How hardware wallets and exchanges work together?Ledger Blue)

[Mecoin]

Correct me if I am wrong please...So after reading up on everything I can find on the internet, Bitcoins are actually not stored on the devices such as Ledger Blue. Only the keys, word phrases to access the bitcoins are stored on these devices and anyone with these key codes and pass phrases. can actually grab my bitcoins. The coins themselves are scattered all over the blockchain. A transaction has a unique address and can be downloaded to any device of my choosing when I want to.

But What about exchanges i.e. coinbase, xapo, bitcoin.com wallet? I have bitcoins and etherium on these exchanges. I can see my wallets when I login with the correct amounts. But can I spend these coins with my Ledger Blue hardware wallet? Or can I store them on my hardware wallet?

I am also earning payouts from cloud mining sites. Can I receive these payouts in my hardware wallet? IS this the safest way to keep and store my coins?

Basically, what I am looking for is a piece of mind. I would like to manage/keep all my coins in the safest place possible and figured a hardware wallet is the way to go. Am I wrong? Any help will be appreciated...

[torusJKL]

Correct me if I am wrong please...So after reading up on everything I can find on the internet, Bitcoins are actually not stored on the devices such as Ledger Blue. Only the keys, word phrases to access the bitcoins are stored on these devices and anyone with these key codes and pass phrases. can actually grab my bitcoins. The coins themselves are scattered all over the blockchain. A transaction has a unique address and can be downloaded to any device of my choosing when I want to.

Yes, the hardware wallet uses the seed to create a private and public key for every address.
The public key is the address itself which can be given to everyone. The private key will never leave the hardware wallet which is the feature that makes them safe.

As long as you have the seed you can restore the same private and public keys in the future and access your coins.

But What about exchanges i.e. coinbase, xapo, bitcoin.com wallet? I have bitcoins and etherium on these exchanges. I can see my wallets when I login with the correct amounts. But can I spend these coins with my Ledger Blue hardware wallet? Or can I store them on my hardware wallet?

Coins held on custodial sites can't be spent with your hardware wallet.
It is generally a bad habit to leave the coins on exchanges because if they get hacked or file bankruptcy you will loose your coins.
You should keep the coins on your hardware wallet.
There is a sentence you might have read: "not your keys, not your bitcoins"

I am also earning payouts from cloud mining sites. Can I receive these payouts in my hardware wallet? IS this the safest way to keep and store my coins?

Basically, what I am looking for is a piece of mind. I would like to manage/keep all my coins in the safest place possible and figured a hardware wallet is the way to go. Am I wrong? Any help will be appreciated...

If you can enter the address of your hardware wallet for payouts then they will be sent to your address directly.
This is generally the safest option as long as you have your seed you can always access them.

[Mecoin]

Thank you for taking the time to respond. I really appreciate it!I have a couple of follow up questions if you dont mind;

You mentioned that the hardware wallet "uses the seed" to create keys. So what exactly is the "seed" and where is that stored?

I understand the best way is to keep everything on my hardware wallet. Meaning I should send all my bitcoins stored on exchanges to my hardware wallet address. Correct?

And I can give the mining sites my wallet address to collect the payouts. This may sound stupid but I have ordered my wallet(Ledger blue) but it hasnt arrived yet. I assume this device needs to connect to internet at all times so it can receive the payouts? You say exchanges are risky but what about the company who manufacture the wallet(in my case Ledger), arent they able to see what I have on my device? Isnt that a similar risk as leaving the coins on an exchange?

[torusJKL]

You mentioned that the hardware wallet "uses the seed" to create keys. So what exactly is the "seed" and where is that stored?

The seed is usually 12 or 24 words of the English language.
The most common implementation is BIP39 which uses a list of 2048 words.

The seed is stored on the hardware wallet itself. No software that interacts with the wallet can ever extract it. Neither can the private key be extracted. The only information the hardware wallet provides to the software on the computer is the public key, meaning your bitcoin address.

I understand the best way is to keep everything on my hardware wallet. Meaning I should send all my bitcoins stored on exchanges to my hardware wallet address. Correct?

Correct.

And I can give the mining sites my wallet address to collect the payouts. This may sound stupid but I have ordered my wallet(Ledger blue) but it hasnt arrived yet. I assume this device needs to connect to internet at all times so it can receive the payouts? You say exchanges are risky but what about the company who manufacture the wallet(in my case Ledger), arent they able to see what I have on my device? Isnt that a similar risk as leaving the coins on an exchange?

You can't be robed of your bitcoins if you give the bitcoin address. Only a person in possession of the private key (which will be on the hardware wallet) can steal the funds from the address.

When you receive your Ledger Blue you will create a new seed. Ledger does not know what seed the device has created because this is a random operation.

The Ledger Blue does not connect to the Internet. You will need to use the Ledger Wallet app to connect to the Internet and check the received amount on your addresses. The app is connected via USB cable to the Ledger Blue.

[Mecoin]

All makes perfect sense I am sure but it is so different then our bank accounts so it is difficult to get used to. I believe this is the biggest reason why Bitcoin is not mainstream yet. I think it would really take off if everyone understands how to keep your coins safe and how to use them. Thank you for all your help1

[torusJKL]

Bitcoin is like Email in the 1980s. Complicated and foreign.

In time it will be understood better and hopefully we will get easier solutions for end users.