When transacting Ethereum, a crucial component of the process is the storage of the cryptocurrency. An Ethereum Wallet is a program that safely stores and send your coins. There is a multitude of different wallets and in order to choose the best one, there is a plethora of different factors to take into consideration.In this guide, we will cover every minute detail you need to know about the successful preservation of Ethereum as well as inform you about other methods of storage.
Ethereum Wallets: Summary
An Ethereum Wallet is a program or device that stores cryptocurrency and allows one to interact with Ethereum by the way sending and receiving the cryptocurrency. A factor with immense significance is that a physical Ethereum Wallet is a much safer route of storage than other methods.
Top wallets from each category:
What is an Ethereum Wallet?
An Ethereum wallet is a software installed on a device that allows the user to safely send and receive the cryptocurrency. The way Ethereum Wallets function is congruent to that of your home address. In order to send and receive mail, you need an address.Like Ethereum, you need an address for sendimg and receiving Ethereum.
This address is called an Ethereum address. Now you have an address, but, you also need a password--this is what a private key is. Private keys act as the gatekeeper to your wallet just as passwords for other applications do. When it comes to guarding your private key, the safest strategy to implement is to keep your private key offline and outside of a computer or phone.
The best practice is to have a secure hardware wallet such as a Ledger that is disconnected from the internet drastically decreasing the odds of Ethereum wallet compromise.
What is a Private Key?
A private key is an extensive strand of unique characters that act as the literal key to your wallet. Your private key determines exactly when you want to send Ethereum to one of your peers. The private key is used to generate the address to your stockpile of Ethereum.
The primary role of an ETH wallet is the usage and storage of the private key. A significant concept to grasp is that the wallet is expendable and the private key is not. If you lose your wallet but still have your private key, then all you need is a new wallet. Now, all you need to do is install new wallet software, key in your private key, and ensure that your Ethereum is safe.
- download a new wallet or get a physical wallet
- import the private key
- regain control of your bitcoins
Ethereum Wallet Types
There are 2 types of wallets - Cold Storage & hot wallets.
TYPE 1: Cold Wallets (Safe & Secure)
Cold Storage wallets operate without the use of an internet connection and cannot be breached by intruders, Great examples of cold storage wallets are hardware wallets and paper wallets. However, there are a few downsides to be discussed.
Hardware wallets are devices such as flash-drive that are connected to the hard drive of your computer allowing you to send and receive EThereum. Because hardware wallets are not connected to the internet, they cannot be hacked into. Of the Hardware wallets currently available, Ledger and Trezor have proven to be the best on the market.
Hardware wallets are constructed to keep your private key’s security at a maximum level. In fact, the security of a hardware wallet is so impenetrable that you can even use them to transact Ethereum on compromised devices. In order to use your wallet on another individual’s device, plug it into their device and launch wallet software.
From there, you will be able to send and receive Ethereum as safe as ever. This premium level of security and usability makes the Hardware wallet the most viable option of cryptocurrency wallets to date.
A paper wallet is simply a piece of paper where your private key is written down. Although paper wallets are very secure, it is easy to misplace resulting in immediate loss of Ethereum. If you want to use a paper wallet as your primary ETH holder, just plug your device in wherever you desire and key the code into the input section and access will be granted.
TYPE 2: Hot Wallets (Convenient BUT Unsafe)
A hot wallet simply means that your Ethereum is connected to the internet in some way, shape, or form. This can be a wallet installed on a mobile device, desktop computer, or cryptocurrency application. Because of the convenience, hot wallets are the most popular type of exchange. However, they are the easiest wallet to hack, which makes them a potential red-flag for Ethereum owners.
This is a wallet that is installed on a desktop computer equipped with its own private keys. It is a wise decision to always keep your computer updated and virus free. This helps prevent potential cryptocurrency thieves from preying on your loot.
This is a wallet installed on your phone that is simultaneously connected to the internet. This means that your coins are a sitting duck for compromise. Storing a large number of Ethereum on this type of wallet could easily end in an Ethereum balance of 0.00.
This is a type of wallet that is derived from a cryptocurrency exchange. This is the least secure wallet because the owner of the site has the information to your private key and are one of the top targets for hackers and theives.
Better Safe than Sorry
It’s as cliche of a phrase as they come, but it’s held up so long because it’s true. It may be the easiest and fastest way of EThereum storage to go a hot route with something like a web wallet. However, as time passes and your EThereum bundle grows, you will thank yourself for investing in a hard wallet like Ledger or Trezor.
The Best Ethereum Wallet?
Our number one pick is the Ledger hardware wallet, it is the number 1 most secure wallet for storing cryptocurrency. Get it straight from the manufacturer below.