Ledger Hardware Wallet: Crypto’s Most Secure Self-Custody?

“Not your keys – not your crypto.” Hardware wallets are designed to keep both safely.

A ledger hard wallet standing strong and unharmed in the middle of a fully destroyed city, surrounded by fire and smoke.
Created by Gabor Kovacs from DailyCoin

One of the biggest drawcards to owning and using cryptocurrencies is having full autonomous control over your money. Traditionally, financial institutions and banks that hold people’s money have implemented a lot of limitations, controls, and constraints on how that cash can be used. 

But, if you hold Bitcoin in a wallet, nothing can stop you from spending, sending, or transacting in any manner you like – IF you hold your private key.

Many people will be holding cryptocurrency because of the freedom it offers them, not entirely aware that the coins and tokens they own are not actually theirs. Centralized exchanges and wallets operate a lot like banks in that they keep track of your money but don’t keep it for you.

The saying goes, “not your keys – not your crypto.” This is why you need self–custody and to think about getting a Ledger Hardware Wallet

What Is a Ledger Hardware Wallet?

A hardware wallet is a physical device that serves as a secure storage solution for your private crypto keys, ensuring they are kept in an offline environment, detached from any internet connection. By keeping your private keys offline, they are effectively safeguarded against online threats.

Ledger is one of the most recognizable names in the hardware wallet space. The company was launched in 2014 and offers several different wallet solutions for different needs. 

In addition to offline key storage, a Ledger hardware wallet enables you to sign transactions, granting you the ability to engage with various blockchain networks. Recognized for their exceptional security measures, Ledger’s hardware devices offer high protection for digital assets while providing user-friendly functionality.

Who Are Ledger?

Ledger is an innovative hardware wallet company headquartered in Paris, France. Notably, Ledger also maintains offices in the tech hub of San Francisco, California, in the United States. Established in 2014 by eight industry experts boasting diverse backgrounds in embedded security, cryptocurrencies, and entrepreneurial ventures, Ledger aims to revolutionize the realm of blockchain applications by creating robust and secure solutions.

At the helm of the company is Pascal Gauthier, serving as the CEO. Currently, the company employs around 130 professionals.

How Does a Hardware Wallet Work?

Hardware wallets play a crucial role in safeguarding cryptocurrencies by ensuring the isolation of private keys from internet connections and the potential risks that come with them.

These specialized wallets can generate private keys for multiple blockchain addresses. Enclosed within each hardware wallet is a chip responsible for generating a secret recovery phrase, which serves as a master key granting access to all the private keys secured by the device.

When utilizing a hardware wallet to sign a transaction, the device employs your private keys to verify and authorize the transaction. Throughout this entire process, the hardware wallet ensures that your private keys remain completely offline, guaranteeing an extra layer of security for your digital assets.

Why Is a Private Key Important?

A crypto private key serves as a critical connection between a cryptocurrency owner and the specific blockchain address holding their assets.

Each blockchain address is associated with a unique private key and public key. The public key represents the blockchain address that can be shared with others to receive cryptocurrency transactions. Conversely, the private key grants exclusive access to the stored cryptocurrency or data linked to that particular address.

Private keys hold significant importance as they provide blockchain users with control and ownership over their respective blockchain addresses and their assets.

Is Ledger the Best Hardware Wallet?

Ledger has almost become synonymous with crypto hardware wallets and crypto cold storage. The company offers two versions of its flash drive-shaped device – the Nano X, and the Nano S Plus. One offers Bluetooth connectivity, and one does not.

Also, coming soon is the Ledger Stax which has the same security and functionality as the other two versions, but with added usability. The Stax will have a touchscreen that allows you to sign transactions more conveniently than any previous Ledger wallet.

Presently, Ledger offers three distinct devices: the Nano X, their premier product, its compact counterpart, the Nano S, and the recently introduced Nano S Plus.

 While the Nano X takes the spotlight with advanced features, the Nano S models are more affordable. Despite being lighter in terms of functionalities, the Nano S remains an excellent choice for individuals seeking their initial crypto wallet purchase, especially if cost-saving is a priority.

Ledger Nano X

With its compact design and lightweight construction, the Nano X is a portable hardware wallet weighing just 34 grams. In addition to the device itself, the package includes a USB Type C cable, an instruction booklet, a keychain strap, and three sheets dedicated to recording your recovery phrase. 

