Hardware vs. Software Wallets

Every self-custody setup runs on something — the question is what. A wallet, in this context, is whatever holds and manages your keys: an app on a general-purpose device, or a purpose-built device that does nothing else.

Software Wallets

• Local Key Storage: keys are generated and held inside an application on a phone or computer.
• Convenient Access: available anywhere the app is installed, which suits frequent use.
• Shared Device Exposure: the same device runs everything else you use, widening what could go wrong.

Hardware Wallets

• Isolated Key Generation: keys are generated and stored on a device that does nothing but that.
• Physical Confirmation: approving a transaction requires a physical action on the device itself.
• Disconnected Signing: the private key is never exposed to an internet-connected device.

Both categories can implement distributed-key architecture — see Key Security. The hardware-vs-software choice is about where a key physically lives, not whether it's split across shares.