Software wallets are connected to the internet, whereas hardware wallets are not. Which should you choose? Depends on what you’re using your wallet for.
Software wallets
Software wallets, also known as hot wallets, are connected to the internet.
Wallets that are connected to the internet are more vulnerable to being hacked. It’s good to remember that a software wallet is only as safe as the device you keep it on.
Software wallets are generally available on one or more of the following platforms:
- Mobile
- Desktop
- Browser extension
Benefits:
- Convenient
- User-friendly
- Access anywhere
- Not tied to a device
- Easy to recover with seed phrase
Cons:
- Security depends on device
- More vulnerable to attack
You need a software wallet to interact with your crypto. It’s easy to send, receive, exchange, and stake crypto from a software wallet.
Choose a browser extension wallet if you want to connect to dapps.
Hardware wallets
Hardware wallets are a type of cold wallet, also known as cold storage. Hardware wallets are small devices that are not connected to the internet.
Another type of cold storage is paper wallets. Paper wallets are exactly what they sound like – a piece of paper on which you record your private key.
Hardware wallets are physical devices about the size of a Tamagotchi.
You can connect them to your computer, and sign transactions, while keeping the wallet’s seed phrase and private keys completely offline.
Hardware wallets can only communicate with other devices when they are physically plugged in.
This means that a hardware wallet isn’t vulnerable to hackers.
Benefits:
- Safe and secure offline storage
- Invulnerable to hackers
- Invulnerable to viruses
Cons:
- Less accessible
- Lacks some functionality of hot wallets
- Possible to lose the device
Choose a hardware wallet for long-term storage, or if you have large amounts of crypto. Better yet, long-term storage of large amounts of crypto.