Ledger is a brand of crypto hardware wallets. They were responsible for bringing the first hardware wallets to market.
In the years since Ledger’s debut, many other wallet makers have hit the scene. But the Ledger name is still synonymous with secure crypto hardware wallets. The company derives its name from blockchain technology. Understanding the question “what is a crypto ledger” sheds light on why the company chose this name.
What Is a Crypto Ledger?
The term “crypto ledger,” or simply ledger, refers to the public ledger of transactions recorded on the blockchain. These transactions are recorded in the form of Bitcoin addresses. Whenever someone makes a transaction on the Bitcoin blockchain or any other blockchain, the transaction is recorded in the blockchain ledger along with the relevant information. This includes the time the transaction occurred, the amount sent, the sender and recipient’s addresses, and the current number of network confirmations.
A new blockchain begins with something called a “genesis block.” This is a manufactured block to start things off because no transactions have occurred yet. From that point on, transactions are grouped into additional “blocks,” with each block being added to the one that came before it. Subsequent blocks form a “chain,” giving rise to the term blockchain. A blockchain is, therefore, a public ledger of transactions.
Ledger, the company, is a leader in the cryptocurrency hardware wallet space. In 2014, they released the first such wallet to the general public.
Recommended: Cryptocurrency 101: A Beginner’s Guide
How Does a Ledger Wallet Work?
First, a brief answer to the question “what is a cryptocurrency wallet”: Wallets are where people send and receive crypto. Hot wallets hold private keys online while cold wallets (such as hardware wallets) hold keys offline. Hot storage vs. cold storage in crypto is an important distinction to make.
Ledger wallets are designed for newer users. Getting started is rather easy. The wallets require a separate application, also made by Ledger, to work. This app, called Ledger Live, lets users interact with their hardware wallet on a desktop or laptop computer.
The display of a Ledger crypto wallet has two parts: the small screen on the device itself and the Ledger Live app on a computer or mobile device. Most users’ actions take place in the app, although pushing one or both small buttons on the device itself is required to confirm some actions, like sending transactions.
The buttons are also used to navigate between the different cryptocurrency wallets. Each wallet is referred to as its own app within Ledger Live. For each crypto they want to manage, users have to install the appropriate app first.
What Are the Different Types of Ledger Wallets in Crypto?
Ledger makes two different wallet types:
1. Ledger Nano S
2. Ledger Nano X
Ledger Nano S
The Nano S has become one of the more well-regarded crypto hardware wallets to date. That said, it only has enough memory for about three apps at a time. That means users who want to work with more than three cryptocurrencies will have to repeatedly uninstall and reinstall new apps.
For example, say someone holds Bitcoin, Litecoin, and Ethereum. If they also want to use Dogecoin, they will have to uninstall the Litecoin app and install the Dogecoin app. Any Litecoin balance will still be held on the wallet, but to access it and send transactions, the Litecoin app will need to be reinstalled, which would require uninstalling an existing app.
Apps for different cryptocurrencies take different amounts of memory, so the potential number of installed apps may be higher than three. While limited currencies can be managed at one time, the list of Ledger-supported crypto is 1,800 coins long.
Ledger Nano X
The Nano X is the newer, upgraded version of the Nano S. Both wallets work with the Ledger Live app, and function in generally the same manner. However, the Nano X has a few extra features and allows for the storage of many more crypto apps at once.
While the Nano S supports only 3-7 apps at a time, the Nano X supports up to 100. Ledger Nano X users can connect to the app via mobile devices as well, thanks to the Nano X’s Bluetooth compatibility.
The Nano X can also run off of battery power and connect to a mobile device via Bluetooth. All of these extra features and upgraded functionality help explain why someone might choose the more expensive Ledger Nano X over the Nano S.
Why Consider Getting a Ledger Wallet?
The biggest reason to consider getting a Ledger wallet is for the additional security. Holding crypto in a hardware wallet results in greater security for two main reasons:
1. Coins can be held offline in cold storage.
2. Private keys are held by the individual.
Holding coins in cold storage means the private keys aren’t connected to the internet, so there’s no way for hackers to access them. While a hardware wallet generally has to be connected to an internet-connected device to send transactions, when not doing so the wallet will be completely offline.
Holding the private keys yourself means there’s no need to trust a third-party like an exchange. If an exchange gets hacked, and there’s no insurance policy, then users could be left empty-handed. This might be why those who hold large sums of crypto choose to make the investment in a hardware wallet like those made by Ledger.
Let’s take a closer look at how hardware wallets, and wallets made by Ledger specifically, come with increased security for long-term storage of cryptocurrency.
Ledger Hardware Wallet Security
Ledger wallets come with the following security features:
1. 24-word backup recovery seed phrase
2. PIN
3. Certified Secure Element (CC EAL 5+) hardware
When setting up a new wallet, users have to create a PIN that will be used to access the wallet. A seed phrase is also provided.
This 24-word string can be used to restore the balances held on a wallet. It’s best to keep that phrase somewhere safe and never store it digitally. Anyone with access to the seed phrase can steal the private keys, and therefore the coins, from your wallet. The seed phrase and PIN come standard with most hardware wallets.
Ledger uses something called Secure Element chips. Chips like these are also used to protect credit cards, SIM cards and passports. Ledger wallets are certified as being secure by an independent third-party.
There are different degrees of Evaluation Assurance Level (EAL), and Ledger has achieved the level EAL 5+. There are only two levels higher than EAL 5. According to Ledger , they are the only company that makes hardware wallets that have earned this level of security certification.
The Takeaway
A Ledger wallet for digital currencies can be used to hold crypto in a more secure manner. Cold storage is considered to be the ultimate in blockchain security measures.
While hardware wallets like those made by Ledger come with increased security for crypto, they also require greater user responsibility. Using a hardware wallet means you hold the private keys to your crypto, rather than them being held on an exchange. If you make a mistake like losing your PIN and backup seed phrase, the crypto held on that wallet will be gone forever. There’s nothing that Ledger or anyone else will be able to do to help.
That’s why investors holding a small amount of crypto might not need a crypto wallet like Ledger. For some people, a trusted third-party custodian like an exchange might be the best option.
Photo credit: iStock/Free Life Design
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