A software wallet is a digital application that allows users to store, send, and receive cryptocurrencies like Bitcoin and Ethereum. These wallets can be installed on computers or mobile devices, providing a convenient way to manage digital assets. They typically generate and store private keys, which are essential for accessing and controlling the user's funds. There are two main types of software wallets: hot wallets and cold wallets. Hot wallets are connected to the internet, making them easy to use for everyday transactions but more vulnerable to hacking. Cold wallets, on the other hand, are offline and offer enhanced security, making them suitable for long-term storage of cryptocurrencies.