In our previous blog article on hardware wallets, we covered what hardware wallets are and how they work.
👀 In this article, we’ll explain what Ethereum wallets are, how they work, and the different types of ETH wallets (hardware, mobile apps and browser add-ons) and what they can store.
❓ WHAT IS AN ETHEREUM WALLET?
👉 Ethereum wallets are pieces of software or hardware that allow users to manage and interact with their Ethereum account.
📒 Like other crypto wallets, ETH-based wallets enable users to keep track of their balance, send and receive transactions,create smart contracts, and connect to decentralized applications (dApps) as a login tool. Ethereum wallets can not only store Ether (ETH) cryptocurrency but also any Ethereum-based tokens🪙 on the network (such as DAI, SAND & ENJ), as well as NFTs.
ETH wallets can manage multiple Ethereum addresses simultaneously. An Ethereum address is a public string of letters and numbers starting with “0x”. Like other open-source blockchain platforms, the balance of every Ethereum address is visible to the public, although the identity of who controls an address is anonymous 👤.
An exampe of a 42-character hexadecimal address is 0x71C7656EC7ab88b098defB751B7401B5f6d8976F.
👀 Here is a set of definitions to understand the differences between some of these key terms.
Ethereum account - an entity that can send transactions and has a balance.
Ethereum address - the address of an Ethereum account where funds can be sent to.
Ethereum wallet - a product or tool that allows Ethereum account management, view balances, send transactions and more.
❓ HOW DO ETHEREUM WALLETS WORK?
Like hardware wallets, ETH wallets are controlled through private keys 🔑 (or “passwords”). Private keys allow users to move funds within a wallet and should only be known to the wallet’s creator as anyone who knows them can access the funds inside.
⚠️ It is important to keep your private key passwords, and any seed phrases that can be used to recover them, secret, hidden and offline where they can’t be accessed electronically via a security breach or hack).
When a user controls the private keys to their wallet, they have custody of the funds. This differs in wallets on third-party platforms, such as exchange wallets, where users do not have the same level of access and control.
There are two types of Ethereum accounts:
Externally Owned Accounts (EOAs) - a basic type of Ethereum account has an ETH address that is controlled by a private key. A user can open as many EOAs as they like.
Contract accounts - ETH accounts with smart contract 📄 code attached to them. Every contract deployed to the Ethereum network has its own account which includes a unique Ethereum address. However, unlike an external account, a contract account doesn’t have a private key that controls it. The code that defines the contract is determined by the pre-defined triggers that control the account and its operation as contract conditions are met.
As Ethereum wallets are only a tool for managing an ETH account, users can swap wallet providers at any time, as well as manage several Ethereum accounts from one application.
🧳 TYPES OF ETHEREUM WALLETS
📄 Smart contract wallets, also known as web3 wallets, allow a user to transfer ETH and deploy or trigger a contract when the predetermined conditions have been met.
Full node/client wallets are the integral hubs of the Ethereum network and contain an entire history of the blockchain. They require increased memory and computer usage and can verify transactions. The most common programs for running an Ethereum full node include Geth (short for Go Ethereum) and OpenEthereum (previously Parity).
When it comes to light node/client wallets, there are several types of Ethereum wallets to choose from. Some can be accessed from a desktop🖥️ or laptop browser💻, or a mobile device📱 and some that are held offline through a piece of paper📃, titanium or hardware⚙️.
📱 Mobile-app wallets for Ethereum include Edge, Rainbow and Unstoppable.
💻+📱 Some popular ETH wallets like MyEtherWallet (MEW) and MetaMask can operate as both a browser add-on and a mobile app. Other wallets in this category include Gnosis Safe and Exodus
📃 Another alternative cold storage option would be a paper wallet such as ETHAddress.
⚙️ Most, if not all, hardware wallets store ETH. The most well-known of these are Ledger, TREZOR and KeepKey. Each of these companies offer different models with varying features.
👀 We plan on covering the best Ethereum wallets for 2022 in an upcoming blog post so stay tuned and follow us for more informative crypto articles!
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such. Bloom does not recommend that any cryptocurrency or NFTs should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.