With the rapid growth of cryptocurrency, many people are now choosing digital assets over traditional fiat as it’s completely decentralized. Nobody wants their funds to be monitored or controlled by the banking systems or governments.
With the rise in cryptocurrency, the need for a digital wallet has come up. This means moving your funds online on the blockchain, which is safeguarded in a digital wallet. Simply put, a wallet performs the same functions as a bank by letting you send, receive, and store cryptocurrency assets. However, in contrast to conventional banks, you have complete control over the asset because you hold the Private keys, also referred to as “seed phrases or secret codes,” giving you access to your assets.
It’s important to note that a cryptocurrency exchange is different from a wallet; this is because the exchange holds the keys to your assets and, by doing so, can freeze or lock your funds. Today, we will briefly compare software and hardware wallets to see which one is better for use.
Software Wallets are digital banks in operation. However, the user has 100% control over their funds. Users can send, receive and store cryptocurrency assets using their computers or mobile phones.
The software wallet is safeguarded by key phrases that act as the wallet’s security. However, these keyphrases don’t protect users from hacker activities, especially when they unintentionally give access to hackers while trying to claim an airdrop by clicking on some links. Such experiences are not suitable to witness as all your funds can easily get wiped out because of a link you opened using the browser part of your software wallets.
Generally, Unlike Cryptocurrency exchanges, a Software Wallet gives you control over your funds, primarily used when you don’t have many funds to manage/store.
Unfortunately, there are far too many instances of lost security access and even hacker activity, which has led to the theft of enormous amounts of cryptocurrency, a primary justification for a hardware wallet. A hardware wallet is a physical cryptocurrency wallet designed for storing and protecting one’s digital assets.
Most hardware wallets have multiple recovery keys if necessary, which isn’t feasible with software wallets.
The most distinct feature of a hardware wallet is the ability to be unhackable even when using an exposed system to operate it. It’s advisable to go for a hardware wallet if you have a chunk of funds to protect against hackers.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.