In 2017, cryptocurrencies experienced an explosion of popularity. Suddenly millions of people began investing in digital currency. This was made feasible by massive amounts of hype and underlying technologies. The wallet for cryptocurrencies began in 2012 and was one of the powerful technologies that enabled this spread.
Wallets for cryptocurrencies come in a variety of sizes and styles today. Businesses and entrepreneurs seek investment opportunities and strategies to profit from this new currency revolution.
Consequently, let’s discuss how to enter the bitcoin market with Crypto wallet development.
What is a cryptocurrency wallet?
A cryptocurrency wallet is analogous to a bank account for cryptocurrencies. It displays the amount of bitcoin you possess and its value in multiple currencies and makes it simple to trade, receive, and exchange cryptocurrencies.
To be clear, though, a cryptocurrency wallet does not store your cryptocurrency. Technically, all cryptocurrencies are maintained in a blockchain, a distributed ledger that keeps track of each coin in a particular cryptocurrency.
Cryptocurrency wallets are comparable to bank accounts. When your bank account indicates you have $1,000, it doesn’t mean $1,000 is in your name. It shows your bank has $1,000,000, which is yours. Your account facilitates the management and usage of that money, but it does not keep it.
As with an account, they have the information proving cryptocurrency ownership. The blockchain stores information about your bitcoin ownership and the blockchain is integrated with your wallet. Like a bank!
Similarly to a bank, it is possible to lose your bitcoin if you lose track of your account details. If someone steals the proof-of-ownership data for your crypto, they can claim it as their own. Since crypto isn’t as established as banks are (by design, to be precise), cryptocurrency wallets are primarily responsible for keeping your crypto secure.
The only distinguishing aspect of a cryptocurrency wallet is that it holds the information that verifies your crypto assets belong to you. Technically, you could write that information on a sheet of paper and use that paper as your wallet (just don’t lose it!).
While maintaining your cryptographic assets on paper is likely one of the most secure methods, it lacks features. It can only “accept” and store cryptocurrency. Those interested in developing bitcoin wallets must, therefore:
- Construct an app/device that stores a user’s bitcoin data. Ensure that this data is as secure as possible.
- Add features that distinguish their cryptocurrency wallet from alternatives.
Because many users have trouble comprehending the concept and using their wallets, ease of use is a crucial element of a bitcoin wallet.
The different types of cryptocurrency wallets
As previously said, a cryptocurrency wallet can be anything that stores the information proving you possess your coin, even paper. Businesses engaged in developing bitcoin wallets have no interest in selling pieces.
Here are the four most prevalent types of bitcoin wallets now accessible. Each offers advantages, disadvantages, and hazards. As with other forms of technology, the more secure something is, the more complicated and restricted it will be. You should select the format that balances these aspects, and best serves your objectives.
Web-based bitcoin wallets enjoy the same popularity as SaaS and other web-based applications. They are easily accessible, available on all devices, and functionally independent of the user’s computing or storage capacity.
The problem with web wallets is that their security and functionality might be limited. Downloadable mobile applications are more popular among customers. Thus it may be difficult to attract users to them.
This takes us to cryptocurrency mobile wallets. Unsurprisingly, they are currently the most popular among crypto users. They’re simple to use, portable and can take advantage of smartphone hardware (like NFC or Bluetooth).
However, the disadvantage of mobile wallets is that they are frequently attached to a person’s phone. In addition, because mobile is such a pervasive medium nowadays, many viruses are masquerading as mobile bitcoin wallets. You must maintain security and assure users that your wallet is as safe as it claims to be.
Desktop cryptocurrency wallets typically offer the most functionality. These are similar to mobile wallets in that they store all of your cryptocurrencies on your computer. These wallets do not require an internet connection to function, yet they offer many of the same advantages as web-based wallets.
Desktop wallets are safe, oriented toward tech-savvy users, and provide a sense of credibility that mobile and web apps typically lack. It is comparable to the distinction between an app like Acorns and Fidelity Investments. The first is more approachable than the second.
Nonetheless, this can be problematic for desktop wallets. No longer is cryptocurrency the exclusive domain of tech-savvy individuals. As a result, users may find desktop wallets scary, if they are even aware they exist.
Hardware wallets are the final type of cryptocurrency wallets. This is likely the “classiest” way to store your cryptocurrency and functions identically to a paper wallet.
Most hardware wallets are physical devices that link to your computer and store the data proving you own your money (your address and keys). They resemble flash or portable hard drives and have a small LED display. This screen will reveal your address and private key, the quantity of cryptocurrency you possess, etc.
