Unless you’re totally new to cryptocurrency, Ethereum does not require an introduction. So let’s dive straight into the article and discuss the best Ethereum hardware wallets to store your ETH safely.
However, before we head straight into the list, we feel it is pertinent to explain what hardware wallets are, why you need them and what features you should look for when choosing a digital wallet.
We have also provided suggestions of the best alternative wallets to store your ether safely.
Cryptocurrencies like Ethereum work by creating codes that enable users to transfer something of value to a recipient over a blockchain.
Although blockchain technology is designed to make transactions securely, there is still a risk hackers, and phishing scams could steal your investment.
Unfortunately, this is the world we live in, and a caveat of internet shopping is that we risk a breach of security in favour of convenience. But, blockchain technology is a step in the right direction to prevent online theft.
However, digital currencies need to be stored in either a cryptocurrency wallet or an exchange – and it is the storage facility you choose that is at risk of being compromised.
Why Is It Important to Store ETH In a Wallet, Not On an Exchange?
Once you have purchased your Ether (ETH), the cryptocurrency offered by Ethereum, you need to store it somewhere.
In this sense, cryptocurrencies work in the same way as a fiat currency that we store in a bank account or investment bond.
Although your coin will be purchased from a cryptocurrency exchange, most investors prefer to use a digital wallet because, in theory, they are more secure than leaving your ether in the care of a third party.
Why? Well, mainly because people do not trust financial institutions with their money.
Call it paranoia if you will, but as Socrates once said: “Paranoia is a glimpse of the truth.”
Precedents have already been set. The notorious collapse of MT Gox where the equivalent of $460m worth of bitcoins was allegedly “hacked” still sticks in the throat of early adopters of Bitcoin.
Since then $64m has been stolen from NiceHash and $31.95m taken from Tether. Perhaps investors are right to be paranoid. Exchanges are not trusted.
Cryptocurrency wallets, on the other hand, give the power of control to investors.
You download the software on to your computer and store data on a device akin to a USB memory stick specifically designed to protect the contents from virtual and physical theft.
How Do Cryptocurrency Wallets Work?
Cryptocurrency wallets are primarily a software package that enables you to safely store digital currencies, perform transactions and check your balance whenever you want.
Tokens are not physically stored in the wallets because the currency is digital and not tangible.
Don’t let this confuse you. Digital currency still has value in the same way fiat currencies have value. The figure you see on your bank account is effectively digital too.
Banks don’t actually have enough money to cover the bank accounts of every customer should everyone decide to leave because your money is invested in loans to other people.
Cryptocurrencies exist on a public ledger called a “blockchain”.
Digital wallets interact with the blockchain that stores the coins you have invested in. When you buy ETH, your wallet communicates with the Ethereum blockchain and the blockchains of cryptocurrency exchanges that also interact with Ethereum.
The blockchain allows you to send and receive digital currencies to make transactions quickly. Your wallet acts as a safe. Your private funds are secured inside your wallet and cannot be hacked unless someone hacks into your computer.
Which is unlikely unless hackers know you have millions of dollars worth of crypto coins waiting to be stolen.
Even if cyber-thieves tried to hack your wallet, they would still have to have access to the private key and a password or passphrase.
Your private key is a code you create yourself that only you know about. It is therefore essential to protect your private key. There are a number of ways hardware wallets enables you to do that.
The most secure way of protecting your ether is to use a hardware wallet.
These have a 6-digit authorisation key that you can choose yourself and are only live when you’re connected to the internet and want to use them. At all other times, they are stored on your hard drive, or even better on a USB memory stick.
Alternatively, you can type in a passphrase that is easy to remember, but difficult to guess.
It is also worth your while to create a paper wallet as a backup in case you forget your private key and cannot access your account.
Different Types of Cryptocurrency Wallets
There are several types of cryptocurrency wallets. As mentioned above, it’s a good idea to have at least two. Digital wallets fall into two categories; hardware wallets and software wallets.
Hardware Wallets
Hardware wallets are essentially portable USB devices explicitly designed to store and protect cryptocurrencies.
In the crypto space, they are known as cold wallets because they are ultra-secure and less likely to be breached by hackers.
To use them, all you have to do is plug them into your computer.
Pros of using hardware wallets:
- Private keys are generated offline thus protected from malware
- Easy-to-use interface
- Most hardware wallets have a backup
- Passphrases are stored on the removable hardware, not on your computer
- You can store them wherever you like
Cons of using hardware wallets:
- More expensive than software wallets
- If you don’t back up your data and your wallet is lost or stolen you could lose your ether
Software Wallets
Software wallets come in three types; mobile, online and desktop. They are less secure than hardware wallets but offer more convenience.
Desktop Wallets
To install a desktop wallet, you have to download software onto a personal computer.
Once downloaded they can only be used from that computer, so if your computer is stolen, you also lose your wallet.
Although desktop wallets provide you with the most security of the three software wallets, they are still susceptible to hackers should your computer be infected with malware.
Pros of using a desktop wallet:
- Easy to usen5
- Ideal for investors that are new to cryptocurrencies
- Private keys are not stored on third-party servers
- Can be combined with TOR network to offer more security
Cons of using a desktop wallet:
- Susceptible to malware
- Can be stolen from your computer by repairers or thieves
- If your computer crashes you could lose your key codes (so keep a backup)
Online Wallets
Online wallets are the most convenient, but the least secure. They are stored on the cloud so can be accessed from anywhere thus are more exposed to cyber attacks
Pros of using an online wallet:
- Speed and convenience
- Ideal for working with a small amount of cryptocurrency
- Enable you to manage multiple currencies easily
- Most have integration with exchanges
Cons of using an online wallet:
- Higher risk of malicious malware, DDOS attacks and phishing scams
- The security of your wallet is under the control of the cloud company and not in your domain
Mobile Wallets
Mobile wallets are the most obvious choice for a second wallet.
