New to Ethereum and lost in translation? I’ll try to ELI5 it.
There is one big ledger shared among all users (storing all transactions ever made). A wallet (or node) is just a way to interact with the ledger (your money are not stored in the local wallet). Each node stores partially or completely the ledger on your computer.
Mist is the official desktop wallet, it will download the entire ledger to your PC or Mac (hundreds of GB).
MEW or MyEtherWallet (Web), store the ledger on the web and the private keys (later about them) on your computer.
Parity is my favourite one (Desktop), especially for it’s advanced settings (very helpful for ICO). This one will “smart-store” a part of the ledger locally, all private keys locally.
There are a bunch of mobile wallets now for mobile, two of them got my attention on iOS, Trust and ImToken.
When you create a wallet with any of the above, you will be asked to store a 12/24/36 words seed safely. If you loose it, you loose your account (unless you backup the private key, in raw format or in a Json encrypted file).
WRITE YOUR SEED WORDS DOWN AND MAKE SURE YOU DON’T LOSE THEM!!!
Note that:
- the twelve words seed is specific to the wallet that created it, can’t be created with Parity and imported in Electrum for example.
- the Json encrypted private key file can be imported/exported with a password to/from any of these wallets. This is my favourite way to store my accounts (private keys).
- private key in raw format. This is not safe to store, it can be imported on any wallet and it’s not password protected. The private key is the one actually used when you interact with the ledger (sign a transaction to send ethers or tokens).
If you have the Json file, the twelve words seed is no longer needed to restore. They exclude each other. Same for the private key.
About exchange wallets (ex Bittrex, Binance), you can use them by signing in with user/pass/2fa, but you don’t own and you can’t export the private keys. Never store large amount of coins on exchanges for long time. They can be hacked or simply they can run with your money.
Once you created an account, you receive a public key (address) like 0x…. All transactions are visible for anyone that knows the public address via etherscan or similar sites. If you want to receive coins or tokens, all you have to do is to share that 0x… public key with the sender. To send money, you’ll need to sign the transaction with your private key. Wallets take care of that for you, they will just prompt you for a password usually. But more about that later.
And one last thing… an Ethereum account can store ERC20 tokens along with ether. If you buy an ERC20 coin from trades (ex AION), you can withdraw it from the trade directly to your Ethereum 0x… account, no need a separate one. You can make sure a token is ERC20 using Etherscan. An account can hold multiple ERC20 tokens at once. While the wallets might not reflect real time the tokens or they are not always in sync with the ledger, you can always check your account status on Etherscan (if it’s up and running) using this format etherscan.io/address/0x or by searching you account on the website.
Conclusion: Your wallet doesn’t hold or store locally any money/coins/tokens. All it does is to store a keychain that allows you to access/move them on the shared ledger (from your address to any other public address). You don’t need a wallet installed/running to receive money, you just need to share the 0x… public key (assuming that you have a backup of your seed, json file or private key associated with that public key)
Other useful resources that I’ll explain later: transaction prices, network status, more about ethereum.
Medium link: https://medium.com/cryptokytzu/ethereum-wallet-what-is-that-82b7ff245aa2