How to Secure your Crypto with a Ledger Cold Wallet
Storing your Crypto securely can be the most important thing you ever do in the space. The first thing you must understand is the difference between a hot wallet and a cold wallet. A hot wallet is one that is connected to the internet, such as Metamask. When leaving your crypto treasure in a hot wallet, there is always a chance something could go terribly wrong. Securing your crypto in a cold wallet, such as on a Ledger or Trezor, is to take your crypto offline, and is the closest thing you can do to “put in a safe”.
Ledger was launched in 2014 and is a leader is cryptocurrency security, securing crypto assets such as Bitcoin, Ethereum, and Cardano. As mentioned above, they are a cold wallet, which means you are storing your crypto on a piece of hardware, and that’s what Ledger is–a little hardware safe for your crypto. Ledger is extremely reputable, with millions of devices sold and trusted in hundreds of countries. They offer 3 different models, and the difference between them and their competitors can be found here.
So how does Ledger work? First of all, on Ledger, your crypto is not stored on the hardware wallet itself–your crypto is of course stored on the blockchain. The wallet simply stores your private key which allows you access to manage your crypto and is secured with a pin. On a Ledger, your private keys are kept off the internet and in ‘cold-storage’.
Ledger has state of the art hardware security, using “chips designed to secure critical data (same technology found in payment cards, sim cards or passports). Ledger can therefore rely on battle tested chips and ensure a much higher level of hardware security.” Even their bluetooth connectivity has been shown to be extremely secure.
The Ledger Nano X is the most popular version of the hardware wallet. It supports over 1,000 crypto’s, and you can hold about 100 at any one time on the device. It goes for around $120 and can be bought many different places, including here. With the X model, you can secure, buy, sell, and exchange anywhere you go. With Bluetooth connectivity you can connect your Ledger Nano X to the Ledger Live app to manage your crypto from your phone. Plus, you can still connect it using the physical cable that is provided so you can manage your crypto straight from your computer.
So let’s say you have your Ledger X in hand, and you’ve unboxed it, what now? First, you will want to plug your Ledger into your computer with the cable that is provided to begin the set up process.
Once you press the button on the right, the device will prompt you to download Ledger live. You will go to ledger.com/start, where you will see the below page.
You will then install the software which you will need to manage your crypto. Once you have that installed, you will have to accept some Terms of Service, and then you will be taken to the page where you either can type in an existing private key, or create a new one. As you know, your private keys are the keys to your ‘crypto vault.”
At this point, if you are setting up a new device for the first time, you will be prompted to toggle the buttons on your Ledger X, which will show you how to use the Ledger in terms of going through the menu, powering on and off, and basic things such as those. Ok, so at this point you will be setting up the new device.
You will press down both buttons on the Ledger to ‘set up new device’, and then as you can see, you will be prompted to set up a pin. You will enter the pin, pressing down both buttons to confirm it. Next, you will be prompted to write down your recovery phrase–it is important to make sure your take this seriously, and make sure your writing is legible and your spelling correct.
You will be prompted, one by one, to write down each word of the 24-word recovery phrase sequentially. This phrase is your only hope should you lose access to the Ledger device, etc–it is the only way to save your crypto should everything else fail. Once you have gone through the 24 words, you will get a message that says processing, and you then your device will indicate it is “ready” with a checkmark. At this point, you will be able to access the dashboard.
Ok, so now that we have set up the hardware, let’s go back to the computer. You have created your numeric pin, written down your recovery phrase, and now Ledger will prompt you to hide that phrase.
Ledger will then run a check to see if your device is legitimate, as there have been many fake ledgers sold to scam people out of their crypto. You will be prompted to allow ledger manager on your device, and then the software will detect if you have a real Ledger X or not.
Once that is done, you will receive a success message, and now you will go back to ledger live on your computer. This is where you will digitally manage your portfolio, and download the assets you wish to store on your Ledger.
As you can see, I have installed Bitcoin on ledger live, and in the bottom left corner, it has synced to my hardware device, and will appear as such. You will then be prompted to open Bitcoin on your device, which you will do by pushing both buttons.
Once you have synched the hardware and software, (ledger device and ledger live on computer) you will use Ledger Live to either purchase or receive Bitcoin, for example.
You can then either buy Bitcoin through Ledger Live, or you can send your Bitcoin which you already have, say, on Coinbase, to your Ledger. The receive address is generated and this is of course the address you will input on Coinbase that you are sending to. They also have a QR code address for even easier use.
The address will then show up on your device screen, which you will need to verify and approve, again by pressing both buttons. The devices have a capacity of 1.8 MB and as you can see below, anytime you add an asset, you will be using hardware storage space.
Once you have assets on your Ledger, you will be able to send out crypto to external addresses as well, say, when you want to sell your crypto on an exchange.
By selecting manager from the left hand side of the page, you can also add the exchange app, which will allow you to use the swap feature to swap and trade assets via Ledger. Ledger also has the ability to be connected to the Compound protocol, where you can lend our your assets to earn yield.
Lastly, I will show you how to connect your Ledger to bluetooth, which allows you to manage your crypto on the go. The first thing you will do, is install the ledger live app on your phone via the app store. Once you follow the prompts after downloading, you will be able to pair your device via bluetooth. Once connected, you will be able to access your crypto and manage it on the go, just as you would via desktop.
That completes the tutorial on Ledger, and specifically Ledger X. Owning one of these have become a pre-requisite for serious investors, as it stores your crypto offline and protects your private keys from Malware attacks and other phishing attacks. Moreover, many hot wallets rely on Amazon web hosting for their systems, which has failed often, putting your crypto in limbo, which is scary.
Owning a Ledger X for your crypto is like owning a safe for your Gold, except of course with crypto, you can fit this safe in your pocket, and even if you lose that, you have your private keys. Basically, anytime your wallet is connected to the internet, you are at risk of losing it all. With the Ledger X, you can be assured that your crypto is wholly inaccessible to the millions of hackers seeking to find victims in this space where wealth is digitized, and thus insecure.
The post How to Secure your Crypto with a Ledger Cold Wallet appeared first on CryptosRus.
Text source: CryptosRus