Unboxing the Ledger Nano X with All contents.
Unboxing the Ledger Nano X with All contents. Source: Ledger

Ledger Nano S Plus

The Ledger Nano S Plus boasts dimensions of 62.39 x 17.40 x 8.24mm, resembling the size and weight of a USB stick, making it portable and lightweight. 

Notably, it features an upgraded 128×64 pixel display compared to its predecessor, the Nano S. The outer shell of the device is crafted from brushed stainless steel, providing robust protection, while the inner components are constructed from durable plastic materials. 

To ensure security, the Nano S Plus is equipped with a CC EAL5 certified safety chip called ST33K1M5. The hardware wallet’s operations are facilitated through two buttons on the top of the device, offering user-friendly navigation and control.

The security components behind Ledger devices.
The security components behind Ledger devices. Source: Ledger

Ledger Nano S vs. Ledger Nano X

Ledger made its debut in 2016 with the introduction of the Ledger Nano S, widely recognized as the pioneering hardware wallet. Equipped with a certified secure chip, this wallet allowed for the storage of three to 20 applications, catering to diverse user needs.

In 2019, Ledger expanded its product line with the release of the Ledger Nano X. Similar to its predecessor, the Nano X supports cryptocurrency purchases and provides asset security and management. Notably, it also incorporates a certified secure chip, enabling the storage of a larger number of applications, accommodating up to 100 applications. 

Furthermore, the Nano X has a Bluetooth connection, allowing users to conveniently manage their cryptocurrency assets from any location.

Ledger Crypto Wallet Pros

  • User-friendly Mobile App Ledger offers a mobile app to control its devices which is both easy to use and available for Android and IOS. The app is also available for desktop and mobile. 
  • Support for multiple coins – Ledger can support a multitude of blockchains. The Ledger website states: “You can secure and manage over 5,500 coins and tokens. Including Bitcoin, Ethereum, XRP, and more.”
  • DeFi compatibility – NFT management and DeFi access are built into the Ledger Live software. Ledger makes connecting to exchanges and dApps easy without sacrificing cold storage.
  • Bluetooth connection – With the Nano X model, you can use Bluetooth to connect to the Ledger Live mobile app. 

Ledger Crypto Wallet Cons

  • Not Open sourced – Ledger’s firmware on the devices remains closed-sourced. However, the rest of its software, such as the desktop and mobile apps, is open-sourced and can be tested by other parties. 
  • Basic Devices None of the current Ledger devices offer touch screens, which is becoming more popular with competitor brands, such as Trezor, in the hardware wallet space. However, the upcoming Stax device will have this.
  • Marketing database breach – In July 2020, Ledger had a data breach in which a phishing scam enabled unauthorized access to customer data, including email addresses, names, mailing addresses, and phone numbers. 

Security Concerns on Seed Phases

Ledger has implemented a new service called Ledger Recover – “an optional subscription” service that helps users back up their wallet seed phrase for $9.99 per month. In this service, Ledger splits customers’ seed phrases into three encrypted fragments stored separately with other third parties. 

Some feel this is a danger to wallet safety and could create a backdoor for hackers and bad actors to exploit. However, Ledger refutes these claims and states this is an important update for those new to the BTC self-custody space

On the Flipside

  • Hardware wallets are seen as vitally important for crypto users to ensure the best degree of security for their tokens. However, despite the drive to make them easy to use and user-friendly, most new crypto users are more comfortable storing their coins on exchange wallets – which are much more vulnerable. 

Why This Matters

Hackers and bad actors are still rife in the cryptocurrency space. However, taking your coins and token into a cold wallet and limiting their access to the internet cuts off the avenues these malicious actors have to your coins. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Darryn Pollock

Darryn Pollock is a South African-born, UK-based journalist and content writer for DailyCoin with a focus on regulation and legislation revolving around the cryptocurrency space. He has covered the evolving crypto regulatory space, and examined how the US has approached law-making to offer protection in the growth of innovation. Darryn values traditional journalistic principles of truth, accuracy, independence, fairness, and impartiality, and has a Bachelor of Arts degree in Journalism and Law from Rhodes University in South Africa.