A wallet is software or hardware that manages all Ethereum addresses and the associated private keys. With an Ethereum Wallet, ethers can be held, received and transferred.
An Ethereum Wallet is thus a kind of bridge, an interface that manages its own public keys and private keys.
Public Keys and Private Keys
What is a public key?
A public key is a public address, also called the receive address, to which Ether is sent. This receive address can be used to receive Ether. For this purpose, the public address is passed on to a stock exchange or a third party.
An ether receive address always starts with 0x and looks like this, for example:
The recipient address is a kind of account number for your Ethereum account. And there is an associated private key for each public address.
What is a Private Key?
The private key is a secret access code for the corresponding receiving address. The private key is therefore a kind of PIN for the Ethereum account. And this private key should always remain private!
If you have a private key, you always also have the ethers on the corresponding receive addresses.
A private key then looks like this, for example:
This private key is the access code for the upper ether receive address. If ethers were stored on the receive address, anyone could steal the ethers with this private key.
Never store ethers on a PC
Once the basics of the private and public keys have been understood, another misconception must be corrected. Ether does not “store” on the PC or smartphone. If the PC is destroyed, for example, you could still access the Ether if you have the private keys.
Remember: You only own your Ether if you have the private keys and keep them safe.
Types of Ethereum Wallets
There is not one Ethereum Wallet. Ethereum is decentralized and open source, everyone can participate and work in it. That is why different types of wallets develop over time.
A paperwallet is the “simplest” form of a wallet and can also be very secure. The paper wallet consists of a single Private Key – Public Key – Pair, which can be created in different ways. Paperwallets are usually only used for long-term storage. With this wallet the ethers cannot be used actively. If you want to use your Ether later, you will need some technical understanding and a desktop or smartphone wallet.
Safe storage of the ethers
Low production costs
Secure creation is complex and time-consuming
No active use of the ethers