Ethereum Wallets | Types, Use Cases and Safety
By right Ethereum is called one of the most popular crypto space projects. Created by Vitaliy Buterin it provides decentralized environment, where developers from different corners of the world are able to develop their own dApps. To ensure stable functioning, system uses Ether tokens.
Similarly to Bitcoin and other cryptocurrencies, Ether uses public and private keys for transactions (instead of bank accounts). A place (software or device), where these keys are stored and where you can receive or send Ether is called Ethereum wallet.
However, Ether is not stored in Ethereum classic wallet or anywhere else. Just like any other cryptocurrency Ether doesn’t exist in a clear shape. Users are just given data, which allows them to access their wallets.
Your assets are nothing more that Blockchain records and your Ethereum wallet interacts only with Blockchain to conduct transactions.
So if you want to send or receive this currency having Ethereum wallet is a necessity.
Often cryptocurrency is compared to e-money. The same way you can compare Ethereum wallet to a regular one, where you keep your money. But before we move on to storage options let us first discuss main types of wallets in terms of their usage and safety.
This will greatly help you to choose the best Ethereum wallet and will surely deepen your understanding of the topic.
Let’s go!
Hot Wallet VS Cold Wallet
There are two main types of Ethereum wallets: hot and cold ones.
Hot wallets store your keys online, so you can get access to your assets literally from any place in the world. You just need to make sure that there is a solid Internet connection. This type of wallets is more popular, because gives users additional freedom and flexibility.
However, hot wallets have one major drawback: they can be easily hacked and you will lose your money. It’s hard to call such wallet the best Ethereum wallet, especially if you operate large sums.
On the other hand, there are cold wallets. They store keys offline and connect to the Internet only if you need it. Of course, such wallets are more reliable in terms of security.
The type of Ethereum classic wallet you choose (hot or cold one) greatly depends on your regular activity: if you often make small transactions, you can choose hot wallets. But if you need to store big sums for a long period, it is better to have a cold wallet.
This will help you to have untroubled sleep!
Private Key
To get access to your Ethereum wallet and to send or receive Ether you will need to enter a private key. Keep in mind, if you lose the key or it somehow ends up in someone else’s hands, you lose all the cryptocurrency you have on your account.
Rather unpleasant, right?
That is why you need to keep the key from your Ethereum classic wallet in a safe place that no one else knows about. Some wallets store these keys online, while others – offline, so it’s up to you to decide how you want to store your keys.
The best Ethereum wallet is always the one that suits your needs and ensures safety of your transactions!
Multi-Signature Wallet
The next type of Ethereum wallet is multi-signature. It requires involvement of all participants in order to conduct a transaction.
To put it simple, all sides must enter their own code to make a transaction. This is the best Ethereum wallet for family use, as well as for enterprises.
Multi-Currency Wallet
There are also different Ethereum wallets depending on the number of cryptocurrencies they are able to store. For example, some of them process only Ether, while others (like Exodus) allow storing Bitcoin, Dash, EOS and other currencies.
Moreover, some wallets allow converting one cryptocurrency into another. So if you want to get Ether and then convert it into Bitcoin, the best Ethereum wallet will be a multi-signature one.
To name a few Ethereum classic wallets of this kind: Trustee, KeepKey and Ledger Nano. The last two are western wallets, so they don’t support Russian language. In addition, they are hardware wallets (i.e. they store keys on a hardware device).
Custodial Wallet VS Non-Custodial Wallet
Ethereum classic wallet can be either custodial or non-custodial. Custodial Ethereum wallets don’t give access to your private account and simply store private keys on servers. A big advantage of such wallets is that you can regain access to your account if the password was lost.
However, your account may be frozen in case of any interference. Moreover, you can lose all your money during cyber attacks on your Ethereum wallet. Unfortunately, cases of such hacker interventions have drastically increased.
Non-custodial Ethereum classic wallets operate in a different way – they give you all the control over access to the wallet without using any servers. The main disadvantage of such wallets is that if you lose your key it will be impossible to regain access to your account.
For example, if you have lost your laptop or broken your cell phone, it will be possible to enter your Ethereum wallet only via the seed phrase.
This seed phrase is given, when you open an account. Of course if you weren’t storing this phrase on the same laptop or phone!
The best wallets for Ethereum in this niche are Trustee, Copay and Jaxx. Actually, there are many other non-custodial representatives, so you have all the freedom to choose the one you like the most.
Ways To Store Ethereum Safely
There is a variety of Ethereum wallets and it is one of the reasons why we love them so much! At the moment there are five types of wallets:
- Web- or online wallet;
- Ethereum hardware wallet, as a separate device;
- Mobile wallet that is installed on smartphones;
- Local, which is located on a personal computer or laptop;
- Ethereum paper wallet.
