We are sure that one way or another, you have heard about Ethereum, blockchain, cryptocurrencies or ICOs. Even if you don’t know what it is, Ethereum and other digital currencies have been covered extensively by the news lately due to billions of dollars’ worth of value attached to them.
Ethereum is a “decentralized platform” that can run smart contracts. Smart contracts are basically codes that are used to transfer something of value to someone else over blockchain. You can use smart contracts to share content, properties, shares and money along with anything of value when certain conditions are met.
Ethereum is often described as a digital currency but here’s something you need to know, it’s a blockchain platform which uses the its own “gas” or “currency” which called is Ether.
Currently its market cap is around $45 Billion whereas a single Ether is valued approximately around $480 ( as of December 1st 2017 ).
So if you are interested in buying Ether that’s awesome but we are living in unprecedented times where you can never be sure on how secure your digital currency really is, due to Phishing scams and Hacking etc. The increasing value of cryptocurrency is now known to everyone and cases where hackers have gotten hold of a lot money is becoming common.
What you will need to safely store your Ether is reliable Wallet, in this post we will look at the different types of Ethereum Wallets and make our picks for the best ones.
What is an Ethereum Wallet?
For those that are uninitiated, storing cryptocurrency can be a little daunting. Imagine if you have a huge wad of cash lying around. How do you carry it around? Most of us prefer to use our wallets as they help us in storing our money and to use it whenever we want to.
If we were to define it, It’s basically software that allows you to easily store and manage your private and public keys. With a cryptocurrency wallet, you will be able to store various currencies (that are supported with your choice of wallet) and easily carry out transactions and check your balance whenever you want to.
So how do they work?
While before we did say that it’s just like your conventional wallet, but a digital currency wallet is quite different in how they work. Here’s the first thing you need to know: Nothing is actually stored in your digital wallet – A digital wallet will not store your currency and there is no tangible form of your digital currency.
Everything exists on the online ledger called a “blockchain”. Your wallet will only interact with the blockchain, allowing you to easily send and receive digital coins and make transactions. To do this, your wallets will act as a safe with your private addresses secure inside and your public address available to everyone. When someone sends their Ether coins to you, they are transferring the ownership of the coins by sharing them to your wallet’s public address.
To unlock the shared coins, your public address and private address should match. The transaction will then be validated on the blockchain.
Hot and Cold Wallets
There are two kinds of wallets, hot and cold.
A wallet is known to be hot if it stores your keys online. These can be accessed easily from any place as long as you have internet. However these are not the best option since they can be hacked and your coins can be stolen.
Cold wallets on the contrary are those that are stored offline, i.e. the private keys are within the hardware. These are more secure as they will only be connected online when you want them to be and have far less chance to be hacked.
Now that we have covered hot and cold wallets, let’s talk about hardware vs software wallets:
Hardware vs software wallets
Let’s start with hardware wallets which as the name suggests are in tangible form. They are like your conventional, portable hard disk but designed for cryptocurrency. They are what we call cold wallets in this business.
Hardware wallets are better as they offer more security, are not connected to the internet 24/7 and can be kept securely wherever “you” like.
Designed like USB devices, they can be plugged into the computer you are using to make a transaction and can generate keys on the go.
Pros of using hardware wallets:
- They are protected from various malwares that come creeping into your computers as they generate the keys while they are offline.
- Convenient, easy to use interface and better option for those that are new to cryptocurrency.
- Most come with backup options to ensure you never lose your coins.
- Can be secured with pin passwords on the hardware itself.
- Can be stored in any place you like, your dog’s kennel or under your pillow, you decide.
Cons of using hardware wallets:
- More expensive compared to software wallets.
- Can be tricky to find as they are mostly sold out.
Software wallets on the other hand come in three varieties: Mobile, online and desktop. These are known as hot wallets.
To use desktop wallets, you have to download and install them on your preferred laptop or personal computer.
They can be used from only one computer where they have been downloaded. In terms of security, desktop wallets are the most secure wallet but only if you can ensure your computer is not hacked or infected by malware.
Pros of using desktop wallets:
- They are very easy to use and great for newbies.
- Third party servers are not used to store your private keys.
- By combining it with “TOR Network”, you can create a more secure and private wallet.
Cons of using desktop wallets:
- Being connected to the internet, it becomes vulnerable to hackers.
- Since it’s based on your computer, it can get stolen, even by those that are repairing it.
- If you don’t back it up, you might lose your keys in case your computer crashes.
Online wallets use cloud and can be accessed from anyplace. This does make them convenient but also increases the risk as they are going to store your private keys online. This makes them susceptible to cyber-attacks and hackers.
Pros of using online wallets:
- Online wallets are superfast compared to other wallets.
- They are great if you are working with smaller amounts of coins.
- Some of the online wallets offer integration with exchanges and also offer you the chance to easily manage multiple currencies.
Cons of using online wallets:
- Since you are accessing them online, you can lose your wallet through malicious malware, DDOS attacks, hacking and also phishing scams.
- Your wallet is basically not your wallet as it is stored somewhere by the company you are using and its security is out of your hands.
- Computers are not the most secure way to access online wallets as you might be using one that has a keylogger or even viruses.
Mobile wallets as the name points out, are apps on your phone. They are great because wherever you go, your mobile goes. This means you can easily check your balance, share coins etc. The UI is also simpler to ensure they don’t take more space on mobile devices.
Pros of using mobile wallets:
- Having a wallet in your phone makes it practical and incredibly easy to use. Send or receive coins or make payments while on the move.
- You get more features in apps compared to other wallets.
