This is a guest post written by Julia Beyers about securing Ethereum with the right cryptocurrency wallets. Julia has acquired a wealth of experience in writing articles on trends and prospects for the development of the game industry in the world and has now found herself as a Freelance Journalist. She writes about blockchain and cryptocurrencies trends, sometimes covering importance of Bitcoin for various other industries.
Despite the fact that the cryptocurrency industry is constantly expanding as new coins enter the market, Ether remains one of the most stable and commonly used. Why? The answer is quite simple – Ethereum is not just another crypto.
What Makes Ethereum Popular?
Ethereum is a platform of choice for many innovative cryptocurrency projects that use Ether or ERC-20 tokens to power their operations. A lot of big-name blockchain solutions that disrupt industries the world over are based on Ethereum – take Golem, OmiseGo, TRON, and FunFair. The latter, for example, is becoming a new paradigm of the decentralized gambling. According to Katie Wager’s review of blockchain-based gambling projects, FunFair once had over USD 235 million in market cap (today according to Coinmarketcap it is only USD 94 million however). If the number of such projects increases, the utility value of the Ethereum network and its native token itself will appreciate significantly and more people will be looking into buying and holding Ether.
How to Secure It?
If you want to secure your Ether tokens, you need to know which types of wallets are available and make sure that the wallet you opt for is safe enough. The below information is supplemental to what is set out in Cryptowisser’s guide Security Measures and the interested reader is encouraged to read this blog post in conjunction with that guide article.
Use the Appropriate Cryptocurrency Wallets
You can use 4 different types of wallets for storing Ethereum. However, each type offers different security levels and functionality. So when deciding on one of them, you should know the amount of Ethereum you have and how you plan to use the cryptocurrency.
The web wallet is generally the most practical. This is because you can access your Ethereum through any computer or device with an internet connection. However, this medium is also the least secure because it is easier for hackers to access. The best security with these wallets will come from officially endorsed ones or those that have taken additional safety measures.
There are some web-based wallets that encrypt your key data to increase security. Some of those wallets have shared its coding via GitHub (one example being Corion).
Most web-based wallets will also have a 2-step authentication process that you can use. As the name suggests, the process requires you to go through 2 verification steps before you are able to enter the wallet. These steps generally include verification via your account password and via a text message sent to your mobile device.
You should consider a desktop wallet in case you are looking for a storage medium with improved security. This wallet is actually a piece of software that you download onto your computer. It allows you to manage, control and retain the needed data for accessing your Ethereum coins.
Desktop or software wallets are generally considered ‘lightweight’. In terms of blockchain technology, this means that only part of the blockchain is placed on your computer hard drive. This stops the software from taking too much of your resources. As this is how the software works, you have to ensure your firewall is very strong and up to the challenge. While desktop wallets are safer than web-based ones, they are still vulnerable to hacker attacks, computer viruses and malware.
The first option for offline storage is a “paper wallet”. A paper wallet is exactly what the name leads you to believe. The keys for your Electrum wallet will be printed on a piece of paper. This is a very secure way of storing your keys. This is because they cannot be hacked and will not be subject to any hardware failures. The primary security risk with a paper wallet comes from the vulnerability of paper. If you lose or damage the piece of paper with the keys, you will not be able to access your Ethereum.
This is another form of cold storage for your Ethereum as it will be stored offline. The purpose of the hardware wallet is to completely separate your public and private key from your computer. The private key won’t be compromised with this wallet as it never comes into contact with an internet connection. The hardware wallet is ideal for people with large amounts of Ethereum and those looking at long-term holding.
Enable Google Authentication
As part of the 2-step authentication process, you can use Google Authenticator. Ethereum wallets are incorporating this into their security measures because of the protection that it provides. This app will have a single whitelisted IP address. This ensures that you are the only person able to complete the identification.
In order to access your Ethereum wallet, you will need to provide your account password and the code generated by the Authenticator app. The code will only be generated in the app on your phone or tablet which makes it more secure than a text message.
Opt for Biometric Authentication
Biometric authentication is gaining traction in many industries and the cryptocurrency industry is one of them. While this is not a security measure that is currently in place, it is one that could soon be available. In most cases, it would presumably be a second step in a 2-step authentication process.
Bitstamp, for instance, has recently started to use biometric authentication for new users. There is currently one wallet that is live with biometric authentication. It is believed that over time, more and more wallet providers will look into this as the primary access authentication method as it is harder to crack than the passwords.
To Sum It Up
Wallets are necessary to manage and use your Ethereum coins. However, they are still vulnerable, particularly if you connect them to the internet in any way. This is why the wallet providers have taken many steps to improve their security and ensure that your currency is safe.
To stay perfectly secure, however, use a paper wallet or any of the following two hardware wallets:
Stay safe out there!
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