What a software wallet actually is
How do you use a software wallet, and which ones exist? Below we walk you through all the ins and outs. A software wallet is an app on your computer (Windows, Mac, Linux) or smartphone that lets you manage your cryptocurrencies yourself. Important to understand: your crypto isn't stored in the wallet, it's stored on the blockchain. The wallet holds the keys that prove the coins are yours. Think of it as a digital keychain.
When you set it up, the wallet generates a seed phrase: a series of 12 or 24 random words. Those words are how you prove ownership to the network. Lose your computer? No problem, with the seed phrase you restore your crypto on a new device. Lose the seed phrase too? Then your crypto is gone. No one can recover it for you.
With a software wallet, those keys live locally on your device. That gives you full control ("not your keys, not your coins"), but it also means the responsibility for backing things up is entirely yours.
Software wallet vs. exchange account vs. hardware wallet
Exchange account | Software wallet | Hardware wallet | |
|---|---|---|---|
Who holds the keys? | The exchange | You (on your device) | You (on a separate device) |
Protected against exchange hacks? | No | Yes | Yes |
Suitable for large amounts? | No | Up to a few thousand euros | Yes |
Suitable for daily use? | Yes | Yes | Limited |
Cost | Free | Free | €50-€200 one-off |
A software wallet is a good middle step for anyone who has just started with crypto and wants self-custody, for example after buying on an exchange. For larger amounts (rule of thumb: anything you don't want to touch within a week) a hardware wallet is safer, because the keys never come into contact with the internet.
Which software wallets are there?
There are dozens of software wallets, each with a different focus. The most-used categories:
- Multi-coin wallets like Exodus and Trust Wallet, handy if you want to manage several cryptocurrencies in one app. They typically support Bitcoin, Ether, Ripple, ERC-20 tokens, and more.
- Bitcoin-only wallets like BlueWallet and Sparrow, for users who hold only Bitcoin and want maximum privacy and security.
- Browser extensions like MetaMask, popular for DeFi apps and NFT marketplaces on the Ethereum network.
- Mobile wallets like Phoenix and Muun, built for the smartphone, often with Lightning support for fast Bitcoin payments.
Only download from the official website. Hackers spread fake versions of well-known wallets through ads and fake app-store listings. Only download a wallet from the official website of the provider or the official app store. Always check the URL and the publisher account before installing.
How to set up a software wallet safely
In five steps you'll have a secure software wallet:
- Download it from the official website. Not via Google ads, not from app-store search results without double-checking, not from links someone sent you.
- Install it and choose a strong password. Don't reuse this password anywhere else.
- Write your seed phrase down on paper. 12 or 24 words, in the right order, with a pen on paper. Never take a photo, never store it in a notes app, never put it in the cloud.
- Store the paper somewhere safe. A locked drawer at home is fine for small amounts; a safe or a metal backup (like SOLIDHODL) for larger amounts.
- Test your backup. Delete the wallet, reinstall it, and restore it using your seed phrase. Does it work? Then you know for sure your backup is good.
Only after step 5 should you send larger amounts to your software wallet. Always start with a small test amount.
Fire-proof and water-proof backup. A paper backup is fragile. In a fire or flood your seed phrase is gone. A metal backup like SOLIDHODL keeps the words etched or stamped into a metal plate, resistant to extreme temperatures and water. Recommended for larger amounts.
Frequently asked questions
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