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How to Create an Ethereum Wallet: A Step-by-Step Guide
Learn how to create an Ethereum wallet for securely storing Ether (ET) and ERC-20 tokens. Learn to send and receive cryptocurrencies and connect with Dapps seamlessly.
In the cryptocurrency industry, Ethereum has become a major hub for decentralized applications (dapps) and smart contracts. The last one figures from DappRadar indicate that there are more than 4,500 Ethereum-based dapps and over 176,000 smart contracts deployed on the network.
ETH is the second largest cryptocurrency by market capitalization and is consistently among the top five most traded tokens every day. Therefore, there is a high probability that anyone who dabbles in cryptocurrencies and blockchain will interact with Ethereum at some point.
For this reason it is advisable to have secure and streamlined Ethereum wallets. This article will give you a complete overview of how to create an Ethereum wallet, especially for beginners who are just starting their cryptocurrency journey.
What is an Ethereum wallet?
Ethereum wallets have been compared to online bank accounts. However, instead of holding fiat currency, these applications allow you to store and manage ETH and other Ethereum-based digital tokens. They also allow you to interact with dapps and execute smart contracts.
There are hundreds of Ethereum wallet providers, each with their own advantages and disadvantages. Choosing a particular one, as we’ll discuss later, is ultimately up to you and what you feel works best for you.
How many Ethereum wallets are there?
One of the most frequently asked questions is: how many Ethereum wallets are there? The answer to this question is multifaceted. At the most basic level, there are two types of Ethereum wallets:
- Externally Owned Accounts (EOA): An externally owned Ethereum account is an account owned and controlled by a private key. Account holders use these keys to sign transactions that send ETH or interact with smart contracts.
- Contract accounts: A contract Ethereum account is an account that uses code. This code, known as a smart contract, can be programmed to do various things, such as send ETH, create tokens, or even act as a decentralized application. Contract accounts represent digital assets, or identities, on the Ethereum blockchain.
Pushing the classification further, Ethereum wallets, especially EOAs, fall into two broad categories: hot and cold wallets, each offering distinct features and security measures.
- Warm wallets: These are ETH wallets that keep your private keys online, so you can access them from any device with an internet connection.
- Cool wallets: This type of ETH wallet stores your private keys offline. You only connect them to the Internet when you’re ready to make a transaction. They may not be as easy to use as hot wallets, but they offer extra security.
Types of hot wallets
Mobile wallets
They are convenient because you can access them anywhere using your smartphone. They are also usually easier to use than desktop wallets.
To use a mobile wallet, you must first download and install it on your phone. Then, you will need to create Ethereum wallet addresses, which serves as your account number.
Most mobile wallets allow you to track the current price of ETH. They also typically have built-in features like a cryptocurrency exchange and a way to purchase ETH with fiat currency.
Overall, mobile Ethereum wallets are a convenient and easy-to-use way to store your ETH. They are also relatively safe, as long as you take precautions, such as backing up your wallet data and never sharing your private keys with anyone.
Web wallets
Web wallets are often provided by third parties such as exchanges, wallet providers, or any other organization that offers custodial services.
Unlike other types of wallets, a web-based crypto wallet does not require downloading or installing any software; all you need is an internet connection and a web browser.
Web wallets are convenient because they allow you to access your ETH from any computer. However, they are also more vulnerable to hacker attacks because they are stored online. In most cases, the user will not have direct control over their private keys when using a web wallet.
If the third-party organization goes out of business, is hacked, or otherwise loses your funds, there is no guarantee that you will be able to recover your money. For this reason, it is crucial to choose a reliable and secure web wallet provider.
Browser Extensions
Browser extensions store ETH and ERC-20 tokens and interact with decentralized applications on browsers like Google Chrome or Mozilla Firefox. They store virtually unlimited addresses and can interact with other blockchains. Extensions are generally more secure than web wallets because they encrypt private keys.
Types of cold wallets
Paper wallets
To use paper Ethereum wallets, you will need to print your private keys on a piece of paper and physically store them. Although paper wallets are accessible, easy to use and safe, the risk of losing them is high. Some ETH wallet users print private keys on titanium plates, which are sturdier and harder to lose.
Hardware wallets
Ethereum hardware wallets are physical devices that store your private keys and allow you to sign transactions. Unlike a software wallet, a hardware wallet is a dedicated device that provides added security by keeping your private keys offline.
How to open Ethereum wallet
For those wondering how to create an Ethereum wallet, it’s simple. You can easily open an account on your smartphone, tablet or laptop by following the steps below:
Warm wallets
First, choose a reliable wallet app or software that suits your needs. You can find many of them on the Chrome Web Store. Make sure it is the official site to avoid scams. Examples of popular ones are MetaMask and Trust Wallet.
Next, follow the app’s instructions to create your wallet, typically setting a strong password to keep it safe. Be sure to write down or save your private key and recovery phrase in a safe place.
Once your wallet is set up, you will get an Ethereum address, which you can use to buy, sell and hold ETH and ERC-20 tokens.
Hardware wallets
Here you will need to purchase a physical wallet such as Ledger or Trezor. They keep your ETH offline for added security.
You will then connect your hardware wallet to your computer and follow the setup instructions. This usually means installing software and updates.
Just like with your software wallets, be sure to write down the recovery phrase you get when setting up your hardware wallet and keep it safe. It’s your backup if you lose your wallet.
After your hardware wallet is ready, you can send ETH from an exchange or another wallet to your new one. Just double check the address to be sure.
Paper wallets
For paper wallets, always use a reliable wallet generator to create offline Ethereum wallets.
Print out your paper Ethereum wallet, which has a public address for obtaining funds and a private key for managing them. Next, store it in a safe place, such as a safe or bank deposit box, to protect it from damage or theft.
You can send cryptocurrencies to your wallet by transferring them from your current wallet or exchange account to the public address on your paper wallet.
When you want to use your funds, you can import the private key into a digital wallet to make transactions.
How to use Ethereum wallet
When you open your Ethereum wallet, you will likely see a dashboard showing your balance and buttons to send and receive tokens.
Sending cryptocurrency: Want to send ETH to another wallet?
- First, get the recipient’s Ethereum wallet address and make sure you are connected to the same network.
- Then, enter the receiving address or scan a QR code to avoid errors.
- Next, click on the “Send” button in your wallet.
- Make sure the recipient is using the same network as you, as different networks are not interchangeable.
- Also, make sure your wallet has enough ETH to cover the transaction fee, which may vary.
- Once sent, it may take a few seconds to a few minutes for the recipient to receive the funds.
Receive cryptocurrency: All Ethereum wallets have their own unique receiving address, which starts with “0x”. Think of it like a bank account number. This address is the one you share with others if you want them to send you cryptocurrencies. Many wallet apps allow you to easily share it via copy or QR codes.
Connection to dapps: Your Ethereum address works on all Ethereum dapps. You don’t need to register separately for each. Once you have a wallet, you can access any Ethereum dapp without providing personal information such as emails.
Conclusion
If you are looking to diversify your assets outside of Bitcoin, opening an Ethereum crypto wallet is a good idea. However, the cryptocurrency market is constantly evolving, so you should only open an ETH wallet if you are confident that you can invest carefully and intelligently.
Once you decide to open an Ethereum wallet, it is essential to choose the right one to keep your assets safe.