DEFINITION of Ledger Wallet
Ledger hardware wallets are a series of multicurrency wallets that are used to store private keys for cryptocurrencies offline. As of this writing, there are two hardware wallets in operation: Ledger Nano S and Ledger Blue. Both wallets support 25 cryptocurrency blockchains. The list includes prominent cryptocurrencies, such as bitcoin and ethereum, as well as lesser-known ones such as Vertcoin and Komodo.
BREAKING DOWN Ledger Wallet
Conducting transactions using cryptocurrencies requires the use of cryptographic private keys. But these keys, which are generally stored online, are susceptible to thefts and hacks. Cryptocurrency users have developed alternative systems for storage. These include hot wallets (which are online), mobile wallets (wallets in smartphones), and paper wallets (stored on paper).
Hardware wallets are a form of offline storage. They are device based, meaning they use storage mechanisms such as USB drives to store private keys, thereby making it difficult for hackers to access the key from online.
The Ledger Nano S wallet is a USB storage wallet while the Ledger Blue is a handheld device with a touchscreen and USB and Bluetooth connectivity. The wallets enable users to perform a wide variety of functions, including sending and receiving bitcoin from blockchains or running third-party apps on the device. For example, users can run universal two-factor authentication on popular sites such as Google and Dropbox using the wallets. Both wallets also use a 20-word backup recovery phrase that can be used to access a user’s cryptocurrencies if the device containing the private key is stolen.