Introduction to Software Wallets
Software wallets are applications or programs that you can install on your computer or smartphone. They store the private keys to your cryptocurrencies on your device, allowing you to conduct transactions quickly and easily.
Due to their user-friendliness and flexibility, software wallets are particularly suitable for daily use and quick access to cryptocurrencies. They offer a good balance between security and accessibility.
In this comparison, we use 20 evaluation criteria across 5 different categories to assess various models and find the best software wallet for different needs.
How to Install a Software Wallet
Choosing and setting up a software wallet is a straightforward process. Here are the general steps:
- Choose a software wallet that suits your needs.
- Download the wallet from the official developer's website.
- Install the software on your device and follow the setup instructions.
- Secure your wallet by creating a backup of your private keys or seed phrase.
👉 Explore secure wallet setup strategies
Comparison of the Best Software Wallets
If you've already enjoyed trading Bitcoin, Ethereum, or other cryptocurrencies, you likely know how important it is to store your digital assets securely. Software wallets are one of the most popular and practical solutions.
We will show you how to set up a software wallet, how to secure your cryptocurrencies, and the advantages and disadvantages they offer.
| Wallet | Type | Supported Coins | Staking | Price |
|---|---|---|---|---|
| Coinbase Wallet | Software | 1000+ | No | Free |
| Zengo Wallet | Software | 1000+ | Yes | Free (paid version available) |
| Bitget Wallet | Software | 90+ | Yes | Free |
| MetaMask | Software | 1000+ | Yes | Free |
| Trust Wallet | Software | 1000+ | Yes | Free |
| Exodus | Software | 260+ | Yes | Free |
| Electrum | Software | Bitcoin only | No | Free |
1. Coinbase Wallet
The Coinbase Wallet takes first place in our comparison. We base this on its optimal integration with the Coinbase crypto exchange and its excellent user-friendliness. The Coinbase Wallet not only supports a vast number of cryptocurrencies but is also well-suited as an NFT wallet.
2. Zengo Wallet
The Zengo Wallet lands a close second in our test. ZenGo is highly recommended due to its unique security features and user-friendly design. It uses an innovative technology called "Threshold Signatures" instead of traditional private keys, eliminating the risk of private key loss or theft.
3. MetaMask Wallet
The MetaMask Wallet is a browser extension for Chrome and Firefox that provides a user-friendly interface for managing Ethereum and ERC-20 tokens. It is easy to use and offers a wide range of features, including support for decentralized applications (dApps). Its browser extension is very popular in the DeFi and NFT sectors.
4. Bitget Wallet
The Bitget Wallet is another recommended option for storing and managing cryptocurrencies. Its user interface is intuitive and easy to navigate, which simplifies asset management for both new and experienced users. Bitget also offers seamless integration with its trading platform, allowing you to trade cryptocurrencies directly from the wallet.
5. Trust Wallet
The Trust Wallet is a mobile wallet for Android and iOS that provides a user-friendly interface for managing cryptocurrencies. It supports a wide range of digital assets and offers a simple way to use decentralized applications on a smartphone. It ranks highly due to its user-friendly mobile app and large number of supported coins.
6. Exodus Wallet
The Exodus Wallet is a desktop wallet for Windows, Mac, and Linux that offers a user-friendly interface for managing cryptocurrencies. It supports a variety of digital assets and provides additional features like in-wallet crypto exchange. It is a solid all-rounder.
7. Electrum Wallet
The Electrum Wallet is a desktop wallet for Windows, Mac, and Linux that provides a lightweight and fast way to manage Bitcoin. It is one of the oldest Bitcoin wallets on the market and offers a wide range of features, including support for hardware wallets. It is the only Bitcoin-only wallet in our test.
Other popular software wallets include MyEtherWallet, Atomic Wallet, and Coinomi Wallet. Before deciding on a software wallet, it's important to check the features and security functions of each one to ensure they meet your needs and requirements.
Best Software Wallet App for Beginners
The Coinbase Wallet app is one of the best options for beginners. With its user-friendly interface and simple functions, it allows for a seamless entry into the world of cryptocurrencies.
As a software wallet app, it provides a secure storage solution for digital assets like Bitcoin, Ethereum, other supported cryptocurrencies, and NFTs.
