What is an Ethereum Wallet?

For those of you who have delved into the crypto world, you’ll know what Ethereum is. But if you’re unfamiliar, here’s an explanation: Ethereum is a decentralized blockchain network that has smart contracts and distributed applications (DApps) that are built and run without downtime. 

Ethereum’s presence in the crypto world is now second only to Bitcoin, making it the crypto asset with the second highest market cap price and number of users. With this position, ETH coins are also in high demand by beginners because their value tends to be more stable than other crypto assets. The question is, how to access and trade Ethereum? Read on!

What is an Ethereum Wallet?

If you are interested in owning and using ETH coins as a means of transaction or investment, you must have a special digital wallet to store Ethereum. Basically, an Ethereum wallet is a piece of software or hardware that allows users to perform activities on the Ethereum blockchain itself. Wallets are used to manage user accounts on the platform. In this wallet, a user can access a record of transactions made and the amount of ETH they have with an unlimited number of Ethereum addresses. This feature also allows users to perform transactions such as sending and receiving ETH, creating smart contracts, and interacting with various applications in the Ethereum ecosystem.

For those of you who are new, you might be wondering, what is an Ethereum address? An Ethereum wallet is the ‘address’ for every Ethereum account on the platform and is a random number, usually starting with ‘0’. All balances of each address are visible in the blockchain system, but the real identity of the user behind the address cannot be known. Ethereum wallets serve to control multiple addresses at once for a single user. 

To access these Ethereum wallets, users have a private key or password that allows them to make transactions in them. This password is only known to the owner of the wallet for security. That’s because anyone with access to this password can access the balance in the wallet. Creating an Ethereum wallet usually requires users to download or write their own private keys that every wallet must have. 

Ethereum wallets come in all shapes and sizes, but not all of them have the same features. Some wallets only allow users to send and receive ETH between addresses. Others have more complex functions such as creating smart contracts.

Types of Ethereum Wallets

In the cryptocurrency sector, there are two types of wallets that Ethereum users can use: hot wallets and cold wallets. A hot wallet is a type of wallet that is stored on an internet-connected hardware device such as a laptop, PC, or smartphone. Some examples of hot wallets you can use are Metamask, Electrum, and Armory.

Cold wallets, on the other hand, are wallets that are used to store users’ private keys offline. Since the system is offline, this type of wallet can protect the private keys from digital attacks by hackers who can cause losses by stealing the ETH in the wallet. Typically, a hacker will use malware software to hack into accounts,cause system damage, and gain access illegally. For cold wallets, some examples that can be used are Trezor, Ledger, and Ellipal.

From the above, hot wallets are usually more user-friendly as they are easy to use and allow users to access their wallets anytime and anywhere. While cold wallets are usually more difficult to use at any time, their main use is to store private keys.

How to Keep an Ethereum Wallet Secure

Although Ethereum is said to have a more secure system, hacking cases are still possible. Most of these hacking cases do not occur on the Ethereum platform directly but on individual wallets. One example is the case of Shelly Palmer, an ETH trader who stored some of his assets on MetaMask (a hot wallet platform) and lost $400 because his account was hacked. In an article he wrote on his personal blog, he explained that his MetaMask wallet suddenly made transactions that he had never made. He suspects that one of the causes was the use of chrome plugins or the possibility that he had entered a website with malware that allowed it to happen.

Therefore, it is important that you continue to ensure that your Ethereum wallet is always secure. Here are some things you can do to make certain your wallet remains secure:

  • Create strong passwords/private keys. A long combination of characters, numbers, and symbols is the best way to keep your account secure, especially when it comes to safeguarding your crypto wallet. Here is an example of a secure password: (x*Ahgkay%51gUJ). Avoid words that are related to your name, as well as correlated words. .
  • Regularly changing your passwords can keep your crypto wallet account secure. Also, make sure you use different passwords for each account. You should have a unique password for each account or transaction code. That way, you can avoid hacking due to the use of easily guessed passwords.
  • Use a password manager. A password manager is an encrypted and secure tool for storing and creating passwords for your accounts. It can also create a unique and secure password every time you sign up for a new service. In addition, some password managers even warn you if your passwords are being hacked, which can help you change them before you’re compromised. Examples of password management tools: Bitwarden, Keepass, and so on.
  • Use two-factor authentication. This system allows a user to employ factors other than a password to access their account. Some platforms use personal questions like, what was your first pet’s name, and others use fingerprints for the other factor. Some send an OTP code to your device so that the unique code sent by the platform can only be accessed by you.
  • Avoid using extensions such as chrome extensions. This is because almost all extensions have the ability to read all the data on your device, making data theft possible. While most extensions do not carry this risk, it is always a good idea to take precautions to keep your assets safe.
  • Use a cold wallet. As explained above, cold wallets store your assets offline,  making them much more secure.

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