Just purchased some ether and are looking to store them away safely? Good move, because Ethereum is the second largest cryptocurrency by market cap behind only the world famous Bitcoin, which makes it a very popular digital currency for investors. Let’s have a look where and how you can store your ether safely, along with just some general tips and information about cryptocurrency wallets.
In order to better understand why a wallet is needed for your ether, it is best to have a look at what precisely a cryptocurrency wallet is and why/what it is used for.
A cryptocurrency wallet is a storage system that allows its holder to place their digital assets inside in a secure place. They do not at all resemble traditional wallets physically and actually come in several forms as well as different names.
However, make no mistake, their goal is just as simple as the humble pocket wallet: to keep your assets safe from any possible danger. Discover below the different types of wallets that you can use to store your ether.
To avoid losing or having your cryptocurrency stolen through a hack because it was left on the exchange platform where you bought it is not a good idea, it’s a bit like leaving your credit card lying around for anyone to potentially read your details off – instead you stick it in your wallet!
You will have to do exactly the same with your newly bought ether (ETH), but as they come in a digital form it will be necessary to store them digitally too. It’s up to you, once you’ve acquired your cryptocurrency, whether you want to use a wallet or not, but remember the large majority of hacks occur on exchanges. Here are just some of the advantages of storing your ether in a wallet:
Keeping your ether safe should not be regarded as a choice, but as a must, no matter how little you have acquired.
Choosing the ETH wallet that is right for you is important and can be made easier by answering questions such as:
These wallets are efficient because they are completely disconnected from the network meaning they are offline (cold) – this is ideal for long term storage of large investments in cryptocurrency. If you do not use ETH every day, for example, or have invested hoping to be able to gain some added value from them in a few years, a hardware wallet may prove to be a good option.
These hardware wallets are also called this because they come in a tangible form, usually a USB stick. Apart from the fact it keeps your cryptocurrency offline, its security is bolstered by passcodes, which must not be lost.
Online wallets are accessed through web browsers and are also called ‘web wallets’. They are generally offered on most exchange platforms which makes them easy to trade in and out of but that also means that safety is not guaranteed, so only leave what you use frequently.
As with online wallets, they are classed as ‘hot’ wallets, because these are wallets that are partially or fully connected to the internet. In reality, desktop wallets are a software that you download locally to your computer or laptop, and which can accommodate lots of cryptocurrency. They are more secure than online wallets; however, make sure that the device you are using has not been affected by any malware or viruses.
A paper wallet is just as simple as it sounds. Once you have created a wallet, you simply print off the details on a sheet of paper or write them down. If you lose that sheet of paper you also lose your cryptocurrency. This means it is more practical for storing large amounts of ETH for the long term, because then you can lock it up in a safe to reduce the chances of losing it.
The Ledger Nano S is a physical Bitcoin wallet that has been the best wallet in class for several years. Composed of a USB key with a screen, it has two physical buttons: one on the right to ascend through numbers or down menus; one on the left to descend through numbers and up through menus. By pressing both simultaneously, users can validate their selection.
In terms of security, the Ledger Nano S offers the opportunity of creating a personalised PIN number and offline storage of private keys. A security seal, in the form of tamper-evident adhesive tape, alerts its owner to prevent anyone from handling it.
Finally, the Ledger Live app allows the installation of 18 different cryptocurrency applications, three of which are already accessible. It can be installed in just three minutes and its size makes it very easy to carry around. Prices start from £54.50.
The Ledger Live app makes it possible to:
MEW is an open-source, online platform entirely for Ethereum transactions and is very easy to use thanks to a highly optimised interface. This free wallet offers the user direct interaction with the Ethereum blockchain, allowing them to create their own ethereum account and therefore wallet, so they can send, receive and store ether.
While sending and receiving ether is nothing special, its specialised Ethereum data protection makes it particularly attractive and secure enough to store coins. As it runs on the Ethereum network, only those compatible with the Ethereum protocol can be used (Ethereum, Ethereum Classic and ERC20 tokens).
In terms of security, the recent MyEtherWallet interface has learned from its past mistakes and subsequently has been optimised so that everyone avoids using their private key as much as possible, as unfortunately in the past users have too often been the victims of scams. MEW is accessible online, but it also supports certain other types of wallets such as Ledger Nano S, Trezor and MetaMask.
This collaboration with hardware wallets gives it an additional level of security.
Exodus is a desktop wallet which is known for its ease of use and informative interface. This makes Exodus a great wallet for beginners and anyone new to storing ETH.
Unfortunately, the software is not fully open source, so its users cannot have full access to the code. However, unlike an open source platform, your private key will be stored directly on your computer and not kept online.
Having a wallet to secure your ether, just with any other cryptocurrency, is not really an option, but essential. Sending, receiving and storing your ETH using a suitable wallet is paramount if you want to avoid the risk of being hacked. When it comes to Ethereum, the second largest cryptocurrency in the world, it makes sense to put it in a safe place when not in use. Moreover, the choice of wallets made available to users and investors for this digital currency are wide and varied.
At the end of the day it is solely up to you, but make sure to learn about the features of each wallet in order to form your own opinion (price, features, security, reputation and so on). The Ledger Nano S is, in our opinion, the most efficient and complete wallet to secure your ether (ETH) in 2020. If the price barrier bothers you, good software wallets that are free to use are available, like Exodus or Jaxx. However, pay attention to the possible costs incurred during transactions made through them.
In addition, when it comes to hardware or paper wallets, keep in mind that there are risks that are not very obvious, but still relevant, like the risk of loss or damage.
By choosing a good wallet and taking the necessary precautions to keep it safe, it is also your financial freedom you are protecting. Remember to do as much research as possible before making any decision on a wallet, as well as to check whether the wallets you have looked at are suitable for receiving and sending ETH. Ultimately, if you have ether, do not hesitate to place them securely on any suitable wallet. This is an investment that is guaranteed to prove to be worthwhile, because as cryptocurrencies gain in popularity as a payment method, your ether could be at an even higher risk if they are stored in the wrong place.
Just your average global millennial embracing, and interested in, the future of money and finance. Excited by blockchain tech as well as fintech but have a special passion for DeFi and Yield Farming, what will this technological disruption bring next?
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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