Beginners can use the Coinbase Wallet to securely manage their cryptocurrencies, conduct transactions, and even use decentralized applications. Integration with the Coinbase exchange also allows for the seamless transfer of assets between the exchange and the wallet, simplifying the trading process for newcomers.
What Is a Software Wallet?
A software wallet, also known as an online wallet or hot wallet, is a digital wallet that allows you to securely store cryptocurrencies like Bitcoin, Ethereum, or Litecoin.
Unlike hardware wallets, which are physical devices that store cryptocurrencies offline, a software wallet is an application that runs on a computer, smartphone, or tablet.
How Does a Software Wallet Work?
A software wallet works by generating private keys, which are needed to authorize transactions and access your cryptocurrencies. These private keys are stored within the wallet, which is protected by either a seed phrase or a PIN code.
When you want to make a transaction, you must sign it with your private key to prove you are the legitimate owner of the funds. In practice, this happens automatically and operates on a similar principle to hardware wallets.
There are many different types of software wallets, from mobile apps to desktop applications. Each type has its own advantages and disadvantages.
Creating a Software Wallet
Creating a software wallet is generally simple and straightforward. Here is a step-by-step guide:
- Choose a suitable software wallet that meets your requirements.
- Download the software wallet from the provider's official website or the relevant app store.
- Install the software wallet by following the installer's instructions.
- Create a new wallet and follow the on-screen instructions.
- Generate a private key. Most software wallets generate one for you automatically. Write it down and store it in a secure, offline location.
- Receive and send cryptocurrencies. Once your wallet is set up, you can receive and send cryptocurrencies by using your private key to authorize transactions.
The setup of software wallets is generally not difficult, even for beginners. The individual steps are intuitive.
Advantages of a Software Wallet
A software wallet offers many advantages compared to other types of wallets, like hardware wallets. Below are some of the most important benefits:
- Quick and easy to install: Most are simple to download and install.
- Access from anywhere in the world: You can access your cryptocurrencies from any location, as long as you have an internet connection.
- Support for a wide variety of cryptocurrencies: Most support a large number of assets, allowing you to manage your entire portfolio in one place.
- Free to use: Unlike hardware wallets, there are typically no costs associated with using a software wallet.
- Potential for security software integration: Many offer additional security features like multi-factor authentication or the option to connect the wallet to a hardware wallet for an added layer of security.
Software wallets are particularly useful if you need to access your crypto frequently. If you are active in the NFT or DeFi space, it makes sense to use one.
You can connect a software wallet directly to DeFi applications like Uniswap. Minting NFTs also typically requires a software wallet, which is why they are often used as NFT wallets.
The Risks of a Software Wallet
Although software wallets offer a convenient way to access and manage cryptocurrencies, there are also some risks that must be considered when using them.
- Susceptibility to hacker attacks: They can be vulnerable to hacking, especially if they are not properly secured or if the security measures on the device they are installed on are insufficient.
- Loss of private keys: If you lose the private key for your software wallet or it is stolen, you will no longer have access to your cryptocurrencies, and they will be lost forever.
- Danger of malware attacks: A malware attack can lead to an attacker gaining access to your software wallet and stealing your cryptocurrencies.
A software wallet alone does not provide maximum security. This is primarily due to its connection to the internet.
How to Properly Secure Your Software Wallet
It is important to take appropriate measures to keep your software wallet secure. Here are some of the most important steps you can take:
- Use strong passwords: Use a long and secure password for your software wallet and change it regularly.
- Keep software updated: Keep your software wallet up to date to ensure all known security vulnerabilities are patched.
- Use multi-factor authentication (MFA): Enable MFA for your software wallet to add an extra layer of protection against unauthorized access.
- Consider a hardware wallet for additional security: Hardware wallets provide an additional security layer. You can use one to store your private keys offline, protecting them from potential hacker attacks.
It is also important to consider other security measures, such as using antivirus software and avoiding public Wi-Fi, to minimize potential risks.
👉 Get advanced security methods
Sending Cryptocurrencies from an Exchange to a Software Wallet
If you want to transfer your cryptocurrencies from an exchange to a software wallet, follow these steps:
- Select the relevant cryptocurrency: Log into your exchange account and select the cryptocurrency you want to transfer.
