What if Ledger Goes Out of Business?
| — Your cryptocurrency is stored on the blockchain and your private key unlocks the use of the crypto coins/tokens.|
— If Ledger didn’t exist anymore, your cryptocurrency coins and keys would be safe and you could still access them.
— You can retrieve your private key that your Ledger wallet was securing with a 24-word recovery phrase and it can be entered into a compatible wallet, meaning your coins are safe from loss if anything happened to Ledger.
“The Ledger wallet is a fantastic way to store the private keys to my crypto, but what would happen to them if Ledger went out of business? Would I lose them?”
While this exact phrasing might not have flashed across your mind, the question and the underlying concern might have. But you don’t need to worry. We’ve got the answers and the info you need to settle your nerves.
The short answer: No, not at all. Your coins would still be safe and you can still access them even if Ledger doesn’t exist.
The longer answer requires a little insight into where your coins live and how they’re stored and secured.
Where do my coins live?
When you own cryptocurrency, you actually own the right to use the cryptocurrency. Your coins are associated with a set of keys: your private and your public key.
You can think of your public key like a mailbox. If John wants to send you crypto, he just needs your public address. It’s safe for you to give out your public key. Your private key is what you need to unlock the mailbox. The private key = access to your cryptocurrency. Like a real key, you wouldn’t go handing out copies to everyone, you’d keep it safe and secure to protect the assets that are secured by the lock. Similarly, you want to keep your private key safe.
The crypto coins live on the blockchain and the keys to your coins live where you choose (ideally, in a secure location where no one else can access). The coins themselves don’t exist on any device or platform, not even on Ledger devices . Your wallet only stores and protects your private key.
Quick recap: your coins live on the blockchain, your keys live in your wallet. And if your private key isn’t kept private, nor are your coins. Remember: Not your keys, not your coins.
How do I keep my cryptocurrency and private key safe?
One way people protect their private keys is by keeping it off the internet. This means there is no history of information that could be hijacked or hacked. Getting your coins stolen by a hacker might seem like something from Mr Robot, but you’d be surprised how common it is if there’s not enough security in place. Tweeting about your crypto, for example, is enough to let someone know that you hold crypto and if you don’t have protection in place, you’re vulnerable to a hack attack.
A hardware wallet, which secures your keys in an offline environment, is the most secure option to store private keys – and Ledger offers one of the most comprehensive wallets that allows you to store and safekeep your private keys.
How does Ledger keep your keys safe?
Ledger’s features are designed to protect your keys with key elements, boasting security. As the only certified hardware wallet on the market, the Secure Elements chip is designed to withstand advanced cyber attacks.
The real kicker about Ledger devices (and where the maximum security comes from) is that your private keys never leave the device. Ledger doesn’t know them so they’re not held in a data bank anywhere. What you get is a 24-word long recovery phrase that is generated by the device in the set-up phase. This phrase is the single most important thing to protect, because it will allow you to restore your keys if anything happens. Like your private key, you want to keep this phrase in an offline environment and make sure it stays safe and sound somewhere where it won’t get lost. If you lose your device and are worried about someone getting into your coins, you don’t need to stress. If the person doesn’t know your pincode (which you choose, in the same as with your mobile), you’re safe. You also don’t need to worry about the loss of your coins, you can still access them by restoring your private key using your recovery phrase on any other wallet.
So the link between Ledger and your cryptocurrency is not that Ledger owns or has access to your keys, rather Ledger wallets store and keep your private keys safe so that you can look after your own funds.
Do I need Ledger to get to my cryptocurrency?
“So Ledger is great and it helps me keep my keys safe, but what if it goes out of business? Will I lose my crypto coins?!”
Another short answer: Nope, you aren’t reliant on Ledger to access your funds even if you use Ledger to store your private key.
The slightly longer answer: Ledger doesn’t operate in a closed system where your private keys and coins are locked into only certain devices, and this is thanks to something known as the BIP-39 standard. BIP39 is an industry wide protocol that sees crypto wallet providers use a common emergency back up format. It allows the contents of your wallet to be recovered via any other wallet using a mnemonic recovery phrase in the case of loss or theft, and means your assets are not tied to any one wallet provider. This is the 24-word recovery phrase you read about earlier.
By operating within an open system, Ledger prioritizes the protection of your funds over profit, meaning you can benefit from the highest level of security while maintaining complete financial freedom.
This means that you are able to access the keys to your cryptocurrency even if your Ledger wallet wanders out of your possession (by loss or theft). Your recovery phrase will let you retrieve your keys on another wallet even if Ledger isn’t around anymore.
Remember: Your cryptocurrency is stored on the blockchain and your address has a private and public key associated with it. You own the key to unlock the use of the cryptocurrency and Ledger helps you keep that key secure and protected. Ledger wallets have a recovery phrase to safeguard your keys – and your crypto – against loss. If Ledger did go out of business, neither your cryptocurrency nor your private and public keys would disappear.
True security doesn’t tie you down
The features and components of Ledger’s hardware wallets offer you unparalleled security; the Nano uses the most secure chip in the industry to secure your private keys and is protected by a pin code controlled by you alone.
Yet, thanks to the BIP39 protocol, any assets that are secured using a Ledger hardware wallet can also be recovered via any other wallet in case of emergency, or if Ledger goes out of business.
So using a Ledger device does not mean that Ledger has access to your crypto or any of your data; rather, it’s a meticulously designed solution that allows you to easily, securely and practically manage your crypto, without submitting any of your control – that is financial freedom.
Knowledge is power.
Trust yourself and keep on learning! If you enjoy getting to grips with crypto and blockchain, check out our School of Block video getting inside the head of a crypto scammer.