Client-side browser wallets have a similar appearance to managed online wallets from a user's perspective, but they differ significantly in their underlying operations. These wallets store encrypted backups securely with the provider, but the provider cannot decrypt them. Encryption and decryption processes occur within the user's browser using JavaScript, with the user's password serving as the key. As a result, the unencrypted wallet and password remain on the user's computer without leaving it.
Advantages of client-side browser wallets include:
User-Friendly Experience: They are easy to use, requiring no software installation.
Accessibility from Any Computer: Users can access their bitcoins from any computer with an internet connection.
Reduced Risk of Wallet Loss: Accidental deletion or loss due to computer failure is not a concern when using client-side browser wallets.
Decreased Dependency on the Provider: The provider has limited opportunities to act maliciously, as the wallet encryption and decryption occur locally on the user's computer. Users can easily switch to another provider and transfer their bitcoins to a new address if they no longer trust the current provider. Major providers also make it simple to maintain personal backups of the wallet.
Disadvantages of client-side browser wallets are:
Trust Dependency: Users still need to trust the provider to some extent. If the provider gets hacked, the hacker could modify the code downloaded to users' browsers and potentially gain access to unencrypted wallets or redirect transactions to their own address.
Privacy Concerns: Client-side browser wallets may offer the worst privacy option among wallet types. Users do not benefit from the large pool of bitcoins operated by centralized server-side controlled wallet services, and providers can still view transactions. Although providers may claim not to track or remember transactions, there is no way to independently verify this.
Transaction Fees: Both major options, blockchain.info and Strongcoin, charge small fees (0.01 BTC or 1%) on outgoing transactions.
The two major options for client-side browser wallets are the blockchain.info wallet and Strongcoin.