Crypto-currencies are no longer an enigmatic subject and are increasingly present in people’s everyday lives. Every year, more and more ordinary investors enter the world of crypto-currencies with the desire to be part of the group of people who profit from them. One wave of popularity follows another, and the most recent one is happening now, between 2020 and 2021 – a period when all cryptocurrencies have broken their all-time records.
The largest cryptocurrency remains the original, bitcoin (BTC), with a market capitalization of $814 billion. In second place comes ether (ETH), the native currency of the Ethereum blockchain, with a market capitalization of $320 billion. Between them, they account for just over 60% of the cryptocurrency sector’s total market capitalization, well ahead of the other members of the Top 10.
Ether, as the second-largest cryptocurrency, has become attractive to more and more categories of investors. Below, we take a look at its main features and blockchain, and analyze the best ways to store it in personal wallets.
What is Ethereum?
Ethereum is a blockchain, a decentralized, open-source platform that enables peer-to-peer (P2P) transactions and communication. Its distinguishing feature is that it is the first blockchain architected with support for smart contracts. In the Bitcoin blockchain, for example, it is not possible to store information other than financial transactions.
But Ethereum has brought the possibility of storing data, which can be scripts for automatic programs – these are the famous smart contracts. These algorithms enable many different tasks to be carried out, such as the creation of decentralized applications (dApps) and the famous “decentralized finance ecosystem” (DeFi).
What is the history of Ethereum?
Ethereum was proposed in 2013 by founder Vitalik Buterin, who launched the project via crowdfunding in 2014. In July 2015, the blockchain was officially launched. The network has undergone several updates, but the most significant changes have been taking place since 2020 and are known as the Ethereum 2.0 project. These include a move to proof of participation (PoS) and increased transaction efficiency and speed through sharding.
Ether (ETH) is the main digital currency on the Ethereum blockchain, and has been around since 2015. It is used in smart contracts, computing services and to pay fees to miners. The valuation of ether represents the valuation of the Ethereum blockchain itself (and vice versa). If you want to invest in it, the first step is to choose a suitable, reliable wallet that can store your ETH safely.
What exactly are cryptocurrency wallets?
Wallets are mechanisms that enable users to store and transfer cryptocurrencies securely. They work much like traditional wallets, except that they store digital assets and may or may not physically exist. There are several types, including online and offline models. Some of these are:
Full node wallet: Your device hosts a complete copy of the blockchain. You can control your private keys.
Custodial wallet: this mode does not allow you to control your private keys. Wallets provided by cryptocurrency exchanges and brokers are an example.
Desktop software wallet: this is usually a desktop application, which connects the user directly to the blockchain and their coins and gives them full control over their keys and funds.
Mobile software wallet: works as a smartphone app for Android or iOS. Works similarly to desktop equivalents.
Hardware wallet: these are physical devices that store data, such as flash drives, made specifically for cryptocurrencies. This is the most secure type of wallet, as it is not fully connected to the internet. During use, they must be connected (via USB, Bluetooth, etc.) to a device with Internet access.
Paper wallet: this is a QR code for public and private keys printed on paper, allowing you to bypass the storage of your currency data in digital form.
Which is the best Ethereum wallet?
Trezor one
Trezor was the first hardware wallet for Bitcoin, produced by SatoshiLabs. It has a simple interface and is quite secure, as the PIN code never leaves the wallet. This protects your cryptocurrencies even if the device is connected to a compromised computer. Some claim that Trezor is the best ETH wallet on the market, and is featured on the official Ethereum website.
Trezor’s main advantages are its ease of use and enhanced security. It generates a random PIN code each time it is plugged into your computer, which you must enter. If a PIN is entered incorrectly, this increases the waiting time by a power of 2, so that it would take 17 years to make 30 attempts. When the correct PIN is supplied, the user must enter the passphrase, which is like a password that only he or she knows. This makes it impossible to hack the wallet using brute-force methods.
It supports hundreds of cryptocurrencies – such as ETH – but doesn’t yet work with Ripple, Monero, Cardano and Tezos. Other negatives are its cost, around $800, and the fact that it’s a physical device. Although it is protected against hackers, it is exposed to the risks of deterioration, destruction, theft and loss.
Metamask
Metamask is a desktop application that works as an extension for Google Chrome. It is versatile enough for novice users and also for developers, who can interact with Ethereum test networks through the extension.
Private keys are password-encrypted and remain on the machine until requested to be exported. Although it’s a software wallet, it doesn’t require the installation of a complete Ethereum node, which is convenient for dynamic users new to the sector. It’s also a good option because it’s completely free.
While the software mode offers convenience and security, it’s worth noting that it’s less secure than hardware or paper wallets. After all, it’s a digital mechanism that can be exposed to malicious users via the Internet connection.
Ledger Nano S
The Ledger Nano S is probably the most popular hardware wallet. Many users consider it the best wallet for Ether. Like Trezor, Ledger stores private keys on a physical device. This option is particularly appreciated by users who handle larger sums of money and/or will be stored for longer periods, necessities that require a greater investment in security.
The value of this investment varies widely, but is also around $800. It supports hundreds of cryptocurrencies and third-party applications, if the user is interested. The same precautions for storing hardware wallets apply, as already mentioned for Trezor One. We recommend storing these devices in fireproof safes or briefcases.
Exodus
Exodus is another software wallet option. It works as a program for Windows, Mac OS, Linux, Android or iOS, and can be downloaded free of charge from the official website. The program features an intrinsic broker and a partnership with several brokers, allowing users to trade over 100 cryptocurrencies. What’s more, it allows synchronization with Trezor hardware wallets, conveniently integrating the two modes. It’s also possible to use smart contracts to send and receive funds via Exodus.
However, in terms of security, it lags behind other options, as it doesn’t offer two-factor authentication. Nor is it 100% open source, nor does it have a web interface. What’s more, the mobile mode doesn’t support the same number of cryptocurrencies as the desktop mode.
Conclusion
All the wallets listed are suitable for holding your ETH, although each has its own distinct features. Choosing the ideal wallet depends on the user and their needs. There are more robust options, but they require a considerable investment, and there are more affordable models which, however, feature fewer security mechanisms. When choosing your portfolio, evaluate your personal objectives and select the model that best suits them.
