A Beginner’s Guide to Setup a Wallet to Securely Store Your Ethereum and Ethereum ICO Tokens

Turbo Panumarch
Jul 22, 2017 · 5 min read

“If you want your Ether safe, don’t store all your Ether in an Exchange market. Keep some in your own wallet”

I heard this from one of my co-workers when I just started investing in Ethereum. That really confused me… Isn’t the wallet in the Cryptocurrency exchange market my wallet too? Why isn’t the exchange safe for me?

So I’m going to walk you through the mechanism of Ethereum wallet and a method to setup your own wallet to store coins that are secure and convenient. At least this will help you understand more to be able to take care your own coins properly.

Note about terms here:
“coins” means any Ethereum currencies, Ether or Ethereum tokens.
“Ether” means the native currency of Ethereum platform, sometimes we call it Ethereum or ETH.
“Ethereum tokens” means any non-native currencies on the Ethereum network which normally comes from ICO, ex. Golem, Augur, OmiseGO.
“Ethereum network” means the distributed network for processing the Ethereum transactions. Miners also are part of it.
“Ethereum wallet” means an address or an account on Ethereum network that can be used to store or transfer the coins.

Quick explanation of Ethereum wallet

icons from https://icons8.com

To create a wallet, you will need to generate a “private key” to claim the “address” of the wallet on the Ethereum network. And 1 address can have only 1 private key. That means you CANNOT change or reset a password (private key). Also, if you lose your private key, you can say you lost your coins forever. 😨

And whoever gets your private key, they can use the private key to transfer the coins out of your wallet.

Which Ethereum wallet client should I use?

  • Exchange market is not the best choice. You have no full control over the wallet in the exchange market because the exchange keeps your private key. So your coins can be hacked or transferred out without your consent. Better keeping just enough amount for trading.
  • MyEtherWallet is a quick and easy choice to create your own wallet with a full control. I would recommend this way if you don’t want to take much time for the setup.
  • Official Ethereum desktop client Mist is the best choice in my opinion. It is one of the most secure ways to store the coins. But it takes some time to setup and it is currently taking 42 GB of my storage 😕.
  • If you don’t understand how to keep your private key properly, using your own wallet can be riskier than using exchange market wallet since you may lose your private key or get your key compromised.

How to use MyEtherWallet to create a wallet?

Despite some security concerns, I would prefer to suggest MyEtherWallet as a safe-enough and convenient choice to most of the starting users.

Let’s start by using Google Chrome as the most compatible browser for this website.

  1. Go to https://www.myetherwallet.com and put your strong password. Then click “Create New Wallet”. It will randomly give you the “private key”

2. You will get the“keystore”. Download the keystore to keep it safe. You can copy it to your flash drive or other ways to ensure you won’t lose the keystore file. Be careful not to put it online unless you understand what you are doing.

3. Click “Print Paper Wallet” to print your private key to a paper. Or you can click print then save it as a PDF if you don’t have a printer.

DON’T copy your private key to the clipboard as it can go to the internet or be hijacked. Don’t take a picture or do anything that can get it to the internet. Just print or write it on a paper and proceed by clicking “Save Your Address”. If you made a mistake, you can refresh a website and restart from step 1.

Basically, your password + keystore = private key. So you may skip printing or noting the private key and only use password with keystore which is more secure but less number of backups.

4. Try using keystore and password to access your wallet by following the number 1- 4 in the picture below

5. If you successfully input the info, there will be a successful message and you can scroll down to see your “address” which can be shared with other to receive the coins.

So if you want to withdraw the coins, just copy the address like this to put on your exchange withdrawal or give to others to receive coins

0xDFda001d16a02DA6e818c75Ab7A30cF72A6e44E2

6. Whenever you want to send the coins, you can come back to the website and click “Send Ether & Tokens”.

Or click “View Wallet Info” if you just want to check the balance. And you can just use your address to check without entering any password.

Tips

  • You can view the balance and transaction of your address or anyone’s address by going to etherscan.io and search for the address. For example of this random address. Every transaction is public.
  • You can also view Ethereum tokens from ICO or other wallets both in MyEtherWallet or etherscan.
  • MyEtherWallet is a very easy place to do a phishing to steal your credentials. DO NOT enter the website from any links you get. Go directly to the site by typing, Google or your bookmark. And always double-check if the URL is correct https://www.myetherwallet.com/
Example of fake website to lure you to enter the credential then steal it

One last thing…

The Ethereum and other Cryptocurrencies may seem to be scary at first. But as we understand more for how it works, they are fascinating technologies that will change the ways we used to do and think about our assets and trust.

This article may not cover all the details or can be inaccurate. Feel free to discuss or request topics you might want to read more.

Flipay

Digital Asset Exchange Gateway | Blockchain Consulting & Development | Smart Order Routing Engine. We are helping businesses and consumers access the power of Digital Asset with ease. Know more about us: 💻 https://www.flipay.co

Turbo Panumarch

Written by

CEO at Flipay. An Engineer who loves Coding, Product Design and Blockchain. Former VP of Engineering at Omise Payment. 📬 turbo@flipay.co

Flipay

Flipay

Digital Asset Exchange Gateway | Blockchain Consulting & Development | Smart Order Routing Engine. We are helping businesses and consumers access the power of Digital Asset with ease. Know more about us: 💻 https://www.flipay.co

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