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Blog posts, Thought leadership | 01/25/2021

Crypto safety: with great power comes great responsibility

crypto Hardware Security
With great power comes great responsibility

Let’s face it, the cryptocurrency industry can feel like a daunting place for beginners. 

With thousands of different cryptocurrencies available, and complex vocabulary thrown about left, right, and center—there is little wonder why so many people struggle to fully grasp the nature of cryptocurrencies, and what they really represent

The truth is, cryptocurrencies are simpler than many realize, but they do have their fair share of particulars that you’ll need to get to grips with to really take advantage of their benefits—and remain safe while doing so. 

One of the most common misconceptions people often have, is that cryptocurrencies are like cash, once lost, getting it back is darn near impossible. However, while this may be true in some rare circumstances, the truth is, cryptocurrencies have a unique feature that means your funds are usually not gone for good if you lose or accidentally delete your cryptocurrency wallet.

Recoverable by design

Imagine losing your wallet with all your identity cards, cash, and even the coupons that have faded beyond recognition over the years. If this happened, odds are slim to none that you will ever get it back—at least not in its entirety (cash… what cash?). 

With cryptocurrencies, this isn’t exactly the case. While there are various ways to temporarily lose access to your cryptocurrency wallet, so long as you have your recovery phrase backed up, you can retrieve your assets at any time. This is analogous to losing your physical wallet, and then summoning it back—coupons and all—using a simple incantation. 

But while achieving this with a real wallet would be nothing short of magic, it isn’t quite as glamorous when it comes to recovering cryptocurrencies, since they are simply recoverable by design thanks to a clever feature known as a recovery phrase. 

Depending on how you store your cryptos, you may have been given a 12, 18, or 24-word phrase when you first created the wallet—this is your recovery phrase. This recovery phrase contains all the information needed to quickly restore your entire cryptocurrency wallet to the exact same state it was in when you lost it. 

If you lose your only copy of your backup (i.e. your recovery phrase), then your funds are gone for good. There is absolutely no way to recover your wallet without your recovery phrase. Unfortunately, this is something many people do not realize until it’s too late.

But on the bright side, this means as long as you’ve got your recovery phrase written down and stored somewhere safe, your assets are safe. Just like the keys to your house, you’ll want to keep this phrase private, and ensure only you (and potentially the people you trust) have access to them— since anybody with your recovery phrase can access your funds without restrictions.

Recovery phrase

To better illustrate how this works let’s go back to the house analogy. If you lose your house keys, your house still exists, but you just won’t be able to get in. If you’ve got a backup of your keys stored elsewhere, your issue is resolved. The same goes for your cryptocurrency wallet, but your recovery phrase is the spare set of keys used to restore your wallet. 

Just like your house keys, it is your responsibility to keep your recovery phrase safe at all times. This means securely storing it in a place that only you have access to, and never sharing it with anybody else. 

Depending on how creative (and secure) you want to be, this might include splitting your recovery phrase into separate chunks and storing these in separate locations, or using a metal backup solution to ensure it’s protected against fire, floods, and other unlikely (but possible) risks. 

Whatever the case, never store it digitally, as computers can fail or get hacked—don’t leave it to chance! 

Your first steps in crypto

Unfortunately, the process of securing your recovery phrase and keeping your funds safe often isn’t the most intuitive thing in the world. 

Some cryptocurrency wallets simply don’t provide this recovery method, while others don’t make it clear just how important it is to keep this phrase safe and private. We get it.

At Ledger, our mission is to help you experience the benefits of the crypto world by cutting through the noise and empowering you to take true ownership of your cryptocurrencies—without all the unnecessary complexity. 

We do this by providing a safe, secure, and simple way to store your cryptocurrencies with our line of cryptocurrency hardware wallets: the Ledger Nano S and Nano X

These wallets provide you both maximum freedom and ownership of your cryptocurrencies, representing an accessible path to financial freedom—while also ensuring your funds are both safe and recoverable at all times. 

Instead, we built our wallets to provide you a secure entry point to the cryptocurrency ecosystem, allowing you to receive, store, send, trade, and invest your cryptocurrencies through a single intuitive portal.
Taking control of your finances is easy with cryptocurrencies, but you will need to take some simple steps to keep your funds safe under all circumstances.

Important disclaimer:

When a user first receives their Ledger wallet, it must always be initialised by following this process:

  • Powering on the device
  • Generating a pin code
  • Generating 24 words

If a user were to receive a device containing a pre-completed recovery phrase or a pin code, the user should not use the device, as it means that the device may have already been used by somebody else. Ledger will never provide a pin code or recovery phrase with the product, nor ever ask for them. Under these circumstances, the user must contact Ledger customer support.

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