfer the signed transaction back: The signed transaction is moved back to an internet-connected device using the same method (SD card, NFC, or QR code).
5. Broadcast the transaction to the Bitcoin network: Finally, the signed transaction is sent to the blockchain for validation.

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Types of Air-Gapped Bitcoin Wallets

There are two main types of air-gapped Bitcoin wallets: pre-assembled, air-gapped hardware wallets and DIY air-gapped wallets. The latter can also be built by using a computer or mobile device.

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Pre-Assembled Air-Gapped Hardware Wallets

If you’re not too technically savvy or for any other reason don’t want to build your own wallet, air-gapped devices designed and manufactured by credible teams might be the easiest solution for you to start using this type of Bitcoin wallet. 

These devices will have buttons, a screen, and many other features that come with a usual hardware wallet. 

Do It Yourself (DIY) Air-Gapped Wallets 

While you can build your own unique air-gapped hardware wallet by buying all the needed components by yourself, some tech-savvy Bitcoiners are using their laptops or smartphones to build air-gapped wallets. 

However, using these devices means you’ll need to remove all possibility of them connecting to any type of network before installing the necessary software and starting to transfer transactions via an SD card or other methods. 

The idea behind DIY airgapped wallets is to not trust any third party, even hardware wallet manufacturers, with the initial build of the wallet and to be in sole control of all the components. However, this type of air-gapped wallet is definitely for more advanced users. 

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How Do Air-Gapped Wallets Enhance Security? 

Air-gapped wallets provide an extra layer of security when it comes to storing your bitcoin. Here’s how: 

Full Asset Control 

Because an air-gapped wallet only works in a self-custodial manner, meaning you have to know your seed phrase and have this on the air-gapped device itself, you’re automatically in complete control of your coins. 

There’s no need to trust a third-party custodian. Only you can determine what happens with your bitcoin. You can further advance the security of that setup by having multiple air-gapped wallets as part of a multi-signature wallet. 

Complete Offline Access 

The most significant security enhancement with air-gapped wallets is the complete offline access. While other hardware wallets and cold storage solutions are much better than having your funds on a hot wallet, they still connect to the Internet. This connection can be abused by hackers or attackers to obtain your seed phrase and potentially control your wallet. 

If you always have your seedphrase offline and never connected to the Internet, you reduce the risk of this. 

Enhanced Privacy

Using an air-gapped wallet, you are also directly in charge of managing your UTXOs. This is a much better privacy enhancement than relying on a third party to store and manage your coins. 

You can also prevent IP address leakage by not being connected to the Internet with your air-gapped wallet. That means your Bitcoin address can’t easily be associated with an IP address, making it harder to profile you. 

Lastly, you also minimize the creation of metadata, which can be linked to your bitcoin transactions, and prevent surveillance software from monitoring your wallet 24/7.

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Is an Air-Gapped Wallet Right For You?

An air-gapped Bitcoin wallet is a great storage solution to protect your coins from attacks associated with connecting your device to the Internet or other networks. 

Also, an air-gapped wallet is worth considering if you’re looking for a multi-signature setup where the signers don’t need to be connected to a computer or each other.

However, it’s worth remembering that no hardware wallet can guarantee protection from all types of attacks, as some vulnerabilities can be exploited regardless of whether it's an air-gapped wallet or not. 

If you decide to try an air-gapped wallet, be ready to learn a few new things, as this device is likely going to be more complicated than your regular, off-the-shelf hardware wallet. 

In either case, these wallets are growing in popularity while also becoming simpler to use and offering more functionalities. 

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Secure Your Bitcoin Through Self-Custody With The Bitcoin Way

Air-gapped wallets provide a great way to securely store your coins, but choosing the right one might not be easy for first-time users. You should choose it depending on your specific needs and what works best for you, while also creating a whole setup that would ensure the security of your bitcoin.

If you are looking for a more hands-on approach to improving your bitcoin self-custody, book an appointment with experts from The Bitcoin Way, and we’ll help with a solution that works best for you. 

Take control of your Bitcoin security—book a free 30-minute consultation with our experts today!

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FAQs

What is the best air-gapped crypto wallet?

While there’s no best air-gapped crypto wallet, you can look for criteria that are a must for a good air-gapped wallet. First, check if it’s completely air-gapped and not just offline, as many hardware wallets are. Also, bitcoin-only wallets are considered to be more secure. Next, check what methods of transferring a Partially Signed Bitcoin Transaction a wallet supports and whether it has what you need. Usually, it comes with an SD card, QR code, and NFC support, but not all wallets offer all these features. 

What happens if I lose my air-gapped wallet? 

It’s the same as losing any Bitcoin wallet. If you’ve secured your seed phrase, you should be able to recover your wallet from a new device or online wallet. So in that sense, air-gapped wallets don’t differ from other Bitcoin wallets. 

Are air-gapped wallets safe?

Air-gapped wallets are considered to be even safer when it comes to reducing risks associated with connecting your wallet to the Internet or any other network. However, none of the wallets can guarantee full protection from all types of attacks. Also, as these wallets require more technical knowledge, it might heighten the risks of human error.