While Ethereum (ETH) used to attract a niche audience a couple of years ago, now just about everyone wants to learn how to invest. And the growth isn’t close to being over. There are different crypto exchanges if you’re curious to know where to buy Ethereum; once you know more about them, you can pick the right one. One of the most important things to consider when you own ETH is how you store it. Owning cryptocurrency means you’re your own bank, so you’re the sole caretaker of your digital assets, which can be appealing but overwhelming. Considering everything, you must increase security and reduce the risks of scenarios like losing/misplacing your tokens, having them stolen, or feeling anxious about your digital assets.
No storage method is perfectly secure, but there are a few ways to protect your funds.
Ethereum Storage: Wallet Types & Options
When you purchase Ethereum, you receive two keys: a public key and a private key. The public key is used to create your wallet address (a string of 42 characters), which can be used to view your balance and receive funds. On the other hand, the private key is used for encryption and decryption, so it’s shared between the sender and the receiver. It’s the key you need to store and safeguard. A wallet allows you to hold Ethereum and participate in the Web 3.0 economy. There are several types of cryptocurrency wallets to manage your assets and keep them secure, such as:
When you buy some ETH tokens, the coins aren’t immediately sent to your Ethereum wallet address but are stored in a wallet on your exchange account. The crypto exchange controls the wallet, so you’re trusting someone else with your funds. The exchange holds the keys for you, guaranteeing their safety. At times, insurance is provided on holdings up to a certain amount to protect the digital holdings against loss from security breaches and theft. When you keep your Ethereum on an exchange account with the intention to continue trading, you keep your funds within easy reach. You must go through an account recovery process if you forget your password.
A hardware wallet is a physical device that records your keys – it can be a USB drive or a piece of paper. It’s hard, if not impossible, for cybercriminals to obtain the keys from an Internet location. Even if a threat actor manages to take control over your PC, they won’t be able to steal your keys. Some hardware wallets are compatible with web interfaces and support multiple cryptocurrencies, including Bitcoin, Solano, Polkadot, Litecoin, and so on. A hardware wallet allows you to verify transaction details on the device screen, meaning you have absolute certainty about what you’re confirming. If you don’t fully understand what you’re signing, you’re a target for scammers.
By definition, software wallets are hot because it’s always connected to the Internet. It can be a browser extension, desktop, mobile, or web app. If you want to make transactions with Ethereum, a hot wallet can be accessed from any device connected to the Internet, but it’s vulnerable and can be hacked. It would help if you used multiple storage types to minimize the risk of theft and loss. Even if the keys are concealed, anyone can access them inversely via your connection, which isn’t the purpose of having a wallet. As you can see, a hot wallet doesn’t have too many benefits.
So, What’s The Best Way to Store Ethereum Right Now In 2023?
A hardware wallet is the safest option because it gives you complete control over your ETH tokens in an environment isolated from an Internet connection. Of course, a hardware wallet isn’t convenient due to limited accessibility, but it’s the best way to store large amounts of Ethereum. You must connect your device to a phone or computer and connect to the Internet to trade Ethereum, but at least the keys are never sent over the connection. Attention must be paid to the fact that hardware wallets come in all shapes and sizes, ranging from Bluetooth to USB hard drives.
USBs have become reliable cold storage for cryptocurrencies because they’re relatively inexpensive and readily available to find in stores and online. Installing an OS on your USB hard drive is the first step towards preparing it for Ethereum storage; using the PC, you’ll create and sign transactions for moving funds in and out of the wallet. Prior to installing the software onto the USB, turn off your Internet connection by disabling the desktop connection or unplugging the router. If the Ethereum wallet is connected to the Internet, that entails some risks. Anyone connected to the Internet isn’t completely safe.
Secure Your Ethereum Wallet Against Hacks
So, you decided to take control of your digital assets and hold your ETH tokens in a cold wallet. Good for you! It’s just that you’re responsible for remaining secure and keeping your keys safe. When it comes to securing your Ethereum wallet, you’ll need to follow these practices:
- Select a PIN code that’s hard to guess
- Enable two-factor authentication (2FA)
- Don’t hold your ETH in a single wallet
- Don’t brag about your crypto holdings
- Consistently assume your device can be compromised
With the growing popularity of Ethereum, new threats have emerged on the cryptocurrency scene, and many people mistakenly believe cybercriminals will never target them. The truth is that anyone can become a hacker’s primary target. Your seed phrase and public/private keys should be backed up and stored offline because digital copies are susceptible to theft.
Wrapping It Up
If you want to transact on the blockchain network, you’ll need a place to store your Ethereum, and this storage location is called a cryptocurrency wallet. Keeping your ETH tokens secure is vital for protecting your finances. If your coins are hacked, lost, or stolen, there’s no way to recover your funds. Cold storage can safeguard your digital assets by taking them offline and storing them in a physical device that isn’t susceptible to hacks.