[Ethereum] Is it common practice to have multiple wallets


Is it common practice to store your Ether in multiple wallets? For example, generating 10 wallets on myetherwallet.com and distributing your Ether among them?

What are the practical reasons for doing so?

Best Answer

Wallets are just a way to store your private keys. Ether is stored (besides smart contract code and data) in addresses on the blockchain, or rather, records like "address X has amount Y of Ether".

From this follows that wallet is just a way to access this information. You should always export and safely save your private keys; that way you can always control your Ether if you lose access to a particular wallet.

Distributing Ether among more wallets arguably helps reducing risk of losing everything if you lose access to one wallet, but creates more work maintaining them (I am not familiar with MyEtherWallet in particular, so I do not know how much), while if you save your private keys (and keep them safe!), you can renew access to your Ether pretty much anytime.

EDIT to answer the comment below:

Bitcoin has different account model based on unspent transaction outputs (UTXO), where you basically should generate an address for each transaction. I have found document that summarizes it well.

A user’s balance is thus not stored as a number; rather, it can be computed as the total sum of the denominations of UTXOs that they own.

Ethereum has account/balance model, I think the decision for that was made mainly because it stores more in the accounts than just balances. This somewhat lessens privacy, but transactions in the UTXO model are not completely private either (can be sometimes linked together by network analysis).

So no, it does not make sense to create a new account (address) for each transaction, while depending on how much Ether you have and how you use it, it makes sense not to have it all in the same place (just like with fiat money).