The popularity and value of cryptocurrencies have driven the interest in crypto wallet development. The future of blockchain technology is firmly rooted in cryptocurrency, so there are a lot of opportunities for companies to develop a crypto wallet app. However, the challenge will be creating a cryptocurrency wallet that appeals to users from a design and interface perspective and provides a secure and valuable service.
Blockchain technology has permanently altered the FinTech landscape. If you want to invest in or use cryptocurrency in any way, you need a crypto wallet. This post will explain what crypto wallets are, the different types of crypto wallets, and the key features app developers should include in cryptocurrency wallet development to create the best possible product.
What Is a Crypto Wallet?
A cryptocurrency wallet is a digital wallet that allows users to store, send, and receive cryptocurrencies. In reality, a crypto wallet is software that enables users to track their cryptocurrency transactions and store cryptocurrency. However, even the concept of storing cryptocurrency is not entirely accurate.
Crypto wallets do not physically hold cryptocurrencies like the wallet in your pocket. This is because cryptocurrency does not physically exist. Instead, it lives on the blockchain. A crypto wallet keeps a user’s private and public keys, which proves their stake of ownership in the cryptocurrency they hold.
Don’t worry if the concept of public and private keys sounds confusing; it is very simple to understand. A user’s public key is akin to a bank account number. It is a unique identifier. If you want to receive crypto, it needs to have a place to go. Therefore, you share your public key with others to accept cryptocurrency payments. Private keys are different. A user’s private key is essentially their PIN number or password to their account. You don’t want to share a private key with anyone else.
Cryptocurrency wallets store public and private keys, allowing users to securely buy, sell, convert, send, and receive cryptocurrencies. Crypto wallets won’t hold crypto coins, but all of the blockchain ownership information that is unique to a specific pair of public and private keys.
The Different Types of Cryptocurrency Wallets
Now that you understand what crypto wallets are, you might be surprised to learn that there are different types. Users might choose different types of crypto wallets based on their plans for the cryptocurrency they purchase. There are two broad types of crypto wallets, hot and cold. The main difference between hot and cold wallets is Internet connection.
Cold crypto wallets are typically hardware wallets. Public and private keys are stored offline on a device not connected to the Internet. Many of the popular cold crypto wallets look like ordinary flash drives. Security-minded people like cold wallets because they are the most secure from cyberattacks since they are not connected to the Internet. However, cold wallets can be physically lost, stolen, or misplaced.
In some cases, users might opt for paper wallets. Paper wallets are cold wallets that are essentially just a piece of paper with a user’s public and private key listed. The issue with paper is that anyone can read it and steal the information if they find it.
On the other hand, hot wallets are based on HiTech software instead of hardware. Hot wallets can be downloaded or accessed on the Internet. There are three main types of hot wallets: web, desktop, and mobile. Web wallets are the most convenient because they can be accessed from any device with an Internet connection. In addition, they rely on the cloud.
Desktop wallets and mobile wallets both require a download to a specific device. Therefore, these hot wallets are considered a little more secure than web wallets. However, mobile wallets, like Bitcoin Wallet, are often more convenient because they allow users to make in-store payments using QR codes and other payment technology.
Hot wallets are more vulnerable than cold wallets because of their connection to the Internet, but it is impossible to lose your hot wallet information. For example, if you lost your cold wallet, remember most of them are the size of a flash drive, it would be impossible for you to recover your cryptocurrency without the combination of your public and private key.
Key Crypto Wallet Features You Should Have
While there are several types of crypto wallets, the truth is that mobile wallets are the most popular. We live in a mobile-first world dominated by mobile apps and smartphones. Unless you have a specific niche user in mind, crypto wallet app development should focus on mobile users to have the most significant impact. With that in mind, there are several key features that all cryptocurrency wallets should have, including:
- User authentication
- Payment gateways
- QR scanner
- Support for multiple currencies
- Conversion rates
- Automatic logout
Since crypto wallet apps are so popular and transact so much money, they are attractive targets to cyberattackers. Robust user authentication features will help add an additional layer of security to your crypto wallet app. Two-factor authentication and multi-factor authentication are popular security layers in addition to the standard username and password. Modern devices, like the iPhone, also allow apps to use facial recognition as another method of authentication. Include robust security features to protect your users from malicious attacks.
Crypto wallets should allow users to purchase cryptocurrencies using their credit or debit cards. Your crypto wallet app needs to have a payment gateway to accomplish this functionality. Payment gateways can also help users efficiently sell their digital assets and send money back to their bank accounts. It is also beneficial to give users more payment options. For example, integrating Venmo, Paypal, CashApp, and other popular payment apps with your crypto wallet allows users to simply add or cash out funds from their wallet.
Public keys are long strings of numbers. QR code scanners simplify the process of adding crypto wallets for payment. Without a QR scanner, there is a good chance that users will incorrectly enter the lengthy public key. QR features reduce errors and make the payment process far more efficient.
Support for Multiple Currencies
The cryptocurrency market has changed significantly since the introduction of Bitcoin. Today, several cryptocurrencies are popular with traders and investors, including Bitcoin, Ethereum, Lite Coin, and DogeCoin, just to name a few of the most popular options. Therefore, your crypto wallet app should support purchasing and selling as many different cryptocurrencies as possible to attract the widest audience.
The value of each cryptocurrency is always moving.Therefore, crypto wallet apps should include real-time values and conversion rates so users can make educated decisions about investments and sales. Conversion rates should also include fiat currencies so users can see how much it will cost them to purchase cryptocurrency using cash.
Automatic logout is a popular security feature with banking, sportsbook, and crypto wallet apps. Automatic logout closes a user’s session after a period of inactivity. Keep users secure by requiring login after a period of inactivity. This is a standard security feature with apps that transact or handle money.
Cryptocurrency wallets are essential to the crypto economy. As a result, there is a lot of opportunity in cryptocurrency wallet development for forward-thinking organizations. If your business is interested in crypto wallet development, reach out to an app development partner to learn more about the specifics.