Cryptocurrency adhering to blockchain technology offers robust security and is one of the main reasons for increasing investment in the platform. The huge popularity of cryptocurrency in recent years has necessitated securing assets more than ever.
To meet the security standards along with the growing demand, the crypto world has been introduced to a hardware wallet system, popularly known as a ledger crypto wallet.
This article features more details about ledger crypto wallets including their features, how to use them, and more.
What is a ledger crypto wallet?
Ledger crypto wallets are hardware wallets or physical devices that securely store private keys in an offline space or more specifically within a chip inside a device. Storing the private keys in an offline environment protects the private keys from hackers even while transacting.
The ledger wallet was created by a Paris-based company, Ledger in 2014 by eight professionals with experience in cryptocurrency, embedded security, and entrepreneurship. Ledger Nano X, Ledger Nano S plus, and Ledger Stax are the three different ledger crypto wallets.
How does a ledger crypto wallet work?
The ledger crypto wallet protects the private keys from threats in an offline environment, eliminating the risk of hacking. All components of a ledger wallet including the operating system, embedded system, and Ledger Live app work together to ensure the security of the system.
Operating a ledger crypto wallet requires a connection to a separate device like a mobile or laptop to install its accompanying software. This software helps you make transactions when the hardware wallet fails to connect to the internet.
Advantages of using a ledger wallet
1. Security
Ledger wallet provides robust security. The offline storage of private keys reduces the possibility of hacking and prevents unauthorized transactions.
2. Supports Multiple Currencies
Ledger wallets allow transactions of different digital currencies providing flexibility to users with different currency portfolios.
3. User Control
Ledger crypto wallet reduces the dependence on third parties, giving users complete control over the private keys.
4. Recovery Seed
The recovery seed available in ledger wallet devices eases the backup and recovery. It reduces the risk associated with losing or hacking the wallet.
How to set up a new Ledger Wallet?
Buying a new ledger wallet device from the official website or retail seller prevents the chances of scams. After turning on the ledger wallet, the user gets a prompt message instructing to set up a PIN code and recovery password.
It is advised not to reveal the PIN code or recovery password to anyone. If you are facing any doubt regarding the setup, go to the official website of Ledger where you receive every instruction required for setting up the wallet.
Steps involved in processing a transaction using a ledger crypto wallet
1. Initialise the transaction using the Ledger Live app.
2. The software interface provides the intent.
3. The user confirms the transaction through the Ledger Live app, allowing the user to confirm the action physically through the hardware device.
4. The user authenticates the transaction using the hardware device.
5. The hardware wallet signs the transaction using the private key which is securely stored inside the device’s chip.
6. The hardware device sends the signed transaction to the network-connected device through Bluetooth or C port, which is then posted to the blockchain.
How does a ledger wallet ensure security?
A ledger wallet is one of the most secure crypto wallets. Let’s check the features that hold security in ledger wallets.
1. PIN Code
A ledger wallet is secured with a PIN code which is set during the initialization of the wallet. To make a transaction one needs to unlock the wallet, which is only possible by entering the PIN code. Only the user is allowed to know the PIN, ie only the user is allowed to conduct the transactions. This ensures security and eliminates the risk of theft and money looting.
2. Secure Element
All ledger wallet contains a ‘secure element’, a highly specialized chip used in credit cards and other security-requiring documents. These chips secure and conceal the data. It secures the private key, manages the signing process, prevents physical attacks, and keeps data to prove the crime.
3. Secure Screen
Ledger crypto wallet comprises a secure screen that has no internet connection. The screen allows a user to verify the details of the transaction before physically verifying them using two buttons. It eliminates the need to trust the internet-connected screen.
4. Operating System
The ledger crypto wallet has a secure operating system that ensures a separate operation of all the applications within a device, eliminating the chances of a single point of error. It necessitates physical confirmation for every crypto transaction. This prevents any person other than the user from accessing the account for regulating transactions.
5. Ledger Live
Ledger devices are connected to other devices through the Ledger live app which is already installed in the device. It allows a user to initiate the transaction and interact with the blockchain. Ledger Live grants permission to access the apps and services.
Different types of Ledger Wallets
Ledger has launched three products for individual retail crypto users, each with specific features.
1. Ledger Nano S
Ledger Nano S is the earlier model of the Ledger crypto wallet. The wallet has to be connected directly to the Ledger Live app to grant transactions. Ledger Nano S has comparatively low storage space than the other two models.
2. Nano X
Ledger Nano X was released in 2019 with a cost of $119 in retail. The built-in battery allows a wireless transaction from anywhere. It connects the Ledger Live app through Bluetooth. It has a licensed secure chip and stores more than 100 applications.
3. Ledger Stax
Ledger Stax is the newest wallet from Ledger, launched in 2023. It is similar to a tablet with an e-paper touchscreen display. The credit card size device’s lock screen can be customized to show nonfungible tokens. It supports more than 500 digital assets and NFTs. Ledger Stax can either be connected using Bluetooth or a USB C cable. The price of the new model is higher than the previous two models.
Limitations of Ledger Crypto Wallet
Though ledger crypto wallets are the most beneficial mode of crypto transaction, they have some limitations.
1. Design Complexity
Setting up a ledger wallet is complicated and challenging, especially for beginners. Though setting up details are available on official ledger websites, it can be overwhelming sometimes.
2. Cost
The cost of ledger crypto wallets is comparatively higher than programmed wallets.
3. Limited Interaction
Interaction of ledger wallets with decentralized apps is less in comparison with programmed wallets.
4. Physical Threat
Ledger wallets can be stolen, lost, or damaged. Clients should always pay attention to these wallets to safeguard them.
5. Updation
Ledger wallets can become outdated or come with new features, necessitating the client to buy a new one.
Final Thoughts
Ledger crypto wallets are hardware devices that are used to make crypto transactions. Using a ledger crypto wallet eliminates potential online hacks and safeguards the device from bugs. The device has to be connected to a mobile phone or laptop either through Bluetooth or a USB-C cable. A user has to install the Ledger Live app to initialize the transactions. The cost, setting up complexity, limited interaction, and physical threats are the main challenges faced by ledger crypto wallet users.