Definition
A software wallet runs as a mobile app, desktop program or browser extension. It provides tools to view balances, generate receiving addresses and interact with supported networks. The software does not contain the coins themselves: it interprets network records and manages access to them. Features and asset compatibility depend on the particular implementation.
How It Works
A self-custody software wallet commonly keeps encrypted keys locally and unlocks signing when the user authorizes an action. Many use a recovery phrase to rebuild accounts after device loss, although other recovery designs exist. A program may also act only as an interface to a hardware signer or as a watch-only wallet. Software wallet and hot wallet therefore overlap but are not perfectly interchangeable: the location and availability of the signing keys determine online exposure.
Key Considerations
Install software from verified distribution channels and check publisher details to avoid lookalike applications. Updates, device security and protected backups all matter. A wallet password usually protects local access; it is not necessarily a replacement for recovery information. Before signing, check the network, destination and any spending permissions. Uninstalling an app does not revoke permissions already granted on-chain. Conversely, recovering a wallet restores access credentials but does not reverse past transactions or remove previously approved contract allowances.