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54 changes: 37 additions & 17 deletions guide/getting-started/hardware.md
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# Hardware overview

Generally, any hardware device that is connected to the Internet can interact with the Bitcoin network. While personal computers and smartphones work great for general wallet management and transactions, some dedicated hardware products are optimized for the nuances of Bitcoin. We’ll explore them and how they work here.
General purpose hardware, like personal computers and smartphones, work great for most basic Bitcoin operations. In some circumstances, dedicated hardware devices are optimized for the nuances of Bitcoin. We’ll explore them and how they work here.

## Physical backups

## Recovery phrase storage

Simple, cheap, and robust storage solutions for recovery phrases come in many forms.

[Seedplate](https://bitcoinseedbackup.com/){:target="_blank"}, is a metal plate that users can etch their recovery phrase into for long-term offline storage. For an even simpler solution, a piece of paper will do. Although paper is less durable and easy to lose, it is a strength of Bitcoin that such simple solutions are possible. See [Bitcoin backups]({{ '/guide/private-key-management/backups/' | relative_url }}) for more details.
Recovery phrases and other important recovery data such as descriptors are often backed up physically. Many simple, cheap, and robust physical backup solutions for Bitcoin exist.

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Many users back up their wallet using metal plates that have their recovery phrase etched into them. This protects the recovery phrase from physical destruction from fire and water. [Seedplate](https://seedplate.com/) is an example of such a product.

A simpler option is writing your recovery phrase on a piece of paper. Compared to steel, paper can be easily destroyed, making this option less secure.

Some applications such as [Muun](https://blog.muun.com/why-not-just-a-mnemonic/) have users print out encrypted PDF backups that contain all the required recovery data, not just the recovery phrase.

See [Bitcoin backups]({{ '/guide/private-key-management/backups/' | relative_url }}) for more details.

## Hardware wallets

You may already be familiar with key fobs from your bank or work. They are small devices with built-in authentication that is used to control and secure access to a computer system. Key fobs are not connected to the Internet or any other network, so they cannot easily be hacked.
You may already be familiar with physical security keys from your bank or work. They are small devices with built-in authentication that control and secure access to a device or service. Security keys are not connected to the Internet (air-gapped), or any other network so they are difficult to tamper with.

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Bitcoin hardware wallets play a similar role but with several noteworthy differences. Like key fobs, they securely store an authentication method and isolate it from the Internet, networks, and other devices. In bitcoin, these are the seed, associated keys, and functions that require interaction with them.
Bitcoin hardware wallets, also known as external signers, act like Bitcoin centric security keys. They isolate the recovery phrase and private keys from the internet and other devices.

Because hardware wallets are so optimized for this specific use case, they have tiny screens and limited input options. Most interactions with them happen via desktop software that the manufacturer provides. The application sends only specific requests to the hardware wallet to verify or sign data. This provides a strong balance of security and convenience.
Hardware wallets only exchange non-sensitive information with external devices. Sensitive processes, such as signing a transaction to open a Lightning network payment channel, happen on the device. Most interactions with hardware wallets happen via desktop [software, like wallets]({{ '/guide/getting-started/software/#wallets' | relative_url }}).

## Nodes

Tens of thousands of computers participate in the Bitcoin network. They are called [nodes]({{ '/guide/glossary/node/' | relative_url }}). Nodes exchange, verify, and compare block and transaction data.
Running your [own node]({{ '/guide/glossary/node/#self-hosted-node' | relative_url }}), instead of relying on a [third-party node]({{ '/guide/glossary/node/#third-party-node' | relative_url }}), lets you validate transactions on your own device. It also improves the privacy of your transaction and help secure the network. Several DIY and consumer hardware products make it easy to run your own node.
A node is a device that participates in a network. There are two types of nodes to understand: A Bitcoin node which participates in the Bitcoin network, and a Lightning node which participates in the Lightning network. For a deeper dive into what purpose these nodes serve check out the [technology primer]({{ '/guide/getting-started/technology-primer/' | relative_url }}).

