What is a Hardware Wallet and How Does It Differ from a Software Wallet?

What is a Hardware Wallet?

Cryptocurrencies are a digitized form of money that is present as software. Therefore, the investors who purchase or sell them need to create a digital wallet account. Digital wallets allow investors to store, manage, and trade digital currencies.

Depending on their size and functionality there are many types of wallets. Digital wallets that are present in the form of programs such as mobile applications, desktop software, browser extensions, and other forms are called software wallets.

On the other hand, digital wallets that are present in a physical storage device are called hardware wallets.

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How does Hardware Wallets Work?

Hardware wallets are usually in the form of a small storage unit that can look like a USB. Investors can purchase these devices from manufacturers such as Ledger and Trezor etc. Investors can create new accounts and secure them using PIN, password, or pattern etc.

Some hardware wallets also allow investors to connect with other wallets using QR code. Hardware wallets are considered secure since they allow investors to place their reserves away from active internet connection. In this manner, hackers and other threat actors cannot reach these reserves.

Hardware Wallets Vs Software Wallets

Private Key Storage

Hardware wallets allow users to store their private keys in a secure place in an offline manner. On the other hand, software wallets are programmable and may store the private key in a digital environment.


Hardware wallet can turn off internet connection at the discretion of the user. On the other hand, software wallets are actively connected to the internet and in some cases investors are only able to access them while connected to the internet.

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Hardware wallets are not actively connected to the internet therefore hackers are unable to reach these reserves. On the other hand, software wallets are actively connected to internet it means that hackers can access them in case of technical errors or lags.


Hardware wallets are more suited for long-term investments and suitable for investors who require strong security against hack attacks. On the other hand, software wallets are best for investors that are performing short-term trades and can handle online security issues.


Hardware wallets have a high cost since investors have to purchase them but they allow investors to make free transactions using peer-to-peer swaps. On the other hand, software wallets allow investors to create free accounts but the manufacturers can charge transaction fees.

What are Public and Private Wallet Keys?

Cryptocurrency wallets are secured using public and private keys. A public key is unique identifier such as bank account number. Investors can use public keys to define their digital wallet addresses. In this manner, they can transfer cryptocurrencies from one point to another.

On the other hand, private keys are like password or code that allows investors to log-in to their wallet accounts or approve transactions. Hardware wallets are non-custodial wallets meaning that they allow investors to have full control of their private keys.

There are also custodial wallets where the private keys are managed and secured by third-party such as crypto trading platforms etc.

Popular Hardware Wallets


Ledger is one of the top hardware wallet manufacturers in the world. The firm has issued various hardware wallet products such as Ledger Nano S Plus, Ledger Nano X, Ledger Stax, and Ledger Live.


Trezor is also one of the most well-known hardware wallet firms. Its most popular products are Trezor Model T and Trezor One. 


Coolwallet is another emerging hardware wallet services provider. It uses Bluetooth for transactions and a mobile application for user settings. In this manner, if the users are available within 10 meter radius, the crypto investors will be able to create, cancel, or add new transactions.

Ellipal Titan

Ellipal Titan supports 41 cryptocurrencies. At the same time, it has U2F authentication method. However, this wallet does not have WiFi connectivity but generates QR code for private transactions.  It is known as the ultimate secure cold storage wallet.

BC Vault

BC Vault has unique features such as a random number generator and makes use of non-deterministic coding to create private keys.


Hardware wallets are known for their security, ease of access, and reliable transaction authentication. Many investors rely on hardware wallets to securely store their cryptocurrency reserves to ensure best protection against cybersecurity attacks and exploits.  

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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