Reliable storage of cryptocurrencies is a concern for everyone dealing with them. This is why users choose cryptocurrency wallets responsibly.
Businesses should also be aware of the types of cryptocurrency wallets and their differences. And if a company is going to offer its clients a proprietary wallet, we will tell why it is better to develop a custom wallet while there are plenty of ready-to-use solutions in the market.
Users often think that they store cryptocurrency right in their wallet. But in fact, coins stay on the blockchain forever after they are mined or issued. And a crypto wallet is just a tool that helps manage addresses on the blockchain network and stores private keys to them.
A crypto wallet is a program or application that allows you to interact with the blockchain: check balances, view transaction history, send and receive payments. In this context, sending and receiving payments means transferring rights to the cryptocurrency from one user to another. That is, the cryptocurrency isn’t actually transferred because it is just assigned to a certain address on the blockchain.
Basically, a crypto wallet is something like a bank account for transactions with cryptocurrencies. It shows a user how many coins they have on the balance, where they received them from, and where they sent them to. If the wallet supports various currencies, it displays exchange rates and allows users to swap coins.
Crypto wallets that are programs, applications, online services, and browser extensions are called hot wallets because they have to be always connected to the internet. They can be:
Crypto wallets that don’t need internet connection are called cold wallets and have a physical form. They can be hardware or paper.
We at Polygant specialise in developing crypto wallets in the form of web and mobile apps, both custodial and non-custodial. Contact us on Telegram to discuss which type works better for you.
This is the most important difference everyone dealing with cryptocurrencies should be aware of.
As we know, all transactions on blockchain networks go between addresses that look like bizarre combinations of letters and numbers. For example, an address on the Ethereum network may look like this: 0x763a8268712D3E015919d0097F93601B0fd4F102.
Since information about all transactions is stored on the blockchain, everyone can easily view transaction history or the balance of any address. Special services called blockchain explorers are used for that.
To send coins to someone from their address, a user needs to sign a transaction using a private key, otherwise the network will reject it. Here’s the private key to the address we mentioned above: 0x34229daaf8fdb3e9d3861f1af065e8a8fa7887d76e33af19e18de8e6c33cd13f.
Only someone who knows the private key can send coins from the address. And if two or more people know the key, it will be impossible to determine who performed the transaction. This is why it is critical that the private key is stored safely.
A custodial crypto wallet is a wallet managed by a third party, which also stores users’ private keys on its side. Many consider this wallet type insecure due to high vulnerability. But the third party can help recover access to cryptocurrencies if the user lost their password or seed phrase.
Depending on the party owning a wallet, there are two types of custodial crypto wallets:
This is a wallet that allows a user to store private keys on their device without disclosing them to any third party. This wallet type is way more reliable and secure. But in this case, the user is personally responsible for storing their keys and seed phrases. If they lose them, their cryptocurrency will be gone for good.
Now let’s look at three types of crypto wallets that have more obvious differences. There are three major types of wallets: web-based, mobile, and desktop, each with its strengths, weaknesses, and risks. In the finance technology world, the more secure the solution, the more complex and restricted it is. You might want to choose one that offsets these factors and corresponds to your goals.
They are popular for the same reason as any web application or SaaS solution. Here are the advantages of web-based wallets:
Downsides: They may have limited functionality or be less reliable than other types.
If you are going to develop a web crypto wallet, don’t forget to enrich it with handy features and enhance security. Otherwise the users will leave you for other crypto wallets, no matter how hard you try to retain them.
These have become the most popular amongst cryptocurrency users. And they offer the following advantages:
Downsides: May be laggy on older smartphones. Malware may be distributed under the guise of a popular wallet.
If you are going to develop a mobile crypto wallet, don’t forget to optimize it and add it to all app stores from your official account. Also mention on your website, forum threads, and social media, where people can download your wallet. This way you will prevent them from getting to fraudulent websites with malicious clones of your app.
These are most versatile wallets. Just like mobile wallets, these applications store private keys on the user’s device (on a PC in this case). They don’t need a constant internet connection, and this is what makes them better than web wallets. Here are the advantages of desktop wallets:
Some may find the last point disadvantageous. While cryptocurrencies have already emerged from a narrow circle of enthusiasts and have reached the general public, an application designed for experienced users may frighten newcomers away.
So if you are going to develop a desktop crypto wallet, try to make its interface friendlier. And don’t forget to compose a helpful manual.
Hardware wallets are physical media that store addresses and private keys in an encrypted form. Looking like USB flash drives or MP3 players, they can be connected to a PC. Most have a small display that shows the current balance, address, and private key. These are all functions hardware wallets have, just because they aren’t connected to the internet. Combined with encryption, this feature makes them very secure.
Paper wallets are sheets of paper with the printed address and private key that are often duplicated in the form of QR codes. They were initially created on generator websites, and then this function appeared in desktop applications that also generate addresses with keys and allow printing them with QR codes.
Hardware and paper wallets work better for those holding larger amounts of cryptocurrencies but rarely using them. Amongst them are long-term investors, large-scale miners, and crypto enterprises storing their or users’ reserves in cold wallets.
Both web-based and mobile wallets, as well as custodial and non-custodial ones, offer the following functions:
On top of that, there are three helpful functions that your crypto wallet should have.
Most countries have recognized cryptocurrency as a digital asset. This is why both a cryptocurrency and related personal data should be protected and stored in a safe place. Your crypto company must ensure high security both for the cryptocurrencies and data of users.
To prevent fraudsters from getting access to your users’ accounts, keep all user data encrypted. Also provide an option to enable 2FA and make the access recovery process as complicated as possible.
Scanning a QR code
QR codes offer a range of advantages and growth potential. They help a user send cryptocurrency in a contactless way, thereby surpassing the capabilities of plastic bank cards. QR codes may also come in handy for crypto payments and P2P transactions.
Any finance application can send transaction notifications. Make sure your crypto wallet can do this as well. Notifications are a means of validation and security. Trading platforms use them to notify users of withdrawal requests.
There’s one rule in the crypto industry: everyone is personally responsible for their coins. This is what differs cryptocurrency from fiat money that you can deposit to a bank account and rest assured it won’t go anywhere.
Purchasing a ready-to-use solution (e.g. a white label wallet), you will have to juggle security and user-friendliness. The better the one parameter, the worse the other, and vice versa. If you aren’t going to store large amounts, consider ordering a crypto wallet that will match your goals and needs.
Your proprietary crypto application will offer users unlimited opportunities. You can add both the primary functions and some advanced ones, namely:
The cost of development depends on the wallet type (custodial or non-custodial), target platform, and expected range of functions.
|Custodial wallet development|
|Web app||Starts at 20,000 USDT|
|Mobile app||Starts at 30,000 USDT|
|Non-custodial wallet development|
|Web app||Starts at 25,000 USDT|
|Mobile app||Starts at 35,000 USDT|
Polygant is ready to develop a crypto wallet offering any functions that you and your future users may need. Send us a request to find out how much the development will cost in your case.