There is an uncompromising upward trajectory when it comes to crypto prices. There is a drastic increase in the number of individuals investing in digital currencies and as a result, cryptocurrencies like Ethereum and Bitcoin are hitting their all-time highs. Every year, we witness new entrants in the global digital currency wallets, leaving plenty of options for the investors. All of this means that there will be an increase in the demand for cryptocurrency wallet development.
Cryptocurrencies can be stored in a variety of wallet options. Similar to a password, the cryptocurrency wallets store a private key for every individual coin. The best way to recharge cryptocurrency to a digital wallet is to do it via a cryptocurrency exchange that people use to buy currency (Id Est Gemini or Coinbase). However, many mainstream companies like Robinhood and Paypal also incorporate options to buy, store, and sell cryptocurrency.
What is Cryptocurrency?
Protected by cryptography, cryptocurrencies are a form of virtual currency that is nearly impossible to counterfeit or double-spend. Most of the cryptocurrencies are built on distributed ledgers and use decentralized networks which are built on blockchain technology. Cryptocurrencies are not issued by central government authorities, which makes them immune to government policies across the globe.
How Do Cryptocurrency Wallets Function?
- The wallet stores crypto transactions in an unalterable blockchain network.
- The cryptocurrency wallet contains all the public as well as private keys related to the currencies.
- When a wallet user sends cryptocurrencies to another user, he actually transfers the digital coin ownership to the recipient.
- The users are only allowed to transfer their digital coins if their private key matches the public key.
- The public key is used to receive the funds whereas the private key is used to validate the transactions.
Types of Cryptocurrency Wallets
Desktop cryptocurrency wallets can be downloaded on a desktop PC or a laptop and only be accessed via that particular computer. Most desktop wallets are secure, however their security can be compromised if there is a cyberattack on your computer. In the case of a virus or hack, the users would lose all of their funds. Some popular examples of desktop wallets are Bitcoin Knots and Armory.
Virtual wallets for cryptocurrency are based on the cloud and can be accessed from any location using any device. Storing private keys online has become safer and convenient with the advent of blockchain technology. Still, they are vulnerable to cyberattacks, and there is a chance of theft, as cloud services are controlled and managed by third-parties.
These cryptocurrency wallets can be accessed from mobile devices using an app. Many retail stores and supermarkets accept payments via mobile cryptocurrency wallets. However, mobile wallets have more limited cold storage capacity than desktop wallets. Some popular examples of mobile cryptocurrency wallets are Bither, Green Address, and BitGo.
Hardware wallets are very different from mobile, desktop, and virtual wallets, as they don’t store user’s private keys online. Instead the keys are stored on a hardware drive like USB. These cryptocurrency wallets incorporate robust security measures and are capable of executing online transactions. Hardware wallets support various digital currencies and are compatible with different web interfaces. Some popular hardware wallets are Ledger Nano S, Keep Key, and Trezor.
Paper cryptocurrency wallets are the most secure means to store cryptocurrencies. The software generates the private and public keys that can be printed. The wallet holders can easily transfer funds from their software wallets to a paper wallet. The users can scan their QR codes to transfer friends back to the software wallets. Bitaddress is a perfect example of paper cryptocurrency wallet.
Current Cryptocurrency Trends in the Market
Bitcoin was the first cryptocurrency developed and all other cryptocurrencies developed post-bitcoin launch are often denoted as Altcoins or alternate coins. Being the best alternative to fiat currency, cryptocurrencies will surely disrupt the current monetary system.
As per Markets and Markets, In 2019, the cryptocurrency market was valued at $1.03 billion. Moreover, by the end of 2024 the market is projected to grow to $1.40 billion with a CAGR of 6.18% during this period. The high cost of cross-border remittance, monetary value fluctuations, investment growth in crypto venture capital, and the transparency that distributed ledger technology brings have influenced the market growth.
Leading Cryptocurrency Wallets in 2021
Majourly, the cryptocurrency wallets can be divided into two categories - Software Wallets and Hardware Wallets.
Best Hardware Wallets for Cryptocurrency
Since its inception in 2014, the Ledger Company has made big strides. This hardware wallet is perfect for anyone who is serious about their cryptocurrency security. Ledger Nano S has its own operating system called BOLOS and features 2-factor authentication.
Trezor is renowned for developing the first hardware cryptocurrency wallet using modern cryptography. The Trezor One crypto wallet was designed and developed in Czech Republic by a stellar cyber security team and cryptocurrency advocates. In Czech, the word trezor translates to “vault”. Similar to Ledger Nano S, Trezor One also use two-factor authentication to authenticate transactions.
Best Software Wallets for Cryptocurrency
With a motive to enable anyone access Bitcoin anywhere, Coinbase is the catalyst in creating an open financial infrastructure. Currently, more than 35 million users across 100 countries trust Coinbase for their cryptocurrency related transactions.
Gemini is the industry-leading cryptocurrency exchange accessible via both mobile and PC. The app users can track cryptocurrency prices in real-time using the app itself. The app also allows users to set price alerts so that the users can act immediately on price fluctuations.
