Securing your crypto: a comprehensive guide to creating a wallet

The digital age has presented us with new vocabulary. Words like 'bitcoin', 'litecoin', 'dogecoin', and 'blockchain' have not only become part of our daily conversations but are also reshaping the financial and technological landscapes. 

To many, these might sound like buzzwords from a futuristic novel, yet their growing prominence in the fintech sphere is undeniable with the rise in market capitalization and trading volume of these altcoins.

Here's something interesting:

By 2028, it is projected to be 992.50 million users in the cryptocurrency market. 

As digital currencies carve their niche, it's important to know how to keep them safe and stored properly.

What is a Cryptocurrency Wallet?

A cryptocurrency wallet isn't just a "wallet". It's a powerful tool bridging the gap between complex blockchain technology and mainstream users.

Imagine holding a key to a safe. This key, in crypto terms, is a combination of your private and public keys. They serve as your signature, authenticating and authorizing transactions.

Cryptocurrencies like Bitcoin exist as records on a ledger called blockchain. When you own bitcoin, what you really own is the right (ensured by your private key) to an entry on this ledger. Your wallet facilitates the management of this right, letting you spend or trade your coins.

Types of Crypto Wallets 

The landscape of cryptocurrency has evolved rapidly, with a core aspect being the storage and management of assets, embodied by cryptocurrency wallets. Understanding the variety of wallet types can help users navigate the often-confusing terrain of the crypto world.

Here are some of the most popular types of crypto wallets according to different criteria: 

By format 

• Hardware Wallets

• • Definition: These are physical devices, similar to a USB drive, that store your cryptocurrency keys offline.
  • Security: Their chief advantage is security. Being offline means they're not exposed to online hacks or malware.
  • Use: Primarily for bulk storage or long-term holdings, they can be a bit cumbersome for regular transactions. Examples include Ledger Nano S and Trezor.

• Software Wallets

  • Definition: These are applications you can download and install.
  • Variety: They are diverse, available as:

    • Desktop Wallets: Specific to one computer. They provide good security unless the computer gets hacked or infected.

    • Mobile Wallets: On smartphones, they're handy for everyday transactions but can be lost with the device.

    • Online Wallets: Cloud-based, they are accessible from any device, anywhere. However, their online nature makes them vulnerable.

  • Use: For regular transactions and ease, with security precautions necessary.

• Paper Wallets

  • Definition: A decidedly old-tech solution in the crypto age. These are physical documents with a printed private and public key.
  • Generation: They are usually generated online but must be printed and stored offline.
  • Security: Since they're offline, they're safe from digital threats, but physical damage or loss can be a concern.
  • Use: Suitable for gifting or long-term cold storage.

By governance

• Custodial Wallets 

  • Definition: Managed by third-party organizations, they have custody of your private keys.
  • Trust: While they can offer convenience and added services, there's a degree of trust involved. You're essentially relying on them to not get compromised and to manage your assets responsibly. Coinbase is an example.

• Non-custodial Wallets 

  • Definition: Here, the user remains in full control of their private keys, which are often stored on their device.
  • Security: Generally considered safer, since you're not reliant on a third-party's security measures.
  • Use: Best for those who want full control over their crypto assets.

By the device used

• Desktop

  • Installed on personal computers, they provide strong security as long as the device remains uncompromised. Examples include Electrum.

• Mobile

  • Installed on mobile devices, they balance convenience with security. Examples include Mycelium and Jaxx.

• Web

  • Operated via browsers, they offer universal access but depend on both user and platform security. Blockchain.info is a notable example.

• Hardware

  • As discussed, these are physical devices, arguably the pinnacle of security for your crypto holdings when used correctly.

Cold Wallet vs. Hot Wallet

Cold Wallet

Imagine a vault buried deep underground, untouched by the digital tendrils of the internet. This is the essence of a cold wallet.

Features and Benefits:

• Offline Storage: The fundamental feature of a cold wallet is its disconnection from the online world. Your private keys never touch the internet, rendering them invisible to hackers and malware.

• Long-term Holding: Given their offline nature, cold wallets are not designed for frequent transactions. They are best suited for those who plan to hold their cryptocurrencies for extended periods without the need for quick access.

Examples:

Hardware wallets like Ledger Nano S and Trezor, or paper wallets, fall into this category.

