How to Store Ether Coin? What’s the Safest Ethereum Wallet?
Some of us purchase Ethereum from Coinbase, Bitfinex, Poloniex and many other cryptocurrency exchanges. However, are they a secure place to store your Ethereum? They may be a great platform to buy and sell your Ethereum but may not be a secure place to store them. How to store Ether coin then? The best bet for storing Ether coin long term is to keep them in cold storage. However, there are several options in the market, which are the safest Ethereum wallets?
How to Store Ether Coin?
Although you get a free wallet from Coinbase, it is not the safest place to keep your Ether coin because they are still a centralized exchange and store all the private keys in their database. This makes them vulnerable to hackers, especially since they have millions stored in their wallets.
If you are long enough in the world of cryptocurrency, you might have heard about the incident of Mt.Gox hack. They were handling more than 70% of all the Bitcoin transactions worldwide. In February 2014, Mt. Gox suspended trading, closed its website and exchange service. Worst of all, they filed for bankruptcy protection from creditors. They allegedly lost $350 million in Bitcoin (7444,400 BTC).
That simply means when you had a balance at Mt. Gox, you didn’t really have Bitcoin because you didn’t actually own the private key. However, you were promised that Bitcoin would be delivered when a withdrawal was executed.
In short, if you don’t own the private keys, you don’t own the Bitcoin (or Ether).
With the recent Coinbase outages, many of us were afraid that the same thing would happen to Coinbase and GDAX.
Hence, if you own a lot of Ethereum or Bitcoin with cryptocurrency exchanges, you are better off investing in a hardware wallet.
In the early days, cold storing Bitcoins on your own computer was meant for IT professionals. You had to know how to store, encrypt and backup the wallet appropriately or you might end up losing all your Bitcoins or Ether. These days, things are a lot simpler. Now hardware USB wallets devices take care of security, privacy, and backups.
Below I summarize a list of reliable hardware and desktop client wallets that worth exploring.
What’s the Safest Ethereum Wallet?
In general, there are two types of safer wallets where you can keep Bitcoin or Ether.
Although the general public likes to believe that their files and passwords are secure on their home computers, the reality of online security is nowhere near that false hope. Hardware wallets allow users to store sensitive information on separate devices, which offers greater security in a situation where their computer has become infected with malware.
#1 Ledger Nano S
Bitcoins or Ether and private keys stored on an online computer are easy targets for hackers. When you use a hardware wallet, which stores your Bitcoin and Ether offline, then your coins are stored offline and out of reach from hackers.
Ledger is the best option when you want to store Ether or Bitcoin securely offline. The level of security provided by Ledger is inferior when compared to the other hardware in the market.
The Ledger Nano S is a hardware wallet that supports Ethereum and other Altcoins besides Bitcoin. You can store Ether, Bitcoin, Lightcoin, Dogecoin, Zcash, Ripple, Stratis, and Dash on this hardware wallet. Other than that, it can also be used for FIDO® U2F, GPG, SSH or build your own applications.
You can send and receive payments, check your accounts and manage multiple addresses. Nano S also supports the FIDO Universal Second Factor standard that simplifies the authentication process for compatible services such as Google, Dropbox or Github.
If you are concerned about recovery feature, your Nano S accounts are backed up on a paper wallet. Easy recovery on any Ledger device or compatible wallet (BIP39/BIP44).
In terms of its secure element, Ledger Nano S is based on a dual chip architecture (ST31/STM32). The firmware integrity is guaranteed by cryptographic attestation.
The Nano S requires the use of Google Chrome extensions when connecting the device to any computer. Before connecting the Ledger, a user can set a 4-digit pin on the instrument itself, which eliminates any key logging.
NOTE: When you set up your Nano S, the wallet generates a recovery phrase. The recovery phrase is a complete backup of your wallet. When you use a hardware wallet like the Nano S, the recovery phrase is generated offline and displayed on the Nano S’s screen, which ensures that the recovery phrase is never on an internet-connected device.
The methods used to secure your Ether wallet are of a military grade. You can decide yourself how many security measures you want to take. Trezor has grown up in the Bitcoin industry, but recently also supports Ethereum and other altcoins.
Trezor is a $100 Hardware Bitcoin wallet from a Czech Startup, Satoshi Labs. The wallet runs on an ARM Cortex M3 processor clocked at 120MHz.