- Open your software wallet: Open the software wallet you want to send the cryptocurrency to.
- Select "Receive": In your software wallet, select the "Receive" option to display your receiving address.
- Copy the receiving address: Copy the address from your software wallet.
- Paste the address on the exchange: Paste the receiving address into the exchange's withdrawal form, usually found by clicking "Withdraw Crypto."
- Confirm the transaction: Review the transaction details and confirm them.
- Wait for the transaction: Wait for the transaction to be completed. This can take anywhere from a few seconds to several hours depending on the cryptocurrency, network congestion, and transaction fee. Some exchanges may process withdrawals only after a few days.
Once the transaction is complete, you should see the cryptocurrency in your software wallet.
Sending cryptocurrencies from your wallet back to an exchange works on the same principle. You simply need to select the deposit address provided by your exchange, usually found by clicking "Deposit Crypto." This procedure also works with hardware wallets.
Online Wallet vs. Hot Wallet – What Are the Differences?
The terms "online wallet" and "hot wallet" are often used synonymously, but they have some differences.
An online wallet is a digital wallet that is accessible online and is typically provided by a third party. User data is stored on the third party's servers and can be accessed from any internet-connected device. Holding your coins on an exchange means you are using an online wallet.
A hot wallet, on the other hand, is a wallet installed on a device like a computer or smartphone that is connected to the internet. Hot wallets offer higher security than online wallets because the private keys are stored on the device itself, not on a third party's servers.
| Feature | Online Wallet | Hot Wallet |
|---|---|---|
| Definition | Digital wallet provided by a third party | Wallet installed on a device (e.g., computer, phone) |
| Data Storage | User data on third-party servers | Private keys stored on the device |
| Accessibility | Accessible from any internet-connected device | Accessible only from the installed device |
| Security | Lower security, as data is stored on servers | Higher security due to local storage of private keys |
| Use Case | Suitable for users who prioritize convenience | Suitable for users who prioritize higher security |
Overall, hot wallets offer higher security than online wallets but also greater complexity in setup and use. The choice between them depends on your individual needs and preferences.
Conclusion of Our Software Wallet Test
Overall, a software wallet offers a convenient and secure way to manage cryptocurrencies and conduct transactions. It is easy to install and provides access from anywhere in the world. Furthermore, it supports a wide variety of cryptocurrencies and is typically free to use.
However, there are also some risks associated with using software wallets. They are susceptible to hacker attacks, and there is a risk of losing private keys. It is important to take appropriate security measures to minimize these risks.
If you plan to hold your coins for a long time, it is generally worth investing in a hardware wallet. But if you actively use your coins and tokens, we hope you found the right provider for you in this software wallet comparison.
Frequently Asked Questions (FAQ)
What is the safest type of crypto wallet?
Hardware wallets are considered the safest type because they store private keys completely offline, making them immune to online hacking attempts. For large, long-term holdings, a hardware wallet is recommended. Software wallets offer a good balance of security and convenience for active use.
Can I use the same wallet on multiple devices?
Many software wallets allow you to restore your wallet on a new device using your seed phrase. However, for security reasons, it is not recommended to have the same active wallet installed on multiple internet-connected devices simultaneously.
What happens if I lose my phone with my software wallet on it?
If you lose your phone, your funds are not automatically lost. As long you have securely stored your seed phrase (recovery phrase), you can use it to restore your wallet and access your funds on a new device. This is why backing up your seed phrase is the most critical security step.
Are software wallets free?
The vast majority of software wallets are free to download and use. You will always have to pay network transaction fees (gas fees) when sending cryptocurrencies, but the wallet application itself does not typically charge a fee.
What is the best software wallet for Ethereum and NFTs?
MetaMask is widely considered the best software wallet for interacting with the Ethereum blockchain, including using decentralized applications (dApps), DeFi protocols, and purchasing or minting NFTs due to its deep integration with the ecosystem.
Can I stake cryptocurrencies using a software wallet?
Yes, many modern software wallets, such as Trust Wallet, Exodus, and Zengo, have built-in staking features that allow you to earn rewards directly from the wallet interface without needing to transfer your assets to an exchange.