Software wallet

A software wallet is an app on your smartphone (mobile wallet) or a program on your computer (desktop wallet). It usually generates a seed phraseGlossarySeed phrase (recovery phrase)A sequence of usually 12 or 24 words from which your wallet derives all its private keys. Anyone who knows the words has full access to your bitcoin – so they belong in an offline backup and never in anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× and stores the private keysGlossaryPrivate keyA secret, randomly generated number that you use to sign transactions and so control your bitcoin. Anyone who knows the private key can spend the bitcoin that belongs to it – it must never fall into anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× encrypted on your device – you hold them yourself. An exchange’s app is different: there, the provider holds the keys (custodianGlossaryCustodian (custodial)A provider such as an exchange or app that holds the private keys for you. Convenient, because support can help if you lose your password – but you don’t hold the bitcoin yourself and depend on the provider paying out.On the learning path: Stage 5 · Step 1 – Understanding custody →In the glossary →×).

Strengths and weaknesses

• For: usually no purchase price, set up in minutes, good for practising and for everyday amounts.
• Against: it’s a hot walletGlossaryHot walletA wallet whose private keys are stored on a device connected to the internet – such as a smartphone app. Handy for payments and small amounts, but more exposed to online attacks than cold storage.On the learning path: Stage 5 · Step 1 – Understanding custody →In the glossary →×: the device is online and runs many other apps. Malware, a stolen phone without a screen lock or an insecure backup are real risks.

Desktop programs such as SparrowProvider · Software walletSparrow WalletBitcoin desktop wallet with no purchase price and full transparency: coin control, PSBT, multisig and support for most hardware wallets.Non-custodial software – no financial licence required · reviewed Sept 2026Price: no purchase price (donations welcome); network fee when sending (as of Sept 2026)On the learning path: Stage 5 · Step 2 – Setting up your first wallet →Our profile →Official website ↗× can also be used without keys of their own: with an xpubGlossaryxpub (extended public key)An extended public key from which all the addresses of a wallet account can be calculated. Nobody can spend bitcoin with it – but anyone who knows it can see your entire account history.In the glossary →×, they show your balance and prepare payments that a hardware walletGlossaryHardware walletA small dedicated device that keeps your private keys offline and signs transactions internally. The key never leaves the device, so malware on your computer can’t get at it.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →× signs via USB or QR code.^[2]

Good habits

• Only download from official app stores or the maker’s website, and check the developer’s name.
• Turn on the screen lock and an app PIN.
• Write the seed phrase down offline on paper – not as a screenshot, a note on the device or in the cloud. According to the Bitcoin Design Guide, that is exactly what beginners often do: a screenshot, a text note on the device or no backup at all.^[1]
• Test a recovery once with a small amount.