What is a ledger wallet and why do you need one now
Your crypto assets (BTC, ETH, etc.) are defined by two things: a public and a private key. To make this very simple:
- the public key is used to receive funds (you can share it without any problem to anybody)
- the private key allows you to send funds. So you have to protect this key to not lose your money.
A wallet is simply a way to store your private key. There are several ways to do that:
- put it on an online wallet: it's simple and convenient but the website can be hacked or they can leave with your funds. There is no worse solution here.
- store it in a local file on your computer and use a local wallet. If you get hacked, or you lose the file, it's the same, you lose everything. So it's up to you to secure your computer, make your backups, and it will only be usable only on one device.
- put it in a password manager as 1password. It's a good compromise while waiting for a ledger!
- write it on a sheet of paper and store it in a physical safe. Rather safe, but quite complex to use it everyday.
So, what is the ledger?
The ledger is a small box that should be plugged on your computer (using USB port). Its role is to store the private keys of your wallets and they will never leave this box.
Developed by a French company, the ledger quickly became the worldwide reference on the market. It supports about twenty different currencies, including the classical BTC, ETH, LTC or NEO. Cardano (ADA) and Monero (XMR) will be supported soon. Note that ETH ERC20 tokens, often distributed by ICOs, can be stored.
Compared to new competitors, like the french archos safe-T, the ledger is the most serious product with a dedicated secure microprocessor (ST31/STM32 dual chip architecture, CC EAL5+ certified) by STMicroelectronics.
To put it in a nutshell, buy a genuine ledger and not another brand.
When to use it?
If you hold more than a half of your monthly salary in cryptocurrencies, it becomes essential to store them in specific long term portfolios. They are called cold storage.
The ledger costs a little less than 100€, and it's up to you to see if it's better to lose that amount of money or all your cryptos!
It is very simple to transfer funds between exchanges and and a ledgerwallet. In addition, for some currencies (such as NEO), the transfer is immediate and free. In my case, I never store more than 10% of my funds on exchanges, and I keep the rest on my ledger.
How does it works ?
As a safety measure, you should always buy a new genuine Ledger, from the manufacturer's website. Do not get a used one from third party vendors ad ebay or craiglist, as several cases of sophisticated scams have been already reported, and the gain it too low to justify the risk.
Once received, follow the up-to-date site documentation (and only this one): Create a 24-word sentence, write it down on a paper sheet and keep this sheet in a safe place (ie : physical safe), and use a PIN code with at least 6 digits. Be careful to not use the same code as your smartphone.. and never enter in front of someone, because with your ledger and this code, a thief can do transactions.
After this setup, just download the Ledger Manager and dedicated apps. For each currency, it is necessary to install, from this manager, a dedicated application on the ledger.
Then you can use an application on your computer, like Ledger BTC, Ledger Ethereum or NEO Wallet for NEO (with NEO complete procedure here). You can also use MyCrypto (the successor of MyEtherWallet) without any problem as transactions are always done on the ledger.
Please refer and follow documentation available on Ledger website for more information. They've done a pretty good job.
What if it does not work anymore?
If you lose the ledger, you don't lose your cryptos! You just have to buy another one, enter your 24 private words, and you are good to go.
What is this magic? It's simple : your private keys are actually derived from this seed of 24 words, so that's why you have to store it in a safe place! If you do not want to buy another ledger, you can also extract your private keys from the seed, but it's not easy to do.
Let's go, I want one!
To buy a ledger, it's here on the Ledger website (that's my referral link, do not hesitate)! I recommend the Nano S which is super convenient and cheaper than the other model.
For those who have a recent computer with USB-C ports, such as a macbook pro, think of ordering a 'short usb-c micro-b cable' (about 20cm) at the same time on Amazon or another platform.
If this article was helpful, you can buy a ledger using my referral link. It does not cost you more, and I will receive a small percentage of your purchase (something like 5 €)