Drawbacks:

• Inconvenience: Needing to access your cold storage for transactions can be cumbersome, especially if you're trying to capitalize on a fast-moving market trend.

• Physical Vulnerability: While immune to digital threats, physical damage like fire, water, or simple misplacement can jeopardize your assets.

Hot Wallet

Think of a digital safe, always connected and ready for transactions at a moment's notice. This is your hot wallet.

Features and Benefits:

• Immediate Access: The chief advantage of a hot wallet is its accessibility. Whether you're looking to buy, sell, or trade cryptocurrencies, a hot wallet facilitates instant transactions.

• Versatility: Hot wallets often support a range of cryptocurrencies, enabling users to manage a diversified portfolio from a single access point.

Examples: 

Online wallets like those provided by exchanges, mobile wallets like Mycelium, and desktop wallets like Electrum are all forms of hot wallets.

Drawbacks:

• Security Risks: Being constantly online, hot wallets are susceptible to a range of cyber threats, from phishing attempts to malware attacks. Strong passwords, two-factor authentication, and regular security checks are vital.

• Exchange Vulnerabilities: If your hot wallet is tied to a particular exchange, any security breach on the platform could put your assets at risk.

Why You Should Create a Bitcoin Wallet 

Bitcoin and other cryptocurrencies have carved a significant niche in the financial landscape. While discussions about its value, future, and the technological intricacies behind it continue, there's one undebatable fact: if you're engaging with Bitcoin, you need a reliable wallet. 

But why is that? Let's delve deeper.

1. Enhanced Security

Unlike the traditional financial system where banks and financial institutions guard your money, in the crypto world, security is primarily in your hands. Holding Bitcoins in an exchange exposes your assets to potential hacks and institutional failures. 

A personal Bitcoin wallet acts as your digital safe, ensuring that only you have access to your precious coins. When using a reputable wallet and following best practices, the risk of losing your investment is significantly reduced.

2. Absolute Control 

One of Bitcoin's core philosophies is decentralization — the idea of wresting control from central authorities. By having your Bitcoin wallet, you embody this principle. You hold the private keys, giving you absolute authority over your assets. No middlemen, no banks, just you and your encrypted digital treasure.

3. Flexibility and Versatility

The crypto landscape is vast, with Bitcoin being the tip of the iceberg. Many modern Bitcoin wallets offer support for multiple cryptocurrencies. This means that by establishing a wallet, you're not just creating a storage solution for Bitcoin but potentially for Ethereum, Litecoin, Dogecoin, and various altcoins. Such a setup simplifies asset management, making trading, holding, or diversifying your portfolio seamless.

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4. Transactional Transparency

The backbone of Bitcoin is its underlying technology, blockchain. Every Bitcoin transaction ever made is recorded on this decentralized ledger. Having a Bitcoin wallet allows you to partake in this transparent ecosystem. 

While identities are pseudonymous, transactions are public. This ensures a level of accountability and traceability, counteracting potential fraudulent activities or financial discrepancies.

5. Economic Empowerment

Stepping slightly away from the technical benefits, having a Bitcoin wallet, and by extension, engaging with cryptocurrencies can be seen as a step towards global economic inclusivity. 

Many regions worldwide lack robust banking infrastructures. Cryptocurrencies and Bitcoin wallets can empower individuals in these areas, granting them access to the global economy. Making transactions, investing, or simply holding onto digital assets can provide financial stability and growth opportunities.

Common Crypto Wallet Misconceptions 

Navigating the vast seas of cryptocurrency can often lead us through myths and misconceptions, especially when it comes to crypto wallets. Before diving deeper, let's dispel some common misconceptions surrounding them. 

People can easily switch from your app 

Myth: Once users begin using a particular crypto wallet app, they can effortlessly switch to another at a whim.

Reality: Transitioning between wallet apps isn't just a matter of downloading a new application. It involves securely transferring private keys or recovery phrases, ensuring compatibility with the new software, and familiarizing oneself with its functionalities and security measures. 

While it's technically possible to switch, the process can be tedious. Additionally, users build trust over time with their chosen wallets, and the perceived security and features often foster loyalty. Therefore, once a user feels confident in a wallet's functionality and security, they're less likely to shift unless there's a compelling reason.

Web wallets are the least secure option

Myth: All web wallets are inherently insecure and should be avoided at all costs.

