The digital currency Ethereum (ETH) is second in popularity and market capitalization in the cryptocurrency rankings, trailing only behind Bitcoin. Individuals interested in purchasing Ethereum can utilize P2P or exchange services. However, they need an ETH wallet—a special storage for digital currency.
Trading volume of Ethereum in Nigeria is rapidly increasing. According to Paxful data, trading volumes grew by 200% in 2023. Many Nigerians lack access to traditional banking services, making cryptocurrencies an attractive option for money transfers and storing funds. The highest inflation rate in Africa pushes people to seek alternative ways to preserve assets, such as cryptocurrencies. The need for secure storage of digital currency remains a primary concern for crypto investors who seek to safeguard their assets.
We discuss how different types of cryptocurrency wallets vary and how to choose the most secure one for storing Ethereum.
Main Types of ETH Wallets
Broadly speaking, all wallets can be divided into two groups: hot and cold. The key difference lies in the principle of storing public and private keys for authorizing crypto transactions. Hot wallets operate through a PC or smartphone’s internet connection. Cold wallets are hardware devices where user data is stored offline. Let’s take a closer look at the characteristics of each.
Hot Wallets
A convenient and popular storage option among ETH owners. However, the features of different types of these storages should be considered.
Mobile Wallets
Installed on a smartphone, they provide access to cryptocurrency anytime, anywhere. Most mobile crypto wallets allow tracking the current price of Ethereum and conducting coin exchanges. Generally, such wallets are relatively safe. Users should take several precautions with their data: responsible storage of the private key, two-factor authentication, backup copying, etc.
Online Wallets
Provided by a third party, typically cryptocurrency exchanges, offering free access to digital currency through a browser. Since all owner’s data is stored online, online wallets are vulnerable to hacking attacks. Therefore, careful selection of the service and checking the user wallet protection tools applied by the service are necessary.
Browser Extensions
These crypto wallets not only store ETH but also interact with decentralized applications through the browser. The security level here is higher than online wallets, as extensions encrypt private keys.
Desktop Wallets
This storage method encrypts personal keys on the PC’s hard drive.
General Characteristics of Hot Wallets
- Usage purpose — for active Ethereum trading, storing small amounts.
- Protection from coin loss — most wallets feature a backup and restoration algorithm, accessible from multiple devices.
- Security — due to constant internet connectivity, they are potentially vulnerable to hacking.
Cold Wallets
A digital cold wallet is protected from unauthorized access, hacking, and other vulnerabilities by storing data on a separate device without internet access. There are two types of such crypto wallets.
Hardware Wallet
A special electronic device with a high security level storing keys offline. Typically, these wallets resemble a USB stick. Advanced models are equipped with a screen for tracking and confirming transactions before signing, providing an additional layer of protection.
Paper Wallets
To use a paper ETH wallet, the user must print and store their keys on a piece of paper. Despite the simplicity, accessibility, and security of using this storage method, there’s a significant risk of losing personal data. Some crypto wallet owners print keys on titanium plates, which are harder to destroy.
General Characteristics of Cold Wallets
- Usage purpose — for long-term storage of large sums.
- Protection from coin loss — backup of the password, but no protection against losing the carrier.
- Security — high data protection level, no internet access, various hardware solutions to prevent damage, theft, or loss of the carrier.
Criteria for Choosing an Ethereum Wallet
The wide variety of cryptocurrency wallets is due to the extensive additional functions and capabilities they can offer to the user. To choose the best ETH wallet, one should first determine the usage tasks and goals:
- What is the wallet needed for: storing digital coins, investing, accessing decentralized financial services (DeFi) tools, or other tasks?
- Which networks need to be supported?
- What wallet functionality is needed: the ability to transfer and exchange between networks, access to DeFi, etc.?
When choosing a crypto wallet, several aspects that affect convenience and security should also be considered. It’s important to evaluate:
- Privacy of keys. Only the owner of the ETH wallet should have access to the private keys.
- Protection. When choosing a secure storage solution, consider the developer’s reputation and the protection methods used. Hardware wallets are considered the most secure, but their functionality and possibilities are significantly limited compared to software solutions.
- Usage features. If the wallet is needed for storage, then crypto wallets with minimal functionality are more reliable due to fewer points of failure. If access to DeFi is needed, mobile wallets and browser extensions, which have built-in access to tools, are more convenient.
- Network support. Crypto wallets differ in the number of supported networks, and therefore, the number of digital coins that can be stored. For ETH wallets, support for the Ethereum network and L2 networks is necessary.
To choose the most convenient and secure wallet for storing Ethereum, consider the functionality, security level, compatibility with other systems, features of selling, purchasing, and exchanging digital coins, as well as ways to withdraw assets. In particular, it makes sense to consider the feasibility of using several types of crypto wallets in parallel. For example, main assets can be stored on a hardware wallet, while funds for investing and various operations can be kept on a hot wallet.
Top-5 Wallets for Ethereum
Here’s a selection of five different wallets for storing Ethereum. Each of them is maximally simple and convenient to use, even for a beginner crypto investor.
Cropty Wallet
A convenient cross-platform custodial wallet, Cropty is designed as a comprehensive solution for managing cryptocurrencies. It combines a simple user interface, high security level, and innovative features. Users have the option to exchange and purchase currency within the app. In addition to Ethereum, the wallet supports many other digital coins and tokens.
Trust Wallet
A non-custodial wallet from the top crypto exchange Binance, positioned as a secure and convenient solution for storing and managing crypto assets. Trust Wallet provides a high degree of access key protection, as they are stored directly on the user’s device, and anonymity without KYC. It is possible to integrate with decentralized applications and DeFi directly from the wallet.
Metamask
A popular browser solution with a built-in exchange that can be integrated with many projects and sites. It allows users to safely send and receive cryptocurrency and manage access to various decentralized applications operating on the Ethereum blockchain and other compatible blockchains. MetaMask is especially popular among those actively involved in decentralized financial operations and the DeFi ecosystem.
Ledger
Ledger is a French company that develops hardware wallets supporting many coins and working with different systems. Physical devices are designed for secure offline storage of private keys. Users can use Ledger to store and manage their crypto assets, signing transactions on the device before sending them to the blockchain.
Trezor
Trezor is a popular Czech manufacturer of hardware wallets for offline cryptocurrency storage. Devices are designed with high security standards and feature an intuitive interface for managing crypto assets. They provide protection for private keys and sign transactions directly on the device, making them a reliable means for storing Ethereum. The only drawback is poor compatibility with iOS.
