Ethereum Wallets: How to Pick the Best One
When it comes to Ethereum (as well as other cryptos), your “wallet” is your access to the coins or tokens you own. It’s important to choose a safe wallet option to protect your investment.
In this article, we’ll consider the main factors that go into choosing a safe wallet to help you pick your own. We will cover:
- Hot and cold storage: what’s the difference and which is best for you?
- The security features to look for in a wallet
- The different types of wallets available
- … and more
Let’s jump right in:
What Are Ethereum Wallets and Where Can You Use Them?
A cryptocurrency wallet is a digital place to store your coins – in this case, ETH. When you buy cryptocurrency, you need a place to put it. That’s what a wallet is for.
There are many different types of wallets, but they all do essentially the same thing. Differences come down to security, convenience, and features.
Just like a physical wallet stores your cash and cards, an Ethereum wallet stores your cryptocurrency. You can then use your ETH to buy things, store it as an investment, or send it to other people.
As more and more businesses adopt cryptocurrency, the number of products and services you can buy with it is increasing. You can now use Ethereum to buy anything from a cup of coffee to a new car. Ethereum casinos are also becoming more popular, allowing you to gamble using digital currency.
Important FYI:
If you’re a casino enthusiast, though, make sure to check the Terms & Conditions of your chosen wallet. Not all providers (when we’re talking about web wallets) allow gambling and it’s important to know what is okay upfront.
How Do Ethereum Wallets Work?
ETH wallets are a variant of crypto wallet used for Ethereum (and sometimes other ERC-20 tokens).
Cryptocurrency wallets work by storing your private and public keys. These keys give you access to your coins. The public key is like your wallet address. It’s what you give to someone so they can send you cryptocurrency. The private key is like your password. It’s what you use to access your wallet and make transactions.
When you want to make a transaction, you use your private key to sign it. This proves that you own the coins you’re trying to spend. Then, the transaction is sent to the blockchain to be verified – miners (a.k.a. other people on the network) verify it using your public key and information about your previous transaction.
Your private key, on the other hand, should be kept secret. If someone gets ahold of it, they can access your wallet and spend your coins. There is a common saying in the crypto world that states
“not your keys, not your coins”. This means that if you don’t own the private keys to a wallet, you don’t really own the coins either. This is true of many online wallets and, while we do recommend you get your own instead, web wallets can still be reliable, as long as you choose a reputable option.
How to Choose a Safe Crypto Wallet?
Types of Wallets
There are two main types of cryptocurrency wallets: hot wallets and cold wallets. Hot wallets are online wallets that are always connected to the internet. Cold wallets are offline, whether temporarily (through a device that could be connected, but it’s currently not) or permanently (some people use devices with a removed network card).
Hot wallets are more convenient to use because they’re always accessible. However, they’re also more vulnerable to hacking because they’re connected to the internet.
MetaMask is the perfect example of a hot wallet and one of the most popular ETH wallets altogether. It’s our number one choice for Ethereum and ERC-20 tokens because it’s free to download, easy to use, and works both on mobile and desktop.
Cold wallets, on the other hand, are a lot less handy to use because you have to physically connect them to a computer to use them. But, it’s a safety trade-off. Because they’re not connected to the internet, cold wallets are out-of-reach for hackers and other less-than-friendly people online.
Trezor and Ledger are two of the most popular cold wallets in the Ethereum community. However, some people simply choose to use an old USB or a computer with the network card taken out.
Level of Expertise
There are ways to make an incredibly secure, offline wallet. Are they viable for people who are just getting into cryptocurrency? No, not really. For the vast majority of people, an online wallet is going to be the best option.
You could argue that a cold wallet is more secure, and you would be right. But, the trade-off is that they’re also a lot harder to use. If you’re just getting started, the last thing you want is to have to go through a complicated process just to access your coins.
MetaMask is the best option for ETH beginners, since it combines ease-of-use and safety.
As your investment grows and you become more familiar with cryptocurrency, you might want to consider moving your coins to a cold wallet. For now, though, we recommend sticking to a hot wallet, which is also much more convenient when you want to spend your crypto.
Keeping Your Seed Phrase Safe
Your seed phrase is a 12-word phrase that you use to access your wallet if you lose your private keys.
It will be generated by your wallet when you create it and serves as your ultimate backup. It’s important to write it down and store it in a safe place. If you lose your private keys, your seed phrase is the only way to access your wallet and get your coins back.
Some people like to store their seed phrase offline, on a piece of paper or in a physical wallet. Others store it on a digital device that’s not connected to the internet, like a USB drive.
We recommend storing the seed in multiple locations to make sure it doesn’t get damaged or lost. Make sure you never share it with anyone or you risk losing your coins.
Check the T&C
Depending on what you’ll be using your crypto for, you might want to make sure that your wallet is allowed to do that.
For example, some wallets will block transactions to casinos (yes, even if it is a reputable, licensed online casino). So, if you’re planning on using your crypto to gamble online, make sure your wallet can do that.
The same goes for any other activity you might want to do with your coins. Checking the Terms & Conditions of your wallet before you create it will save you a lot of headaches down the road.
Final Thoughts
With the tips in this article, you should be able to choose a safe Ethereum wallet for your needs. Just remember to:
- Consider what you’ll be using your ETH for. If you’re just getting started, a hot wallet is going to be the best option.
- Look for a wallet with strong security features, like 2-factor authentication.
- Make sure your wallet is allowed to do what you want to do with your crypto. Not all Ethereum wallets allow gambling, for example.
- Store your seed phrase in a safe place. You’ll need it if you lose your private keys.
And there you have it – your ultimate guide to picking the very best ETH wallet for your needs!