Reality: It's undeniable that web wallets, being constantly online, are vulnerable to various cyber threats. However, painting them all with the same broad brush is unfair. Many web wallets employ state-of-the-art encryption methods, multi-signature requirements, and two-factor authentication (2FA) to bolster security. They're also constantly updated to tackle emerging threats. 

While they may not be as secure as hardware or paper wallets due to their always-online nature, to label them as the "least secure option" outright oversimplifies the spectrum of security measures in place. It's crucial for users to research individual web wallets and their security protocols.

No one can see your transactions

Myth: Cryptocurrencies, with their decentralized nature, ensure that your transactions are utterly private.

Reality: Cryptocurrencies operate on the principle of transparent ledgers. This means that while the identities involved in transactions might remain pseudonymous, the transaction details are visible to anyone who wishes to view them on the blockchain. 

For instance, if someone knows your Bitcoin address, they can see the history of transactions associated with that address. What remains hidden are the real-world identities tied to these addresses. Some coins, like Monero, prioritize privacy and obfuscate transaction details, but for many mainstream coins, transparency is a feature, not a bug.

Users can generate a new password for their crypto wallets 

Myth: Lost your wallet password? No worries. Like email or social media platforms, you can reset it.

Reality: Crypto wallets operate differently from conventional online accounts. They prioritize security and autonomy. The "password" to a wallet, often referred to as the private key or seed phrase, is a unique cryptographic code that provides access to one's assets. If lost, it cannot be regenerated or reset like traditional passwords.

Wallet providers don't store these keys for security reasons, ensuring that only the user has control over their assets. This decentralized approach guarantees security, but with great power comes great responsibility. Misplacing the private key often means losing access to the funds permanently. It's essential to understand this distinction and maintain multiple secure backups of your wallet's access credentials.

How to Develop a Cryptocurrency Wallet?

Building a cryptocurrency wallet is a meticulous process, blending robust technology with high-grade security measures. 

Let's delve into the detailed steps involved in crafting such a digital asset.

1. Find a development partner

While you might possess the vision, executing it requires technical prowess. Collaborating with a seasoned development partner can facilitate a smoother journey. They bring industry insights, technical know-how, and the experience of having built similar platforms, ensuring a streamlined development process and a sophisticated final product.

2. Use Standard Cryptocurrency Open-source Libraries 

Reinventing the wheel isn't always necessary. The crypto community thrives on collective knowledge, and many open-source libraries offer well-tested functionalities vital for wallet development. Leveraging these libraries not only accelerates the development process but also ensures adherence to industry best practices.

3. Use APIs 

Application Programming Interfaces (APIs) act as bridges, enabling your wallet to communicate and function in the vast crypto ecosystem. APIs can offer features like real-time exchange rate updates, connection to various blockchains, and seamless integration with other financial tools. Choosing the right APIs enriches your wallet's capabilities while ensuring it remains relevant and interconnected.

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4. Go Cloud

Cloud integration offers numerous advantages, from ensuring consistent uptime to scalable solutions that adapt as your user base grows. Utilizing cloud services also provides automatic backups, reducing data loss risks. With renowned providers offering robust security features, cloud solutions offer a blend of reliability and scalability crucial for a modern crypto wallet.

5. Select the Right Technology Stack 

The choice of technology directly influences the wallet's performance, security, and user experience. While languages like Python, Java, and C++ have been traditionally popular, newer technologies and frameworks can offer added benefits.

The right stack depends on your target audience, platform (web, desktop, or mobile), and desired features. A knowledgeable development partner can guide this choice, ensuring a robust foundation for your wallet.

6. Accentuate Security 

In the crypto world, security is paramount. Your wallet should employ state-of-the-art encryption methods, two-factor authentication, and cold storage options. Given the irreversible nature of crypto transactions, ensuring the utmost protection against hacks, phishing, and unauthorized access is vital. Regular security audits, penetration testing, and updates can further reinforce the wallet's defenses.

7. Check Out Your Competitors

Before diving into full-fledged development, study the landscape. What features are competitors offering? Where are the gaps in the market? Such insights can help tailor your wallet to user needs, ensuring it stands out in a crowded marketplace.

8. Begin Your App Development

With a clear roadmap in place, commence the actual development. It's a multi-phase process:

• Design: Crafting an intuitive user interface (UI) ensures a pleasant user experience (UX). The design should simplify complex crypto processes, making them accessible even to crypto novices.

