Ever since its inception, Ethereum has remained the only cryptocurrency to challenge Bitcoin in value. It is the second most valuable and most traded crypto. It has particularly grown in demand in recent times due to the Defi and the NFTs boom. There is also the possibility of an even greater value increase as the token moves to ETH2.0.
As a result, more users are looking to join the Ethereum network. As more people join the network, so does the need to create secure crypto wallets for the users to store their Ether tokens. Currently, there are multiple Ethereum wallets you can use to store your tokens.
However, with the variety comes complexity in making a choice. Choosing the right ETH wallet needs you to look into security, functionality, reliability, ease of use, and more.
This guide has all you need to help you on the same.
What is an Ethereum Wallet?
An Ethereum Wallet is a software or application that allows you to store your Ethereum tokens in a secure location. Once you buy Ethereum from an exchange it’s right that you transfer them to a wallet. The exchanges are susceptible to hacking or shutting down which can lead to losses.
An Ethereum wallet comes with both public and private keys for running it. The public key is the common address that allows you to receive tokens. You can share it with anyone without compromising the security of your tokens. Private keys are what you use to access and control your tokens. It acts as the password that gives you access to account details like balance, transactions, and the general status of the account.
Ethereum addresses and accounts
Ethereum wallets come in two main forms; externally owned accounts (EOAs) and contract accounts.
The EOA Ethereum accounts are the most common. They come with an Ethereum address managed by a private key. One can create several such accounts and they are also usable in creating and activating smart contracts.
The contract accounts are for deploying smart contracts. It relies on the unique Ethereum address of every contract that is controlled by a code.
Even with the difference, both Ethereum accounts share various features such as; codeHash, storageRoot, a nonce, and balance.
Hot and cold wallets
Generally, Ethereum wallets can be subdivided into two main types; hot and cold wallets.
Hot wallets are the ones that store private keys online. They are accessible anywhere and from any device as long as you have an internet connection. However, they are highly susceptible to hacking.
The cold wallets are the non-custodial ones that store private keys offline. You only connect them to the internet during a transaction. They are more secure compared to hot wallets.
Types of Ethereum wallets
Paper Ethereum wallets – it’s a simple ETH wallet where you print your private keys on paper. You don’t have to store it on a software or hardware device hence it is convenient and safe. Some of the paper wallets include ETHAddress and MyEtherWallet.
Hardware Ethereum wallets – it is a storage that resembles a USB drive. You store your private keys inside a physical medium and access them by connecting to a computer.
Software wallets – these are ideal for repetitive transactions. They come with friendly user interfaces and are tested for bugs hence not easily hacked.
Mobile wallets – these are the convenient Ethereum wallets you can have on your mobile device. They however come with the risk of hacking as anyone who knows your Mobile PIN can access them.