You have been solid so far in investing. You do your research while sipping your coffee and dollar-cost average on value coins every month. Your portfolio looks neat, and you are pleased with the coins you own.
But do you really own those coins?
If you have them tucked away in an exchange, you do not. You could wake up tomorrow morning with no portfolio and no way to get your funds back. That is the world of crypto currently, and here’s why.
The Regulation and Protection Question
The crypto market is still largely unregulated. This means that you do not enjoy institutional protections if your exchange takes your money and dips. Unlike in traditional markets where the FDIC provision will have your back, the crypto markets could leave you dead in the water.
Crypto exchanges take advantage of the largely unregulated nature of the industry and tactfully let you know that keeping your money with them is a gamble you might regret. They are even blatant enough to make you agree to that when you sign up. Here the devil is in the details.
This is a screenshot of a section of the Celsius terms and conditions as you sign up. The same Celsius company filed for Chapter 11 bankruptcy back in July, leaving investors unable to recover their funds.
Coinbase, one of the more reliable exchanges out there, also has some demons in its fine print.
You can lose access to your account for reasons unknown to you and they are not obligated to explain a thing. In the streets, it's called ‘jacking’, but in the crypto world, it's called terms and conditions.
It's so bad that the Financial Stability Board (FSB) is now calling for the postponement of further innovations in crypto and DeFi until policy evaluations are concluded to ensure that investors are protected in the crypto space.
You must protect yourself from these lurking crypto hazards, and this is where the Ledger hardware wallet comes in.
What is the Ledger Hardware Wallet?
Ledger is a hardware cryptocurrency wallet used to store private keys for cryptocurrencies offline. It’s a multi-currency wallet that can store your Eth, BTC and many other coins away from the grid. Think of it as a digital version of your wallet or purse developed by a company from France known as Ledger.
Your crypto and NFTs are most securely stored with a Ledger hardware wallet and the Ledger Live software. Your private key is always kept secure in a certified secure chip by your hardware wallet. You are the only one who can access it. You must physically validate each transaction after physically confirming it on the trusted display of the device.
You have the autonomy to manage your cryptocurrency on your own thanks to your wallet. You can securely buy, trade, and grow your cryptocurrency all within the Ledger Live app.
How Ledger Compares to Your Crypto Exchange Wallet
The question in your mind right now is probably, why not trust the exchange wallet? These wallets promise the same security and freedom that Ledger offers right?
Wrong.
A simple rule of thumb in crypto storage is “not your keys, not your coins.”
Meaning that exchanges give you an illusion of ownership that they can’t really guarantee. Look at the terms and conditions I highlighted earlier from two of the most trusted exchanges.
Not very assuring, are they?
Hardware wallets give you your own private keys and that is your power and ownership right there. Keeping your coins in an exchange custodial wallet is trusting that company to keep your funds for you. Time has taught us that this can go wrong because you do not have any control of that exchange’s private keys.
We have seen exchange owners shut down their firms and disappear with private keys. Some CEOs have passed away while being the only ones with knowledge of the private keys, and just recently we had exchanges like Mt. Gox going bankrupt.
All these are hazards you can avoid by purchasing the Ledger Hardware wallet and storing your coins there. Ledger helps you take your portfolio off the grid and gives you control over your assets. The caveat with hardware wallets is four words long.
Don't lose your keys.
Millions in assets have been lost courtesy of owners losing their keys or forgetting them somehow. That would truly suck if it happened to you. So keep your keys safe and the rest will be history.
Here is a simple breakdown comparison between the Ledger wallet and your exchange of choice.
You read the last two points right. To ensure that the wallet cannot be compromised, Ledger uses the greatest security measures. To begin with, each hardware wallet from Ledger has a verified chip that is built to withstand the most sophisticated assaults and safely store cryptographic information like private keys.
To ensure that your physical device is impervious to malicious attacks, Ledger has gone a step further and developed a unique operating system (BOLOS) for its wallets. In addition, the bespoke OS creates additional protection on top of the secure chip by ensuring that your apps are kept separate from one another.
Ledger also increases security by employing its genuine check, an authentication tool it developed that makes sure your wallets haven't been compromised or modified with by a third party.
You have spent time and energy building that portfolio. Don’t play Russian roulette with it by housing it in exchanges where it can all be gone by the morning.