ERC20 token wallets
This article was written by Isonex Capital as a short guide into ERC20 wallets and their compatibility for buying ICO tokens. For the purpose of this article we demonstrate a step by step guide using MyEtherWallet, through the Bitstamp exchange, most exchanges operate in a similar manner and all require KYC and AML be completed during registration.
If you own Ethereum or any other cryptocurrency, you will need somewhere safe to store it. In the cryptocurrency world, that medium of storage is known as a wallet. A cryptocurrency wallet is a software program that enables you to securely store your cryptocurrencies and easily conduct transactions. Some wallets are hardware devices for secure offline storage, but they also operate through the use of software, often in the form of a desktop wallet.
Wallets are becoming more sophisticated; there are now some that enable online crypto trading through internal exchanges. Cryptocurrency wallets do not work like conventional physical wallets. Cryptocurrencies do not exist in any tangible form. They exist as records on the blockchain; this is a decentralized distributed ledger and is the underlying platform that cryptocurrencies run on.
Wallets have public addresses. These are randomly generated lines of case-sensitive letters and numbers. If someone wants to send you digital assets, they must have access to your public address, -also referred to as a “public key”-, to transfer ownership. Your private key is a password that you will need to in order sign off on transactions and to unlock assets sent to you. It should be understood that your private key must be kept secure and should only be known by you, if you would like to avoid loss or theft of your digital assets.
Hardware wallets are not connected to the internet, your digital assets will remain completely immune from any kind of cyber-attacks and hacking. Most hardware wallets enable backup options, ensuring you won’t lose your Ether. This can be further secured with two-factor authentication as well as a PIN password. Most hardware wallets have a built-in screen enabling you to sign for transactions on the device itself, This means that the device itself is not online as you input your PIN directly on the device and not on your computer. They will definitely cost you a little more than you’d spend on a software wallet, but they will be worth the price, especially if you’re storing a large amount of any cryptocurrency. A word of advice: only ever buy from the company’s verified website, as there could be clones or the unit could have been tampered with.
You may be aware that Ether (ETH) is the primary currency used to fund initial coin offerings (ICOs). This is because most ICOs are currently launched on the Ethereum blockchain. This means that you will most likely need to set up an Ethereum ERC20 compatible wallet before investing in an ICO. Not all cryptocurrency wallets support ERC20 compatible tokens. Never participate in an ICO by sending crypto from an exchange. If you do you will lose your funds. You will need to send it from an ERC20 wallet.
Below is an ERC20 token compatible Ethereum wallets list.
MetaMask (Firefox and Chrome browser extension)
Almost all exchanges have Ethereum wallets that are known to be incompatible with ICO’s. Therefore, before investing you should move your ETH to one of the wallets mentioned above.
MyEtherWallet is the most convenient Ether wallet as it is capable of smart contracts. It’s an online wallet, but it also provides offline and hardware wallet support. This means users can generate wallet keys for a variety of Ethereum storage solutions. These capabilities have led to it becoming one of the most popular wallets for investors in ICO’s.
How to open MyEtherWallet to participate in ICO
It is simple to set up.
1.Go to www.myetherwallet.com.
Create a password.
In creating a password it’s not recommended to use birthdays, etc. Instead use a combination of letters, numbers and symbols to make it as strong as possible. Write it down immediately and make copies and keep them safe. Next click “Create New Wallet.”
Download and store your keystore file.
Do it for security reasons. As there can never be too many safety precautions to cyber- security. Store your keystore file in a secure location and click continue.
Save your private key.
It may look just like a string of symbols, but the safe-keeping of this is of paramount importance. This is your private key, without it you will be locked out of your wallet forever. Make sure to back it up and keep it safe. You can also print it to keep it as a paper wallet. Remember, there is no way to retrieve your forgotten or lost private key and password; therefore, take all necessary safety measures.
Use your private key or keystore file to open your wallet.
There are many ways to unlock your wallet, but to keep it simple let’s stick with the private key and keystore file. Select and paste your private key or upload the keystore file to unlock your wallet.
Congratulations on successfully opening your Ethereum wallet.
There is an option on the MyEtherWallet website that if followed will allow you to run the wallet offline/locally via a GitHub link. This involves downloading the distribution zip file. This makes using the wallet even safer for those that are comfortable with following the instructions.
Let’s look at how to go about buying some Ether to put in your wallet; if you already hold some, then you can just send it to your public address.
When buying any cryptocurrency, the first step is to register with an exchange. Before doing so, make sure it has a good established reputation for security and customer support. Research blogs and find out what people are saying. Some exchanges have been known to hold funds or to be unreachable when users wish to cash out. Does it accept the currency you wish to trade in ?. Cryptocurrencies can be complicated enough, so additional procedures may not always be necessary.
