Noob Question: ELI5 – What’s the reasoning for linking a Ledger to a Wallet?


Can someone please ELI5 as to the reason why you would want to link your ledger to your wallet?

So my understanding so far is that your coins don’t get held on the Ledger, your private keys do, your coins just remain on the blockchain network (right?). So for arguments sake, I have a Ledger and I have installed the Cardano app. I want to store my ADA on my Ledger for security reasons. Apparently though I cannot store my ADA directly on the ledger as it’s not supported (?), I need to use a wallet such as Daedalus or Yoroi.

So what’s the reason for downloading the Cardano app on the ledger in the first place if I need to use a wallet elsewhere? Are they not just safe on the wallet of Daedalus or Yoroi?

I don’t understand how the two connect and the reasons why. Why can’t I just hold my balance directly on the ledger and not use these ‘wallets’?

Please ELI5 with a general answer (i.e. doesn’t have to be specific to ADA as I have other coins too), much appreciated.

What do you think?

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  1. The Ledger stores private key material.

    The ledger doesn’t know how to use that key material until you install the network-specific application. When the application is open the Ledger will know how to interface (cryptographically) with the network of choice.

    The Ledger device itself does not provide any user interface for sending/receiving or executing smart contracts. That is where a wallet comes in. The wallet provides you with an interface for initiating a transaction and the Ledger signs it according to the cryptographic protocols of the network.

  2. It’s a common misconception. No wallet physically “stores coins” the way you’re thinking. These wallets are just a fancy way of managing your keys. It’s really just a figure of speech. Your “coins” is just some text written in the blockchain that says, “hey /u/jordW0 has 10 tokens, they were mined by /u/person, who used their private key to approve /u/jordW0 owning 10 of them”.

It is going to be interested to see how smart contracts evolve as rules are becoming tighter. What do you think?

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