Ledger hardware wallets manage your cryptocurrencies through apps. Apps can be installed on your device through the Ledger Live manager. But why do Ledger Nano X and Ledger Nano S need apps? What is the purpose of doing so? Let’s take a closer look.
Apps on Ledger devices play a vital role in managing crypto assets – there is a dedicated app for each cryptocurrency. These apps can be installed by connecting your hardware wallet to Ledger Live.
So what do these apps do? In short, the app in the hardware wallet calculates the private key based on your 24-word recovery phrase and is used to verify receiving addresses and transactions. While we would like to take you a little deeper into the above process, we would also like to explain a little more about the application-based system.
Creating Private Keys
The 24-word recovery phrase is a backup of all your crypto assets and must be kept safe. Each individual cryptocurrency address is managed through a private key. While the 24 words can access all your cryptocurrency accounts, each private key can only access one specific crypto asset address.
The application does not have access to the recovery phrase, which is designed to be the most secure. Instead, the application sends a request to calculate the private key from your 24 words based on specific parameters called the derivation path. The derivation path is unique for each crypto asset. After meeting the necessary security checks, the application receives a reply containing the private key. Of course, to ensure the security of the sensitive operations described above, each operation is completed within the secure element chip.
That's okay! Now the private key for the cryptocurrency you need is already in your hardware wallet! The application can then derive your public key from it. The public key is more commonly referred to as the address. Anyone can send cryptocurrency to this address.
We created the following diagram to summarize this process:
So why do I need to use the app after this?
Because your private key is still very important after this, and it will be used to verify your receiving address and transactions. Without your private key, you can't do any of the above operations. Let's take a closer look at how it works:
When attempting to make a Bitcoin transaction, you need to use your Bitcoin private key to sign (i.e. approve) the transaction. After determining the amount of Bitcoin to send to an address, the wallet application will send a signature request to your Ledger hardware wallet.
The exact request made by the wallet app will then be displayed on your Ledger device screen, allowing you to verify that it matches the transaction you set up. This reduces so-called man-in-the-middle attacks.
Once the transaction has been verified and approved, the app on your Ledger device will use the private key to create the correct signature and send it back to the wallet app.
The wallet app will then broadcast the transaction to the blockchain – your transaction is complete!
But apps can’t talk to each other?
No. Ledger decided to use a separate app for each cryptocurrency. This was done for security reasons, but also to allow third parties to participate in development (more on this later).
Security-wise, this is to ensure that if a problem occurs with one cryptocurrency app, no other crypto assets will be affected. This principle is enforced by the BOLOS custom operating system designed and developed by Ledger.
Ledger is not only the only hardware wallet provider to have created its own operating system, but is also one of the few to use an app system. Other hardware wallets use so-called monolithic firmware. In such wallets, if there is a problem with the code of one cryptocurrency, it can affect all other cryptocurrencies.
Third-party development
Because the apps are independent and cannot interact with each other, we can allow people outside of Ledger to develop their own apps. We have been able to publish more than 40 programs created by members of the cryptocurrency community and developers – thank you very much!
Of course, we still review them to make sure they meet the highest standards of user experience and security. You can learn more about the process of submitting apps to us here.
Will my crypto disappear if I uninstall the app?
Don't worry, you can still access your crypto! As mentioned at the beginning of this article, your Ledger device calculates your private keys from the 24-word recovery phrase based on a specific parameter called the derivation path.
This means that if you always have the same recovery phrase on your device, it will be calculated consistently. So when you install the app again, you will have access to the same addresses as before.
