Ledger Swap & Security: What you need to know
Disclaimer: This service is operated by our partners. If you encounter any transaction related issues, please reach out to them.
The brand-new Ledger Swap feature innovates how you can swap your cryptocurrencies. However, when you swap your crypto, you’ll want to be sure that this is done in a secure manner. Let’s take a closer look at how the Ledger Swap is secured.
If you own cryptocurrencies for a bit, you’ve likely swapped some of your crypto for another at some point. If you have, you probably did this through an exchange, right? Well, you no longer need to. Ledger swap, powered by our partners, lets you swap your crypto directly through Ledger Live!
So how about the Ledger swap’s security? Of course we’ve taken that into very serious consideration. Let’s first dig into how the Ledger swap works.
How does the Ledger swap work?
Before you’d start swapping with Ledger, you’ll need to have one of our devices and Ledger Live. Already got that? Alright, let’s go over to step 2: getting the correct apps on your Ledger device. To be precise, you’ll need three applications:
– The app of the crypto you want to swap
– The app of the crypto you want to receive
– The exchange app
Remember these three apps – they’ll play an important role when we discuss security later on. So now that you’ve got all this take care of, what’s next?
Now it’s time for the fun part: the actual swap! When you swap, you are actually sending your crypto to our partners, and they will send you back the amount you agreed on.
So I’d be creating a transaction to one of our partners and they’ll need my receiving address right? Yes, pretty much. What may surprise you is that you’re not asked to verify our partners’ address, nor your receiving address through your Ledger device. Instead, you’d only verify how much you’re sending out and receiving. Not to worry though, this was not an oversight.
How is the Ledger Swap kept secure?
We wanted to keep the Ledger swap’s user-interface simple and user-friendly. Needing to verify so many different elements can get a bit rough, especially for those new to crypto. Now, we didn’t let this come at the cost of security of course. So first, what would be a potential threat?
Someone could try and trick you to send the ETH you want to swap to their address. Or perhaps they’d give their address instead of yours to receive the freshly swapped coins. This is called a man-in-the-middle attack. Normally you’d verify all transaction details on your Ledger device to make sure there’s no one trying to come in between and steal your crypto.
With the swap, we worked together with our partners to create a different solution. Let’s go over the steps.
Once you’ve set up your swap request, Ledger Live will ask your Ledger device the address where you want to receive your crypto. It will then create a new swap request with all key elements (which crypto you’re trading for which, amounts, receiving address, etc.).
After this, your Ledger Exchange app will create something to identify your specific request: a Transaction ID. This ID is unique to your request and cannot be used for another.
This Transaction is sent through Ledger Live to our partners. They send the transaction back including a summary of all information (also its ID).
Additionally, they will convert those information into a format that can be read by the Ledger device with a specific signature.
Your Ledger Exchange app can verify if the signature is valid, thus checking if indeed the request and its details come from our partners and is legitimate.
At this point, your Ledger Exchange app interacts with the other two apps: the app of the crypto you’re sending out and the app of the crypto you want to receive. It’ll be able to verify that the addresses you’re about to use for your swap are indeed valid. All of this happens in the background to give you a better user experience.
Your device will already know if our partner’s address is valid or not, thanks to its signature. It’ll also check if the Transaction ID is the same as the one it’s previously created. At this point, you’ll see how much crypto you’ll be sending out and how much you’ll receive displayed on your Ledger device. Once you’ve double-checked this, you’ll need to give your manual consent to approve the swap.
And voila! Your swap is made securely!
This is the somewhat simplified explanation of how the Ledger Swap works in a secure manner. For more technical details, you can check out this article.
At Ledger, we always aim to combine innovation with security and great user experience. The Ledger Swap has been the result of lots of testing, hard work and great collaboration with our partners.
Ledger’s solution is the ultimate way to start your cryptocurrency adventure. From buying crypto assets to swapping them for one another, we provide a vast amount of services with our partners, all in a single platform. The best part: you are completely in charge of your own assets and cannot be limited by anyone – not even us. On top, our technology empowers you to enjoy your financial freedom securely.