Below we will provide maximum details on each of the types above to help you choose the best Ethereum wallet. You can thank us later!
You should always choose a wallet depending on the field of your interests. For example, if you are planning to store a big sum of money, it is better to choose hardware wallets but if you want to complete speedy transactions or to research potential opportunities, you can turn to wallets like Trustee or Blockchain.info.
1. Hardware wallets
Such hardware wallets as Trezor, Ledger Nano S and Keepkey provide a convenient solution for accessing Bitcoin with a high level of protection, because private keys are stored only in the memory of the Ethereum wallet.
Even though the fee for using such wallets may reach 100 dollars, they allow conducting transactions without a risk of cyber attacks. Wallets of such protection levels are perfect for receiving or keeping Ether.
Once it lands in your Ethereum classic wallet you can transfer its part any place you want for a permanent use, while the main sum will be safely hidden in your hardware wallet.
2. Desktop wallets
You don’t need to download blocks for a thin wallet. All the data is accessible on the server, which the client is using. Such Ethereum wallet is easy to utilize from your laptop or tablet. They are rather convenient and nimble.
There is only one single ‘but’: Everything that needs to be checked is conducted by a third party, which effects security matters rather negatively.
However, you have access to the keys and no one interferes.
Thick Ethereum classic wallet involves downloading a full blockchain copy on computer. Thick wallet is a full node on a network, which allows both to manage the account and to support Blockchain viability.
Thin desktop wallet occupies only a few megabytes of space and is installed in a matter of minutes. This client program doesn’t require downloading all the Blockchain. It allows creating Ethereum addresses and completing transactions.
Thin wallets interact with networks indirectly (unlike thick ones): through program developers’ server. That is why they are considered less secure but yet more convenient.
To name a few thin desktop wallets: Exodus, Jaxx and Electrum.
3. Online wallets
Browser Ethereum wallet can boast a wide range of benefits:
You don’t need to download all blocks of the network. This saves lots of your time, because you don’t have to download them both during the first and all the next runs of a switched on local wallet.
You can manage your online Ethereum classic wallet from all types of devices not depending where you are: just make sure there is a proper Internet connection.
Most of online services offer users a set of additional features. For example, you can complete transactions to other users via email or phone. You may even send notifications and use address books.
But there is always a fly in the ointment:
Entrusting your money to online wallets is quite risky. Safety of assets will also depend on others: when such services are hacked, your coins can be stolen.
The most popular online wallets include Coinbase, Cryptopay, Blockchain.info, Xapo, Bitpay and Matbea.
4. Mobile wallets for smartphones
We have already discussed best Ethereum wallets for computers and Internet, so it is a right time to talk about wallets for smartphones, because they are in a high demand!
Such wallets are installed on a smartphone, which runs on iOS or Android. Operations can be conducted using QR codes or NFC (near field communication) technology not depending on your location or time of the day!
Here are a few popular representatives: Airbitz, Mycelium, Bitcoin Wallet and Trustee. By the way, the last one also allows withdrawing Ethereum on Ukrainian and Russian bank cards.
5. Paper wallets
Are you surprised that such type of Ethereum wallet also exists? Even though it is not that convenient, it still has many benefits if you are not planning to make transactions and want to store cryptocurrency for a very long time.
Paper wallet is a piece of paper, which contains private and public keys in a form of a QR code.
To use these keys you will need to scan them. Usually, paper wallets are better and more secure than any other type of wallets.
Here are a few reasons to use them:
- They are rather simple. Creating a paper wallet doesn’t require specific skills or technical background unlike trying to master hardware wallets. A few simple steps will greatly secure your coins.
- They are autonomous. Hackers and scammers won’t be able to access it online, because it rests in your drawer. All your assets are presented in a piece of paper form with printed out keys. Your wallet is like a valuable cash receipt, which is used for transferring money.
- There are no problems with equipment. Paper wallets are much safer than hardware ones, which can be damaged or have software malfunctions. Paper wallets are the simplest form of storing cryptocurrencies.
- Easy to pass on to people you trust. If something happens to cryptocurrency owner, friends or family members will hardly have access to his hardware or exchange wallets. But paper wallet can be easily stored as a part of valuable assets in a locker or on a physical space.
Summary
Ethereum wallet is a necessity for those, who are somehow related to cryptocurrencies. There are different types of wallets, so you can always choose the best Ethereum wallet considering your kind of activity and quantity of cryptocurrency that you are planning to store.
Our experts have already come up with a perfect formula: best Ethereum wallet should be hot, non-custodial and mobile to make small everyday transactions and a cold one to store large sums.
However, if you are only getting familiar with a world of cryptocurrencies, we recommend turning to the following article, where you will find information on providers, crypto signals and much more.
We are sure that after reading today’s article you can start writing your own Ethereum wallet reddit posts and to become real ETH experts!