The way you store your cryptocurrency matters as it relates to security. In the world of crypto, there are generally two forms of storage: hot and cold.
Hot storage is connected to the internet while cold is not. The benefit of hot storage, like a digital wallet offered by a crypto exchange, is the convenience. However, this is more vulnerable as your private key is stored online and could be at risk to cyber attacks. Cold storage on the other hand, stores your private key offline, which maximizes security.
Ok, but just how common is a security breach or cyber attack? Well, in 2020, there were 28 attacks on crypto exchanges that resulted in the loss of over $300 million.
So, if you are interested in a cold wallet, where do you even start? Which one is best?
In this article, we will provide a complete Ledger Nano X review. While it is more expensive than it's earlier model, the Nano S, the Ledger Nano X has a few key differences that make it standout.
Ledger Nano X Review
The Ledger Nano X is a cold wallet that is designed for investors with a vast portfolio of cryptocurrencies. With compatibility of over 1,100 cryptos and up to 100 apps at once, this device will be able to manage most portfolios.
Using a cold wallet is a great way to maximize the security of your private key.
The Ledger Nano X was first launched in 2019 and provides investors a secure way to store their cryptocurrency offline. Ledger, the company, has been creating various hardware relating to Bitcoin storage since 2014. The Ledger Nano X is actually the second wallet offered modeled after the Nano S.
As stated on their website: "The next level hardware wallet. Buy & Securely manage your crypto in one single-app, anywhere you go. Become the only one in charge of your assets."
The main concern with the first model, Ledger Nano S, is the storing capacity. With over 16 times the storage capacity, the Nano X is certainly well-equipped for a diversified crypto portfolio.
When you purchase the device, you will receive the following:
From a glance, the Ledger Nano X could easily be mistaken for an old thumb drive. But upon opening the device, you will see a few unique differences.
This device features a small analog screen with 2 buttons on either side of the screen. In order to power on the device, you will press the button next to the USB port for 3 seconds.
The two buttons on the device are used to navigate through the setup and options. Once powered on, you will need to enter in your PIN, which you will have created upon first setting up the device.
In order to get started, you will need to download the Ledger Live app to a smart phone or computer.
You will then follow the steps using both your phone and device to get started.
The button on the left moves left or down and the button on the right moves right or up. Pressing both at the same time moves to the next option or confirms a number. (For example, if you imagine a PIN number as 4 numbers, the right button will change the first digit from a 1 to a 2 and so on. The left button will change the first digit from a 6 to a 5, etc.)
After setting up the pin, you will need to record your seed phrase by moving through each word, recording the words, and then verifying accuracy. This is a highly tedious process as you will have to manually click through each word. However, it is important that you take your time and ensure accuracy. This seed phrase can be used to recover your funds. If you lose your device and cannot come up with the seed phrase, you will not be able to recover your assets.
After the pin and seed phrase are complete, you will complete the security checklist in the app on your phone. Finally, you will connect your new device to your phone. First, ensure that Bluetooth is enabled on your phone. (Bluetooth is enabled on the Ledger Nano X by default.) Second, within the app, you will select the name of your new wallet and wait for the pairing process to complete and verify the number on your device matches your phone. Finally, you will set up a password for the ledger live app.
From there, you are ready to start managing your cryptocurrency.
While the Ledger Nano X is compatible with over 1,500 cryptocurrencies, you will need to install 'apps' for each coin you want to manage. Each cryptocurrency requires a unique app to manage it. The Ledger Nano X supports up to 100 apps at a time. This is a great benefit of the X model (The Ledger Nano S supports up to 6 only).
Once you download an app to your device, you will be able to manage that type of coin from your new wallet.
There is a common misconception that a cold wallet stores the actual cryptocurrency. This is not entirely accurate. A cold wallet actually stores the private key generated from a transaction.
When trading cryptocurrency, all transactions are recorded on the blockchain. To verify ownership of cryptocurrency, keys are used. There is a public and a private key.
The private key is used to withdraw and spend cryptocurrency, while the public key is used to receive cryptocurrency.
Let's use a bank as an example. When an employer pays you, they will typically ask for your routing and account number. This is used to receive money into your account. You can liken these numbers to the public key. If you want to receive cryptocurrency, you will need to share your public key.
The private key should always remain just that: private. You should not share your private key with anyone. If someone were to obtain your private key, they would have access to your funds. With a digital wallet (or a hot wallet), the exchange actually owns your private key, which means that they actually own the cryptocurrency.
Both private and public keys are long alphanumeric codes created through cryptography.
The Ledger Nano X stores the private key of the investor. When a transaction occurs, the wallet generates a digital signature by processing the transaction with the private key.
This signature is used to confirm that a transaction has come from a particular user. Changing the transaction would change the signature, which is why transactions in crypto are highly secure.
Ok, so what is the seed phrase? The seed phrase, or recovery phrase, is a way for a user to recover information on a lost or damaged wallet. This phrase is typically 24 random words out of 2084 possible words. When you set up your wallet, you will need to record your phrase on a piece of paper or metal card. Never share your seed phrase as someone who obtains it can access all of your funds.
If the wallet is lost, damaged, or stolen, you can purchase a new device. During setup, instead of choosing to set up a new device, you will select to recover from an old device. When you enter in your seed phrase, all your information will be made available on the new device.
If you are confused at this point, don't worry. Most people are! Here is a high level summary:
The list above is in order, meaning you can go from 1 to 2 to 3 to 4, but you can't move up the list. Each of these codes are utilized to secure the network.
The Ledger Nano X is a cold wallet that is highly popular due to the expanded storage capability vs its earlier model, the Ledger Nano S.
This wallet is a great way to store your private key offline. Using a digital or hot wallet is not necessarily unsafe, but as cryptocurrencies are not regulated by a central authority like a bank or government, many investors want to ensure the safety of their investment. Especially considering the number of cyber attacks on crypto exchanges in the last few years.
While it is pricier than the Nano S, the Ledger Nano X features added storage, bluetooth connection, compatibility to smartphones, and not to mention a sleeker design and more modern screen. This model can manage up to 100 crypto apps at once and is compatible with over 1,500 different cryptocurrencies.
If you are looking for a cold wallet, this could be the one for you!