The crypto ledger is another important cryptocurrency concept that many beginner crypto users are not aware of, and is often confused with the similarly named Ledger wallet. But, the concept of ledgers and where data is stored is very important to cryptocurrency, and all long-term holders should be aware of what crypto ledgers are and how they can help you in your daily life.
With desires for increased security and privacy being key reasons for the popularity of cryptocurrency, crypto ledgers allow the provision of strong security to all crypto users, regardless of their experience level or scale of holdings, while still allowing access to all the benefits that cryptocurrency provides.
What is a crypto ledger?
A crypto ledger, otherwise known as a cryptocurrency public ledger, is a record-keeping system associated with cryptocurrency. The public ledger maintains all information on users’ identities, their cryptocurrency balances, and all transactions completed between different holders of crypto.
All information is stored in secure and anonymous form, in line with cryptocurrency’s founding principles of security and privacy.
The term “ledger” comes from the traditional record-keeping systems of the same name. Since medieval times, agricultural commodity prices and news would be stored on the public ledger, which anyone could access and verify.
The cyrpto ledger is similar, where any transaction can be queried and verified by one of the two parties who took place in the transaction, since it is publicly published on the ledger. However, unlike with bank ledgers, no centralized authority or other viewers can see the identity of the two parties. This maintains privacy in the blockchain, thus making crypto popular with people who want to exchange money with security and privacy.
What is a public ledger versus private ledger?
Bitcoin is a form of public crypto ledger, where transaction details are recorded on a series of blocks one after the other. It is a public ledger, because all crypto transactions are recorded here and made available to the general public to view. Any movement of crypto on a public ledger will incur a transaction cost, and the user receiving the crypto (e.g. BTC), will need to wait for on-chain confirmations of the transaction to receive it.
Many companies, such as Coinbase and FTX, maintain private crypto ledgers. This means that the transactions are not available on the public blockchain and they do not incur on-chain transaction fees when crypto is moved from one wallet to another. Custody wallets will use the benefits of a private ledger to quickly move crypto from one address to another, without waiting for on-chain confirmations. This also makes these transactions free. Crypto debit cards are examples of products that utilize private crypto ledgers.
What is a Ledger wallet?
Crypto ledgers should not be confused with Ledger wallets, which are a type of cryptocurrency wallet made by the company Ledger. The company chose this name given the importance of the Ledger to crypto, but it can cause some confusion.
The Ledger wallets were created to provide extra security to users of blockchain and cryptocurrency, by allowing users to store their private keys for cryptocurrency offline. Often, users store their private keys to cryptocurrency online, whether through a custodial wallet or otherwise. This is particularly true for novice crypto users, who prefer convenient platforms such as Coinbase.
However, online storage makes the private keys more susceptible to being hacked or stolen, as they can be accessed from an online location by hackers. In storing the private keys offline, the idea is that the Ledger wallet provides added security to cryptocurrency users.
Of course, if not stored online, an alternative location is needed. Ledger wallets are device-based, meaning that they use physical device hardware to store the data. Normally, this is in the form of a USB drive, which hackers will find it hard to hack from an online space.
Ledger wallets allow users to carry out a variety of actions, in addition to providing extra security. They are multicurrency, allowing a variety of currencies and coins to be held simultaneously. Users can send and receive cryptocurrency from blockchains, with hardware wallets supporting a variety of coins and the possibility for thousands of tokens. Users can also run third-party apps on the device, including two-factor authentication on a number of major websites.
These wallets also have the possibility for recovery, if the physical device carrying the private keys is ever stolen. With a 24-word recovery phrase, users can access their cryptocurrency from another device. Many online non-custodial wallets don’t have the same possibility.
Ledger wallets are a popular choice for cryptocurrency users who want to use a non-custodial wallet and be completely in control of their crypto funds. They allow users to hold the private keys to their wallet themselves, while also providing strong security and the chance for crypto recovery if necessary. All of a user’s funds can be stored on the ledger, and access to NFT or DeFI portfolios are also possible through the Ledger application.
Why should you care?
If you hold cryptocurrency, or are considering holding any cryptocurrency in the future, knowledge of crypto ledgers and how they work is important to a successful experience.
Knowing about the public ledger is important to truly understanding how the blockchain works and how this impacts crypto users. The blockchain public ledger keeps crypto transactions anonymous, but still easy and fast-paced.
Many crypto users find comfort in knowing that their transactions are safe from external eyes on the public ledger, and that only those involved in the transaction can view the parties’ identities. At the same time, they know that the transaction is authentic, since it has to be approve by full nodes on the network.
It is, of course, also important that crypto users know the difference between a crypto public ledger and a Ledger wallet, and how a Ledger wallet could be of use to them.
If you prefer to use a non-custodial wallet, Ledger and other hardware wallets can provide an accessible and secure way to store and move your money. Since you will be solely responsible for the security of your crypto funds, you need to make sure you’re aware of the characteristics and benefits of your various storage options, and decide appropriately which to use.
While online cryptocurrency storage may seem convenient, you should be aware of the security matters that accompany this. Using an offline Ledger wallet could be a better way for you to prevent theft of your crypto funds, while still having access to all the important functions and benefits provided by cryptocurrency.
If you’re currently using a custodial wallet, it’s also important to be aware of why this is so. If a custodial wallet genuinely provides you with personal benefits, such as convenience or accessibility, that’s great. But, being aware of Ledger wallets and how they work is necessary to truly making the most of crypto for you, and their use has the possibility to change your relationship with crypto for the better.
Crypto ledgers with Hydrogen
Hydrogen offers crypto debit cards.
The crypto debit cards are USD wallets that are linked to private crypto ledgers and custody crypto wallets. Individuals can use their cards to make purchases with crypto at the point of sale. Merchants don’t need to accept crypto for the cards to work! This opens up crypto purchases to 10 Million merchants in the US alone.
How does it work? Hydrogen operates private ledgers in USD and crypto to nearly instantaneously facilitate transactions and movement between wallets and merchants.
Get in touch today to find out more about Hydrogen’s cryptocurrency features, among a range of other products.