This post was last Updated on by Himanshu Tyagi to reflect the accuracy and up-to-date information on the page.
Crypto exchanges offer a straightforward way to buy, sell, and store digital assets like Ether, ensuring high comfort levels. Many of them, including Binance, provide custodial wallets for their users, so you can hold your funds on the exchange if that’s what you want.
When you outsource wallet custody to a business, you outsource your private keys to that exchange. Whether you hold ETH or any other cryptocurrency, at some point, you’ll want to withdraw your funds, moving them to your wallet.
If having complete control of your Ether sounds appealing, withdraw the crypto to a wallet address under your control.
Disclaimer: This information provided in the blog is for informational purposes only and should not be taken as financial or legal advice. CodeItBro is not responsible for any losses or damages that may result from relying on the information provided in the blog.
An Ethereum Wallet Allows You to Hold Ether
An Ethereum wallet lets you send, receive, and spend Ether – in other words. You can manage your crypto balance as you wish. The wallet doesn’t contain the actual Ether but the privileged credentials (i.e., the private keys) to access the blockchain.
An Ethereum wallet combines and contains your digital key and your address. The address is a 64-character string of letters and numbers, an individual account on the Ethereum network; the wallet is the only tool for managing the Ethereum account.
You can use your Ethereum wallet to interact with applications like smart contracts, meaning you enjoy advanced features.
There Are Two Types of Accounts in Ethereum
Ethereum has two kinds of accounts: Externally Owned Accounts (EOAs) and Contract Accounts. Creating an EOA costs nothing; you can have as many accounts as you like.
You use the private key to digitally sign transactions so that the Ethereum Virtual Machine can validate your identity. Popular wallets such as MetaMask are EOAs, meaning that only your private key stands between you and your Ether being lost, a nightmare scenario for any wallet owner.
An EOA is created whenever an Ethereum wallet is created, and transactions can only be ETH/token transfers. Incoming transactions aren’t listed.
A Contract Account can perform all the functions of an EOA, the only difference being that it’s formed when a contract code is deployed. It’s also called a smart contract.
Every contract includes a unique Ethereum address but doesn’t have a private key to control it, so it controls itself.
The advantages of using a Contract Account are viewing incoming transactions, using more than one signature to authorize transactions, and setting daily limits (if exceeded, multiple signatures are required). The smart contract is executed once the conditions are met.
Key Features to Consider When Choosing an Ethereum Wallet
You’ll need a wallet to get involved in the fast-growing Ethereum community and securely store Ether. What you need is a wallet that lets you hold ERC-20 tokens.
Even if all crypto wallets ensure a high level of security for safekeeping digital assets, inappropriate security practices on your behalf can lead to a complete loss of funds.
The best Ethereum wallet is the one that meets your needs as a user or an investor, so if you’d better access DAppps, DeFi applications, and NFT marketplaces, Trust Wallet is the right fit. Key features to take into account when choosing a wallet are:
- User-friendly interface
- Portability
- Multi-currency support
- The reputation of the wallet provider
- Security
While meeting your personal and investment needs, the Ethereum wallet must guarantee improved functionality, so look for an innovative yet flexible solution. Keep all the features above in mind as you move forward.
Common Types of Ethereum Wallets
Suppose your Ether is spread across different wallets. In that case, you can quickly bounce back if one is compromised in a security breach, so having your Ethereum wallet is an effective method of blocking brute-force attacks.
There are several types of Ethereum wallets, as follows:
1. Smart Contract Wallets
As the name suggests, an Ethereum smart wallet is controlled by a smart contract instead of a private key. You can enjoy multisig transactions, emergency account freezing, daily transfer limits, and account recovery.
The smart contract automates specific responsibilities, so it’s more than necessary. The distributed ledger is the underlying network, ensuring safety and security. Smart contract wallets can be divided into full-node and light-node client wallets.
2. Full-Node Client Wallet
A full node is a computer program that validates transactions and blocks, holding the entire history of the Ethereum blockchain.
If you can run your node, you can host your wallet and control every transaction that goes in.
You can use a program such as Geth, developed by the Ethereum Foundation, to run a full node, but remember that all actions are in your hands.
3. Light-Node Client Wallet
A light node wallet allows you to carry out transactions on the blockchain without downloading it. It relies on third-party full nodes to get much-needed information rather than holding an Ethereum blockchain copy.
Since running a node can be costly (and, in some cases, impossible to do), a light node wallet is a good alternative; to connect to the blockchain network, all you have to do is to access the Internet and talk to other nodes. You can use a device with limited space, such as a smartphone.
Closing Thoughts
ETH must be stored in a wallet, but there are different wallets to choose from, some more secure than others. You’re probably wondering what the best option for you is.
There’s no right or wrong answer, so taking action is the only thing you can do to move forward.
Pick a brand wallet and play around with a small amount of Ether to get the hang of things. As far as security is concerned, you can never be too cautious.
Keep the software updated with the latest security patches, use a strong password, enable two-factor authentication, and keep track of all transactions made. Make sure your Ethereum wallet is safe and secure.
