Staking via hardware crypto wallet: Ledger exec explains how it works

As cryptocurrency staking is increasing progressively popular, 1 whitethorn wonderment astir staking opportunities of not lone crypto exchanges oregon bundle wallets but besides hardware wallets.

By definition, staking allows investors to gain crypto without selling their holdings but alternatively by delegating crypto to a staking validator to enactment a blockchain. Originating from the connection “stake,” the staking process refers to gaining profits and an associated passive income from crypto done a statement mechanics known arsenic proof-of-stake (PoS), arsenic opposed to the mining-based proof-of-work (PoW) mechanics of Bitcoin (BTC).

Amid the increasing popularity of PoS, staking has been increasing rather fashionable connected online crypto exchanges and bundle wallets, with galore trading platforms actively adopting the feature. Some hardware wallet providers person been integrating the staking diagnostic into their portable carnal devices arsenic well.

Ledger, a large hardware cryptocurrency wallet supplier, has been actively moving connected its crypto staking features since debuting staking successful 2019.

On May 9, Ledger introduced staking for Solana (SOL), allowing investors to gain SOL by committing the cryptocurrency to enactment the Solana network.

The caller staking diagnostic is enabled connected the Ledger Live app successful practice with the blockchain work Figment, which provides nodes for staking utilizing the Ledger validator. The latest staking summation joins six coins already disposable for staking connected Ledger Live, including Ether (ETH), Tezos (XTZ), Polkadot (DOT), Cosmos (ATOM), Algorand (ALGO) and others.

Staking via hardware wallets vs bundle wallets and exchanges

Staking coins done a hardware wallet has a fig of peculiarities compared to staking via bundle wallets oregon crypto exchanges, caput of Ledger Enterprise Alex Zinder told Cointelegraph.

“The main quality betwixt staking connected a bundle wallet versus staking with a hardware wallet is security,” Zinder said, noting that hardware wallets stay the “safest mode for users to support afloat power of their integer assets.”

“When staking with a bundle wallet, you ain your coins, arsenic you ain your backstage keys, but the information of your coins is babelike connected an outer root of security,” Zinder stated. The information of coins staked connected bundle wallets depends connected the information of the user's machine oregon smartphone, the exec added.

In opposition to staking connected crypto exchanges, staking via hardware wallets allows investors to genuinely ain and power their crypto holdings arsenic good arsenic offers the state to take a validator, the Ledger enforcement said. On the different hand, staking with an speech is easier due to the fact that specified benignant of staking requires little steps to follow, Zinder noted. “You don’t request the level of acquisition required to take betwixt antithetic validators,” helium added.

Crypto ever remains online, adjacent connected a hardware wallet

As hardware crypto wallets are designed to supply a signifier of offline retention for crypto, the process of staking coins via specified wallets is sometimes referred to arsenic “cold staking,” arsenic opposed to “online staking” via exchanges.

At the aforesaid time, storing crypto connected a hardware wallet doesn’t mean that crypto itself is offline, Zinder pointed out, stating:

“It's captious for everyone to recognize that your crypto ever remains online connected the blockchain adjacent erstwhile utilizing a hardware wallet. When we speech astir hardware wallets, we’re talking astir backstage keys that are stored successful a secured spot successful the hardware wallet.”

“When signing a transaction, specified arsenic delegating your coins to a validator, that connection is transmitted done the unafraid element, signed connected the Nano, and past sent to the blockchain,” the exec added.

Related: Noncustodial Bitcoin wallets unbannable, says exec down Trezor wallets

A hardware wallet is simply a benignant of noncustodial crypto wallets, designed to assistance the idiosyncratic afloat control of the owned crypto. Contrary to custodial wallets, noncustodial wallets region the request to trust connected a 3rd enactment that could recover, frost oregon prehend the user’s crypto assets. This makes the idiosyncratic solely liable for storing the backstage keys successful bid to entree crypto holdings.

With a hardware wallet, the idiosyncratic gets a instrumentality to store a cryptocurrency wallet and backstage keys. However, the idiosyncratic inactive has to support the backstage keys safely offline arsenic well.