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What is a Software Wallet

What is a Software Wallet?

You must have heard about the storage of crypto assets in crypto wallets. But have you ever wondered if these are like the actual wallets we carry, or is there something different since crypto assets are all digital? To answer your question, we would like to introduce you to the functionalities of the most commonly used variety of crypto wallets- software wallet for crypto. 

A software wallet for crypto is kind of like having a bank account for cryptocurrencies. It tackles the problems faced in using hardware wallets, like scalability and storage issues, since the hardware used can be lost or locked. Now, what are the top software crypto wallets? Let’s find out!

What is a Software Wallet? 

This is best understood with a simple example. For instance, let’s think of what you do when you store your jewelry in a vault. You keep your belongings inside and set a password. Then every time you need to take out any items, you must enter the password and prove that it is you. 

Similarly, consider a software wallet a digital vault for your precious crypto assets. It generates a random 12 to 24-character long alphanumeric key that you need to enter every time you want access to your assets. This password is a ‘seed phrase’ in technical terms and helps prove your ownership over the assets stored in your software wallet for crypto. 

Different Variants of Software Wallets for Crypto

Software Wallets for Crypto
Source: Freepik

Software wallets for crypto are segregated into different variants based on their functionalities and requirement of internet connectivity. All software wallets are ‘hot wallets,’ meaning they are connected to a network at all times. Whenever you need access to your coins, you can go on the network and access them. Different software wallets can be used to perform this process.

Web Wallets 

If you are a beginner to crypto, you would want the process of accessing your coins to be simple. A web software wallet for crypto can be your answer to “What is a good software wallet I can consider?”. With web wallets, you can access your crypto funds through a web-based interface. Some web wallets ask you to set a strong private key, while others offer the option to store your private keys with them through a shared control approach.

Desktop Wallets 

With desktop wallets, you have to download an application or software on your desktop computer to store your assets. It provides complete control of the crypto assets to the user as a wallet.dat file gets stored with private key information on the user’s desktop.

Mobile Wallets 

A mobile wallet is one of the top software crypto wallets as it allows users to store and trade their crypto assets using just a mobile application. You can gain access to your assets by setting up a strong private key and securing the application with biometrics.

Web Wallets

Web wallets are online platforms that allow users to store and manage their cryptocurrencies. They are accessed through a web browser and typically require users to create an account and provide relevant personal information. Some web wallets offer additional features, such as buying and selling cryptocurrencies or trading them on a built-in exchange. One of the biggest benefits of using a web wallet is that it can be accessed from anywhere with an internet connection. However, web wallets also come with certain security risks, as they are vulnerable to hacking and cybercrime. Using a reputable web wallet and being cautious about storing large amounts of cryptocurrency in one place is important.

Desktop Wallets

Desktop wallets are software programs that can be downloaded and installed on a computer. They allow users to store, manage, and send cryptocurrencies. They offer a higher level of security than web wallets, as the private keys are stored on the user’s computer and not on a third-party server. This means that the user has full control over their funds and is responsible for securing them. Some features of desktop wallets include offline transaction signature, encryption, backup, and restore options. However, it is still important to use a reputable desktop wallet and to practice good security habits, such as regularly updating the software and keeping the computer free of malware. Additionally, the funds stored in the wallet may also be lost if the computer is damaged.

Mobile Wallets

Mobile wallets are software applications that can be downloaded and installed on a smartphone. They allow users to store, manage, and send cryptocurrencies on the go. They are convenient for everyday use and for making transactions in person. Mobile wallets offer a similar level of security as desktop wallets but with the added convenience of being accessible from a mobile device. Mobile wallets’ features include QR code scanning, touch ID and face ID integration, and support for multiple cryptocurrencies. However, it is important to use a reputable mobile wallet, keep the device and the wallet software updated, and be aware of the security risks of mobile devices, such as loss, theft, or hacking.