Trezor is a reliable hardware wallet. A Trezor wallet costs 99 USD and is heavily secured. One of the security features that I really like is that when you enter your pin number to access your account, the keyboard numbers don’t appear on your computer screen. Instead, they appear on your Trezor screen.
Trezor users can use their wallets on any computer, even if it is compromised, given that SatoshiLabs created a wide variety of mechanisms to protect those assets while the device is connected to the computer.
Like other Bitcoin/Ether wallets, Trezor can use 2-factor authentication for an extra layer of security between your funds and the outside world. If you lose your Trezor, you can use your secret words to quickly regain access to all your keys, money, history, accounts, and emails.
Trezor wallet supports Bitcoins, Testnet, Namecoin, Litecoin, Dogecoin, and Dash.
Trezor device is a very simple and easy-to-use device. It certainly provides an added layer of security.
NOTE: Having a paper copy of your recovery seed enables you to recover your account in the event that you lose it or someone steals your Trezor. Trezor has a built in recovery mechanism or seed, which can be used to restore digital assets stored in the hardware wallet should the device itself fall into the wrong hands or be otherwise compromised.
The security of hot wallets is dependent upon the security habits of individuals and third parties. They are vulnerable to theft because they are constantly connected to the internet.
As compared to cold wallets, your Ether or Bitcoin is still vulnerable because a hacker could get your coins by gaining access to your computer.
Depending on the usage of the Ether and Bitcoin, some owners prefer to have their coins in a wallet on mobile devices or computer. If you are a frequent trader, then it is recommended to go for hot wallets (desktop clients).
Exodus is a software application that is also a kind of hot wallet but it is downloadable to your computer. That simply means Exodus doesn’t store your private keys on its servers and therefore, your money is under your control, not theirs.
Exodus is an independent wallet that encrypts and stores the private key and transaction data on your machine and not on any external server. That means no accounts, no servers, no data sharing.
Exodus is a Bitcoin and Ether desktop wallet with simplistic design and an intuitive interface. The user interface will also create a pie chart based on a user’s holdings. This feature is well appreciated by a lot of users so far, as it provides an interesting visual of their cryptocurrency holdings.
You will also receive a backup link via email if you want to install Exodus on an another machine (say your computer gets destroyed). It’s all very secure through the use of a password and a mnemonic phrase (in case you forget your password).
Currently, Exodus support Ether, Bitcoin, Agur, Dash, Litecoin, Decred, Golem, and Monero. I am sure other assets and cryptocurrencies will be added over time.
ShapeShift.io, an instant digital asset exchange for Bitcoin and other blockchain tokens is currently integrated with multi-asset desktop wallet Exodus. The API integration allows Exodus wallet users to quickly and securely convert between blockchain assets without leaving the application or sending coins to an exchange.
I also find the team behind it really approachable, especially on Slack. The developers are constantly updating the wallet and adding new features to make it a more user-friendly experience. Expect a wallet update nearly every two (2) weeks.
#2 Electrum (Bitcoin-Only)
Electrum is a free software both as a client and a server software. It is a desktop Bitcoin wallet for Windows, Mac, and Linux. The main features of Electrum support for hardware wallets TREZOR and Ledger Nano S I mentioned above. It offers cold storage solutions, allowing users to store part of their funds in an offline manner.
The Electrum wallet supports 4 types of wallets that are
- Standard Wallet;
- Wallet with two-factor authentication;
- Multi Signature Wallet and; and
- Watch Bitcoin address.
Electrum functions as a hot wallet or cold storage. For both wallet types, a 12-word seed is generated which allows you to backup and restore the entire wallet and its keys.
For cold storage, a seed is generated on a secure offline computer and written to a piece of paper. A master public key is created from the seed and imported into a separate Electrum install on your everyday computer. You can now view the wallet balance, accept payments, and create new addresses on a host computer without the risk of funds being stolen. All transactions must be signed by the offline computer.
Electrum is a lightweight Bitcoin client and uses servers created by users to get transaction and balance information. A server has no way of knowing your actual identity but does know your IP address, wallet addresses, and balance.
Electrum is a great fast, secure and stable wallet, however, it does not suit beginners.
Some of the readers requested a thorough review of other services such as Mist Wallet, MyEtherWallet and etc. To be honest, I haven’t used them and there are still some negative feedbacks on the other wallets. Hence, it doesn’t worth mentioning in this post. Perhaps, I will wait until they are more stable.