Desktop wallets are a popular choice for managing digital assets due to their balance of accessibility and control. However, they also present a unique set of security challenges and features that need to be carefully considered. This chapter examines desktop wallets across various metrics to help users make informed decisions about their digital asset management strategies.

Cold-Storage vs. Hot-Storage

Desktop wallets typically operate as hot-storage solutions, as they are usually connected to the internet whenever the computer is online. This continuous connection makes them vulnerable to the same threats that affect browser-based wallets, such as malware, phishing, and remote access attacks. However, many desktop wallets offer features that can simulate cold storage, such as the ability to run on an air-gapped (offline) device or to be used in conjunction with a hardware wallet. By keeping the desktop wallet offline or using it solely for signing transactions offline (cold storage), users can significantly reduce the risk of online threats. For those managing large amounts of digital assets, leveraging these cold-storage capabilities is often essential to maintain a high level of security.

Integrated Display with OS vs. No Integrated Display with OS

Unlike hardware wallets, desktop wallets do not come with an integrated display for verifying transaction details. They rely entirely on the computer’s screen, which introduces vulnerabilities, particularly if the operating system is compromised. Without an integrated display, users must trust that the transaction details shown on the screen are accurate and have not been tampered with by malicious software. This reliance on the general-purpose display of the operating system highlights a significant security gap when compared to hardware wallets that provide an isolated, secure environment for transaction verification. Desktop wallet users should consider using hardware wallets in tandem to verify and authorize transactions, adding an additional layer of security.

General Purpose OS vs. OS Built to Secure Private Keys

Desktop wallets run on general-purpose operating systems like Windows, macOS, or Linux. While these systems are versatile, they are not specifically designed to secure private keys. This environment leaves desktop wallets vulnerable to a wide range of potential security threats, including viruses, keyloggers, and OS-level exploits. In contrast, operating systems built to secure private keys are hardened against such attacks and offer a more secure environment for managing digital assets. Although most users prefer the convenience and familiarity of general-purpose OSs, it’s essential to implement additional security measures, such as using a dedicated machine for the desktop wallet or employing encryption and sandboxing techniques to protect private keys.

Test of User Presence

A crucial security feature that differentiates more secure wallets from less secure ones is the ability to enforce a test of user presence. This feature ensures that transactions can only be authorized with the explicit physical interaction of the user, such as pressing a button on a connected hardware wallet. Most desktop wallets, however, lack this capability, making them vulnerable to remote attacks where an attacker could potentially execute transactions without the user’s knowledge. Without a test of user presence, the security of desktop wallets heavily depends on the overall security of the operating system and the vigilance of the user in detecting unauthorized access. For enhanced security, users may opt to pair their desktop wallet with a hardware wallet that requires physical confirmation of transactions.

Wallet Update (Firmware Update, Software Update)

Desktop wallets are updated through software patches, which are critical for maintaining security and protecting against new vulnerabilities. However, the update process for desktop wallets is not as secure as the firmware update process seen in hardware wallets. Firmware updates in hardware wallets are typically cryptographically signed and verified by the device itself, ensuring their integrity. Desktop wallet updates, while often signed, rely on the security of the operating system to ensure that the update has not been tampered with. This reliance introduces the risk of supply chain attacks, where an attacker could compromise the update mechanism to distribute malicious software. Users should always verify the source of updates and consider running these updates in a secure, isolated environment to reduce risks.

On-Chain vs. Off-Chain Recovery

Recovery mechanisms for desktop wallets can vary, but they typically include both on-chain and off-chain options. On-chain recovery methods, such as multi-signature schemes, allow users to distribute control over their assets across multiple devices or parties, providing a high level of security and redundancy. However, on-chain recovery can be complex and may not be supported by all desktop wallets. Off-chain recovery, using techniques like Shamir’s Secret Sharing, involves splitting the private key into multiple parts and storing them separately, offering a balance between security and convenience. Desktop wallets that support both on-chain and off-chain recovery methods provide users with flexible and robust options for securing their assets in the event of device failure or loss of access.