Indisputably, crypto wallets have become indispensable tools that revolutionize contemporary business performance. But what’s so special about them, and why do startups and enterprises invest in their development?
That’s quite simple. Cryptocurrency wallets economize costs for transactions by minimizing the dependency on banking institutions and promoting cross-border payments via blockchain, etc. Hence, in this article, you can learn how to develop a crypto wallet app, its types, features, and benefits your startup or enterprise can reach by crafting one.
Source: Business Research Insights
Types of Crypto Wallets to Types of Blockchain Wallets
If you want to build a crypto wallet app, you need to distinguish between their types to understand which option will suit your needs the most.
Hot Wallets
Hot wallets store the user’s private keys on the internet-connected device, including the smartphone native application or web-based app version.
The disadvantage is, wallet’s vulnerability to cyber threats, in particular, malware attacks, Some examples of hot wallets include MetaMask (supports Ethereum) and Alby, designed for Bitcoin transactions.
Cold Wallet
Cold wallets keep users’ private keys and digital assets offline to minimize the risks of cyberattacks. Trezor and Ledger are some of the examples of this wallet type.
Custodial Wallet
In custodial wallets, third-party custodians have ownership over the private keys and facilitate transactions. Some custodial solutions like Fireblocks utilize multi-party computation, so the keys are not stored traditionally. Instead, Fireblocks splits the key into mathematical shares and distributes them across different parties.
The disadvantages, however, include the client’s lack of full ownership of digital assets and vulnerability to cyberattacks. Examples of custodial wallets are Coinbase, Gemini, and Binance Wallet (which offers custodial and non-custodial options).
Non-Custodial Wallet
The non-custodial wallet is a cryptocurrency storage solution where the client has full ownership over their digital assets. The key challenge is the absence of recovery options. If the user loses their private keys, that’s it; they lose their funds. Trust Wallet and MetaMask are some examples of non-custodial wallets.
Gain insights into the essence and differences between custodial and non-custodial crypto wallets.
Multisignature Wallet
Multisignature wallet requires two or more signatures to execute transactions, improving its overall security.
Nevertheless, time delays are its core challenge. Examples of multisig wallets include the Electrum (Bitcoin) wallet that supports multisig configuration and BitGo, an institutional-grade multisig cryptocurrency wallet that supports cold and hot options for storage.
Smart Contract Wallets
Smart contract wallets can create self-executing smart contracts by leveraging the capabilities of the blockchain system. This wallet type can refrain from private keys to access funds.
However, Argent Wallet utilizes smart contracts but comprises the mechanism of social recovery, which does not mean the absence of a private key.
If there are flaws in the code’s logic, then the user can manipulate the wallet’s functions, like bypassing approvals, representing the implementation risk. Examples of smart contract wallets are Harmony and Cronos.
Why Businesses Need a Blockchain Wallet App
Crypto mobile wallet app development might become a useful option to optimize your business performance due to the range of the following benefits:
Cost-Effectiveness
Integrating a cryptocurrency wallet is a cost-effective alternative to traditional connectivity with third-party intermediaries, such as banking institutions. For instance, a smart contract wallet or multisig might reduce operational costs by enabling secure and automated financial transactions. These wallets can utilize either multiple user signatures or predefined blockchain-based conditions to facilitate trustless transactions without an intermediary’s oversight.
Optimized Security Layer
Cryptocurrency wallets provide a decent level of security due to the robust encryption, where only the owner can access them. However, you have to consider the peculiarities of the crypto wallet to know what security measures they operate within to guarantee the safety of your financial transactions.
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Hot Wallet offers password encryption and, in some cases, Two-Factor Authentication.
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Cold Wallet’s security measures include encrypted backup & PIN protection.
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In multisig, the attacker won’t be able to gain funds because the transaction requires signatures from multiple parties.
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Smart contracts involve smart contract-relevant security measures, such as time-locked transactions, social recovery, and role-based permissions.
