Where you store your digital wealth is as important as the digital wealth itself. With Ethereum being the 3rd cryptocurrency based on market capitalization, there has been an upsurge in the number of Ethereum wallet with each promising a number of benefits which only a few live up to their promise.
With experts predicting that a positive wave of prices will hit the cryptocurrency market this year, Ethereum (ETH) is among coins that are predicted to record a massive appreciation in price.
As you slowly accumulate some ETH coins in your Ethereum wallet, you should have peace of mind knowing you can access the wallet at any time without worrying that someone is successfully keeping track of your trips in and out of your wallet.
In this guide, we shall look at the types of Ethereum wallets in existence while giving examples in each case. As a bonus, we shall look at the characteristics of a good Ethereum wallet.
Definition of an Ethereum wallet
Simply put, an Ethereum wallet is a storage solution whether hardware or software, that allows you to safely store your Ethereum coins. More than just storing, an Ethereum wallet enables you to send ETH coins and at the same time keeping track of many ETH coins are remaining in your storage.
Types of Ethereum Wallets
Desktop Ethereum wallet
As the name suggests a desktop Ethereum wallet is only available for installation on a computer – laptop or desktop. This type of wallet is advantageous in the sense that it gives control on whether you just want to store, receive and send your ETH coins without the need of the full functionality of the Ethereum blockchain. This type of an Ethereum wallet is called a light client.
Additionally, with a desktop Ethereum wallet, you can download a full client which has all the functionalities of the entire Ethereum blockchain. A full client is better than a light client although where just a basic Ethereum wallet is needed a light client will work just fine.
Advantages of a desktop Ethereum wallet
- Relatively secure
- Easy to use
- Easy to download and install
- Once a computer is compromised the wallet is at risk
- It’s always connected to the internet which can open it up to hackers
Leading desktop Ethereum wallet
This is an official Ethereum wallet which adds to its reliability. The wallet is available for both Linux-based and Windows-based operating systems. When downloading the wallet, apart from specifying the type of operating system that you intend to install the wallet on, you should also consider the specification of your system.
For example, when downloading the Mist Ethereum wallet for Windows-based operating system, you should take into consideration whether your O.S is 32 or 64-bits.
Although this is available as an extension on the google chrome web browser, it stores wallet keys on the computer.
Hardware Ethereum wallet
Hardware wallets are argued to be the most secure places to store your ETH coins. They resemble ordinary USB drives with the only difference being that they are purposely designed to store cryptocurrencies.
They do not need to always be connected to the internet. The only time they need an internet connection is when you need to perform a transaction.
- Expensive than other types of wallets
Leading Ethereum hardware wallets
The top choices for this type of wallet include the Trezor, KeepKey, Ledger Nano S, and the recently announced Ledger Nano X which provides a Bluetooth connection.
Ethereum wallets in this category are held in the cloud and can be accessed from any machine with an internet connection. Unlike the desktop wallets, online wallets provide flexibility in terms of accessibility.
- Keys are stored online
- Easily accessed by hackers
- You do not have full authority
Leading online wallets
The safest online Ethereum wallet is MyEtherWallet which unlike other online wallets stores the keys on your machine. It’s also decentralized.
Other types of online wallets include those provided by cryptocurrency exchanges.
Factors to consider when choosing an Ethereum wallet
Before settling on either of the above types of wallets, what you need out of the wallet should dictate your choice.
Do you want to have full control or a third party solution is enough?
Third party ethereum wallets are those provided by cryptocurrency exchanges. But with hackers targeting coins stored on virtual currency exchanges, this option may not be the best if you value your digital wealth.
Do you want a light or a full client?
A full client wallet will be the preferred choice of those seeking to participate in confirming transactions on the Ethereum blockchain.
Do you want a hardware or a software Ethereum wallet?
This choice will depend on whether you want to store your ETH coins on a portable device where it is not always connected to the internet and you have maximum control of your keys plus increased security.
Qualities of a good Ethereum wallet
Whichever option you choosing, make sure that the Ethereum wallet provides:
Security – this should be your number one consideration. Without proper security features, you are basically inviting a hacker to come and enjoy your wealth whenever they want to.
Reviews – before settling on any one of the Ethereum wallets, you should do a background check and see how the product has actually been performing with others who have used it before. While negative reviews are a red light, positive reviews are not necessarily a green light since some of the reviews can be cooked.
Clear T&C – a good Ethereum wallet should be backed with clear terms and conditions showing how the wallet works and what rights do the end users have over the wallet.
The signature scheme used – to improve on security, a wallet that has a multisig (multi-signature) is the best option. A multi-signature requires multiple signatures from different people for a transaction to be authorized. The number of people to provide the signatures is agreed upon before setting up this functionality.
Basing your search for the best Ethereum wallet on our above discussion, you will surely land on the best Ethereum wallet.
In your search, make sure you consider the functionalities you want from an Ethereum wallet and focus heavily on security.