In the previous installment of the Ledger 101 series, we have seen the necessity of using a hardware wallet to manage your crypto assets.

But not all hardware wallets are born equal.

In the same way that you wouldn’t build a vault out of lego bricks, you wouldn’t build a secure hardware wallet using the components taken from your coffee machine.

Ledger has built all its devices around specialized chips called Secure Elements, and designed a secure Operating System (BOLOS) engineered to leverage its unique security capabilities.

What is a Secure Element?

To build a relatively complex electronic device such as a hardware wallet, you need a microcontroller. It is basically the same thing as the processor in your computer or smartphone, but at a much smaller scale.

There are two types of microcontrollers:

the “normal” one used in your microwave, hobbyist drone or TV remote controller. It’s called a MicroController Unit or MCU in short.

the “secure” one used in payment cards, SIM cards or passports. It’s called a Secure Element or SE.

As you can see, Secure Elements are mainly used in mission critical environments where important assets such as money or identity are at stake.

The origins

Since the beginning of the information technology age, security has been a game of cat and mouse between proponents of new systems and hackers wanting to disrupt them. With the advent of payment or telecom networks, the security scope has evolved from heavily-guarded mainframes to widely distributed endpoints such as the SIM card of your phone, set-top boxes or electronic toll collection systems.

Massive efforts have been put into securing these endpoints, making sure that they could not be counterfeited in any way. The most famous example is the “smart card”, introduced in Europe in the 80s (the USA would have to wait almost 40 years) and today used to secure payment networks around the globe. Smart cards are designed to ensure the highest level of security in the worst attack scenario where the attacker has physical access to the device.

In order to scale globally, these payment cards have to be extremely secure. So how exactly do they differ from a “normal” electronic card? The answer is simple: they are built around a Secure Element, leveraging its unique security features.