Misc. | 04/15/2021

How to keep yourself private in the crypto world?

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In the world of crypto, privacy is a key issue for many users. While most transactions may be secure and anonymous, there are ways for “malicious eyes” to peep into your wallets. A lot of crypto-users may be unaware of the fact that even the smallest transactions can lead 3rd parties to finding out how much they own. This can potentially become a threat to the user’s holdings as hackers may attempt to target them for their worth. 

It’s a dirty and scary world out there and we all know it. The world of crypto hasn’t been at all spared the greedy clutches and the prying eyes of the hackers and malicious elements on the web. Ever since people have started using cryptocurrencies to transact, hackers have been trying to find out different ways to gain access to wallets and be away with the goods.

In the world of Ledger, we have always been perfecting the art of privacy and security to meet the demanding expectations of our users. From our Nano wallets, to our Ledger Live application and our Ledger vault, our state-of-the-art security and privacy standards have been implemented to mitigate any potential threats to those valuable crypto-holdings.

Our hardware wallets are safeguarded with secure element chips – the kind you will find in credit cards, passports and other such items – and constantly tested by our own internal security lab, the Ledger Donjon. Our team of white-hat hackers performs all sorts of penetration tests, from fault-attacks, to software-attacks and even side-channel attacks to make sure that Ledger devices are bullet-proof and can withstand any attack.

In our Ledger Live app, we also made sure that with subsequent updates, the public addresses of your crypto wallets would not spew you out important information about your holdings. Moreover, we’ve made sure to implement some nifty features that will help you upgrade your privacy protocols to the max.

We’re going to tell you how features like “Discreet Mode”, “Coin Control”, “Full Node”, can help to keep you private, along with some other cool features in our bag of Ledger tricks.

Discreet mode

First off, we’ll start with the easiest of our privacy tools, “The Discrete Mode”.

Whenever you’re using Ledger Live you have the option of enabling discrete mode. You can easily do this by clicking on the small eye button on the top right corner of your Ledger Live interface.

By doing so, Ledger Live will only show asterix symbols “***” instead of showing your actual balance on the account. This can be especially useful when you’re browsing on Ledger Live and you don’t want prying eyes over your shoulder to see how much BTC you actually have. It can also be useful, let’s say, when you’re trying to onboard a friend onto Ledger Live but you don’t want them to actually see how much you own.

Another cool trick to remember when working with BTC and its derivatives on Ledger Live is that Ledger generates a new address each time you receive a new Bitcoin transaction. These addresses all have their own extended public keys or XPUBs. This means that your holdings won’t all be displayed on the same address but will have separate designations, keeping the full amount of your BTC assets undisclosed.

Moreover, all the XPUBs are always stored locally on your computer and never on Ledger servers, providing you with extra-privacy and security measures to start off with. The XPUBs are all encrypted by your Ledger Live password for the tightest security.

You can read more about how Ledger Live works with XPUBs and keeps your information private and secure here or here.

Coin Control

This one is for all of you Bitcoin users out there and especially the ones that thrive within our Ledger ecosystem. For more advanced users, it’s a fact well known that Bitcoin and its derivatives make use of what is referred to as HD wallets or Hierarchical Deterministic wallets. This basically means that a single Bitcoin account in Ledger live manages multiple Bitcoin addresses.

What does this actually mean?

Previously, Ledger Live would make use of your oldest received coins in the transaction o a First in, First OUT (FIFO) basis. These transactions are also referred to as UTXO or Unspent Transaction Outputs. Nowadays, the Coin Control features offers you the option of choosing which address and UTXO you would want to use in order to execute your transaction, giving you more control and privacy when you’re doing so.

One of the main issues that Ledger’s Coin Control solves is the safeguarding of your assets against what is known as a “Dusting Attack”. This type of attack usually happens under the guise of small BTC transactions that you receive. Via these infinitesimal transactions, a hacker can potentially exploit the address and find out how much BTC or other assets you’re holding onto those addresses, painting a target on your back for a full-hack.

You can read more about how Ledger’s Coin Control helps keep you safe here.

Going Full Node

If the Cost Control feature is not enough to satisfy your need for privacy and security, we’ve thrown in yet another feature that will give you all the control you need over your actions.

This one’s not for the faint-hearted and not for those that lack technical expertise. Implementing your own full-node on your computer comes with a few requirements and only works for BTC in Ledger-Live, in an experimental fashion at this time.

So what is a full node?

You’re probably familiar by now with miners and how they act on the Bitcoin network to help you process your transactions. Once you issue a Bitcoin payment, it goes to the miners to be processed out. But have you ever wondered what happens with your transactions afterwards?

Enter the Nodes!

As you may also be familiar, Bitcoin uses a blockchain to store all information about transactions, past and present. This history is kept secure by a number of people across the globe who run Bitcoin nodes on their computers. If one node falls to a hack, the others are there to restore and back-up the network, no harm done.

So how does this impact your Bitcoin experience?

Say you use “Bitcoin Wallet Alpha”. This wallet connects to a specific node of its selection in order to verify and complete the transaction. This way, you’re entrusting your wallet and the node provider with your transactions, both of them being able to see your balances and transactions in the process.

This process might not be private enough for some and can potentially lead to unwanted outcomes. The safest & most private way to go about it? Run your own full-node on Ledger Live, in combination with a Ledger hardware wallet (Nano X or Nano S) and keep your privacy & security to the tightest level.

Running your own full node will give you all the privacy and control you need, while your keys are always stored safely offline onto your Ledger hardware wallet. As we said earlier, please be advised that setting-up and running your own full node takes quite a bit of expertise and will set you back on the hardware resources of your device.

If you want to learn more about how full-nodes work with Ledger Live and how to set-up one, you can read about it here.

And there you have it ladies and gents – keeping yourself private and uptight secure has never been better on Ledger Live and Ledger hardwallets. With hackers increasingly targeting wallets and finding new ways to do so, it’s paramount to know how to best keep your security at a top-notch level. Regardless if you opt for Coin Control or you have the technical skill to tinker around with a full node of your own, Ledger has your back.

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