Ledger is a hardware wallet company founded in 2014 that makes hardware products, similar to a flash drive, that are used to store cryptocurrencies offline as a means of security.
The wallet, in this case the Ledger Nano X, stores the private keys (or “seed phrase”) that unlocks access to the coins you want to retrieve to sell, swap, trade or use in a number of other ways. Essentially, the user plugs the hardware wallet into their device via Bluetooth or USB and connects to Ledger’s software and coin mobile apps to take actions with their crypto. When done, they can unplug and detach from the online environment (i.e. a phone or laptop), keeping their crypto out of harm’s way.
Ledger Nano X is the latest hardware wallet from the Ledger team featuring two major upgrades:
The Nano X version is priced at $119.00, roughly double that to the previous Nano S version. With the Nano X, you are able to manage as many as 100 coin apps at the same time, meaning you can store this many types of tokens safely offline while also having the ability to access them anytime you want, from anywhere.
For each crypto, you must download a corresponding app and connect it with Ledger’s software, “Ledger Live”. As there is considerable time involved in setting up this many apps, hard wallets may be considered to be appropriate for advanced, or at least highly motivated, users.
Both Nano X and Ledger’s main competitor, Trezor, are first generation hardware wallets, and while they have long been highly regarded as the safest way to store crypto, hacks and security issues for both have cropped up to make us all think twice. It seems likely that in the coming years the next generation of hardware wallets will speak more to the decentralized aspects of cryptocurrencies as a way to better secure their customers’ data and crypto.
As a non-open source application, Ledger takes more heat in the press than Trezor when a hack or security issue occurs. In crypto circles, it is generally understood that centralized, closed-source applications lead to centralized data stores and less expertise available to manage the code to avoid vulnerabilities.
Ledger Live is the software that users must download in order to activate the crypto on their hardware wallets and connect to exchanges and other platforms. It’s available in desktop version or mobile and provides access to over 1500 tokens. You can select any 100 cryptos at one time to manage using your Ledger Nano X and the Ledger Live software.
You can purchase your hardware wallet directly from the Ledger website. From there, you would download the Ledger Live software and download the coin apps you want to use.
The Nano X is Bluetooth-enabled making it easy to hook it up to your phone or any other device, all while the seed phrase stays on a secure chip inside the hardware wallet.
A 100mAh battery allows the device to be used for several hours at a time. For those using the Nano X to store crypto for a long duration, the battery will last when idle for a few months. At any point it can be charged back up with the cord provided with the wallet.
Always remember to store your hardware wallet safely, such as in a safe or safe deposit box.
You can send and receive digital assets to and from your Ledger Nano X. It’s recommended that you send a small amount first as a test before initiating a large transfer. You’ll need to make sure you have the bitcoin app for sending or receiving bitcoin, and so on with other coins and tokens.
It is generally not recommended to have mining proceeds sent to your Ledger Nano X due to the large number of small transactions that would slow down Ledger Live and possibly affect the ability to engage in other transactions. Miners may prevent this by batching their transactions and sending only periodic, larger transfers.That way, they can still use the Nano X to safely store their mining rewards.
There are no fees for using the Ledger Nano X, other than the upfront cost of $119.00. However, blockchain network fees as well as those charged by connected crypto platforms may be incurred when utilizing your crypto assets. But overall, there are no storage or withdrawal or deposit fees associated with transfers in and out of the Ledger Live management system.
Crypto enthusiasts and traders like to use their crypto assets in diverse ways, such as with staking. When a user stakes crypto, they are holding it aside in a special wallet while they earn tokens (usually in kind). The Ledger Nano X enables you stake coins to help grow your digital asset holdings. You can stake up to 7 coins at one time. The supported staking coins include popular crypto like Cosmos, Algorand, Polkadot and Tezos. All of them are available for staking/earning directly from the Ledger Live management system.