These wallets do not connect to the internet by design, preventing them from performing additional tasks. Encryption is a regular feature on these gadgets, making them highly secure. However, if someone forgets their encryption password, they will likely also lose their cryptocurrency.
Therefore, hardware wallets are ideal for crypto holders that prioritize security and stablecoins. However, those who wish to trade volatile crypto assets will benefit more from a more flexible option.
The difference between hot and cold cryptocurrency wallets
When you begin developing bitcoin wallets, you’ll discover that the accessible wallet types mainly fall into two categories:
- Wallets with internet connectivity
- Not-connected-to-the-internet wallets
There are “hot” and “cold” wallets for cryptocurrencies. Hot wallets link to the internet and prioritize providing consumers with functionality and ease of use. In contrast, cold wallets are used for long-term storage and security. They are typically more complex to operate yet provide more excellent protection.
Cryptocurrency wallet development: Developing it yourself or choosing a custodial service
The custodial wallet is a fork in the road you will encounter once you develop a bitcoin wallet. Hot wallets may be custody-free or custody-based.
Custodial wallets store your cryptocurrency on your behalf. You can continue to trade, transmit, receive, and manage your cryptocurrency in other ways. You just do not carry the physical keys and address of your wallet. Coinbase is a popular custodial wallet that resembles a stock trading application.
Non-custodial wallets provide you with complete control of your bitcoin. They are simply how you govern it.
Custodial wallets are typically more user-friendly, feature-rich, and have the added benefit of keeping track of your cryptocurrency. As long as you have the app downloaded and have memorized your username and password, you will not lose your cryptocurrency.
On the other side, the custodial wallet is responsible for keeping track of your cryptocurrency correctly. You will lose cryptocurrency if they are hacked, vulnerable to a government takeover, or just cease operations.
When comparing these two possibilities, you must again examine the type of product you wish to create. Today, custody wallets are the most popular option. People that use cryptocurrencies as a marketable asset rather than a currency are mainly responsible for the growth of custodial wallets. However, as time passes and the market becomes more stable, non-custodial wallets will undoubtedly come to dominate.
The 6 most important components of cryptocurrency wallet development
As with any service dependent on security, your team must provide a high level of protection to its users. The cryptocurrency was not as risky as a few years ago, but it should still be protected as a financial asset. It is crucial to keep data encrypted, secure behind logins and 2FA, and have a comprehensive account recovery procedure.
A non-custodial crypto wallet is required for offline access. A person’s address and keys must also be stored on a personal device, such as a computer, smartphone, or hardware wallet.
Consider offline access when designing your cryptocurrency wallet to enable offline crypto transfers and more secure crypto storage.
QR code scanning capabilities
QR codes and NFC tags offer significant possibilities for developing bitcoin wallets. They enable contactless money transfers, which have begun to replace physical credit and debit cards.
Adopting NFC and QR codes as payment methods for cryptocurrencies is not only a terrific way to embrace this technology’s futuristic nature but also advantageous for P2P transactions.
Every software for financial transactions must include transaction notifications, and bitcoin is no exception. Warnings serve as a kind of validation and security. And exchange sites such as Coinbase can inform consumers when the value of the assets they possess has increased or decreased.
Trading and exchange features
As previously said, most cryptocurrencies have not yet achieved a point of value stability. And they are likely to remain so until they gain widespread support among consumers, corporations, and governments.
Many consumers will likely treat cryptocurrency as an asset rather than money. It is, therefore, prudent to explore incorporating trading and exchange capabilities into your platform. Until cryptocurrency is widely accepted as a payment mechanism, users will likely seek to exchange their crypto for fiat currency. Having a structure in place for doing so should therefore be considered.
Payment gateway integration
Integrating your bitcoin wallet with a payment gateway such as PayPal should also be considered. It can help legitimate your purse and make it more attractive than alternatives that appear to lock your cryptocurrency within an application.
You may also consider creating or integrating a blockchain-based payment processing platform. As cryptocurrency’s general appeal increases, the demand for these services increases.
Partner with Suffescom Solutions and accelerate your cryptocurrency wallet development
Understandably, the novelty of cryptocurrencies might make it scary and difficult to enter the market. But you need not do it alone.
Suffescom Solutions can assist you in navigating this new technology and developing a market-competitive offering. If you are interested in creating a bitcoin wallet, please contact our team so that we can determine
how we can assist you.