What is an online Ethereum wallet?
Commonly known as an Ethereum web wallet, an online Ethereum wallet is a wallet you sign up for an access through your browser. The advantage of this type of wallet is that you can access it anywhere that you can go online, and with any device (smartphone, tablet or PC). This makes it ideal for day traders or those who use ether to make payments regularly. However, this wallet is more vulnerable to hacks since the private key is stored online in an encrypted form by the provider.
How do online Ethereum wallets work?
Signing up for an online wallet is simple: you just need to choose your preferred provider, create an account by following the prompts and use a username and password of your choosing to access it. Sending or receiving ether (Ethereum’s cryptocurrency) is easy. You will need your wallet address for receiving ether, and the receiver’s address if you’re looking to transfer Ethereum to someone else. On a technical level, your keys are stored on a server owned by the company you create your wallet with, meaning that they are responsible for their security.
So they’re like online banking?
Correct. Just like you access your online banking account, you simply need to enter your password and username on an online wallet to access your ether. Once you are logged in, you can view your transaction history, account balance, and make or receive transactions.
What other types of wallet are there?
There are four main alternative types of Ethereum wallets that you can consider. Here’s a summary of the differences between them:
- Mobile wallet. This is similar to an online wallet, only that it’s stored on a native mobile phone application. Examples for mobile wallets include Jaxx, BRD, and Abra.
- Desktop wallet. This is effectively a wallet that you can download and install on your PC. It stores the private key on your computer, giving you control of your funds and their security. Examples of good desktop wallets include Exodus, Mist, and Electrum.
- Hardware wallet. This is an electronic device that’s specifically built to hold ether. It stores your private key completely offline, guaranteeing the maximum protection of your coins from online attacks. Some of the most widely-known manufacturers of these wallets include KeepKey, Trezor, and Ledger.
- Paper wallet. This is basically a piece of paper with both the private and public keys of ether addresses printed on it. Just like the hardware wallet, it keeps the ether completely offline, making it a great choice for those looking to hold their coins for long-term. Some of the best places that allow you to create a paper wallet include ETHAdress and WalletGenerator.
Are online Ethereum wallets free?
Yes, they are absolutely free to sign up to. Just choose your preferred wallet, create an account, and you can start using the wallet instantly.
Are there additional fees with online Ethereum wallets?
Yes, but they’re not usually charged by the wallet provider themselves. When sending ether between addresses, you will be charged a small fee called ‘gas’ which is used to pay miners to verify transactions. These rates vary depending on a mixture of factors, such as how busy the network is, and the priority of your transaction (some wallets allow you to pay more to incentivize miners to prioritise verifying your transaction), but typically they’re very low, often an amount of ether worth less than £1.
What are the best online Ethereum wallet providers?
There are many different options when it comes to online wallets. Here are some of the best:
One of the most common online wallets, Blockchain allows you to hold multiple cryptocurrencies (Bitcoin, Bitcoin Cash, and Ethereum), and lets you exchange between the coins for a small fee.
Launched in 2011, this web wallet is one of the oldest out there. They employ a security feature they call ‘hybrid wallet’, which effectively means they encrypt your private keys on your browser before saving the encrypted version on their servers.
This is also a popular wallet because it is coupled with the brokerage, allowing you to purchase Ethereum, Bitcoin, Bitcoin Cash, and Litecoin directly on its platform. It has a friendly user interface perfect for beginners.
This is simply a Chrome browser extension that allows you to interact with the Ethereum Blockchain and store your ether. It doesn’t require login to access it and the private keys are stored in Chrome instead of a server.
Released in 2015, MyEtherwallet is an open-source tool that allows you to create your wallet that works with the Ethereum blockchain. The private keys are stored on your computer and not by the provider. This allows it to eliminate the vulnerabilities that come with keeping digital assets online.
Binance is an exchange with an integrated web wallet, just like Coinbase. It allows you to hold your ether and other altcoins all in one place, and exchange them between one another.
Like Binance, this is an exchange too with an integrated wallet. It allows you to store ether and hundreds of other coins as well as trade them.
This wallet is attached to the Gatehub exchange, operates just like the Bittrex and Binance exchanges.
Can online wallets hold multiple cryptocurrencies?
Definitely. Online wallets can often hold a variety of different cryptocurrencies. Some online wallets such as Coinbase and Blockchain support the storage of top coins like Bitcoin, Ethereum, BitcoinCash, and Litecoin, whilst others such as Gatehub and Bittrex support the storage of hundreds of coins.
So online Ethereum wallets can be connected to exchanges?
Yes, but it actually works the other way around. Most exchanges have their own online wallets that can be used in conjunction with their own exchange features. However, it’s not possible to pair existing online wallets with exchanges unless it is their own proprietary wallet.
Can I backup an online Ethereum wallet?
Yes, but it depends on your online wallet provider. Considering that a web wallet is similar to an online account, each provider will have its own security features that allow you to gain access to your wallet in case you forget your password. For example, a wallet provider such as Coinbase allows you to reset your password, whereby you receive an email with a link to help you reset your password.
Others such as Blockchain lets you set up a 12-word recovery phrase (also known as recovery seed), which you can use in future if you forget your wallet details. MyEtherWallet, on the other hand, requests you to safely save a file containing details of your wallet to allow you to access your account in an event that your computer defaults.
How to set up an online Ethereum Wallet
To set up an online Ethereum wallet, the process is very like signing up for any online service. Each provider will be slightly different, but these are the general steps:
- Select the online wallet provider you want to use.
- Go to the website and click ‘sign up’ or ‘register’.
- Fill in your details (usually this will be your first name, last name, and email address) and agree to the terms and conditions.
- Set up your password. Sometimes you do this on the registration page, and sometimes it’s through a link in your confirmation email. Make sure you set your own secure password as it is what will protect your bitcoin wallet.
- (Optional): Download the mobile app offered by the wallet provider so you can access your coins on the move.
- Set up any additional security features offered by your web wallet provider (e.g. a recovery seed).
- Transfer ether into your wallet using the wallet address.
What are the risks of using an online Ethereum wallet?
Compared to mobile, desktop, hardware and paper wallets, online wallets are the least secure. This is because the private keys are stored on the providers’ servers, meaning that you don’t have much control over their security. If the wallet provider is hacked or closes down, it is highly likely you will lose your coins. It’s advisable to use online wallets only when trading or when you need to store coins to make transactions back and forth quickly. If you have a sizeable amount, consider more secure options such as hardware and paper wallets.
And what are the advantages?
Convenience is the biggest advantage of web-based wallets. For example, if you were a day trader, you’d be better off with a wallet that you can access quickly and easily. Furthermore, online wallets are also user-friendly, allowing beginners to get into the cryptocurrency space without much hassle. Additionally, online wallets that are often integrated with exchanges are a plus as you can trade between multiple coins without having to keep transferring funds into and out of an exchange.
Should I use an online Ethereum wallet?
Well, yes, you should if you are looking for quick access to your Ethereum, either for trading purposes or making payments. Otherwise, consider other safer options such as hard wallet for safer storage of a large amount of coins.
How do I find the best online Ethereum wallet?
You can find them right here. We have reviewed the most reliable and reliable online wallet options for you so you can narrow down what the best online wallet for you is.