Lending through Ledger gives Nano X owners a connection with Compound, one of crypto’s top DeFi lending protocols. When lending through Ledger Live and Compound, the user puts stablecoin tokens (USDT, USDC or DAI) into a Compound smart contract that converts their tokens into cTokens. These cTokens represent the principal you are lending and are used to automatically figure in your interest earnings. Lending through Compound and your hardware wallet gives DeFi enthusiasts a more secure way of earning from their crypto holdings.
The Ledger “OTC kit” provides 3 USB cables that can be used for your hardware wallet. You can also bundle the Nano X with a Nano S, or buy “family packs” that offer a discounted price when buying in bulk.
As there are numerous steps to take when setting up your Nano X and also steps for using it each time, it may not be for a non-tech savvy individual. Ledger’s support mechanisms and documentation are spot on, but a misstep in the complex process can cause anywhere from a small frustration to the loss of a user’s digital assets.
Ledger Nano X is compatible with most Internet devices and the following operating systems:
The hardware wallet has also partnered with many exchanges, platforms and wallet services, as well as decentralized exchanges (DEXes), where no user data is stored. Compatible DEXes include:
Partner wallets include:
Ledger was born out of a need to keep cryptocurrency secure from online hackers, so security is their number one feature. As the crypto industry has evolved, so have bad actors and their tactics. One of the biggest threats comes through the phishing attempt, which mimics a company’s homepage and lures in users to try and “receive” their digital assets.
Even with Ledger’s focus on securing digital assets, the company has experienced two hacks. It’s important to remember that all hacks are not malicious, as we see in the first one, it was duly reported to the company by a researcher who happened to find the flaw.
The first, began in 2017, when a 15-year-old researcher found a flaw in the hardware (this was the Nano S version, not Nano X). They were able then to tweak the firmware, something they said could allow them to change the recovery seed phrase. Ledger at the time disagreed saying that the vulnerability requires having physical access to the wallet before the seed gets set up, but later they upgraded their firmware.
The second vulnerability was discovered in July of 2020 by a developer in Ledger’s bounty program. Ledger moved to address and patching the brach but not before someone had illegally lifted a list of 1 million email addresses along with 272,000 names, mailing addresses and phone numbers of Ledger users. At first, when Ledger was responding to the attack, they noted that 9500 users had been compromised, according to their company statement. Later it was clarified that a larger number of users had been affected, and Ledger contacted each of these users within 24 hours of the data breach. Essentially, the company’s marketing database had been exposed along with a 3rd party ecommerce partner, Shopify.
In December of 2020, a massive data dump that corresponds with the July hack was noted on the darkweb, where 1 million email addresses were exposed as well as the name, mailing address and phone numbers of 272,000 Ledger users.
The effects of the 2020 hack were an enormous blow to Ledger, who until that point had maintained the reputation for having a high level of security. In response, Ledger immediately hired a new Chief Information Security Officer and began working with Chainalysis to track down the data hackers. They also posted a bounty (payable in 3+ BTC) for information leading to an arrest of the hacker. Ledger has since become more transparent about what data they hold onto, where they store it, and for how long.
Over the course of both hacks, no user funds were stolen. But as the Internet becomes ever more omnipresent in our lives, the importance of secured data, especially financial, becomes more important.
Other research firms and industry players have weighed in on the security issues of hardware wallets and data, including Kraken, whose team found a flaw in Ledger’s prime competitor, Trezor. Another example is Kaspersky, a leading cyber security company, who offers these tips for maintaining a high level of security when using hardware wallets:
Tips for securing your hardware wallet from Kaspersky:
Ledger has long been a go-to hard wallet company but has recently suffered data breaches that have threatened its viability. Fortunately, no user funds were lost, which is their main security function.
While the Nano X hardware wallet improves upon its predecessors with Bluetooth compatibility for more convenience and many more crypto coins supported, it makes a strong move to the usability of hard wallets. However the user experience is still very complex with many steps. We expect over the next few years for cold storage options to expand and evolve along with crypto markets, with data security stressed as much as digital asset safety.