Hardware Wallet vs. Software Wallet: How To Choose? | OWNR Wallet
Hardware wallet vs. software wallet: What’s Better?
A crypto wallet is an essential tool that allows holders to send, receive, exchange, and store cryptocurrency. In contrast to other assets, cryptocurrency is considered to be more prone to security threats. Thus, choosing a reliable and feature-rich wallet plays a crucial role in keeping your funds safe and sound.
There are two main types of wallets that you can use for your cryptocurrencies: software and hardware. The debate over which one is better is as old as Bitcoin itself. Both have pros and cons, but which is best for you? In this article, we’ll compare and contrast the two types of wallets to help you make an informed decision.
What is a hardware wallet?
A hardware wallet is a physical device that usually looks similar to a USB stick or external hard drive and is used to store private keys and cryptocurrency offline. As hardware crypto wallets are not connected to the internet, they are considered the most secure way to store digital assets.
You usually need to buy a specific device from a company to set up any type of hardware wallet. Once you have it, you can download a wallet application and create a new account. Then, it will be possible to transfer your crypto into the hardware wallet by sending the funds from your software wallet to your hardware wallet address. Finally, after disconnecting your hardware wallet, you will be able to keep your assets safe. It’s important to note that although this type of wallet is not vulnerable to hacker attacks, it can simply be lost or stolen, so it’s crucial to keep it safe and always have a backup of your private keys.
Ledger and Trezor are the two most popular hardware wallet manufacturers. Ledger offers a variety of hardware wallets, including the Ledger Nano S and Ledger Nano X. Trezor also offers a few models, such as the Trezor One and Trezor Model T. There are many other devices on the market; the choice will depend on your personal preferences, needs, and budget.
What is a software wallet?
In contrast to hardware wallets, software wallets store users’ private keys in a digital format on a computer. They are usually user-friendly, easy to use, and provide a high level of security. However, they are susceptible to malicious attacks if a user’s computer is compromised.
Software wallets can be divided into 3 groups by the device used: desktop, mobile, and web crypto wallets.
- Desktop wallets should be installed on a computer and can only be used from that particular device.
- Mobile wallets are special apps that can be downloaded onto a mobile phone.
- Web wallets can be accessed via a web browser. They are very convenient, as they can be used on any internet-connected device.
Nowadays, there is a wide variety of software wallets on the market. OWNR wallet is a robust solution that stands out among its competitors with seamless security features, a rich set of capabilities, and affordable fees. This multifunctional software wallet provides its users with both desktop and mobile applications that run on all major platforms. Download OWNR wallet now and stop worrying about the security of your assets.
Differences between a hardware and software wallet
Choosing a crypto wallet is considered the most important step before entering crypto trading. The main functionality of crypto wallets is securing the private keys of the holder, which are used to gain access to his crypto assets. They are divided into hardware and software wallets, which have significant differences, and should be taken into serious consideration.
Software cryptocurrency wallets are generally considered to be less secure than hardware wallets. This is because the latter store all the wallet’s private keys on a physical device, making it nearly impossible to be hacked. Thus, such sensitive information is difficult to be compromised. Moreover, it’s almost impossible for someone to gain access to the stored cryptos, since they are stored offline, and can only be accessed by plugging the device into a computer. However, if the hardware wallet is lost or stolen, then the holder loses all their assets forever.
Conversely, most software wallets are more susceptible to malicious acts, since they are connected to the internet. It is very important to choose a trustworthy online wallet provider to host your crypto assets. Using a software wallet may seem less secure, but there is no need to worry about forgetting the secret keys or losing the wallet itself.
Both software and hardware wallets have different levels of accessibility. For instance, when using hardware wallets, to gain access to your funds you need to enter a pin code. This adds an extra layer of security. However, if you lose your pin or the device, you will not be able to access your funds. Moreover, using hardware wallets may lack flexibility, since it is important to have a computer device in order to access and use the crypto funds.
Conversely, when using a software wallet, the application is stored either on a computer or on a portable mobile device. This means that it is more vulnerable to hacking, albeit easier to access. Users can log in directly by simply entering their username and password in the app. Thus, they can make use of their holdings anytime and anywhere, even for buying groceries.
Both hardware and software wallets are used to access cryptocurrency assets. Hardware wallets store your private keys and allow you to sign transactions offline. This means that your keys are never exposed to the internet, which makes them much more secure against hacks and cyberattacks.
Software crypto wallets also aim at securing your funds and storing them safely. However, apart from that, they usually offer many other features, such as the ability to send and receive cryptocurrency, exchange your assets, check your balance, and see your transaction history.
When it comes to supported currencies, there is a significant difference between software and hardware wallets. Software crypto wallets are typically more versatile, supporting a wider range of currencies and allowing for more customization. As such, they can be used with multiple types of currency.
In contrast, hardware wallets are specifically designed for use with one particular type of currency. This means that if you want to use a hardware wallet with multiple currencies, you will need to purchase one for each type of currency you want to use.
To make a transaction with a hardware wallet, first you need to connect it to your computer using a USB cable. Then, it’s necessary to open your wallet software and enter the amount you want to send. Finally, you need to confirm the transaction on the crypto wallet and wait for it to be broadcasted to the network.
