Hardware vs. Software Wallets: Where Should You Store Your Cryptocurrency?
Have you been wanting to get into crypto, but haven’t yet taken the plunge? Then we don’t blame you. Even though digital currencies have been popular for years, they’re also infamous for being extremely volatile, hard to get back if lost due to the blockchains’ independence from the banking system – and environmentalists have long protested the use of the proof-of-work consensus mechanism, which consumes enormous amounts of energy. In recent years, however, the crypto space has gone through massive changes – for instance with one of the most popular blockchains, Ethereum, switching to the much more sustainable proof-of-stake mechanism.
This has prompted many previously hesitant followers to take the next step and finally give investing a shot. If you’re about to do so yourself, you’re going to need somewhere to store your crypto – which is where we come in. Below, we’ll take you through two of the most popular wallet options available to you, highlighting their respective pros and cons so that you can decide for yourself which option will suit you best.
Software Wallets: Easy, Convenient and Free
First up, we have software wallets. As a crypto newbie, these are probably the first ones you’ll come across since many exchange platforms as well as blockchains offer their own. Software wallets are digital wallets that let you store your crypto in an app, which is why they’re definitely more convenient if you’re trading often.
However, this is also part of the reason why they’re known for having less than stellar security. Software wallets are also known as ‘hot wallets’, which means they’re always connected to a server. That means that all a hacker has to do to empty your wallet and steal your crypto assets is to hack into this server – which, for example, is what happened to nearly 8,000 wallets in the solana attack last year.
Hardware Wallets: An Investment in Extra Security
Due to software wallets’ security issues, we’d recommend going with a hardware wallet instead – if you have the means to do so, since these do cost money (as opposed to software wallets, which are free). However, many would say they’re worth the investment. Plus, as with many other investment items, hardware wallets come in all shapes, sizes, and price ranges. While most of them look sort of like a USB thumb drive (see e.g. the popular Ledger for an example), Safepal, for instance, is more similar to a large, black credit card.
The latter option is also more affordable than many of the more established hardware wallets. And which cryptocurrencies does Safepal support? Well, just like most of the newer hardware wallets on the market, you can store a wide variety of currencies and tokens on it. And no matter which hardware wallet you pick, you’re guaranteed much safer storage of your crypto than with a software wallet. This is because hardware wallets are so-called ‘cold wallets’, meaning that they’re only online when you are. You use the crypto you’re storing by connecting your hardware wallet to your device – and once you’re done trading and disconnecting from your device, others can only gain access to your wallet by physically stealing it and then getting a hold of your private key.
While using a hardware wallet is certainly a much safer experience, we can’t exactly claim that it’s convenient, though. So, all in all: If you’re a frequent crypto trader and value convenience over security, a software wallet will serve you well. But if you don’t mind the hassle and a heftier price tag in exchange for extra security, a hardware wallet is the way to go for you.v
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