If you are just getting into cryptocurrencies, chances are you have heard the stories about friends of friends making hundreds of thousands of dollars on Ethereum or another cryptocurrency. Next thing I know I was on the hunt to find the best Ethereum wallet I could get my hands on.
Best Ethereum Wallet - How to Decide
Deciding on which is the best ethereum wallet to go with is determined by what features you are looking for. In addition to that, the hardware wallet needs to be extremely secure, easy to use, and be fully recoverable. As I began my research I learned that there are a number of different ways to store Ethereum, each having their own set of pros and cons as well as different levels of security.
Blockchain Sensei highly recommends hardware wallets over software wallets for storing cryptocurrency. Here is why:
Best Ethereum Wallet - 3 categories
I like to define cryptocurrency wallets into 3 different categories: Hardware Wallets, Software wallets, and Exchange Wallets. Changing from one wallet to the next is like graduating, new users typically download Coinbase to their smartphone or sign up for an exchange based on a recommendation from a friend.
From there, new users begin to do more research and realize that leaving your crypto on the exchange can be a risky extremely risky. This usually comes around the time the read about the Mt. Gox hack that effectively cratered the price of Bitcoin in 2014.
Best Ethereum Wallet - Hardware or software?
After the realization that your cryptocurrency can be stolen directly from the exchange, software wallets look to be the next best choice. MyEtherWallet.com is one of the most secure software wallets for Ethereum, and comes highly recommended by many users.
Exodus wallet is another top contender with a phenomenal user interface and altcoin support. The issue with software wallets such as these is that at some point during the setup process, your private key or seed is exposed to the internet.
Best Ethereum Wallet - Are Hardware wallets secure?
If your computer is infected with malware such as a screen capture tool or keystroke logger, consider your private key compromised. You might be thinking, “Nah, there is no way my computer is compromised.” but we assure you, you probably are.
Cyber security expert and cryptocurrency advocate John McAfee has given numerous talks on the topic of security as it relates to cryptocurrency and digital assets. McAfee explains that any person who has visited an “adult website” is most likely infected with a keystroke logger. After watching a number of McAfee’s talks, gaining a deeper understanding of cryptography, and seeing people I personally know get hacked, I came to the realization that software wallets are not 100% secure.
“If any of you have ever visited a porn site, I promise you, you have keystroke logging software on your [device].” ~ John McAfee
Best Ethereum Wallet - Which Hardware wallet?
Enter the Hardware Wallet, a combination of both software and hardware to keep your cryptocurrency safe! Hardware Wallets are the safest and most secure option for storing cryptocurrency because of one simple reason: offline seed generation.
You see, when you generate a software wallet on your computer or tablet, your private key or seed pops up on the screen so that you can write it down or print out a paper wallet. While this is certainly more secure than trusting an exchange, your seed can still be stolen if your device is infected with a keystroke logger or screen capture malware.
Best Ethereum Wallet - Holding your private key
Hardware Wallets provide you with your private keys directly on the device, away from the prying eyes of hackers and malware. Copying down your private key or seed is the most crucial step in cryptocurrency security, which is exactly why hardware wallets exist.
Generating the private key on a secondary screen (your hardware wallet device) is the only way to ensure that it has not been exposed. I personally write down the recovery seed for all of my hardware wallets and store them in a safe or multiple safes.
I have been thinking about keeping my recovery seeds in a safety deposit box, but I’m not so sure that I trust banks anymore, either! The remainder of this blog post will talk about hardware wallets, and the best choices for storing Ethereum.
Ledger Nano S
The Nano S gives you the flexibility to manager your ETH with the software interface of your preference. Ledger Apps are available to download via their website via Google Chrome applications. I personally use the Ledger Ethereum Wallet via the Chrome application at the moment, but I may switch over to using the MyEtherWallet (MEW) integration as I am comfortable with the user interface.
In addition to the slick user interface, MyEtherWallet allows for the receipt of ERC20 tokens that are airdropped via smart contracts for participating ICOs. Mycelium and Electrum are popular software wallets with smartphone integration (Android), but I would only suggest using them in combination with a Hardware Wallet such as the Ledger Nano S.
Always remember to utilize an approved wallet for any ICOs that you participate in. If the ICO is legit, they will provide proper instructions on where you can send ETH from in order to redeem your ICO tokens. MyEtherWallet is typically a supported wallet. DO NOT SEND ETH FROM AN EXCHANGE WALLET.
