Let’s see how the crypto transaction process works with a software wallet:

You initialize the transaction from your wallet’s interface

The interface provides you with the intent.

However, this intent is presented to you via the screen of your internet-connected device. This means the display of your transaction details can potentially be tampered with by hackers. In this sense, a software wallet can never offer you absolute certainty about what you are signing. 

You press confirm to approve the transaction 

The software wallet signs the transaction using the private key stored on the host device.

In doing so, your software wallet accesses and uses that private key while your host device is connected to the internet. This is a potential threat, as the host device—your laptop or smartphone—is vulnerable to malware and spyware. 

Yes, if you use these types of wallets a hacker can extract your private keys. Or, they can even tamper with your screen to lure you into accepting a malicious transaction. 

The software wallet uses the internet connection of its host device to broadcast the signed transaction.