A hardware wallet is a physical device specifically designed to securely store cryptocurrency private keys offline in cold storage. These USB-like devices (such as Ledger or Trezor) generate and store keys in an isolated chip that never exposes them to internet-connected computers, even when plugged in for transactions. Users confirm transactions by pressing physical buttons on the device, protecting against malware. They typically cost $50-200 and support multiple cryptocurrencies.
Example:
A trader stores Bitcoin, Ethereum, and various altcoins on a Ledger Nano X. When sending $10,000 in Bitcoin, they plug the device into their computer, enter a PIN, verify transaction details on the device's screen, and physically press a button to authorize. Even if their computer is infected with malware, the private keys never leave the hardware wallet's secure chip.