Hardware Wallet security vs. software if you have a nano ledger, you can access your coins with the ledger live app. Even if the device is not plugged in, I can still see my currency from the app. You are given a 24 word recovery phrase when setting up the nano ledger.
What makes this any different from a software wallet like Electrum? The electrum wallet has a seed phrase just like the hardware wallet, no? If I can access ledger live from either my PC or phone, I don't understand what makes the two any different? Is it the case that you can not trade or transfer coins unless the physical device is plugged into the PC or phone with the app open?
What is the differentiator between the two that I am missing?
The difference is that the private keys that allow you to move your Bitcoin are stored on the hardware wallet itself.
Bitcoin uses asymmetric cryptography. This means that a &quot;key&quot; has two components: the private key, and the public key. The public key is computed from the private key and can be shared publicly. The private key is randomly generated and needs to be kept private.
Hardware wallets store the private keys and provide a way for software to communicate with the device. Software will create transactions (and other data) and ask the hardware wallet to sign it with its private keys. Furthermore, those hardware wallets also allow the software to ask for its public keys.
So your software wallet on your computer (like ledger live) asks the hardware wallet for a public key. It then saves that public key on your computer and generates the address for it. Then it can search the blockchain for your transactions and be able to see your balance. In order to spend your Bitcoin, you need to plug in your hardware wallet so that the software can request it to sign transactions.
Software only wallets (such as a default Electrum wallet. Note that Electrum can work with hardware wallets.) save the private keys on your computer. You don't need a separate device to sign transactions; the private keys are stored on your computer and everything happens on your computer.
What this means is that if your computer is compromised with malware, with a software wallet, that malware can steal your private keys. With a hardware wallet, because the private keys cannot be retrieved from the hardware wallet and because the keys are stored on the hardware wallet, the malware cannot steal your private keys. In this way, your funds will be safe.

The 24 word recovery phrase is a BIP 39 mnemonic. It is a representation of the private keys in your wallet. Modern wallets use this and BIP 32 Hierarchical Deterministic wallets. BIP 32 allows for many private keys to be deterministically generated from a single randomly generated seed. So BIP 39 provides the seed and BIP 32 generates the actual private keys that you use.
In this way a wallet can store generate and store a single random seed and derive the actual private keys and public keys on the fly. BIP 32 also allows public keys to be derived from public keys. So for hardware wallets, they will export a single public key and the software can derive further public keys from that.
Both software and hardware wallets use things like BIP 39 and BIP 32 (Electrum has an alternative mnemonic scheme, but they still use BIP 32). The difference is where the seed is actually stored.