Full Ownership over Private Keys
Owning a custom blockchain wallet instead of using third-party solutions, like custodial wallets, provides you with the opportunity to keep your private keys on your own, so that you keep full ownership of your digital assets.
Customization
Custom crypto wallet app development provides a decent level of flexibility, unlike third-party wallets that have preset features. Crafting a custom crypto wallet might include multi-chain support that will exclude third-party restrictions, facilitate custom transaction logic, and integrate with custom blockchain protocols.
How to Monetize a Blockchain Wallet App
If you want to build a cryptocurrency wallet app for your own business needs or the demands of your business, don’t forget about the monetization strategies you can implement and earn revenue from.
Transaction Fees
A wallet can charge a fee for each action, like swaps or transfers. Trust Wallet does not earn from the basic transactions but implements a fee for in-app swaps and staking services.
Subscription Model
The subscription model offers additional wallet features, such as improved security and premium support based on the monthly or yearly subscription. For instance, Ledger Live provides clients with a premium opportunity of Ledger Recover so that after paying $9.99 per month, they can back up and recover their private keys.
Advertising and Partnerships
If you wanna know how to create a crypto wallet app and make it profitable, consider advertising and partnerships. This monetization strategy represents the wallet’s partnership with exchanges or DeFi services so that it earns referral fees when clients interact with DApps, staking platforms, or NFT services.
MetaMask promotes third-party staking services and generates revenue from the involved Aave DeFi lending platform. Another example is Coinbase Wallet, which is owned by Coinbase and integrates with the Coinbase exchange. Coinbase Wallet promotes users to trade with Coinbase, which charges fees.
Token-Based Monetization
This strategy implies that the crypto wallet launches its own utility token in order to generate revenue. The clients will pay fees and gain discounts or obtain governance rights by utilizing the native token. For instance, in Trust Wallet (TWT Token), users feel convenience in holding TWT, which enables them to gain discounts on trading fees.
White-Label and Enterprise-Level Solutions
This monetization model circulates over the customizable wallet infrastructure favorable for business organizations. Wallet providers charge API access and licensing. For instance, Fireblocks.
Unlike retail wallets, such as MetaMask crypto wallet and Fireblocks (platform for operating digital assets) provide enterprises with modular infrastructure so that they can align with their specific needs. Business companies can integrate customized governance rules, for instance, by implementing multi-signatures. Moreover, Fireblocks offers integration with the internal treasure system and DeFi via API.
Choose the Right Blockchain for Wallet Development
The development of a crypto wallet app is a complex task as it requires considering multiple factors such as features, security measures, monetization strategies, and, of course, blockchain platforms.
Blockchain enhances security in transaction processing and record-keeping due to cryptographic integrity and immutability. Let’s analyze some of the blockchains that are effective for business and wallet development.
Bitcoin
Speaking about wallet development from a business perspective, Bitcoin blockchain is best for businesses that manage Bitcoin treasuries. This blockchain offers multi-signature opportunities to prevent inter-organizational expenditures of bitcoins based on the lack of signatures. This blockchain does not require PCI compliance, so the company representatives will not have to proceed with clients’ sensitive information regarding their payment card numbers.
Finally, Bitcoin benefits accounting by offering a stable and permanent transaction history and automating payroll and invoicing (for automating recurring Bitcoin payments for employees).
Regardless of the aforementioned benefits, Bitcoin isn’t the best option for DeFi or tokenization. It mainly suits simple Bitcoin storage.
Explore how blockchain benefits accounting.
Ethereum
Ethereum will suit mostly wallet development for companies that offer tokenized assets or DeFi services. Ethereum Enterprise enables companies to customize blockchain solutions considering privacy and governance. the blockchain’s architecture promotes scalability beneficial for accommodating small teams and numerous participants. The Ethereum blockchain excludes intermediaries by enabling users to make transactions through smart contracts.
High gas fees and issues with smart contract code represent the core challenges you’ll have to consider when choosing this platform for wallet development. However, don’t forget that applying Layer 2 networks like Polygon can reduce ETH gas fees and accelerate transaction speed based on its dependence on Ethereum for security.