{% include picture.html
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Dedicated node hardware is particularly relevant for heavy users of the Lightning network. While a bitcoin node can be turned off and on, Lightning nodes need to be online at all times to maintain payment channels with other nodes. Smartphones are typically online 24/7 but are not suited for this task due to large amounts of data transfer and storage capacity requirements.
It is quite common to have dedicated hardware to run Bitcoin [node software]({{ '/guide/getting-started/software/#nodes' | relative_url }}). This ensures your node stays in sync with the network and is regularly verifying the network rules, increasing Bitcoin’s security. Some node software also comes packaged with other third-party applications which may benefit from dedicated hardware and more regular uptime.

Lightning node software can be run on a smartphone. Though, this often comes with trusting a third-party for certain node functions such as payment path construction. For this reason, dedicated hardware Lightning nodes may be a better option for those who do not want a trust-minimized setup.

While [plug-and-play hardware nodes]({{ '/guide/glossary/node/#hardware-node' | relative_url }}) can solve various problems for bitcoin users, they have not seen widespread adoption as commercial products.
Heavy users of the Lightning Network, such as routing node operators, often run Lightning nodes on dedicated hardware. Lightning nodes require 24/7 uptime, which is much easier to achieve with dedicated hardware. Lightning nodes also require the private keys to be stored on the same device. Dedicated hardware reduces the attack surface and makes it easier to secure these keys.

## Miners
[Plug-and-play hardware nodes](https://samouraiwallet.com/nodl) exist and make it simple to set up a dedicated hardware node. The most common way people run dedicated hardware nodes is installing a node OS, like [Umbrel](https://getumbrel.com/) or [MyNode](https://mynodebtc.com/), on a hardware device.

Since Bitcoin's inception a multi-billion dollar industry has emerged around the mining of new bitcoins. Today, dedicated hardware (so-called ASICS, or application-specific integrated circuits) are optimized for continuously executing the Bitcoin hashing algorithm (called [SHA-256](https://en.wikipedia.org/wiki/SHA-2){:target="_blank"}) over and over until an acceptable hash is found. A modern miner (in 2020) can generate around 14,000,000,000,000 hashes per second. The more hashes generated, the higher that miner’s chance of “finding” a new block and receiving newly minted bitcoin as a reward.
See [nodes]({{ '/guide/glossary/node/' | relative_url }}) for more details.

## Mining hardware

Miners are the backbone of Bitcoin generating new blocks, which creates new bitcoin. Dedicated mining hardware, which runs dedicated [mining software]({{ '/guide/getting-started/software/#mining' | relative_url }}), exists for mining bitcoin. Various billion dollar industries have developed around the manufacture and deployment of such hardware.

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Outside of purchasing hardware, the main cost of mining is electricity. That’s why mining facilities are found wherever electricity is abundant and cheap, such as in Iceland (geothermal) or in China (hydroelectricity).
When Bitcoin was first launched back in 2009, mining hardware was mostly conducted by CPUs and GPUs. As the network grew in size, and the market around mining grew, more specialized and powerful hardware known as application-specific integrated circuits (ASICs) became the standard mining hardware.

Today, most Bitcoin miners are SHA-256 ASICs. They are optimized to continuously execute the SHA-256 hashing algorithm with the goal of finding a suitable hash and thus mining a new Bitcoin block. Modern miners (2021) are capable of producing 100 trillion hashes per second.

## ATMs

A Bitcoin ATM (Automated Teller Machine) allows users to purchase or sell bitcoin for cash or with debit cards. These machines are usually bound to local money transmitting laws and regulations, such as KYC (Know Your Customer) and AML (anti-money laundering) regulations. More on [Wikipedia](https://en.wikipedia.org/wiki/Bitcoin_ATM).
Bitcoin Automated Teller Machines (ATM) are a convenient way to buy or sell bitcoin using cash or card.

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Much like traditional ATMs, Bitcoin ATMs allow the deposit and withdrawal of money. Bitcoin ATMs however allow someone to deposit fiat currencies in exchange for bitcoin.

Modern Bitcoin ATMs take advantage of the Bitcoin Lightning network. This enables almost instant withdrawals and cheaper fees, which makes the purchase experience more friendly and cost effective.

Bitcoin ATMs are usually bound to local money transmission laws and regulations, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. More on [Wikipedia](https://en.wikipedia.org/wiki/Bitcoin_ATM).

You can find local ATMs using services like [coinatmradar](https://coinatmradar.com/).

---

Ready to learn more about [designing Bitcoin products]({{ '/guide/designing-products/introduction/' | relative_url }})?
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