Beginners Guide to Setting up Your Ledger Cold Wallet

Updated April 2024

Cold wallets, like the Ledger Nano and Trezor, are the most secure way to manage your crypto since the private key is never accessible with an internet connection.  Wallets link you to your private key which allows you to control assets at a specific address on the blockchain.  

In this guide to setting up your Ledger, we’ll cover the unboxing and installation process of a Ledger Nano S complete with pictures, best practices and notes.  

Note – Ledger is NOT a fully open sourced wallet like Trezor or Blockstream Jade.

Crypto Cold Wallet Basics

Hardware Device – Hardware wallets often resemble USB drives.  The buttons and simple monochrome screen are used to enter your pin and confirm crypto transactions.

Wallet Pin – The pin is the password to your hardware wallet.  It does NOT control the private key like your recovery seed.  

Blockchain Address: The location of specific crypto assets which can only be accessed with a private key.  

Recovery Seed Phrase: 12-24 words that can be used to restore and recreate your private key if you lose or damage your original cold wallet device.  

Public Key:  Like your bank account and routing number and the ID for sending/receiving crypto.

Private Key:  NEVER share your private keys.  Each crypto asset you hold will have its own private key:  It’s like your bank account number + your password + 2FA authentication wrapped up into one. 

Safe Accounts: Your wallets that are not associated with this storage device.  (ie – exchange service, software wallet or another cold wallet on a separate device.)

For more details, check out our ultimate guide to crypto wallets here. 

Step-by-step guide for setting up a hardware wallet

There are several reputable hardware wallet manufacturers like Ledger, Trezor ColdCard, BitBox’s Bitcoin ONLY, and KeepKey. 

Purchase the hardware wallet directly from the manufacturer, NOT Amazon or Ebay, and expect delivery within a few days.  

Ledger provides instructions in the box and on their website here. 

I’m not going to re-write their instructions and will focus on sharing what I feel they left out of the setup guide. 

Step 1: Unbox and Initialize the Hardware Wallet

If you are prompted to enter PIN code on a brand new device contact Ledger Support before proceeding.  Ledger states: “If a user were to receive a device containing a pre-completed recovery phrase or a pin code, the user should not use the device.”

Pro Tip:

Step 2: Create a PIN and Generate Recovery Seed

Use the buttons to navigate the monochrome screen on your Ledger and create a PIN code.  Enter and confirm 4 – 8 numbers that you will use to unlock your device. 

Next, your device will generate a 24 word recovery seed and you’ll need to write down the words in order on the supplied sheet. 

Follow the prompts to review and confirm.   

Pro Tip: At this stage of the setup process, I like to reset the device. After you reset the device, turn it on and select the option to restore from recovery seed.

Step 3: Install the Ledger Live Companion App

Before you transfer crypto to your cold wallet, make sure you’ve successfully recovered your device by resetting it and using your recovery seed. 

Most hardware wallets require a companion app or software to interact with the device and manage your crypto. 

This may sound basic, but be sure to confirm that your computer and operating system are up to date and support Ledger Live.

Ledger Live is simple, intuitive and powerful.  

Pro Tip: With the hardware wallet connected to Ledger Live, complete firmware updates for your hardware wallet and install.

Step 4: Configure Crypto Accounts

You can now install apps on your device and add accounts in Ledger Live.

If you are transferring Bitcoin from your exchange custodial wallet to your Ledger, you’ll need to install the Bitcoin app.  

In Ledger Live and select the crypto you want to manage which will add the ‘account’ and synchronize with the hardware wallet.

Step 5: Test and Verify

With Ledger Live connected to your cold wallet, login to your online exchange account.

I like to set up a very small transfer.  You’ll need to copy your Bitcoin wallet address from Ledger Live and paste that into the transaction details on your exchange to send the small amount.  

After transferring your funds, verify that the balances and transactions are correctly displayed on your hardware wallet and the companion app or software.  You may need to wait up to 30 minutes for the transaction to move from pending to complete.

Step 5: Safely Store the Recovery Seed Phrase

If you forget your pin or your cold wallet crashes, you will need to restore your hardware device with the 12-24 word seed phrase that you wrote down during the setup process.

A single piece of paper is vulnerable to fire and water damage.  Consider using a fireproof and waterproof safe or engraving the seed on a metal plate.  

Being your own bank has lots of advantages. 

The responsibility to keep your crypto secure has one main disadvantage…hiding your cold wallet and recovery seed phrase.  

This industry has come a long way in a very short time and if you’re just getting started on your crypto journey we’re here to help!

Note: Stratus does NOT provide investment, legal or tax advice.  All information in this article is for educational purposes and should not be interpreted as investment, legal or tax advice.  The opinions expressed are those of the author for informational purposes and neither Stratus nor the author are liable for any errors, inaccuracies or omissions.  Digital assets, such as cryptocurrencies or decentralized finance, present unique risks for investors.  For investment, legal, tax, or other financial guidance you should consult your own advisor.