With the popularity of cryptocurrencies skyrocketing, more users are entering the space each day. Due to this, the industry is growing at an alarming rate. Even though Bitcoin is the most popular cryptocurrency, many alternatives have entered the market!

One of the most popular alternatives is Ethereum (ETH). Ethereum is a decentralized software platform that anyone can access freely worldwide. The applications on Ethereum are run on Ether (ETH), its platform-specific cryptocurrency token. Launched in 2015, Ether is currently the second-largest digital currency after Bitcoin. Trading at around $2,580 per ETH on March 8, 2022, its market cap is less than half of bitcoin.

This increasing market capitalization results in the need to store higher volumes of funds on Ethereum’s blockchain. Blockchains are fundamentally different from what novice users think. Hence, storing funds can be a challenge for them.

So, let’s dig a bit deeper into the world of Ethereum and the different ways you can store funds on it.

1

What is an Ethereum Wallet and How to Set it Up?

An Ethereum wallet is hardware or software that allows users to interact on the Ethereum blockchain. To set up an Ethereum wallet, you need to have an Ethereum account. These accounts allow you to store, send, receive, and interact on decentralized apps and keep track of the Ether you own.

Ethereum accounts are usually of two types:

  1. Externally-owned accounts, controlled using a private key
  2. Contract accounts that have their own codes

Both these accounts have four components in common – Balance, Nonce, StorageRoot and CodeHash.

2

The Difference Between Hot and Cold Wallets

In cryptocurrency, there are two main types of wallets – hot and cold. Hot wallets are those stored on devices connected to the internet like a mobile phone or a desktop PC. These wallets are user-friendly and allow users to access their funds anywhere, anytime. But, these are not very secure and have pieces of software stored on the devices.

On the other hand, cold wallets store the users’ private keys offline. By doing so, they mitigate hacking and malware risks. Cold wallets are less intuitive, difficult to exploit and have hardware stored physically.

Due to these security concerns, users prefer cold wallets to store their cryptocurrency. They usually only store their short-term obligations in hot wallets.

3

Different Types of Ethereum Wallets Available

There are different types of Ethereum wallets for different types of users. Most wallets only allow users to send and receive Ethereum. But some wallets can also connect to a credit or debit card. This makes investing and trading in Ethereum easier for users.

But more advanced wallets allow users to hold multiple cryptocurrencies. Users can also explore decentralized apps on varied networks.

Let’s explore them one by one!

Mobile Wallet

Mobile wallets can be installed on your mobile phone and used to access your funds. Unfortunately, this type of wallet is easy to hack if you lose your phone. But having backups can save you from the losses arising out of losing your phone or keys.

Desktop Wallet

Desktop wallets run on operating systems like Microsoft Windows, macOS, or Linux. These wallets are ideal for those who prefer handling their finances on desktops. Like mobile wallets, desktop wallets too have many advanced features. Users can create smart contracts, run a full node, and use several other functionalities.

Web Interface Wallet

Web interface wallets are websites that allow users to use a web browser and connect to their Ethereum accounts. These wallets use cloud storage and are accessible from anywhere, anytime. Thus, it eliminates the need of purchasing and managing data storage equipment.

While some web interfaces are considered trustworthy, the users may still be exposed to some attacks. These include phishing schemes, domain name system attacks, etc.

Browser Extension Wallet

Browser extension wallets are used on a desktop browser to interact with decentralized apps and can store both ERC-20 and ETH tokens. They can also be used to interact with other blockchains. These wallets are a safer alternative to web interface wallets as they store the users’ private keys in an encrypted form. They need users to protect them with a password, thus, bolstering security.

Hardware Wallet

Hardware wallets are nothing but pieces of hardware that store users’ private keys offline. These are cold wallets that are protected by passwords and have to be connected to a computer to move funds. But, these can be expensive for users having small amounts of funds to store.

Also, the security of hardware wallets can be compromised after being used once. Thus, it is important not to buy a used hardware wallet or take one from a third-party user.

Paper Wallet

Paper wallets are cold wallets that involve printing out the users’ private keys on a piece of paper and storing it. The main advantages of this type of wallet are its accessibility and security. All you need is a pen and paper to access the funds. However, these wallets may not be suitable to hold funds for the long term due to their fragility.

4

What's the Best Wallet for Safe Storage?

Once you select a wallet type and fund it, you do not need to worry about the security of your funds. Attacks by hackers and malware remain a possibility. But there are things you can do to ensure your wallet’s safety:

  • Firstly, you should triple-check everything. Ensure that you are sending funds to the right address. Interact with the application you intend to, and write down your private keys
  • Bookmark your web wallet and websites of decentralized apps you regularly use to avoid phishing schemes
  • While dealing with DeFi protocols, always find out whether the service is audited and legitimate or not. You can do it by simply searching the web for the service’s name with the word ‘audit’ or ‘review’
  • Avoid schemes that look too good to be true and do your own research into newer projects
  • And most importantly, never share your private keys with anyone.

There is no third-party accessing your Ethereum accounts. Hence no unauthorized activity can lead you to lose your funds. So, as long as you are attentive and stick to the recommended practices, your Ethereum wallet is secure.

FAQ

How do I store Ethereum in my wallet?

Setting up an Ethereum wallet involves downloading your private key/seed phrase or writing it down. Private keys allow users to send or spend their crypto. The seed phrase gives them access to the wallet and all the private keys in the wallet.

Can I keep my Ethereum?

If you are storing your ETH on a cold storage wallet (like Ledger), you’ll need to transfer the ETH back to an exchange if you want to sell it for fiat currency. You can use a centralized exchange like Coinbase or Binance or a decentralized exchange like Sushiswap.

How can I spend Ethereum?

As a BlockCard holder, you can spend Ethereum without difficulty. Use the BlockCard Crypto Visa Card to deposit ETH and spend it in USD wherever Visa cards are accepted.

How can I convert Ethereum to cash?

Pick a trustworthy crypto exchange platform, connect an existing bank account to your wallet, transfer ETH and your mining rewards to the crypto exchange wallet and sell exchange ETH for your preferred fiat currency. 

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