Crypto is experiencing more adoption by individuals, and a crypto wallet is one of the most reliable ways to hold crypto assets. Today, owning a crypto wallet is almost as common as possessing a regular leather wallet.

There are different kinds of wallet, each suitable for different contexts and use cases. Furthermore, there are different methods through which crypto wallets can be classified. However, wallets are commonly divided into two types: crypto wallets and hardware wallets  

This article will feature a head-to-head of crypto wallets and hard wallets.

Firstly, let’s define each independently and see if you can understand the key differences after all and what are the best Bitcoin wallets out there.

What Is a Hard Wallet?

Hard wallets, also known as hardware wallets are portable plug-in devices used to store and manage crypto assets. As stand-alone devices, they offer an extra layer of protection in the event of a user’s personal computer getting compromised. They look like modems or USB sticks.

What Is a Crypto Wallet?

Crypto wallets, commonly referred to as soft wallets in the crypto community, are web applications that securely save public keys associated with a particular user using encryption, and offer interaction with blockchains. 

Crypto Wallets Vs. Hard Wallets 

While both are storage tools for private keys needed to transfer and receive crypto, the distinction between both has to do with how they are stored. 

Private keys are long strings of characters assigned to a specific user, which makes it possible for them to store and transfer cryptocurrency across the blockchain. 

Offline and Online Wallets – Security Concerns 

Hard Wallets provide physical storage. Similar to the way you can save documents on a hard drive, so can your private keys be saved on a hardware wallet. This way, your crypto key is tucked somewhere in your drawer (safely I hope) and only retrieved when the need for it arises. 

This means your wallet stays offline for most of the time, and only goes online when it is plugged into a computer with an internet connection. The extra layer of security hard wallets provide, plus their limited exposure to the web makes them less vulnerable to cyber-attacks, phishing, and malware.

However, this is not to say that hardware wallets are immune to cyber-attacks. In the past, a  hardware wallet, Ledger, suffered from a firmware attack, endangering the users’ wallets on the platform. 

Whereas, crypto wallets store your data on a crypto exchange’s internet server. The exchange releases your private key for a dedicated purpose only after you verify your identity. Contrary to hard wallets, soft wallets remain online at all times. If a malevolent actor breaches the security of the crypto exchange or digital app, the crypto holding of all the accounts on the platform is at risk. 

Convenience 

Though hard wallets provide extra security, it seems to trade off security for convenience. The idea of carrying around a thumb drive and having to set it up with a computer before you can assess your wallet can be a little overbearing.  In a case where convenience is a priority, soft wallets are your go-to crypto wallets. They can access them on the go via multiple devices and in different formats: on smartphones, and desktop computers as browser extensions or applications.