How to Set up and Use Ethereum Wallet - Everything is Simple

Contents

Ethereum Basics

Ethereum (ETH) is a very sophisticated crypto-application environment, where many applications can be developed. The actual cryptocurrency used to finance all this mechanism is caller Ether. Ether is very promising and better than Bitcoin, in many aspects, and it may even surpass Bitcoin in terms of market capitalization and range of applications. To actually buy Ether, one needs to have a compatible crypto wallet, and then to be able to either receive a payment in Ether, or to simply buy Ether directly from an exchange such as Coinbase.com, where fiat currency can be converted into cryptocurrencies, directly. So the moment you join and use Coinbase.com or similar online Exchange, one where fiat money is accepted, you will be provided with an Online type Crypto Wallet. Remember that online wallets are convenient and easy to use, but they are not the safest. Because in the rare case where the online Exchange is hacked, your crypto wallet may be stolen, so it’s best to limit its use to possibly $500, or to the minimum amount necessary.

If you do engage in cryptocurrency trading, between Ether and other cryptocurrencies, you will have to maintain larger amounts of money in the online exchanges you use, therefore more than $500. Again, it’s wise to mitigate hacker risk, and use more than one exchanges for your trading. Actual security has improved, but it cannot be perfect yet.

Ethereum is very versatile, not just as a digital crypto currency, but as a whole blockchain technology. It is theoretically slightly less secure than Bitcoin, but way faster than Bitcoin. More likely Bitcoin will dominate in very large amount transactions, which will take many minutes or hours to confirm, and will cost a lot, but still a lot less than traditional banking. Ethereum on the other hand solves problems that Bitcoin cannot solve, or cannot solve well. There are real technical differences that dictate how this is indeed the case.

In the longer term, Ethereum is likely to follow Bitcoin higher, but in terms of mainstream acceptance and market capitalization Ethereum may grow very large, even larger than Bitcoin. So it’s definitely a key choice for all cryptocurrency investors.

Types of Ethereum Wallets

Just like in the case of Bitcoin, there are few major wallets that can accept Ether, or both Bitcoin and Ether, because Ether is already a mainstream cryptocurrency, and it could even become number one, some day. There are mobile wallets such as Jaxx which can store both Bitcoin and Ether, and work relatively well in terms of speed and convenience, however even mobile wallets are not very safe for storing large amounts of cryptocoins. Both online and mobile device based wallets have improved, but they are still vulnerable to hacker attacks. So it’s best to also consider Hardware and offline storage options.

For very large amounts of cryptocoins, Hardware wallets such as Trezor and Ledger Nano offer the highest level of isolation from hackers, and they can store all major cryptocurrencies, they already are compatible with both Bitcoin and Ether.

Using a Simple Ether Wallet

You can go to Myetherwallet.com and create a new Ether wallet, just by doing the following simple steps. First you need to enter a secure password, and click on the Create New Wallet button.

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Next you need to download the UTC file, this file holds your Private Key, and thus it should not be shared with anybody, not be downloaded/copied to other people’s computers.

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This is your Private Key, and is strictly personal, remember Private Keys work like the pin numbers of your bank account’s cash card, or like your personal cheque book, they are not be shared with anybody else. Only Public Keys are shared.

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At this point, you should select the UTC/JSON option, that’s the actual file you have downloaded. The Ledger and Trezor options require having the actual USB devices, since these are hardware type wallets. You can consider getting these later, if you wish to store a lot of money in Ether.

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As soon as you choose this option, it will ask you to select wallet file, and that’s the UTC file you have downloaded, you can find it in your downloads folder, it’s the download named by a long string of symbols, starting with the prefix UTC.

Here you need to enter your password that you set when first starting the whole process. As soon as you enter this password, an Unlock button will show up, you click on it, and your Ether wallet will open up.

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At this point, your Ether wallet is ready to use, but it’s empty of funds. That’s why there’s a reference to Coinbase.com on the right side, because you can buy Ether at that exchange, by using a debit or credit card directly.

Your address number, is also known as your account number, or as your Public Key, it works just like your bank account number, and you have to give it out when you expect someone else to send you money. But you should never share your Private Key, your QR Private Key code, or your wallet password.

Finally, when sending Ether payments into another wallet, there is a parameter called Gas, which is adjustable from minimum to maximum, this is the amount of money, in Ether, which you are willing to spend for the transaction. This is how miners get paid. The more Gas you allow, the faster the transaction will be. But even at medium settings it will still be very fast, and quite faster than similar transactions in the Bitcoin network.

More Tools on Ethereum

At the website Etherchain.org you can actually enter someone else’s Ether wallet Public Key, and you can see the amount of money in that wallet. This may be useful in avoiding scammers, when sending money out, and you can check their claims and integrity against their wallet balance. Legitimate business and traders will have some available balance at all times, though this is still not enough to tell if the other person is fully legitimate, and it still requires getting to know that person.

Moreover, the Ethereum platform is wide and powerful, and many cryptocurrencies are based on Ethereum technology, and this makes your Ethereum wallet compatible with all these cryptocurrencies!

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You can use your Ethereum wallet directly on this exchange shapeshift.io and convert Ether coins into any other cryptocoin that is based on the Ethereum platform. OmiseGo, EOS and Augur are only a few of them, there are many more.

More on Safety Ethereum

The wallet we have reviewed is a kind of desktop or offline wallet, more precisely, if you store your private key, UTC file, and password offline, and keep all this data off your computer, then you actually have an offline secure wallet, one that is safe in case your computer gets damaged, or stolen, and there’s only the hacking risk, because hackers can still install data interception software on your computer, and steal your personal wallet data next time you use it. This is a remote but still possible event, that’s why the industry came up with hardware wallets such as Trezor and Ledger Nano, because data interception is impossible with these.

As far as devices go, computers in general are safer than smart portable devices, even a laptop is still safer than a smart phone, and it can be made to be even more safer in many ways. Hackers tend to steal data by silently invading computers and installing data interception software that monitors key strokes, or even takes screenshots of what you are seeing, so even QR codes can be stolen. And all these malicious software tools hackers tools work easier on mobile phones and smart portable devices than on older generation computers.

The exchanges themselves are becoming more and more safe, because of the increasing demand for transactions, by many new users, so it’s possible but less likely that exchanges will be attacked. Whereas smart devices are much weaker and can be hacked even today. But as long as you are careful and don’t rely too much on neither online wallets nor smart devices, and rely more on offline and hardware wallets, your money will be safe even if an attack ever happens.

Crypto coins are very valuable to hackers, just like gold was valuable to thieves and robbers in the days of the gold rush, in the old wild west. So by comparison, we can say that things have become safer overall. When comparing cryptocoins to fiat currency or other investments, again the risk is less with cryptocurrencies, mainly because they are not vulnerable to hyperinflation or economic fraud. And no other asset in the world provides both liquidity and safety of this kind and magnitude, as cryptocurrencies do. And because demand by users will only increase, safety will increase too, to the point where small amount theft will become uneconomical for thieves. Bitcoin wallets are more likely to be targeted because of the vast amounts of money held in some of these wallets, but Bitcoin security is higher too, making even these theft attempts too time consuming for criminals. But if a super thief comes along, they are likely to target Bitcoin wallets rather than Ethereum wallets, and only fat Bitcoin wallets, because of the limited time available they will have to act. So in that regard Ethereum wallets come in second place, in terms of advance hacker attack risk.

Video How to install the Ethereum wallet