Making a transaction with a software wallet is very simple. All you need to do is enter your software wallet account and provide the recipient's address and the amount of currency you wish to send. Finally, confirm the transaction and send it. The whole process won’t take more than a minute.
Choice on the market
There is a wide variety of both hardware and software wallets on the market. They usually vary in price, number of available features, currency choice, compatibility, etc.
When it comes to choosing a hardware crypto wallet, make sure that the wallet is compatible with the type of cryptocurrency you're looking to store, look at the security features of the wallet, and last but not least, consider the price of the wallet. Hardware wallets can vary widely in price, so it's important to choose one that fits your budget.
When choosing a software wallet, it is important to pay attention to security and privacy features. Another factor to consider is the cryptocurrency choice offered by a digital wallet, as well as the number of supported functionalities (crypto storing, exchange, purchasing, etc.). No matter what your needs are, there is likely a software wallet that will meet your requirements.
Hardware wallets are considered to be more expensive than software ones. However, the price of each of them depends on a number of factors that include the features of the wallet as well as the type of use. Some providers offer software wallets for free, but they may be less efficient than others which can be sold for a relatively low price. Hardware wallets on the other side have a value that can vary and their cost is added to the crypto users total expenses.
Hardware wallets are designed to be portable and easy to carry around. They typically look like hard drives or USBs and are small and compact, which allows for storing them in a pocket or purse. However, hardware wallets can be expensive, and they're not always compatible with all computers.
Software wallets, on the other hand, are online solutions that can be downloaded onto any computer or smartphone. As such, they are much more accessible and customizable.
Backup and restore features
Hardware wallets typically have a number of features that make them more secure than software wallets, such as offline storage and the ability to generate multiple backup copies. However, these features can also make it difficult to restore a hardware wallet if it is lost or stolen.
When it comes to software wallets, it’s possible to restore a digital wallet account using a special seed phrase. It is a set of words that are used to recover the private key of a software wallet. The phrase typically consists of 12-24 words. If the private key is lost, the seed phrase can be used to generate a new key and regain access to the wallet.
Hardware vs. Software wallets: Comparison tables for clarity
|Level of Security
|Requires a connection to the web. It is partially insecure and considered to be more vulnerable to attacks. However, modern providers come with enhanced security features.
|Crypto assets and secret keys are stored offline. Thus, it is resistant to hacking attacks. However, it can be lost or stolen without the ability to regain access to your funds.
|Most wallet providers offer them for free. In some cases, they can be bought at a relatively small price.
|Acquiring a hardware wallet comes with a cost. Depending on the quality of the device, the price may vary.
|They can be accessed from anywhere using the users' credentials.
|They do not offer high accessibility, since they require a computer to use.
|They take the form of an application that is stored either on a mobile device or a computer.
|They are physical devices that can be stored separately and used only through a computer.
|They provide access to the holder’s assets anytime and anywhere.
|It is limited since it requires a computer in order to gain access to the crypto assets.
Hardware wallets: Pros and Cons
Before you decide to use a hardware crypto wallet, you should first compare the pros and cons that it has to offer, and see if it truly fits your needs. Let’s take a look at some of the advantages and drawbacks of using a hardware crypto wallet:
- High level of security. Since hardware wallets are used offline, hackers cannot access them. This is why they are considered a more secure option than online or even paper wallets.
- Easy to use. Using a hardware wallet is typically easy, even for those who are not tech-savvy. Thus, they are considered a relatively better option for holders that are interested in storing their cryptocurrency without having to worry about complicated features and long-time setups.
- Can be lost or stolen. A hardware wallet is considered to be vulnerable in case of loss or theft, in which case the holder will completely lose access to their assets. This is a significant downside of using a hardware wallet, since there is no way to recover lost or stolen cryptocurrencies.
- Not free. Hardware crypto wallets typically cost a considerable amount of money. This is an additional expense that a user should consider before choosing to use one.
Software wallets: Pros and Cons
It can be tricky to decide whether to invest in a software or hardware wallet. Before making a decision, you should first carefully analyze and consider the advantages and disadvantages of software wallets.
- Full control of the assets. A great benefit of a software crypto wallet is that it gives full access to the crypto funds, since you can be remotely connected from your mobile. You only needs to have the app and log in with your credentials.
- Cost-efficient. Most providers offer to download a software wallet for free and give the option for the application to be used on multiple devices.
- User-Friendly. Software wallets can be installed directly simply by following some steps. Moreover, they don’t require any type of troubleshooting or configuration.
- Lack of Security. Software wallets can be vulnerable to hacking attacks and phishing scams. This is because they need an internet connection in order to operate.
Conclusion: Do I need a hardware or software wallet?
So, which of these wallet types is more suitable for you? Ultimately, the decision of whether to use software or hardware wallets depends on your priorities and plans. For those who consider security as their first priority, a hardware wallet is likely to be a better fit. If you are looking for convenience and portability, then a software wallet like OWNR may be a better option. With so many different options on the crypto market, it’s important to take the time to find the perfect crypto wallet for you.