Solana
Solana can be considered a blockchain option for wallet development, considering the fast transactions and low fees. Additionally, Solana supports NFTs and DeFi, making this blockchain beneficial for Web3 startups that create gaming or payment apps, as well as businesses that operate high-speed and low-cost transactions, such as microtransactions.
Nevertheless, if choosing Solana, you should pay attention to the centralization concerns. Although decentralized, this blockchain shows centralized aspects such as token distribution and large staking pools. This blockchain suffers multiple outages, which might disrupt the transaction process.
Key Features of Blockchain Wallet
Сryptocurrency wallet app development is impossible without a set of must-have features that will represent its functionalities. Let’s talk more about some of them.
Key Management
Key management is a must-have feature of cryptocurrency wallet application as it elucidates the ways those keys are stored. For instance, in custodial wallets, a third-party custodian will hold keys, which is beneficial in terms of recovery if the keys is lost.
In non-custodial wallet, the user has a full ownership of their private keys and so can have a full control of their funds, which, however, make key recovery impossible if the key is lost. in the multi-party computation, the keys are split between multiple sides to enhance security.
Finally, multi-signature wallets, which are mostly non-custodial (excluding Fireblocks), use signatures from multiple parties to authorize the transaction, which improves security and prevents users from manipulating cryptocurrency.
Multi-Currency Support
Multi-currency support can significantly benefit businesses that aim to develop a crypto wallet due to the convenience as users, board of directors, and clients can use one application, which can process multiple coins. Another benefit is the support of diversification. Businesses can keep versatile assets but don’t need to create separate accounts for each.
Although we talked about DeFi and NFT compatibility in the blockchain section, the multi-chain wallets can promote seamless operations within multiple ecosystems, such as Solana, Ethereum, etc.
Biometric Authentication
Biometric authentication is an essential crypto wallet feature as it enhances the overall wallet and transaction security. Instead of the standard PIN entrance, the user can apply fingerprint scanning or facial recognition to unlock their device or approve transactions.
This feature prevents phishing cyber attacks as the user might switch to biometric data to operate their transactions, and, in the case of loss, the culprit will be unable to access the device.
QR Code Payments
Another essential feature of the Bitcoin wallet development is the integration of QR code payments. Instead of traditional manual copying of the wallet address, the users can send and receive transactions by scanning the QR code. The benefits include accelerated P2P transactions, which are useful for in-person payments, and error reduction while speaking about mistakes when typing or copying the wallet address.
Step-by-Step Guide to Blockchain Wallet Development
A lot was said about the essence of crypto wallets, their features, and blockchain platforms, but what about developing? It’s time to answer this question: how to develop a cryptocurrency wallet.
Marketing Search & Features Selection
The phase of marketing search implies analyzing key competitors in the market by identifying their core strengths, weaknesses, advantages, and disadvantages. Pay scrutiny attention to their monetization models as they can give exclusive features without losing the quality of the basic application.
Then, you have to analyze your UVP and consider the ways of its delivery. In other words, what is the customer’s pain point and how are you going to solve it with your crypto wallet? At this stage, you can check competitors’ wallet types, blockchain ecosystem, and functions it supports (DeFi, NFT).
Finally, select the wallet application type such as custodial/non-custodial, cold/hot, multisig, and its subsequent features like private key storage, multi-currency support, security elements, etc.
Crafting a Blockchain Environment
First of all, define what blockchain environment your cryptocurrency wallet will support (Bitcoin, Ethereum, etc.). Then, you have to consider how the wallet will be connected with the blockchain (a full-node run or APIs).
Another essential element to consider is selecting a wallet standard, such as BIP-39 or ERC-20. BIP-39 will be important for key generation on the Bitcoin blockchain, and it enables clients to back up and recover their wallets easily. ERC-20 is appropriate for creating fungible tokens on Ethereum, and it is applied for DeFi. You should not ignore selecting the standards that will ensure interoperability and security on different blockchains.