• Backend Development: This is the heart of your wallet, ensuring seamless transactions, secure storage, and robust connectivity with the crypto ecosystem.

• Testing: Before the official launch, rigorous testing is crucial. It identifies potential bugs, security vulnerabilities, and areas of improvement. Testing tools, both manual and automated, alongside real-world beta testers, can offer invaluable feedback.

• Launch: With testing complete and refinements made, it's time to introduce your wallet to the world. Ensure you have a support team ready to address user queries and concerns as they arise.

Key Features to Include in Your Crypto Wallet App 

Creating a cryptocurrency wallet app requires attention to detail and a focus on features that enhance the user experience while maintaining rigorous security standards. 

Here are some indispensable features that can set your wallet app apart in the vast crypto universe:

QR Code Scanner

In the realm of digital transactions, convenience is key. Instead of manually entering long and complex cryptocurrency addresses, a QR Code Scanner allows users to quickly scan and process transactions. This not only saves time but also reduces the possibility of errors, ensuring smooth, and error-free transactions. 

Multiple Cryptocurrencies 

Supporting only Bitcoin or Ethereum isn't enough. A multi-currency altcoin wallet appeals to a broader user base, allowing them to manage, transact, and store multiple cryptocurrencies like Litecoin, Dogecoin, and other altcoins all under one roof. This holistic approach ensures that users don’t have to juggle multiple apps for different coins.

Paper Wallet Import

Paper wallets, though seemingly old-fashioned, are a secure way to store crypto offline. By providing a feature to import paper wallets, users can easily transfer their assets from a physical medium to a digital one, ensuring they can easily spend or transfer their assets when needed.

Push Notifications

Staying updated is essential in the fast-paced crypto world. Push notifications alert users about wallet activity, such as received transactions, conversion rate changes, or security alerts. Timely updates not only keep users informed but can also act as an added security layer by alerting them of any unauthorized access or suspicious activity.

Latest Conversion Rates 

The volatile nature of cryptocurrencies makes real-time tracking crucial. Integrating live conversion rates gives users instant insight into their portfolio's value, aiding in informed trading decisions. By sourcing data from multiple exchanges, your app can provide an accurate average rate, ensuring users are always in the know.

Blockchain-Based Transactions

A wallet's primary function is facilitating transactions. Ensuring these are blockchain-based guarantees transparency, security, and immutability. Users can independently verify their transactions on the blockchain, reinforcing trust in your application. 

Managing Familiar Addresses

For frequent traders or those sending funds to familiar addresses, a feature to save and manage these can simplify the process, making repeat transactions hassle-free and speedy. 

Payment Gateways 

Integrating popular payment gateways can facilitate seamless fiat-to-crypto or crypto-to-fiat conversions. This allows users to not only store and trade but also easily cash out when needed.

Optional Session Logout

Security cannot be emphasized enough. An optional session logout feature ensures that if a user's device is left unattended or is compromised, their assets remain safe. Users can set auto-logout times, adding an extra layer of protection to their digital wealth.

How Much Does it Cost to Develop a Crypto Wallet App?

Thinking of building a crypto wallet app? The cost varies based on many aspects.

Here's a simplified look:

Features and Complexity: Do you want the basics, like sending and receiving coins? Or are you thinking bigger with QR scanning, in-app trading, or staking? More features mean a higher cost.

Platform Choices: Planning for mobile, web, or both? Remember, designing for multiple systems (like iOS, Android, and Web) can bump up the price.

Design Aspects: A basic design is wallet-friendly, but a fancy, unique look might stretch the budget. A user-friendly design, though, is key for happy users.

Security: A must-have! Top-notch safety features, such as fingerprint logins, two-step verification, monitoring of hashrate, and solid encryption, can add to your bill. But they're crucial for trust and safety.

Backend Bits: Think of this as the engine room. Costs here include servers, databases, and managing the techy side of transactions.

Third-party Add-ons: Want to add special features, like live price checks or specific blockchain features? These extras can add to the tally.

Quality Checks: Testing is key. You'll need to budget for thorough checks for glitches and safety.

Developer's Location: Prices can differ. A developer in the US might charge more than one in Asia or Eastern Europe.

After-launch Care: Once live, you'll have ongoing costs for updates, help for users, and perhaps some promotion.

As a rough guide? A basic app might be between $20,000 to $30,000. A deluxe version? Over $100,000. To get a clear picture, chat with experts or development companies.

