Hardware vs. Software Password Storage: Which Is Safer?

What is the best way you can store your login credentials? There are software and hardware options, so which is more secure?

Many of us choose to store our passwords digitally, as it saves space, time, and fuss. But there isn't just one method of digital password storage out there. You can now choose from a myriad of options, some using hardware, some using software, and others using both. But between hardware and software password storage, which is safer? Is there one option that outshines the other in terms of security?

Hardware password storage involves the use of physical devices, such as solid-state drives (SSDs) and flash drives to store your passwords. Say you use a simply USB stick to store your passwords. This would qualify as a kind of hardware storage.

The following devices are commonly used to store data:

The above devices and components all store data in different ways. You can also get older types of memory storage, like floppy disks, which use magnetic disk memory (MDM), but such methods are rarely used nowadays.

If you want to store your passwords in a portable hardware device, you can use portable HDD or SDD, or a USB flash drive. These are sold by thousands of online vendors, as well as many physical stores. Depending on the brand, memory capacity, and speed, the prices of such devices can vary wildly.

However, these three storage options aren't designed specifically for sensitive data storage, meaning they can be more easily accessed by unauthorized parties should the opportunity present itself. For instance, if someone were to come across your portable SDD, and you have no layer of protection guarding the data it stores, they can very easily access your passwords by connecting the SDD to a PC. The same goes for portable HDDs and USB flash drives.

But worry not: there are hardware storage options out there specifically designed for the storage of sensitive data. Encrypted USBs, like the Kingston IronKey, are a popular option for those who want to store data using hardware but don't want to deal with the vulnerabilities suffered by typical storage devices. An encrypted USB can come with a variety of useful security features, such as password protection, data encryption, and multi-password recovery.

However, there are ways you can encrypt a regular USB stick using flash drive encryption software, such as DriveCrypt and Rohos. Make sure you're using a trusted software program if you want to do this so that you know your passwords are really being encrypted.

You can also use a basic electronic password device, such as a PIN-Master, which stores your passwords in an encrypted and offline setting. These are pretty low-tech devices, but sometimes less is more, as a lack of internet connection can cut off remote attacks.

Software password storage uses software programs, such as apps, to store login credentials.

You can actually use a huge number of apps to store your passwords. Any app that lets you store plaintext data, such as a digital note-taker, technically suffices. However, these apps are not made to secure your data. Rather, they just store it for you.

To store your passwords using software, it's best to use a trusted password manager app.

Password manager apps have become incredibly popular over the past decade, with people looking for an efficient yet safe way to store their passwords. There's nothing more convenient than having an app right there on your phone or computer that stores all your login details, be it for ecommerce sites, social media, banking platforms, or similar. You can also use password managers to store other kind of valuable information, like your passport details or social security number.

Legitimate password managers don't just keep your passwords close by for easy access. These apps employ various security measures to make sure that this sensitive data is only accessible to you. This will be discussed in further detail a little later, but is worth keeping in mind if you're concerned about software password storage.

Some password managers come with a fee, while others are totally free of charge. Usually, a given manager app will keep certain features behind a paywall, meaning you'll need to be a premium user to access the app in its entirety.

Neither software nor hardware storage is a terrible choice for keeping your passwords safe. Both hardware and software can offer you solid password storage methods, but there are pros and cons associated with each type.

When it comes to hardware storage, one of the biggest obstacles is finding a device that can protect your passwords without spending too much money. Of course, hardware tends to cost more than software, and some portable HDDs and SSDs can cost hundreds of dollars, and often don't come with security features. What's more, encrypted flash drives can also be very pricey. Even dropping $50 on a hardware storage device may work out to be a lot pricier than using a software password manager.

On top of this, if you don't back up your hardware-stored data on another device, a further risk crops up. If you lose the device on which you're storing your passwords and have no recovery option in place, you may lose all of your passwords, meaning you won't be able to access a lot of your accounts. This is the same if you damage your hardware storage device beyond repair.

Lastly, if you're accessing your passwords on your PC, and a hacker has gained remote access of the machine, you run the risk of your passwords being accessed through this cable connection between the hard drive and the computer itself. You may also accidentally import your password file onto your PC from your hardware storage device, which exposes it to malicious actors if your computer is targeted.

However, hardware storage methods have a very important attribute: they can remain offline. A typical SSD, HDD, or USB flash drive doesn't require any form of online connection to store data, as the data is sent via a hardwire connection straight from the PC to the device itself. The case is the same for encrypted USBs and other electronic password devices. Online avenues are very often used in data theft, so cutting off this vector makes it that much harder for a malicious actor to access your passwords.

What's great about software password storage is that it's convenient and affordable. Some password managers do charge a hefty premium for their most exclusive features, but this isn't the case across the board. Many reputable password managers are either free to use or have a very affordable premium version.

On top of this, software password storage can be accessed very easily. You don't need to grab a separate device and plug it into your PC. Rather, you can simply open the app on the device you're using, be it a smartphone, laptop, tablet, or similar, and view your passwords.

However, software password managers are often cloud-based. This means that, when you enter passwords for storage, the internet is used to store the data in the cloud. What's problematic here is that using an online connection to transfer and store data opens a door for remote attacks. For instance, if the connection between the user and the password manager isn't secure, a vulnerability could be exploited by an attacker in order to access the data being transferred.

Cloud storage services often employ various security measures to make cloud storage a safe option. But no software program is 100 percent impervious to malware and hacks, meaning there is always a slight possibility that a cloud storage platform could be compromised.

Be that as it may, there are offline password managers out there that you can use, as well as password managers that offer both an online and offline option. However, many password managers still require an online connection when you're adding more passwords to your vault. Again, this opens up a vulnerability.

If you've got a lot of passwords for your online accounts, it's crucial that you're using a secure storage method to keep this valuable data safe. It can be hard to choose the best method for you, so consider the pros and cons above to see whether hardware or software password storage suits you best.

Katie has been writing about tech-based topics for two years, with a specific interest in cybersecurity, AI, and cryptocurrency. Katie has covered a variety of topics during her time at MUO, including crypto explainers, cybersecurity guides, VPN reviews, recent hacks, and software tutorials. With a passion for emerging tech, Katie is also excited to see what new devices and digital platforms the coming years will bring.