UX/UI Design
UX/UI design development matters to analyze the core user’s flow, including wallet development, transactions, and token swaps, as this stage can significantly reduce the number of upcoming wallet app revisions. The UX/UI phase covers designing the wallet interface, creating wireframes, and designing user flows, such as sending and receiving crypto.
MVP Development
MVP, or minimum viable product, represents the basic Bitcoin wallet app development and only includes necessary features. Don’t ignore this step, as MVP will enable you to validate your crypto wallet idea, preserve funds, and refrain from coding unnecessary features. The MVP development phase includes crafting the following elements:
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Private keys generation
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Wallet creation
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Send/receive cryptocurrency
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Transaction history
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Basic security features
Explore how your startup or business can economize on project development due to MVP creation.
Development
Let’s break down the development phase into two sub-groups: tech stack selection and development of the core wallet’s features.
Tech Stack Selection
Choosing the appropriate tech stack is an essential step in developing a crypto wallet because it will determine its security and blockchain connectivity, etc.
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Blockchain Connectivity
Blockchain connectivity is about the wallet’s real-time synchronization to facilitate fast transaction processing as well as minimization of API latency. The appropriate tech stack here is: Infura and Alchemy for blockchain APIs, web3.js, bitcoinjs-lib for libraries, and Solidity, Rust, etc. programming languages for smart contracts.
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Security
One of the key importance of security is to protect private keys from potential hacking attacks. This factor matters as it facilitates proper encryption and hacker resistance. The tech stack includes OpenZeppelin for smart contract security, Sha-256 for encryption, Fireblocks for key storage, and Node.js, Python, and Go for the backend.
Let’s summarize the appropriate technologies for crypto wallet development in a comprehensive table.
Developing Wallet’s Features
This development phase is about the practical crafting of the wallet’s features you’ve selected during the marketing search phase. We’ve illustrated the breakdown of the core features the wallet can include.
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Wallet creation to generate key pairs (private and public).
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Send and receive transactions to authorize the transaction and broadcast it to the blockchain.
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Check balance and transaction history.
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QR code payments to simplify the process of sending and receiving transactions.
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Multisignature to authorize the transaction by multiple users.
Implement Security Features
The next phase is adding security elements to prevent hacking attacks and boost the overall crypto wallet’s security. You can consider launching:
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Biometric authentication, such as Face ID and fingerprints.
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Anti-phishing protection
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Encrypted private key storage.
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Smart contract security (based on OpenZeppelin security tools).
Testing
After crafting all the required elements, it’s time to test your crypto wallet, in particular, its functionality, working under peak loads, security, etc.
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Unit testing will check the functionality of the crypto wallet’s individual features, such as transaction processing.
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Security testing will analyze whether there are any vulnerabilities.
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Integration testing will check how all the wallet’s functions work together.
Marketing Launch & Maintenance
Lastly, after all the tests are performed, you can start launching your crypto wallet on the market. Just a tiny tip of advice, focus firstly on the local market to check how the target audience will respond. If they like your app, you can promote an international launch of the crypto wallet.
After uploading the app to Google Play or App Store, it’s time to analyze the users’ feedback to understand the strengths and weaknesses of your crypto wallet so that to provide rapid response, required alterations, and updates.
How Much Does it Cost to Develop a Crypto Wallet App?
After demonstrating the comprehensive guide on how to create a crypto wallet, it’s essential to present the approximate price range, as the app's complexity will directly impact the extent of investment.
Basic Crypto Wallet
The basic cryptocurrency wallet development can range from $20,000 to $60,000+ as it will comprise the standard set of features required for the wallet’s functionality:
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Single blockchain support (such as Bitcoin or Ethereum)
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Sending/receiving transactions
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Wallet creation
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Transaction history
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Standard security elements (PIN)
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Either web or mobile application
Middle-Range Cryptocurrency Wallet
The middle-range crypto wallet can cost approximately from $60,000 to $100,000+ even $150,000+ based on more complex elements and functionalities it comprises.
