Cryptocurrencies are fast becoming a permanent fixture in modern life as they have caught on and taken root deep into the mainstream psyche. Whenever anything has value, it is natural to feel apprehensive as its owner, as there are automatic threats to such things which portend the owner to take adequate measures to keep their assets safe. Cryptocurrencies are no different in this, as they are rather more exposed to threats of theft due to their increasing value, their ultra-portability as well as the irreversibility of their transactions.
To keep one's crypto holdings safe, Wallets are both the purse and the bank that the crypto owner uses. But there has been an unending debate about whether it’s a hardware or software wallet that works best, and in this piece, we will go over a few pros and cons of each and weigh arguments on both sides
Software Wallets
Software wallets as the name implies are a group of dedicated software that are coded from the ground up with the specific interest of being used as a storehouse in which an investor keeps and banks their crypto holdings. Software Wallets comes on a wide range of platforms and devices from the Mac or PC, to Smartphones and Tablets, Software Wallets serve as both the day to day transaction portals as well as digital vaults that can be adapted to store large volumes of crypto holdings over long period of time.
Software Wallets are categorized into two main types which are the host and non-hosted software wallets. The Hosted Wallets are those kinds of software wallets that only give temporary access of crypto holdings to its owner when they log into them while online, and as such the actual currencies, are not under their direct control, while non-hosted wallets hold the cryptocurrencies right there on the owners device, and gives unfettered access to the owner even when they are not online
Pros
Ideal for day to day transactions and payments.
Gives the user easy access, especially with mobile devices even when on the go
Usually made to be very user-friendly making them ideal for first timers
Can be easily switched from hot to cold wallets depending on the need of the user
Cons
Being mostly connected to the internet makes them highly susceptible to hacking
Not the cheapest to use due to transaction fees that goes to the software wallet developer on each transaction
Hardware Wallets
A Hardware Wallet is a dedicated device that is specifically created to serve as a vault storage for Bitcoin as well as other kinds of cryptocurrencies. Hardware Wallets are USB powered portable devices that are created only to be used as a storage facility for crypto assets, as they come with multiple layers of security features which makes them ideal for use as long-term storage facilities as well as the ideal place to store large volumes of the digital assets
Key among the features of Hardware Wallets is that they are created to be completely resistant to both physical and electronic theft. With a number of security features such as a personal identification number as well as a Wallet recovery phrase, it is virtually impossible to steal a cryptocurrency stored in a hardware wallet.
Pros
Highly secure
Ideal for keeping large volumes
Can be used even on computers that are known to harbor malware without fear.
Very user-friendly, as they are easy to set up even for first timers
Cons
They are mostly not mobile friendly, and as such the user needs to be on a computer before they can send crypto assets from them
Not as accessible as Software wallets, which is why they not mostly used for day to day transactions