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It is worth noting that Ethereum wallets work nothing like conventional physical wallets do. Ether is actually is not stored in your wallet, or anywhere else for that matter. Ether, just like every other cryptocurrency, doesn’t exist in any tangible shape or form. All that exists are records on the Blockchain, and your wallet will only interact with the Blockchain to enable transactions.

Wallets have public addresses, which are randomly generated strings of case-sensitive letters and numbers. If someone wants to send you some Ether, they will send it to this address, which is also referred to as a ‘public key,’ essentially transferring the ownership of the coins.

What is stored ins your wallet, is your ‘private key,’ a password that you will need to sign off on transactions and unlock coins shared to you. It goes without saying that your private key has to be kept a secret if you would like to avoid theft of your Ether.

The public and private keys are paired, which means that in order for you to perform any transaction, the two strings of numbers and letters should match.

How to choose a wallet

Your own or third-party Ethereum wallet

The easiest way of storing your Ether is doing so in a third-party wallet, for instance in a wallet provided by an exchange. Of course, in this way you have easy access to your funds and keeping your tokens on the exchange will probably speed up the trading process. But, if opting for this method, you will essentially give the exchange full control over your funds, as it is the third party that stores your private keys. Moreover, the cryptocurrency history is filled with instances of exchanges being hacked and their users’ funds being stolen.

The Ethereum platform allows you to create a personal wallet for yourself, and you can choose from a variety of options. This way, you and only you will have control over the private key and, by extension, access to your funds.

Full node or not

Running a full node enables you to have direct access to the Ethereum Blockchain. If you don't have one, you will need to connect to another node to receive all the necessary information and verify your transactions.

A full node wallet requires you to download the entire Ethereum Blockchain to operate. Essentially, this transforms your computer into a node, an entity that supports the entire network by updating the Blockchain via reaching an agreement on the legitimacy of transactions with other nodes. This is only possible if using a desktop wallet, as the Blockchain is many gigabytes in size and it is constantly growing.

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