Practically everybody has heard of cryptocurrency. However, most people only know the name of the most famous cryptocurrency (Bitcoin) and that there are people mining cryptocurrency using special equipment. In this article we will explain what a cryptocurrency wallet is, what types of wallets exist and what their main features are, as well as we will give advice on how to create a crypto wallet.
What Is a Cryptocurrency Wallet?
A cryptocurrency wallet is a way to keep your digital funds secure while retaining complete control over them. The cryptocurrency is stored on the blockchain – a series of linked blocks that store information on a dedicated address for transferring and receiving digital money. This address is the cryptocurrency wallet. Currently, the popularity of crypto wallet mobile apps is on the rise.
The Features of a Cryptocurrency Wallet
There are many different types of crypto wallets, each with its own features. It’s vital to pick a crypto wallet according to your needs and preferences. Thorough research of all available options is the best course of action. Before committing to a choice of a crypto wallet, you need to study its capabilities and make sure they’re the best fit for your needs. So, what are the features of a crypto wallet?
- Security. Only you can access your crypto wallet since a combination of public and private keys is required to access your account. A public key is like an address you can share with other people. A private key is like a password, and only you are supposed to know it.
- Ease of Use. If you’ve dealt with any bank app before, you’ll have no trouble managing your crypto wallet.
- Quick and Affordable Transactions. There are no intermediaries, and the transaction fees are much lower than at traditional banks.
- Decentralization. There is no central bank system, so you don’t have to worry about any new regulations that might affect your funds.
- Versatility. You’re not restricted to a single cryptocurrency; currency conversions are easy. Additionally, you can easily convert your funds from fiat to cryptocurrency and vice versa.
Types of Crypto Wallets
There are two main types of crypto wallets: hot wallets and cold wallets. Let us give you a better understanding of each.
Hot Wallets
These wallets require an internet connection to function properly. Therefore, they are less secure than cold wallets. However, they are generally more user-friendly and accessible. Essentially, all software crypto wallets fall into this category. Desktop wallets, mobile wallets, and online wallets are the three main types of hot wallets.
- Desktop Wallets. Desktop wallets are considered secure and reliable but are vulnerable to any virus or hack performed on the host computer. You can use these wallets on laptops or PCs. There is one restriction: you can access your wallet only from the computer where it was initially installed.
- Mobile Wallets. These wallets come in the form of mobile apps for various models of smartphones. You can use these apps to pay at retail stores and supermarkets. Mobile wallets generally have less storage space than desktop ones.
- Online Wallets. Also known as virtual wallets, their key advantage is accessibility: you can manage your crypto wallet from any location and device, mobile or desktop. These wallets are more susceptible to hacking and data theft since their information is in the hands of a third party (the provider).
Cold Wallets
These wallets don’t need a connection to the Internet, since they store cryptocurrency in cold storage (offline), hence the name. You can use these crypto wallets in a similar fashion to a bank vault – storing the bulk of your funds in a cold wallet. There are two types of cold wallets – hardware wallets and paper wallets.
- Hardware Wallets. Unlike hot wallets, this type of crypto wallet doesn’t store private keys online. Instead, your private key is housed within a device similar to a USB drive. It provides a higher level of security, but it comes at a cost: these wallets are generally more expensive than others.
- Paper Wallets. In this case, the wallet’s software automatically generates your public and private keys, which you can print. A transfer between software and a paper wallet is straightforward. These wallets are secure and easy to use.
Steps for Creating a Cryptocurrency Wallet
Now that you know more about crypto wallets, it’s time to learn how to create a coin wallet. Below are the key steps to take:
- Choose an open-source crypto library. You don’t need to develop your own tools to build a cryptocurrency wallet app because there is a wide variety of open-source libraries and tools for you to use. Popular free options include BitcoinJ SDK and Coinsbase SDK.
- Install an API to set up blockchain synchronization. API (application programming interface) serves as the basis for any crypto wallet and you can’t create a cryptocurrency wallet without it. You need to use an API to integrate your crypto wallet into a blockchain ecosystem.
- Select a cloud platform for your cryptocurrency wallet. To do this, you need to find a cloud provider and adapt it to your needs. Some of the major cloud providers are Azure, Amazon, and Microsoft.
- Choose the correct tech stack for your cryptocurrency software development. Depending on your requirements, different tech stacks might be available. If you want to build a web-based app, then you can choose Node.js, HTML5, Angular.js, or CSS3. For Android, your choice is limited to Java and Kotlin; Swift and Objective-C are the tech stacks available for mobile app development on iOS.
- Choose the features of your future app. Here are some of the key features essential for any cryptocurrency wallet:
- User authorization with two-factor authentication (2FA) or multi-factor authentication (MFA).
- The support of incoming and outgoing transactions.
- The support of multiple cryptocurrencies.
- A QR code scanner.
- Push notifications.
- Up-to-date conversion rates for cryptocurrencies
- Blockchain-based transactions.
- Payment gateways.
- Managing familiar addresses.
- Design the UI of your app. User-friendly and simple should be two main criteria while developing the interface for your cryptocurrency app. There are plenty of open-source libraries that you can use to create a great interface.
- In order to do the actual coding of the app, you can hire a team of external blockchain developers to do the work for you. Though, it’s important to outline the task in a detailed way to avoid any confusion or additional expenses.
- Test your cryptocurrency wallet app thoroughly to avoid malfunctions. No app is perfect from the outset, and testing is an important step toward fine-tuning your app. All features must be tested to ensure the highest quality of the app at launch.
Bottom Line
To sum it up, a cryptocurrency wallet is a digital system that allows you to keep and easily manage your digital funds while providing improved accessibility, ease of use, security, versatility, and affordability. Depending on your needs, you can choose one of the existing crypto wallets on the market, or develop your own crypto wallet from scratch.