The registration process will require submitting a few general personal details under verification. You will most likely need to provide a proof of address as well as a photo identification. This is done in compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. If raising your tier status to gain benefits such as larger sums permitted on cashing out per day, you may be required to offer more information.
Once verified, you will need to choose a deposit method. Depending on a particular exchange, there are various ways of doing so. But typically these include bank wire transfers, credit card and debit card payments, although some as of yet, will not accept fiat currency. In this case you would have to use another exchange first to buy a base currency that the exchange of your choice does accept. This scenario can occur when, say, a specific crypto is only sold by the exchange that does not accept fiat. ( I did warn you that crypto could be complicated.) There is typically a small deposit fee charged by an exchange, which may depend on the deposit method.
Most exchanges do accept US dollars and euros, with other major fiat currencies such as British pound sterling, Russian ruble, Japanese yen and so on being accepted on some exchanges as well. It usually takes several hours for your deposited funds to appear in your exchange account. As soon as the funds are in your exchange account, you can start trading.
For the purpose of this article, we will focus on a purchase through Bitstamp which is based in Luxembourg. It allows trading between USD currency and Bitcoin. It allows USD, EUR, Bitcoin, Litecoin, Ethereum, XRP and Bitcoin cash deposits and withdrawals
Purchasing Ether with Bitstamp
If you never bought cryptocurrencies before, please follow the steps below which demonstrate opening a Bitstamp account to guide you through the process.
Go to www.bitstamp.net
Create an account.
After you click register, your login credentials will be sent to the specified email address. Use them to log in to the site.
Upon logging in, you will be asked to change your password to a new one. Mix it up with upper and lowercase letters and numbers to make it more secure. Login again using your new password. It’s recommended to enable two-factor authentication; you can do that later on.
If you click “Buy/Sell” option on the top header, you will be asked to verify your account. Under new KYC and AML laws, it will not be possible to make a deposit without verification.
You will be given the option between verifying a personal or corporate account. Fill in all the required details about yourself, including a copy of ID card, proof of residence and other relevant documents. Make sure that the pictures you upload are high-quality; otherwise, the verification request will be denied.
It might take a while, but if you followed all of the instructions, you should be verified within 30 minutes. Now you can make your first deposit and proceed to buy Ether.
Choose “Deposit” from the main menu.
On the right side, you will see many deposit options. If you want to buy Ether with fiat, choose between “EU Bank”, “International Bank” or “Credit Card” options.
Be aware that different deposit methods come with different fees. For that, see Bitstamp fee schedule.
Select your most suitable payment option, the amount you wish to deposit and to make the transfer. Bank transfers usually take one day to complete. Credit-card transfers happen almost immediately.
Depending on your deposit method, you might have to wait for your money to arrive. Once your account is credited, pick the “ETH/EUR” trading option in the top-left corner.
Head to the “Buy/Sell” section and select “Buy ETH” since it’s the simplest purchase method.
Enter the amount that you want to spend on ETH and click “Buy”. Your newly acquired Ether
will be credited to your account immediately.
Congratulations! Your first Ethereum purchase, made simple.
After you’re done with purchasing Ethereum tokens, it is highly recommended to transfer your coins to a private ERC 20 Wallet. To transfer your Ether from Bitstamp, go to the “Withdraw” section and select Ethereum (ETH). You’ll see an easy to follow withdrawal window.
Fill in your ERC20 Ethereum wallet address and select the amount of Ether you wish to withdraw. Always double check the wallet address before sending any cryptocurrency, as mistakes cannot be rectified. MyEtherWallet is one of the most popular Ethereum wallets available. It is easy to use and lets you store Ether as well as ERC20 tokens, which is important when investing in ICOs.
Now that you have an understanding of how MyEtherWallet works, you hopefully have a better understanding of the fundamentals of protecting your cryptocurrencies. As you are essentially your own bank, it is best not to tell others that you keep cryptocurrencies at all. Remember, whichever wallet you use, always keep your private keys private and safe. If they get lost or are stolen, you are at high risk of losing all your digital assets. This wallet like all others is as safe as you allow it to be. MyEtherWallet offers good security, but when all is said and done, it is down to you. Happy investing!
**Isonex Capital is dedicated to the growth of digital currencies within the global marketplace and in facilitating investment into the blockchain ecosystem. We strongly believe in investor protection through security and transparency. We are committed to helping newcomers gain an understanding of the risks involved in this new asset class. If you would like to find out more about us, visithttps://isonex.io