Which tools work well for storing my Ethereum, and how do I get the best results? Due to the digital nature of Ethereum, you might think of storage options as complicated, automatic and limited. That’s not exactly true. Ethereum storage methods are based on simple, responsible actions and present a wide range of technological function. These features are designed to help you avoid cryptocurrency pit traps while keeping your Ethereum safely secured.
A wallet is the short answer to the question of where to store Ethereum safely. The word “wallet” equals account in the world of crypto-currency. You have more than one type of wallet to choose from. Each option offers its own set of advantages and cautions when compared to the others. You can go with paper, hardware and desktop wallets or use more internet based tools. Like any other currency, all of these Ethereum storage methods are available at the same time. They can even complement one another when used correctly.
Wallets at a glance:
- Paper wallets – most secure
- Hardware wallets – most secure
- Desktop wallets – good security
- Hot wallets – average security
* Hot wallets is crypto-currency for: Mobile, Website and Browser
The old way of securing currency, with printed information on paper, is the best way to safeguard your Ethereum. It looks and feels like a traditional bank statement issued while opening an account. Paper wallets for Ethereum have private keys (password info) inked on them instead of account numbers. The core concept remains the same. The best failsafe for this method would be to physically lock the information away for safe keeping. Presumably, holding on to a substantial amount of Ethereum for longer periods of time would be the purpose of taking such measures. Think shares of stock in a company or barer bonds to get the jest of it. This storage method is intended for fool-proof security but not recommended for trading.
Pros: maximum security
Cons: impractical for regular use
The more things change, in the way of safeguarding currencies, the more they stay the same for storing Ethereum safely. Hardware wallets operate on the same principles of the paper method but with an electronic twist for functionality’s sake. These wallets have no kind of software by design, and they cannot be hacked like programs or cracked like safes. This method is best used for storing large amounts of Ethereum away while keeping it handy at the same time. The errorless protection afforded by hardware wallets has one contingency. Just like the paper method, hardware wallets can be permanently lost, stolen or damaged beyond repair. Some models of hardware wallets store other types of cryptocurrency than Ethereum, and you can always use more than one for added security.
As an example, the following product list shows comparisons of the pros and cons between hardware wallets:
Ledger Nano S
Pros: maximum security, altcoin support, excellent customer support, easy to use
Cons: no free substitutes
Pros: maximum security, altcoin support, easy to use
Cons: more expensive than Nano S
Pros: maximum security, altcoin support, great design
Cons: cheapest option is more expensive than cheapest Nano S or Trezor
The only constant in securing currency is the changes made while safely securing Ethereum. Desktop wallets provide comparable amounts of security to paper and hardware methods for storing Ethereum. Because desktop wallets use online connections to work, there’s a need to update and monitor PC security systems regularly. A randomly overlooked virus may leave you smarting over the loss of critical information regarding currency. Similarity to the desktop wallet makes hardware technology the perfect back-up option for fail-proof security.
To get a better idea of how desktop wallets secure Ethereum, take a look at the following product list with pros and cons:
Pros: altcoin support, accepts credit card, easy to use, offers hot wallet mobile version
Cons: slow customer support
Pros: altcoin support, self-hosted, easy to use
Cons: no mobile version (desktop only)
Pros: altcoin support, ShapeShift, easy to use
Cons: least secure desktop wallet
5 Tips for Better Ethereum Security and Profit
- The more Ethereum you have to store and trade with, the more wallets you should have opened.
- Cold wallets (paper and hardware) work best for long-term securing and back-up safety if secreted duplicates exist.
- Hot wallets (Desktop, Mobile, Website and Browser) work better for exchange purposes than cold, but it’s always better to have both methods on deck.
- Technically, there is no actual holding of Ethereum currency, but it can be exchanged into FIAT funds on the right platforms.
- Ethereum is not just a type of crypto-currency but an account that can interface with other blockchain currencies.
