Software Wallet

A Software Wallet is a form of cryptocurrency wallet that’s based on software, so installed as a mobile app or accessed via a website, or installed as software on a desktop or laptop computer.

The software itself stores your private keys that are used to access your cryptocurrency funds.

To secure your private keys, the software wallet is encrypted and normally requires a password to gain access to the wallet and records/information within it.

Remember, wallets don’t actually hold your digital assets.

Wallets are simply an interface to the blockchain, which holds your digital assets and all the transactions related to your wallet address.

Software wallets come in the form of desktop wallets, mobile wallets, and web wallets.

An example of a software wallet is the MetaMask wallet, which is used to interact with the Ethereum blockchain.

MetaMask wallet can be installed as a web browser extension or mobile app, allowing you to access your Ethereum, Avalanche, and Binance Smart Chain wallets.

MetaMask also offers a mobile wallet app that can be downloaded and installed on your smartphone, making it a mobile wallet in addition to a web wallet.

Exodus Movement Inc. is a company that provides the Exodus desktop wallet, which can be downloaded and installed on your Mac or Windows operating system computer.

A software wallet is considered a hot wallet in that it’s always connected to the Internet when in use.

For that fact, software wallets are considered less safe when compared to hardware and paper wallets.

However, software wallets tied to centralized exchanges are often thought as more convenient to the end-user, as they’re easily accessible from almost any Internet-connected device, your digital assets are easily transactable, and in the event your account funds are lost to a hack, they’re more than likely insured.

Related Terms

Desktop Wallet

A common type of crypto wallet used to securely store and manage your private keys on a computer hard drive. They’re considered more secure than web-based wallets, since you can only access them from wherever your computer is located, and again, you control your private keys.

Wallet

Made up of a unique public address called your public key (similar to your bank account number) that you can share with the world, your friends, family, and other businesses and companies that you trust, to send and receive digital assets. A wallet also stores a private key (much like the PIN that you use to access your bank account at the ATM), which, when combined with the public key, confirms ownership of the wallet, and allows you as the wallet owner to view the digital record of your wallet transactions, and allows you to perform actions such as buying, selling, withdrawing, and swapping funds.

Web 3.0

Web 3.0 is described as a phase of evolution that includes more user interaction, data sharing and ownership, decentralized connectivity, and blockchain technology at its core. Machine learning and artificial intelligence will play a larger part in the apps and services that we’re already using. Everything that can be connected to the Internet will be connected to the Internet, and there will be a huge focus on decentralization, enhanced connectivity, and more user control over personal data ownership. Centralized authorities, like governments and gigantic, multinational companies will take a backseat to self-governing and self-ownership of various parts of this new Web 3.0 world, and the individual will take a larger role in operating on a blockchain network, while also making decisions about the blockchain’s future evolution

Hot Wallet

A Hot Wallet is a cryptocurrency wallet that is connected to the Internet. Wallets can be classified as either hot or cold. Hot simply means that a wallet is connected to the Internet, perhaps because it’s a wallet at a centralized cryptocurrency exchange or a wallet offered as a web browser extension on your desktop […]

Hardware Wallet

A type of cryptocurrency wallet that’s based on a physical device, such as a USB thumb drive with buttons and a screen, that stores your private keys to your cryptocurrency funds. A hardware wallet is considered a cold wallet in that it isn’t connected to the Internet, keeping your wallet (and wallet funds) away from hackers and theft.