A software wallet, also known as a wallet app, is an application that allows users to HODL, send, and receive cryptocurrencies.
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What Is a Software Wallet?
A software wallet, also known as a wallet app, is an application that allows users to HODL, send, and receive cryptocurrencies. Blockchains technically store cryptocurrencies on-chain, while software wallets provide an easy way to interact with blockchains via a graphical user interface (GUI). Software wallets can usually be broken down into three categories: web wallets, desktop wallets, and mobile wallets.
Like most other categories of crypto wallets, software wallets are usually non-custodial. This means no central platform or third party has custody of cryptocurrencies belonging to a particular wallet. Only the end user of a particular wallet has the ability to move funds using private keys.
Software wallets, which can be installed on any device, are encrypted and require a password to access a user’s coins. These types of wallets are oftentimes connected to a cryptocurrency exchange. Some software wallets even support non-custodial decentralized exchanges that use automated market makers (AMMs) or atomic swaps to facilitate cryptocurrency trading.
The advantages of software wallets include being more accessible and convenient for users to buy, exchange, sell, and send cryptocurrencies. They also provide support for multiple crypto assets, which is commonly referred to as a multi-coin wallet.
Software wallets are generally easy to use on desktop, tablet, and mobile. Another benefit is that software wallets are free, unlike hardware wallets which are more secure but require users to purchase them. Software wallets generally store a user’s private keys within a secure location. A software wallet typically requires a user to safeguard a seed phrase that is usually a series of 12 or 24 randomly generated words.
A few of the most popular software wallets include AtomicDEX, Electrum, Exodus, and Guarda.
Author: Kadan Stadelmann, CTO of Komodo
Kadan Stadelmann is a blockchain developer, operations security expert, and Chief Technology Officer of Komodo, an open-source technology provider that offers all-in-one blockchain solutions for developers and businesses. Komodo works closely with organizations that want to launch their own custom decentralized exchanges, DeFi platforms, and independent blockchains. Its flagship technology and end-user application is AtomicDEX – a mobile and web-compatible non-custodial multi-coin wallet and atomic swap-powered DEX rolled into one dApp. Kadan strongly identifies with Komodo’s open-source vision and ideology. His dedication to the Komodo project is founded on an unwavering desire to make the world a better place. In addition to cryptography, blockchain technology, and development, Kadan is interested in literature, mathematics, astrophysics, and traveling.