Steps for Cryptocurrency Wallet Development
It isn’t easy to develop a cryptocurrency wallet that is user-friendly and secure at the same time. The cryptocurrency wallet developers need to have a clear understanding of which type of wallet application they want to build. The following are the typical process for cryptocurrency wallet development:
1. Define Your Cryptocurrency App Type and Concept
As there are several cryptocurrency wallet apps already out there, there is no need for you to reinvent the wheel. Your app idea can be similar to the existing cryptocurrency wallets; hence, you can learn from your competitors and speed up your cryptocurrency wallet development process.
Your answer to the following questions will help you define the crowdfunding app concept:
- What type of cryptocurrency wallet do you want to develop?
- What will be the USP of your cryptocurrency wallet?
- Which cryptocurrencies do you want to support with your app?
- How will you differentiate your app from the competition?
2. Evaluate Existing Market Scenario
When you know the type of cryptocurrency app that you want to develop, it’s time for you to analyze the market. In the earlier section of this article I’ve talked about the types and trends of cryptocurrency wallets, and the top existing cryptocurrency e-wallets in the market.
I recommend you to do a SWOT (Strengths, Weakness, Opportunities, and Threats) analysis to know how to win the competition. Try to identify the USP of top cryptocurrency wallet apps and replicate the strategies for your app.
3. Design UI/UX
Yes, designing FinTech apps is quite challenging. Many FinTech developers directly skip to UI/UX designing without creating mockups for their apps. To be noted that mockups are essential when it comes to FinTech app development. Wireframes and mockups allow FinTech companies to identify user flow and build user-friendly information architecture. At Nimble AppGenie, our designers use Mockingbot and Axure for wireframing and mockups.
4. Develop Technical Architecture and Backend
Your cryptocurrency app performance heavily depends on the technical architecture. Several aspects like user interface, database, workflow, service tools are part of the technical architecture. You can refer to the following illustration to understand technical architecture better.
When your cryptocurrency app’s technical architecture is ready, you should start developing the backend. Backend development is a lengthy process as the developers would have to set up the development environment and build internal and integrate external APIs to create robust app’s backend.
For backend development, you either use a SaaS solution or develop the entire infrastructure by yourself. I prefer using a ready to implement SaaS solution i.e. Cloudkit, AWS Mobile Hub, and Firebase. By using SaaS software solutions, we are able to save time and money for our clients. However, apps that require personalized features and have rigid requirements need to be developed from scratch.
Some other recommendations for cryptocurrency wallet backend development are:
Use Bitcoin libraries for iOS and Android Since most of the cryptocurrencies are open source, there is no need to reinvent the wheel to create your cryptocurrency wallet. It is sufficient to utilize specific libraries like Coinbase SDK or Bitcoin SDK. Based on the type of your cryptocurrency wallet, we can suggest the best technology for developing your app.
Synchronize your wallet into the blockchain via several APIs Distributed ledger Application Programming Interfaces (APIs) will allow you to synchronize your cryptocurrency wallet with the blockchain ecosystem. The most common APIs are Factom, Bitcore, and Coinbase.
Add payment feature If you want your users to make payments via your app, you should empower them with the ability to pay via cryptocurrency. You can integrate cryptocurrency payment services like BitPay or BitPOS to enable this functionality in your app.
5. Frontend Development
First thing first, you need a responsive design. Your app should respond immediately when users input a command. The user experience needs to be top-notch. The most crucial thing about the cryptocurrency wallet frontend is that it should prove the crypto benefits with a sense of reliability. The wallet will be accessing real-time crypto market data, which is very essential for their decision making.
Testing is an indispensable part of every software development life cycle. No matter which software development methodology you are using, testing will be there at the end of every sprint. The quality analysts check the app functionalities and code, and also compare it with the original requirement document.
When the first testing spring is done, the QA team forwards the software code back to the development teams and asks them to resolve the errors/bugs. Afterwards, the development team makes the required changes and sends the final draft back to the QA team. The app can only be released when it gets a green flag from the QA team.
Necessary Features for Cryptocurrency Wallets
Features for cryptocurrency wallets are no different than other FinTech applications. Starting from the seamless registration process, followed by KYC and AML compliances, the cryptocurrency app would require you to pay significant attention to the user experience because app abandonment rate is high when it comes to FinTech apps.
Features like Trading and exchange are quite difficult to implement in comparison to the process for investment apps. Cryptocurrency apps are required to be integrated with the cryptocurrency ecosystem in order to receive real-time updates.
However, following are the feature you should consider incorporating in your cryptocurrency wallet app:
- Seamless onboarding
- User account management
- Robust security
- QR-code scanning
- Cryptocurrency management (send, receive, and store cryptocurrencies)
- Trading and exchange cryptocurrencies
- Push notifications
Indeed, cryptocurrencies are the future of digital payments. The rise of bitcoin has impacted the global monetary ecosystem. Several studies have revealed that the cryptocurrencies market will continue to grow and reach unprecedented levels.
Keeping this growth in mind, it is evident that there will be an increase in the demand for cryptocurrency wallet development. If you’re looking for a FinTech software development company that has extensive knowledge in developing technology solutions for the banking and finance industry, feel free to reach out us at email@example.com
We have been developing FinTech solutions for the last six years and have deployed several successful FinTech apps to the play store and apple store. You can check our wallet development services for the banking and finance industry by clicking here: E-Wallet App Development
Jermaine Trotman is the co-founder of Nimble AppGenie, a company renowned for its bespoke mobile app development and web development in e-wallet app development and fintech development.