The next Ethereum Wallet on the list is the TREZOR Wallet, the original Bitcoin Hardware Wallet. The TREZOR Wallet is very similar to the Ledger Nano S, but comes with an added Password Manager feature. I have yet to push this feature to its limits, but I will be doing a full blog post on how to use it in the future.
MyEtherWallet is the interface of choice for the TREZOR Wallet, which is a positive in our opinion. Accessing your Ethereum wallet is straight forward, simply connect your TREZOR Wallet to your computer and visit www.trezor.io. After launching your wallet, click the dropdown to access your Ethereum Wallet, which will automatically bring you MyEtherWallet.com.
From there you click on the TREZOR button under the View Wallet Info tab, enter your PIN number and presto! You have accessed your wallet without giving up your PIN or private keys to a device that is connected to the internet!
Ledger’s latest hardware wallet, the Ledger Blue, is arguably the most advanced consumer hardware wallet on the market. The Ledger Blue is also currently on pre-order Batch 2, with expected shipping dates in late November / Early December for new orders. The Ledger Blue sports a 3.5 inch LED-backlit display in full color, 320x480 pixels, plenty for a cryptocurrency hardware wallet.
“Ledger Blue is the most advanced hardware security gear on the market. It boasts multi application execution, and packs enterprise-level crypto-capabilities into a lightweight handheld device designed and crafted in France. It is architected around a Secure Element, featuring a touchscreen and USB & Bluetooth* connectivity”
The interesting thing about the Ledger Blue is that it is suitable for those who are new to cryptocurrency and those who are more advanced. The touch screen enabled device feels familiar in the hands new users, being able to enter your PIN just like you would on your iPhone or Android smartphone. While basic hardware wallets is fairly easy to use, signing transactions on a device the size of a USB flash drive can nerve wrecking for first time users.
Advanced users will enjoy the ability to store between 8 and 10 different cryptocurrencies on the Ledger Blue, about double the allowed amount on the Nano S. This is another thing to consider if you hold a diverse portfolio of altcoins that you wish to store on a secure hardware wallet. It would be cheaper to actually buy 2
Nano S hardware wallets to have the ability to store 8+ different cryptocurrencies, but now you are dealing with more than one device to manage your portfolio.
KeepKey is one of the latest entrants into the Hardware Wallet space, and was just recently acquired by asset exchange ShapeShift. This strategic acquisition gives KeepKey the unique advantage of being able to swap and exchange different cryptocurrencies directly on the device.
I must admit, this feature is a game changer for new users. Transferring Ether from a hardware wallet to an exchange to convert it to another altcoin and then sending it back to your Hardware Wallet can be a cumbersome process, especially if your Hardware Wallet doesn’t support the altcoin you were looking to store.
KeepKey simplifies this process of moving crypto to and from your hardware wallet to the exchange by bringing the exchange directly to the device. The efficiencies gained center around the time it takes and the removal of 3rd party risk of your crypto being on the exchange.
The only downfall are the fees for conversion. It will always be cheaper to do the conversion on the exchange, but at the expense of your time and security. If you are just starting out, you may also be saving yourself the hassle of having to sign up with an exchange at all and conduct all of your trades directly on the KeepKey.
Screen size and readability is also something to consider when purchasing a hardware wallet. The KeepKey is larger than the Ledger Nano S, but has a larger digital display that makes confirming transactions easy on the eyes. I will say that the KeepKey might be the cleanest device of the bunch due to its design and large display.
Coinbase is the most popular smartphone app that functions as a Bitcoin exchange. They recently added 1 million users in the early part of the summer, helping the price of Ethereum to soar. Coinbase currently allows the purchase of Bitcoin (BitcoinSign.svg), Ethereum (Ξ), and Litecoin (Ł) with fiat currencies of over 30 countries. In addition to purchasing Bitcoin (or Ethereum/Litecoin), you can also store your digital assets on the Coinbase wallet.
Although leaving your digital currency on an online exchange is not recommended, Coinbase has proved to be a reliable and legitimate company and has also introduced its Vault service. Coins do take a few days to settle in your account, which can be frustrating due to the extreme volatility we have seen in the market throughout 2017.
Best Ethereum Wallet - Why aren't software wallets secure?
You also have the option to keep your Ethereum on a software based wallet on your computer or phone. This is the easiest way to store your Ethereum, but it is certainly not the most secure. Software wallets are inherently flawed when it comes to keeping your private keys, well, private.
