A Ledger hardware wallet stores a user's cryptocurrency private keys offline for enhanced security
What is a hardware wallet and what does it store?
Hardware wallets are physical devices that are used to store the private key associated with a cryptocurrency address offline, providing an added layer of security for the assets stored on the blockchain. They do not store the actual cryptocurrency, but rather the private key that grants access to the corresponding address on the blockchain. To access and interact with your tokens, all you need is your private key that is stored on the hardware wallet.
Ledger's hardware wallets are based on devices, which means they store private keys on USB drives. This makes it hard for hackers to get to the key from an online location as the key will be offline.
They serve two purposes!
They keep your private keys safe. Hardware wallets are sometimes called "cold storage" because they keep your private keys away from the Internet. This makes it less likely that your assets will be stolen in an online attack.
They let you sign transactions on the blockchain and confirm them. When you make a transaction on the blockchain, you "sign" a special message. Your "signature" shows that your private key belongs to you. Without the key, this signature can't be forged, so no one else can do business on your behalf without it.
If you lose it, what will happen?
Your private keys are kept safe on the hardware wallet by a PIN and, if you choose, by a passphrase too. If someone stole your hardware wallet, it would be nearly impossible for them to get your private keys. The keys are never shown on the internet, so they can't be stolen. So, it's called a cold storage.
If you lose your hardware wallet, your assets are protected by a single seed phrase. A seed phrase, which is also called a recovery phrase, is a list of words that can be used to create your private key again. You can simple buy a new ledger and by using your seed phrase, you'll have access to your cryptocurrencies.
Pros and Cons of a Ledger!
Pros: Ledger is the most well-known company that makes hardware wallets. You can store many different types of cryptocurrency in the wallet. There is a lot of support from the community in the form of software integration that uses a ledger to do transactions directly. There are a lot of new decentralised exchanges among these. New software is always being added to the device.
Cons: Because of the way the layout works, setting up or restarting your wallet takes a long time. It's great that it now works with mobile phones, but its main improvement, the ability to use Bluetooth, is far from smooth. Many software updates change how users feel, like when they slow down or can't use their wallets right away. Only hardware wallet company to add Bluetooth connectivity. Even though security worries about Bluetooth haven't been proven, the industry looks at it with scepticism because it could give hackers another way to attack.