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Multi-chain support
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Dex integration
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QR code payment
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NFT support
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Web and mobile compatibility.
Advanced Crypto Wallet
The price for advanced crypto wallet development can range from $100,000 to $200,000+, even $500,000+, due to the sophisticated elements it includes:
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Multisignature and multi-computation security
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Hybrid wallet (including hot and cold wallet features)
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NFT Marketplace Integration
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Credit card integration to buy crypto
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KYC/AML compliance for enterprise-level operations.
Challenges in Blockchain Wallet Development & How to Overcome Them
Regardless of the transformative power for business operations, decentralized crypto wallet development can experience a set of challenges you cannot ignore if you want to ensure your employees or clients with safe and seamless transaction experience.
Scalability Issues
Scalability issues can emerge as a result of the high network congestion, resulting in an increase in the transaction fees and slowed down time for confirmation. As an outcome, the blockchains like Bitcoin or Ethereum can experience delays in transactions.
Solution
You can incorporate the Layer-2 scaling solutions such as zkSync or Polygon for the Ethereum blockchain as they reduce gas fees and optimize the transaction speed. Or, if you select Bitccoin-based wallet development, then you can integrate the Lightning Network to reach the very same outcome for the BTC transactions.
Regulatory Compliance (KYC/AML)
The regulatory compliance challenge occurs when the government sets restrictions on buying and selling crypto assets. Especially, this issue touches on the custodial wallets, as in the case of non-compliance, the custodian can freeze or block the transaction. As a result, users might seek for another wallet alternatives to skip identity verification. On the other hand, the risk of cyberthreats arises, which we will discuss a bit later.
Solution
You can consider integrating third-party KYC/AML provider, such as Sumsub, Onfido for compliance. Additionally, why not thinking about the decentralized identity (DID) solutions? For instance, Polygon ID enables users to verify their identity once and then reuse this verification.
Security Issues
Security issues represent another challenge for effective crypto wallet operations. The protection of private keys and keeping smart contracts error-free are the highest safety concerns for the blockchain wallet app development, as they can lead to phishing and MitM attacks.
Solution
Again, you can integrate multisig and biometric authentication to prevent phishing and MitM attacks, as the attacker will not be able to reach the user’s credentials or funds. Domain whitelisting or blocking false wallet websites and anti-phishing pop-ups can serve as additional security measures.
You can implement established smart contract libraries like OpenZeppelin for ERC-20 to prevent errors with smart contracts. Additionally, you can consider applying a checks-effects-interactions pattern to avoid reentrancy cyber attacks.
Build a Powerful Crypto Wallet App with Agillie
Agilie is a European IT outsourcing organization that, for over 14 years, crafted from scratch and optimized digital solutions compliant with the unique needs of versatile industries, including fintech, e-commerce, healthcare, real estate, etc.
Agilie can be your reliable partner in a custom cryptocurrency wallet app development due to our following blockchain software services:
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Blockchain development
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Smart contract development
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Decentralized finance development
Agilie elaborated on Wallex, an international digital bank that focused on integrating fiat and crypto for B2C and B2B markets. Wallex comprises cold and hot wallets in its arsenal, which required Agilie to solve the subsequent challenge of safe storage and management of keys in a non-custodial variant.
Our dedicated developers crafted a password-protected database, which implied that the keys were never stored in the app’s memory, only when the transaction had to be signed. The mechanism was as follows. The client entered the password, which was extracted and decrypted. After signing the transaction, it was deleted from the app’s memory.
Conclusion
The article demonstrated how to build a cryptocurrency wallet app, elucidating its core elements, benefits, challenges, and relevant solutions. If you want to create one, you must align it with your business or enterprise needs to choose the appropriate blockchain environment and core functionalities to gain the maximum security level. Finally, don’t forget about the development team, as it will significantly affect the development cost without compromising its quality.