The only way to write down your private key and store it in a safe place is for the software to show you and give you your private keys over the internet. That brief exposure to the free world could cost you your private key, and all of your Ether.
Cryptocurrency exchanges can also be used as a wallet. Due to the lack of security in early Bitcoin exchanges, hacks were commonplace and many people lost their coins. More cryptocurrency exchanges are in the works, such as the one from Overstock via their upcoming ICO.
John McAfee has been a tremendous cryptocurrency advocate and has now dedicated his new business venture towards the entire cryptocurrency ecosystem. His background in cyber security makes him all the more paranoid about the lack of education around keeping private keys "private" and utilizing hardware wallets as the only true source of security.
“If you do not have a hardware wallet, do not keep much money on your wallet. Because if you keep your wallet on a smartphone, on your computer, I promise you it will be hacked.” – John McAfee
Best Ethereum Wallet – Entry level
For most HODLers, we recommend going with the Ledger Nano S to store your Ethereum. The Nano S is the cheapest of the group (depending upon where you buy it) at around $65 plus another $30 or so for shipping. The TREZOR will run you around $99 plus plus another $30 for shipping to put it in perspective.
If you are only holding a few coins and Ripple / XRP is one of them, I would go for the Nano S. With all of the recent attention Ripple has been getting, it is worth storing XRP off of the exchange. I do prefer the interface of the TREZOR Wallet slightly more, but at this price and its Ripple support as well as other altcoins makes it a great choice.
Best Ethereum Wallet - Easy to Use
The TREZOR Wallet is our top choice for those looking to utilize the added benefits of the Password Manager feature. While this is not the most useable feature at the moment, the recent Equifax Hack and impending hacks of other large firms or financial institutions will drive adoption for Password Manager functionality.
It is important to not use the same password for all of your separate accounts, ranging anywhere from Facebook to online banking. If a hacker obtains your most commonly used password in a hack, all of your accounts are now compromised. I would be most concerned with using your favorite password on your exchange of choice, as the hacker can now login to your account and send your funds to their own wallet, with no recourse.
The TREZOR Wallet has one of the best user experiences. Accessing funds can be done right from the TREZOR.io website, no Chrome extension or anything else needed to send, receive, or manage your Bitcoin holdings.
Best Ethereum Wallet – Simple display and ShapeShift
I recommend the KeepKey to anyone who doesn’t need the smallest possible hardware wallet, or want one with a bigger screen that is easy to use. I would also recommend the KeeyKey if you are getting it as a gift for a baby boomer, they will appreciate the size and style of the device. The KeepKey’s ShapeShift functionality and similar price point as the TREZOR Wallet makes it a very strong contender for the Best Ethereum Wallet.
Best Ethereum Wallet – Touchscreen and Bluetooth
The Ledger Blue is the go-to if you are looking for the latest and greatest hardware wallet with all the bells and whistles. The Bluetooth feature is not currently in production, but a future firmware update will activate it. I am extremely excited to test the Bluetooth functionality of the Ledger Blue, especially as we continue down the path of a wireless lifestyle.
I also have a Macbook Pro with USB-C connection, needless to say carrying around USB adapters gets annoying after a while.
The Ledger blue is also the best choice if you hold a lot of altcoins and want to keep them on a single device. Ledger support states that the Nano S can only store between 4 and 5 different cryptocurrencies on the device. The Ledger Blue will be good for up to 10 different cryptocurrencies (maybe less depending upon the size of each individual app) and the perfect all-in-one solution.
Best Ethereum Wallet - Who is the winner?
As you can see, there are four different hardware wallet suggestions we have made to help you decide what the Best Ethereum Wallet is for you. Each investor needs to decide what level of security and functionality is most important to them.
True believers like myself are more interested in security and storing their Ethereum in hardware wallet, off of the exchange. I’m comfortable storing my ETH on a hardware wallet as I do not anticipate selling any of it anytime soon. This is a long-term play.
Others may be more comfortable leaving their crypto on the exchange due to the volatile nature of its value, wanting the capability to sell at a moment’s notice. While that argument is certainly valuable, I wouldn’t be willing to risk any significant portion of my holdings to the vulnerabilities of an exchange.
I know that exchange security has increased since the Mt. Gox hack, but I would prefer not to bear the risk of hoping that an exchange has taken the appropriate security measures necessary to withstand an attack.
What do you think the Best Ethereum Wallet is?