Choosing a wallet that is secure and easy-to-use is essential to successfully keeping your ETH tokens safe. In the past, storing cryptocurrency has been a process that was often regarded as technically complex.
Thankfully, there are new, user-friendly options being continuously developed. However, successfully navigating the landscape of safe ETH storage can still be daunting. Use this guide to choose the best way to store your ETH safely. After all, they could be worth millions someday!
For a more detailed look into how to secure you crypto assets you should check out our post on storing and securing your crypto.
Choosing A Wallet: What to Look For
- Private Keys: Who is in control of my ETH’s private keys? You, or the wallet’s company?
Since you cannot own a physical ETH coin, the thing that you have ownership of is the private keys. The private key is a string of characters that are used to sign transactions when sending, receiving or transacting with the Ethereum blockchain.
When it comes to private keys, there are two types of wallets: wallets that give you control over your private keys, and wallets that store your private keys in a private server owned by a third-party. The best practice is to keep control over your private keys. That way your keys will not be at risk if something (i.e., hacking) happens to the third-party’s private server.
- Software/Hardware: Is the wallet open source? Does the wallet have an active development community (or team of developers)?
If a wallet is open source, this means that it’s possible to view the wallet’s code. Therefore, it can be independently verified by each user, and any malicious code will be in plain sight.
Understanding who is behind the development and maintenance of a wallet will help to ensure that the wallet is continuously being improved and updated to match the ever-changing landscape of hackers and other security threats.
- Ease of Use: How user-friendly is this wallet? Does this wallet offer any customer support? If so, how reliable is it?
This is an especially important factor for people new to cryptocurrency investing and trading. Choose a secure wallet that does not require a lot of technical know-how to operate. Although all things crypto have traditionally been somewhat inaccessible to the non-technically minded, more user-friendly wallets and exchanges are being created all the time.
- Security and Options for Backup: What kind of security features does this wallet have? Which options for backup does this wallet offer?
When choosing a wallet, choose one that has multiple security features: full encryption, two-factor authentication, multisignature; the more, the merrier.
Additionally, your wallet should offer you the option to create a backup in case something happens to your original wallet file–something like the loss or destruction of a hard drive or computer (god forbid). The backup will come in the form of a mnemonic seed or the private keys themselves. Store multiple physical copies of the backup across various secure locations. This is essential to the safety of your coins.
- Reputation: What are other members of the crypto community saying about this wallet?
Because cryptocurrency is so new, and because it was initially conceptualized within an online community, the online cryptocurrency community is the most reliable (and, really, the only) source of information. Before you choose a wallet, check several different sources for information and user reviews. It could save you a lot of time, trouble, and money.
Researching peer reviews could also save you from scam wallets that will steal your tokens.
Option One: Paper Wallets
Paper wallets are an affordable option for storing your ETH tokens in “cold storage” (offline). When coins are stored offline, they are virtually impervious to hacking. However, paper wallets are vulnerable to all the things that paper is traditionally susceptible to (i.e., fire and water damage).
When you create a paper wallet, be sure to print multiple copies and store them in various secure locations. When printing, use an offline printer (if possible); online printers are susceptible to hacking. MyEtherWallet.com is a reliable, free, and open-source platform for creating a paper wallet.
Option Two: Hardware Wallets
Hardware wallets are considered to be one of the most secure forms of cryptocurrency storage. Hardware wallets keep your coins in cold storage and will allow you to generate a mnemonic seed for backup. While a hardware wallet will run you somewhere between US$100-200, they are definitely worth the expense. If you are storing a significant amount of cryptocurrency, a hardware wallet is practically a “must.”
Trezor, KeepKey, and Ledger are the three big names in the hardware wallet industry. All are reputable, and all of them have different merits. Choose the one that suits you the best.
Option Three: Desktop Wallets
A desktop wallet is slightly more secure than a mobile wallet if it is used correctly. When choosing a desktop wallet, choose one like Exodus, which keeps your private keys stored on your machine (although you must be connected to the internet to use it).
Exodus is an extremely user-friendly wallet that contains an exchange within its platform and supports the storage of seven different cryptocurrencies in addition to Ethereum. Exodus is encrypted and can be used to create mnemonic seed backups. Exodus also has excellent customer support. Exodus is not entirely open-source, but most of the functional parts of it are; it is compatible with Mac, Windows, and Linux.
Option Four: Mobile Wallets
Mobile wallets are an option for those who wish to have easy, instant access to their crypto coins. Mobile wallets are not considered to be the most secure option for storing cryptocurrency, and therefore should not be used for storing coins on any long-term basis.
Most of the popular mobile wallets, like Coinbase and Copay, store your private keys on their private servers. Not so with Jaxx. Jaxx is a mobile wallet that stores your private keys on your device. Jaxx offers backup in the form of mnemonic seed generation. Jaxx can also be used as a desktop wallet and supports thirteen different cryptocurrencies (including ETH). Jaxx is not open-source, but the code is visible on the Jaxx website. However, Jaxx also comes with some security risks as the mnemonic seed can be accessed by rogue software.
If you are planning on using a mobile wallet, make sure you know the risks associated with doing so. Paper and hardware wallets are much more secure options.
Option Five: Online Wallets
Online wallets are far-and-away the least secure option for storing crypto coins. They should only be used temporarily, when you are making a trade on an exchange, and you must transfer your coins into the exchange’s wallet.
Which Wallet Do You Think Is the Best?
We would love to know! Please leave a comment and tell us about your best (and worst) experiences. The crypto community is the best resource we have.
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