How Long Does it Take to Create a Crypto App?

Let’s break it down in easy terms:

Sketching and Planning (1-4 weeks): Think of this as drawing a map. Before you start, you need a clear plan, knowing what features you want and who your app is for.

Building the App (6-12 weeks): This is the main work. Simple apps that let you check balances and send money might be done quicker. But if you're adding cool features and more difficulty to your app, like trading inside the app or mining, it might take longer.

Testing Phase (2-6 weeks): Just like test-driving a car. Before it's ready for everyone, you need to check for any issues, fix bugs, and make sure it’s safe to use.

Launch Time (1-2 weeks): The final step. This is about getting your app on the app stores and making sure everything runs smoothly from the backend.

So, a simple crypto app can be ready in about 10 weeks. But if you’re going for the bells and whistles, think closer to 6 months. Just remember, it's not about how fast you can do it, but doing it right and safely.

What is SDLC and how does it work? Read about how we design, develop and maintain software in our article.

Build a Powerful Crypto Wallet App with Agillie

Crafting a powerful, reliable, and secure crypto wallet app is an intricate task. This is where Agillie, with its immense expertise and technical experience, steps in as the perfect partner.

Mastery Over Cutting-Edge Technologies

At the heart of Agilie's capabilities is their expertise in a spectrum of technologies. From the perfect mastering of Swift and Kotlin for mobile applications to the prowess in Ruby, Python, and Node.js for crafting powerful backends, Agillie encompasses the technical diversity required to build a versatile crypto wallet.

User-Centric Design Philosophy

One of Agillie’s core strengths lies in its unwavering commitment to the user experience. A crypto wallet, irrespective of its backend strength, needs to resonate with its users visually and functionally. Agillie's design team, equipped with the nuances of UI/UX, ensures that your wallet app is not just functional but also intuitive and aesthetically appealing.

Emphasis on Security

Security isn’t just an option; it's a mandate. Agillie’s proficiency in technologies like Ruby on Rails and its incorporation of best security practices ensures that the crypto wallet stands robust against potential threats. With a combination of encryption techniques, multi-signature requirements, and regular audits, the company fortifies your crypto app's defenses.

Agile Development Approach

Agillie, true to its name, employs an agile methodology in its development processes. This approach ensures flexibility, frequent feedback loops, and quicker time-to-market. For a crypto wallet app, this means staying ahead of the curve, quickly iterating based on user feedback, and continuously enhancing functionality.

Integration and Scalability

As the crypto world evolves, so do its demands. Agillie’s expertise in cloud solutions like AWS and Azure ensures that your crypto wallet app is not just integrated seamlessly but is also scalable. Whether it's catering to a spike in users or integrating new blockchain protocols, the company ensures your app is future-ready.

Comprehensive After-launch Support

Agillie's relationship with its partners doesn't conclude post-launch. Their dedicated team provides comprehensive support, ensuring any hiccups are addressed promptly, updates are rolled out efficiently, and the app remains in sync with the latest in the crypto universe.

FAQs

1. Do you recommend custodial or non-custodial app development?

Both options offer unique benefits. 

Custodial wallet development is akin to traditional banks; users trust a third party with their assets. It's ideal for crypto beginners due to its security feeling and faster transactions. But there's a centralized control risk, and hacks might result in asset losses. 

Non-custodial wallet development gives users total control over their private keys, which decentralizes control and boosts security. However, users must be responsible. If they misplace their private keys, they lose their assets. 

Your choice should focus on your target users and the experience you wish to provide.

2. Should I rely on third party crypto SDKs/APIs or build everything from scratch?

Third-party crypto SDKs/APIs can cut down development time and guarantee reliability. They offer ready-made functions for quick solutions. 

Starting from scratch provides more flexibility and is ideal for developers with unique needs. Yet, it's more demanding in terms of time and resources. 

For many startups, third-party tools are a sensible option, but your project's needs, budget, and timeframe should guide your decision.

3. Do crypto wallets enable only peer-to-peer transactions?

No, they offer more than just peer-to-peer (P2P) functions. While P2P is a core feature of many cryptocurrencies, modern wallets can link to exchanges, support staking, and integrate with DeFi platforms. 

Some even feature integrated marketplaces for direct purchases. So, apart from P2P, crypto wallets now offer multiple functions in the digital asset domain.