A software wallet is an electronic wallet or digital wallet that allows users to store, send and receive digital currencies like Bitcoin. The wallet acts as a secure holding place for a user’s private keys, which are cryptographic codes that provide access to digital coins.
The main difference between a software wallet and a hardware wallet is that software wallets are completely digital, versus hardware wallets that require physical hardware to store the private keys. Software wallets offer more features than hardware wallets that allow users to retrieve transactions and balances quickly, access updated exchange rates, manage passwords, generate new addresses, and more.
Some wallets are built directly into the platform of the currency exchanges, while some are independent applications. For example, the MetaMask wallet allows people to securely store, buy, and manage different cryptocurrencies using a web browser. Software wallets store cryptocurrencies safely in an internet-connected environment and allow users to remain in complete control of their funds.
Since software wallets are stored online, they are vulnerable to attack by viruses, malware, and hackers. It’s important to enable 2FA authentication and use a strong password to protect your funds. Additionally, it’s best to avoid sharing your public or private keys with anyone, as they can be used to gain access to your funds.