Cons of using mobile wallets:
- It’s in your phone so if you lose it, you might lose all your coins.
- Android phones can be hacked or get malware that can result in you losing your wallet.
The Best Ethereum Wallets of 2017
By now you must be fully versed in what wallets are and why they are important for you. But now let’s get into what really matters the most: the best Ethereum wallets in 2017.
To choose the one that you like best, it’s recommended to have a criteria. Here’s what we follow when choosing a new wallet for Ethereum or any other digital currency that we are using.
- Private Keys: These are very important as we told you earlier that they match with public keys and confirm the coins for you. So you need a wallet that lets you control where you store them.
- Easy to use interface: Cryptocurrency can be tough for many but even if you are a veteran, you need a smooth and easy to use user interface in your wallets.
- Solid track record of development and support: It’s important that you get a wallet that is supported by a development team. There have been instances where wallets have been abandoned by the company and you really don’t want to lose sleep over bad companies.
- Security and backup: We are all humans and we can lose our wallets due to myriad of reasons. So choose one that offers security and backup features.
So without much further ado, let’s get into the best Ethereum wallets.
The Ledger Nano S
Ledger Nano S is without a doubt, one of the best hardware wallets in the market. Here’s why we loved it: it has all the four features we mentioned in our criteria.
A hardware wallet, it’s designed is just like a conventional USB but with a small OLED screen. Lightweight and extremely durable, it offers a very easy to use interface on its OLED screen that allows you to carry out transactions easily. Transactions can be verified with a simple tap on its buttons. (This was added as a protection feature against Malware).
As an added security feature, you can set up a 4 digit pin on the device, allowing you to enjoy an extra layer of protection every time you plug in the device.
Your Ether coins will be stored offline in the hardware and you can sign off on transactions with your private keys. When it comes to backup, Ledger Nano S offers you the chance to create a “recovery seed” which will help you recover your coins in case you misplace or lose your wallet. It supports both Ethereum and Ethereum Classic. Weighing just 16.2g and costing $67 ( its price is 58 Euros on its website, so check the exchange rate before buying), Ledger Nano S is indeed the best hardware wallet for your Ether.
Designed to be ultra-portable and works with your USB port, the Trezor is the perfect investment if you want something that is tried and tested. You can use it to store your Ether coins through MyEtherWallet.
It features a beautiful OLED screen that allows you to see your transactions as you do them, allowing to confirm the details easily. The device also features buttons to bring physical touch in confirming transactions.
On the security front, Trezor has great features that you can rely on. Firstly, it offers user with two factor authentication using FIDO/U2F protection. Second, every transaction you make has to be verified physically using the buttons under its OLED. And lastly, you can use a recovery seed so that whenever you lose your password, you can access your wallet again.
The design is also great. It’s small and robust. The best part we like about it is how easily it can fit into the palm of your hands. But that’s not all. The Trezor device is waterproof and very durable. The idea behind its design is not only to offer you security but a permanent place to store your coins.
It’s also incredibly easy to use. All you have to do is connect the device to any computer and simply follow the prompts. Since there are only two buttons, one to approve a transaction and other to deny it, it’s perfect for those that are new to the game.
The device will cost you only $89 but will stay on with you for the rest of your life.
If you need to choose between these two devices, take a look at out Comparison Review of the Trezor vs Ledger.
MyEtherWallet is an interface which allows you to create Ethereum wallets for storing your Ether and ERC-20 tokens securely offline, it allows you to print out a paper wallet which you can store safely somewhere knowing your funds are secure and offline.
We have written a full guide on how to use MyEtherWallet so take a look at that.
So, we’ve already discussed about the two major hardware wallets but now let’s talk a bit about Jaxx which offers users a platform that can support six currencies all at the same time along with Ethereum and Ethereum Classic.
What’s really awesome about Jaxx is that it doesn’t stores the private keys on its servers but on the device you choose.
Another reason to love Jaxx is the cross platform functionality. It is available on 9 different platforms and can be interlinked with all these platforms which means that the same balances and wallet is available when a different device is being used.
Those in the cryptocurrency business love ShapeShift which is already embedded in the wallet and users are on the freedom to exchange coins whenever and wherever they want to.
An incredible well designed and brilliant user interface makes Exodus a great option for storing your Ether. Though not entirely open source, most of the things in Exodus are. This has inhibited the development community to fully review its code. It’s only available on desktops and only supports Ethereum, not Ethereum Classic.
Exodus stores your Private Keys on the machine you choose and not on any server, giving you peace of mind when it comes to the security of your coins. It also has a ShapeShift feature embedded into the interface that allows you to easily exchange your Ether whenever you want too! Whether you want decred for some Litecoins or want to exchange them for Ether, you can do it without a hitch on Exodus.
One of the well-established and well-reputed option, Coinbase has appeared Bloomberg and Time due to its clear an easy to use interface. While Coinbase is usually seen as an exchange for purchasing Ethereum, it does have wallet functionality and your funds are secure and insured with them. It’s fine to store smaller amounts here but for larger amounts we do recommend moving them to a dedicated wallet where you control the private keys.
Now, you might be wondering what’s so special about them to make it this far is the fact that they’ve got a lot to offer, from instant currency conversions to recurring investments and multi sig support, they have everything that you’ve ever wished for. Also, they have years and years of experience and they have been serving quite a huge figure of customers in 32 countries.
The one thing about Coinbase is that they do support Litecoin, Bitcoin and Ethereum but when it comes to Ethereum Classic, well they are not the right option for you because they do not support the ETC.
Read our full review of Coinbase to find out more.