Learning the Basics of Cryptocurrency Wallet Development
Articles
Blockchain technology entered the digital field with massive hype and anticipation. Industry experts worldwide were fascinated by the prospect of decentralisation, anonymity and freedom of choice. Today, blockchain is an essential player in the global technology sector, providing ample opportunities for businesses to implement innovative solutions.
Crypto wallets are among the many innovations the blockchain methodology brings, providing a safer, faster and cheaper way to store and transfer cryptocurrencies. This piece will discuss how to create your own wallet and how to achieve this hefty goal despite the technical complexities.
Key Takeaways
- Crypto wallets are designed to store, transfer, and exchange cryptocurrencies across different networks conveniently.
- There are three types of crypto wallets: paper, cold, and hot wallets.
- Building a crypto wallet app requires using open-source libraries, integrating APIs, choosing cloud providers and front-end development tools, implementing security measures, etc.
- Crypto wallet development is an extensive challenge that should not be tackled without the presence of experienced developers.
A Brief History of Crypto Wallets
Crypto wallets were invented alongside the flagship Bitcoin network in 2009. As Bitcoin launched, the anonymous team behind the project developed a way for users to interact with the platform, storing and transferring their Bitcoins safely and decentralised.
The first iteration, simply named the Bitcoin wallet, was the first personal crypto wallet that featured a staple of this technology – public and private keys. A public key is connected with other wallets, whereas the private key allows users to access their crypto wallet app.
Users could exchange the funds through their wallet address, which was generated separately from any personal user information. As a result, crypto wallet integration made Bitcoin the first cryptocurrency that could be anonymously transferred between users.
Since the founding years of Bitcoin, crypto wallets have progressed dramatically and experienced numerous improvements. Today, we have two distinct types of crypto wallets to choose from.
Different Types of Crypto Wallets
Initially, Bitcoin introduced paper wallets, allowing users to access their funds through paper printouts that verified user identity. However, it swiftly became apparent that paper wallets were dangerous due to their destructibility and increased likelihood of theft. So, hot wallets and cold wallets were introduced to mitigate these shortcomings.
A hot wallet is an entirely digital crypto application accessed through a unique user ID and available on several devices. Hot wallets can be accessed as mobile or desktop wallets, increasing the flexibility and accessibility for users. While convenient, hot wallets often suffer from cybersecurity issues, making them susceptible to malicious attacks.
Conversely, hardware wallets can only be used through a dedicated device that stores cryptocurrencies offline, safe from cyber threats. However, hard wallets have limitations; they are inconvenient and susceptible to physical damage. Theft threats are reduced compared to paper wallets due to encryption and authentication safeguards.
Should You Make a Cryptocurrency Wallet?
Cryptocurrency wallets have become increasingly popular thanks to crypto globalisation and the emergence of numerous successful currencies. As of 2023, there were 420 million registered crypto owners globally.
The ownership numbers have been climbing steadily, with the crypto market spreading globally. So, the crypto wallet app development has naturally become a popular business idea, with thousands of new startups and established companies introducing their unique iterations.
Despite the increased interest, the market is nowhere near being saturated, as there are still many areas for improvement. The crypto field is growing and advancing rapidly, which means that crypto wallets have to evolve and add new features frequently. So, entering this market in 2024 can be one of the most profitable decisions for your business.
How to Create a Cryptocurrency Wallet in 5 Steps
Blockchain wallet app development is not an easy task, requiring extensive technical knowledge and experience with the unique blockchain methodology. So, if you are not fluent in the technical side of blockchain, it is advisable to search for cryptocurrency wallet developers to join your team. Blockchain developers will bring the necessary expertise to accomplish some of the highly technical tasks below.
#1 – Choose an Open Source Library
First and foremost, choosing an open-source library provided by several well-established crypto platforms like Bitcoin and Coinbase is crucial. The open-source libraries feature all base frameworks required for building a crypto wallet infrastructure, making the development process much smoother. Libraries will also let you avoid starting from scratch and help you effortlessly set up the base architecture for app development.
Bitcoin and Coinbase SDKs are multi-functional libraries that support the most popular coding languages and allow app development across different operating systems like iOS, Android and Windows.
#2 – Add Features Through APIs
APIs are an excellent option for adding features and functionality to your crypto wallets. APIs allow developers to construct core wallet activities like transfers, authentication, data retrieval, etc. Additionally, APIs are perfect for adding extra features, including live data feeds, extra support for new blockchains and much more.
In simple terms, APIs will help you enrich your crypto wallet functionality, bringing it closer to the leading wallet applications available.
Crypto wallets have come a long way, from being simple storage devices to having numerous new tools and functionalities. So, your API integration process will demand a lot of work. You must choose wisely, as customers have become well-versed in this field and will not tolerate a lack of essential features.
#3 – Cloud and Web App Development
Like any other digital software, a crypto wallet app will require a cloud setup to function beyond your local premises. While it is possible to use normal PaaS (platform as a service) to fill your needs, purchasing a brand new BaaS (Blockchain-as-a-service) is recommended for maximum efficiency and compatibility. BaaS offerings are more suited for crypto wallets, allowing developers to incur smaller hosting fees and connect with various networks more efficiently.
In addition to the servers and hosting capabilities, you should determine which front-end development tool will work best for your needs. This section depends on which platform you plan to support – android, windows, iOS or others. Each operating system has its stack of development tools, including Node.js or angular.js for the web, Java for Android and Swift for iOS.
#4 – Implement Security Measures
Building a secure cryptocurrency wallet app might be the fourth step in our guide, but it is arguably the most essential task. Adding layers of security is crucial to gaining the public trust. After all, users will entrust your application with their hard-earned funds, and they can’t take chances with an unsecured platform.
The usual suspects in this case are 2FA (2-factor authentication), KYC and KYT protocols and physical authentication tools for hardware wallet users, including biometric scans and fingerprints. Aside from these established mechanisms, you should continuously monitor the security updates across the crypto field and modify your security measures according to the newest AML regulations.
#5 – Start Developing
With all the variables and factors decided, it is time to engage in actual development. Considering that you have chosen the open-source library, all relevant APIs, cloud support, front-end languages and security measures, the development will take anywhere from one to three months, depending on your specialists.
However, delays and prolonged time-to-market periods are common in crypto wallet development. Numerous complications and issues can arise seemingly out of nowhere, making it harder to finish the product within your specified deadline. So, having realistic expectations and expecting delays from two to four weeks in your development cycle is prudent.
Cryptocurrency Wallet Development Services as an Alternative
If you wish to avoid the massive process described above, a viable alternative is available on the market. Numerous specialised companies can outsource wallet development in return for a fixed payment or income share.
However, it’s important to note that outsourcing your wallet development will be pretty expensive and might not lead to optimal results. Outsourcing is more limited, and you will have fewer chances to create a product than you envisioned.
Final Thoughts – Is Building a Custom Crypto Wallet a Good Idea?
Cryptocurrency wallet development is not easy, requiring fluency in many technical aspects of blockchain and general programming. However, the current demand for crypto wallets has surged beyond expectations, and there has never been a time more convenient to enter this specialised niche.
As a business, being a reliable crypto wallet provider is one of the most profitable ideas in crypto, as it doesn’t live or die with the ever-present fluctuations of cryptocurrencies. So, if you have sufficient capital to hire a team of adept developers, setting up a cryptocurrency wallet could become a cash cow that provides dividends for a long time!
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