Insights About the How and Why of Hot Wallets
What Makes an Ethereum Wallet “Hot”
There are a few things you should remember and feel familiar about Hot (Mobile, Website Browser) Ethereum wallet functionality in order to make a fully informed decision. Hot ETH wallets are software based products that exchange information and perform certain protocols within the Ethereum blockchain. The accessibility, security and ease of use of these functions depends on various factors.
Different Accounts all Have the Same Components
The type of ETH account (External Open vs Contract) and application (centralized vs decentralized) in play by users determines their wallet functions. The Blockchain operates on anonymity tied to a pairing of private and public key entries, and currencies stay on the ledger. Moreover, being aware of the different components of an Ethereum account (nonce, balance, codeHash and Balanceroot) should help to guide your choice of action.
Points about ETH account components:
- Nonce is the number of transactions sent from the account’s address.
- Balance is counted in units of Wei (an ETH unit of denomination), 1 ETH is equivalent to 1×1018 Wei.
- codeHash is the code of an account on the Ethereum virtual machine (EVM).
- storageRoot encodes the storage contents of the ETH account.
The Performance of Full and Light Nodes (Wallets)
The decision to open an Ethereum wallet using a full or light node is a good example of this dilemma. When an ETH wallet downloads the full blockchain network to a device or computer, it functions as a full node. These tools can do more than light nodes because their protocols interact with decentralized networks. There’s no need or use in a third party service getting involved. Full nodes require adequate storage, memory space and processing power within the hardware being used. Light nodes don’t have access to the full blockchain as they are installed applications. This is why mobile wallets, web interfaces and browser extensions stand apart from the other options already covered.
A bird in the hand, like currency, is worth two in the bush, and securing Ethereum safely is no exception to the rule. Mobile wallets put the power to make moves throughout ETH Blockchain in the palm of your hand even though they perform as light nodes. These tools rely on miners inside the network to act like information brokers that fill in the gaps. This method of storage doesn’t allow for full access to the Blockchain. It does afford a level of user ease and interaction that shouldn’t be underestimated. Think email access and functionality on a handheld device to get the idea behind using this method. Software for this crypto-technology has a browser engineered into its design. This means mobile wallets can exchange information and perform transactions within the decentralized finance sector. The result is a level of financial service and empowerment within the future of commerce and business.
To put it in a nutshell, the future of currency securing happens now. Ethereum looks good forever when it comes to web interfaces. This storage method doesn’t quite function like its predecessors because it’s not quite a wallet at all. Web interfaces are something like software as a service that interlink the information of the ETH blockchain to your account. Web interfaces work with their own browsers and cloud storage to handle the complexity of the blockchain ledger and growth. Because there’s no hardware to equip or software to install, the exchange of information from transactions through the network happens instantly. This cutting-edge service requires trust from the user as they release private key information to a third party. The real risk comes from scammers posing as the website service in phishing attempts or domain name redirects. Both scenarios can really cause serious trouble through online connections.
Work smarter, while securing currency, not harder, or else there’s a price to pay on your Ethereum investment. Browser extensions appear to be the ultimate solution that set the standard for all the other methods to follow. These tools perform protocols over desktop browsers to connect with decentralized software and networks. They do this without running out of space or processing issues because they connect directly online with the ETH blockchain. Ethereum browser extensions even have the capability to interact with another Blockchain. This means browser extensions have the ability to store things like ERC-20 tokens. What’s the difference that make browser extensions the right answer? Encrypted data storage keeps user information safe and secure from prying eyes. Quality browser extensions have ETH wallets installed, so all you have to do is tell it what to do for you.
Which methods work best for my Ethereum storage, and how do I get the best results? You have so many options to choose from, and none of them should fail with the proper precautions in place. For old time’s sake, you could start with paper wallets and build your Ethereum portfolio from there. You need only to employ one after the other until all the data goes right back where it started with a perfect ledger and transaction system created in cyberspace.
- How Does Ethereum Work?
- Ethereum for Beginners
- Keeping Your Ethereum Wallet Safe
- Bitcoin Wallet Safety Information
- Buying and Storing Ethereum: An Introduction