They appear as an app on your phone and can be accessed wherever you are. Once cryptocurrencies become mainstream tender, mobile wallets will offer the most convenient storage for small amounts of digital tokens.
Pros of using a mobile wallet:
- Easy-to-use interface
- Practical and convenient
- Access your wallet on the move
Cons of using a mobile wallet:
- If you lose or phone, you lose your coins.
- Mobile phones are easier to hack or become infected with malicious malware.
The Best Cryptocurrency Wallets for Ethereum
Before selecting a digital wallet to store your ETH safely, make sure the following five conditions are met:
- You control your private keys
- The wallet has backup, security and restore features
- The user-interface is easy to navigate
- The software is compatible with multiple operating systems
- There is an active development community always looking to improve the wallet
The digital wallets we present below have been selected because they satisfy the above conditions. So without further ado, let’s check out the best Ethereum hardware wallets for storing your ETH safely:
Ledger Nano S
Ledger Nano S is regarded as the best Ethereum hardware wallet on the market.
It is also one of the cheapest (€58) – but it still comes with superior quality.
The hardware is designed in the same way a conventional USB so is lightweight and durable but has additional security features that protect your data from malicious malware.
Ether coins are stored offline and protected by your private key. For an extra layer of security, you can set up a 4-digit pin number on the device so that it is difficult to access if the device is stolen.
And if you do lose the USB, Nano Ledger allows you to make a backup to recover coins that are in your wallet.
For more details, read our Ledger Nano S review.
TREZOR
Designed to be ultra-portable, waterproof and easy to use, TREZOR is hardware wallet that was initially designed to store Bitcoin but now uses MyEtherWallet so Ethereum owners can safely store digital tokens as well.
Additionally, TREZOR also supports lesser-known coins such as Dash or Litecoin.
The security of these digital wallets is so robust, you can store your entire collection of coins in them.
Regarding security, TREZOR uses two-factor authentication and every transaction made when using the device has to be verified physically using the eye-catching OLED touch buttons.
The program also has a backup option so you can recover your wallet if you forget your password.
The downside of the wallet is the price – currently, it costs €89, which is slightly more expensive than its competitor Ledger Nano S.
Read our TREZOR review for a more detailed description.
KeepKey
The advanced security settings available with KeepKey make it one of the best – if not the best – digital hardware wallet available right now.
When you first set it up, the private keys and the backup uses an entropy from the computer you install the software on to and the hardware device itself.
This means KeepKey protects your digital coins from virtual hacking and physical theft. And unlike most other digital wallets, the device can be used securely on any computer – even machines that have been infected with malware.
Concerning offline security, the device forces users to enter a pin code and a randomised number using a two-way authentication one-time password.
Unfortunately, all that comes with a price tag of €175 for storing only Bitcoin, Ethereum, Litecoin and Namecoin.
In our KeepKey review, we are describing the wallet in more detail.
The Best of The Rest
At the time of writing, there are only three devices that can be categorically classed as “hardware wallets.”
However, other options serve their purpose. Even though they are mostly classed as software wallets, they have some of the features that make hardware wallets the safest way to store ETH:
Mist
Mist is the official Ethereum wallet and provides security measures by linking your wallet to all the other nodes in the blockchain then prompting you to add a password which will act as your private key.
If you forget this password, you will not be able to access your wallet. Hence you should create a second wallet – preferably a paper wallet you can store in a safe place.
The only place the private key is stored is on your computer – so providing you keep your computer protected from malware, you can be assured your Ether is safe as well.
Mist also has ShapeShift built in so trading with other currencies from your digital wallet is easily done.
Mist, however, is not recommended for the beginners as it can be a bit complex to download and set it up.
MyEtherWallet
MyEtherWallet is the most popular alternative to the ETH hardware wallets mentioned above, principally because it is unlike traditional web wallets.
MyEtherWallet gives you all the convenient benefits of a cloud-based wallet, but your private key is stored on your personal computer rather than with a third-party on an online server.
Subsequently, you can store your digital tokens in a secure environment offline where they are less likely to be stolen.
You can also print out a paper wallet which is another convenient feature MEW offers that other wallets don’t.
The wallet has a built-in swap facility which allows you to switch ETH to BTC and vice-versa.
Exodus
The edge Exodus has over its competitors is that it is free.
The software still works in the same way as other leading wallets and allows you to manage multiple cryptocurrencies thanks to the built-in ShapeShift trading platform.
To operate Exodus, users have to be connected to the internet, but your private key stays on your machine.
The software also comes with one-click password recovery and backup seeds for restoring your wallet if your computer crashes or goes missing.
Conclusion
Anybody investing in Ethereum cryptocurrency is advised to purchase a hardware wallet or best alternative to protect your digital coins securely.
Digital wallets are not expensive, and although the leading cryptocurrency exchanges are probably reliable, digital wallets provide you with additional security features that give you peace of mind.
We trust this round-up of the best Ethereum hardware wallets to store your ETH safely has been of value to you.
If you have any other suggestions as more hardware wallets surface on the market, visit our Cryptocurrency Wallets page.
