Coinbase Teams Up with Ledger to Support Offline Key Storage

Coinbase, the most popular crypto exchange in the U.S, today announced native support for Ledger, the popular crypto hardware wallet.

The Ledger wallet integration is accomplished using a Coinbase browser extension, essentially giving users another level of security.

This comes at a time when the fast adoption of non-fungible tokens (NFTs), and decentralized finance protocols has led to a rise in malicious hacks, seeing millions being stolen in cryptocurrency just this past year.

"There's no future in Web3 without security at the start of the consumer journey," Charles Hamel, the vice president of product at Ledger, said speaking with crypto news outlet Decrypt. "With billions of transactions happening every month, no matter what or why you trade and hold, we believe every user deserves world-leading security and ease-of-use. Coinbase and Ledger partnering enhances this for crypto and NFT communities."

Hardware wallets are physical devices, that look much like a regular USB stick, but instead of storing your vacation photos, these are designed to hold private keys in an offline state instead of online. Private keys are crucial pieces of information needed for one to interact with certain blockchain networks such as Bitcoin or Ethereum, but when stored online as to how Coinbase stores their keys, they can be easily susceptible to attacks.

For example, in August of 2016 Bitfinex was hacked for 120,000 Bitcoin all due to a vulnerability in the exchange's hot wallets — a name given to wallets stored online.

"We want to empower everyone to use dApps and access Web3, and that requires building the easiest-to-use and most accessible self-custody wallet in the ecosystem," Coinbase said.

Coinbase further explained every transaction on a blockchain needs a user's public and private key, a "hardware wallet ensures that only the user who holds the physical device can complete a transaction."

"Using a hardware wallet is a lot like using two-factor authentication to secure a website login, but instead of a six-digit code that is sent as an SMS or generated in an authenticator app, your hardware wallet is used to physically confirm transactions with the press of a button," said Adam Zadikoff, senior product manager at Coinbase.

This partnership between these two leaders in the industry will only benefit us end-users, as the recent plague of hacks has led to the necessity of buying one of these devices if one would like to participate in the crypto space.