6 Best Software Wallets of 2023

What are the top crypto wallets you can consider in 2022? To help you out with the choice, here we list some of the top software crypto wallets available today!

Exodus 

It is one of the most well-known software wallets for crypto since it allows the storing of around 110 cryptocurrencies, including BTC, ETH, and Litecoin. While users can download the software wallet for free, there are some transaction charges. Notably, the wallet is open source.

Atomic Wallet 

Among the top software crypto wallets, Atomic Wallet is one of the most favored choices. It is available for free and allows transactions using as many as 300 cryptocurrencies. The user’s private keys and transaction data are stored on their desktop through a secured wallet.dat file.

BitGo 

It is a popular storage platform for institutional investors to store crypto assets. It can be called a hybrid software wallet since it offers access to crypto assets through both desktop and mobile. It also allow users to transfer access from one device to another through proper authorization. Additionally, you can get a suitable version of the platform for business purposes.

Jaxx Liberty 

It is another software wallet for crypto that offers accessibility across all major desktops, OS, and mobile devices. It has also partnered with the ShapeShift exchange to support faster transactions. The underlying code of Jaxx is open source, except for the user interface part. Further, it does not allow multi-signature access or fiat exchange.

Electrum Bitcoin Wallet

If you are looking to hold your Bitcoin in self-custody, Electrum is a popular desktop Bitcoin wallet known for its speed, security, and simplicity. It is one of the oldest wallets for BTC. The platform is super easy to use, and you can find it available for both desktop and Android mobile devices. 

Bitcoin Core

Bitcoin Core is a full Bitcoin client, it stores a copy of the entire Bitcoin blockchain, and can be used as a wallet, as the Bitcoin Core wallet is integrated with the client. What’s more, it can be used to mine Bitcoin. 

Tips for Selecting the Ideal Software Wallet for Crypto

Ideal Software Wallet for Crypto
Source: Kaspersky / What is the best software wallet for you?

If you are new to the crypto world, these are some factors to keep in mind when picking the best one from the top software crypto wallets for yourself:

  • First, always check whether the private keys are controlled by some central figure or the access is given solely to the users. Go with the crypto software wallet that provides users complete privacy.
  • Multi-signature support, two-factor authentication, encryption, biometric access, etc., are all great additions to a software wallet’s security.
  • The wallet should have a backup for user data and crypto assets in case of any hacking attempts or malicious happenings.
  • Cryptocurrency conversion allowed in multiple tokens should be the preferred choice in a software wallet for crypto.
  • Try to use software wallets that are open source and provide complete anonymity to the users.

Conclusion 

We hope this post has helped you grasp the notion of “what is a software wallet for crypto?” clearly. Software wallets are much preferred by a majority of crypto users today as they are easily accessible and more secure than few other options. So, if you too want to start your crypto journey, looking for a secure and open source software wallet for crypto will be a great decision.  

 Frequently Asked Questions (FAQs)

1. How does a Software Wallet Work?

A software wallet is a program that stores the user’s private keys on their device, allowing them to manage and transact with their cryptocurrencies. It connects to the blockchain network, displays the user’s balance, and enables them to send and receive transactions using the stored private keys. Software wallets can be either desktop or mobile, offering a good balance of security and convenience.

2. What is the Difference Between a Software Wallet and a Hardware Wallet?

A software wallet is a program that stores the user’s private keys on their device. In contrast, a hardware wallet is a physical device that keeps private keys offline and away from potential online threats. Hardware wallets offer a higher level of security than software wallets since they are not as vulnerable to hacking or malware. 

3. Are Software Wallets Safe?

Software wallets can be pretty safe if they are used correctly and with caution. They offer a balance of security and convenience, but they also come with certain risks. It is important to use a reputable software wallet, keep the device and the wallet software updated, and practice good security habits such as creating strong passwords and regularly backing up private keys. Additionally, it is important to not store large amounts of cryptocurrency in a single software wallet.

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