Where Should You Store the Private Keys to Your ETH?

By Frank Corva 

There are a number of factors to consider when choosing where to store the private keys for your Ether (ETH) — the native asset of the Ethereum blockchain.

First, you have to consider whether you’re planning to hold your ETH long-term or short-term.

Then, you must think about how important safety is to you.

You also have to consider whether you want to put your ETH to work — do you want to stake it, lend it or yield farm with it?

Because of the dynamic nature of ETH, choosing the right wallet in which to store the private keys to your ETH is a serious consideration.

ETH is not a share of a company

When most people first buy some ETH — or any other digital asset for that matter — they open an account on a major centralized exchange like Coinbase or Binance, buy the digital asset that they want, and then leave the asset in a wallet “on the exchange.”

But the asset isn’t “on the exchange” — instead, it’s on the blockchain. The private keys to the asset remain in the hands of the exchange if you don't take custody of them by transferring them to a wallet for which you hold the private keys. More on that in a moment, though.

Most people leave their private keys with an exchange because they’re accustomed to buying assets via brokerages like Fidelity, Charles Schwab or Robinhood. 

When you buy assets via these exchanges, your IOU for the share of the stock you buy is stored on the platform’s centralized database. You don’t have the option to move your shares of Apple stock (AAPL) into your own custody. But this isn’t the case with ETH or other crypto assets.

Taking responsibility for your ETH and putting it to work

So, now you’ve done it — you sat down to move the private keys for your ETH into your own custody because you finally heeded the “not your keys, not your coins” warning.

But where do you move the private keys to your ETH to? 

If security is of paramount importance to you and you plan to hold your ETH long-term, then you’ll probably want to move your private keys to a device like a Ledger or Trezor wallet — a hardware wallet that stores your private keys offline 

Because transferring the private keys for your digital assets on and off a hardware wallet is a bit of a hassle, you’re more likely to buy and hold once you transfer your private keys to one of these devices. 

If you’re only speculating in the short-term with your ETH holdings, then you might want to transfer the private keys to your ETH to a desktop or mobile wallet like Exodus or Atomic. Storing the private keys to your ETH in a software wallet is safer than leaving them in the hands of an exchange, but not quite as safe as storing them offline in a hardware wallet.

Or maybe you’re a crypto degen — a more savvy crypto investor who likes to take bigger risks with their crypto — and you want to put your crypto to work. Then, you’ll want to transfer your crypto to a browser extension wallet like MetaMask. Doing so will allow you to utilize DeFi platforms like Aave or SushiSwap, where you can lend your ETH or use it to yield farm.

Recognizing the commitment to your ETH

Purchasing some ETH on a centralized exchange is only the first step in committing yourself to your crypto investment.

The next step is finding a home for the private keys to your ETH — and recognizing that the home for those private keys may change as you become a more sophisticated crypto investor. 

If you’re new to investing in ETH, what’s most important to understand from the onset is that ETH isn’t a stock or any other type of traditional investment — or an IOU which can only be stored on the centralized database of the brokerage where you purchased the asset. 

Where you store the private keys to your ETH is ultimately up to you — and this is perhaps one of the most important considerations when choosing to invest in the asset.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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